Foreign Direct Investment (FDI) in

Bangladesh

GROUP -4
MUSABBIRUL ISLAM
ID:113 0074 660
AVIJIT HIRA
ID:113 0138 060
MALLICK ASADUL HAQUE
ID: 113 0198 090

What is FDI ?
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FDI stands for Foreign Direct Investment, a component of a country's

national financial accounts.

It refers to the net inflows of investment to acquire a lasting

management interest in an enterprise operating in an economy other

than that of the investor.
It is the investment of foreign assets into domestic structures,

equipments, and organizations.

It is thought to be more useful to a country than investments in the

equity of its companies.

Types of FDI
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There are two types of FDI

Inward

FDI

It is the capital provided from a foreign direct investor residing in a

country, to that economy, which is residing in another country.

Outward

FDI

It is a business strategy where a domestic firm expands its operations to a

foreign country either via a Green field investment, merger/acquisition
and/or

expansion

of

an

existing

foreign

facility.

Background of FDI in Bangladesh

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Several underlying factors have contributed to increasing FDI inflow

in Bangladesh in the last decade

trade and exchange liberalization

current account convertibility
emphasis on private sector development
liberalization of the investment regime
opening up of infrastructure and services to the private sector-both
domestic and foreign and

the interest of foreign investors in energy and telecommunication sector.

FDI as Percentage of GDP & Total Investment

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Category-wise Share of FDI Inflows

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FDI Inflows and Association Outward Remittances

7

Sector Wise Distribution Of FDI Inflows

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Sector Wise Distribution FDI Inflows

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Sector Wise Distribution FDI Inflows

10

Inward FDI Flow In Bangladesh, South Asia And

East Asia
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FDI Policy
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Bangladesh does not require any prior approval for foreign investment except

that a foreign investor has to register at the Board of Investment (BOI).

There is, in general, no sector specific restriction for foreign investment in
Bangladesh except investment in readymade garments requires prior clearance
from Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
There is no limit on foreign equity participation , where India has 75% and
Srilanka has 40% limitations.
Industrial policy of Bangladesh encourages private investment, without making
any distinction between local and foreign investors.
Export processing zones (EPZs) are created to attract private investment by
providing ready infrastructure and to allow import of raw material at
international prices.
South Asian countries, licensing regulations apply to private activities in energy
and telecom sector.

Factors Behind The Poor FDI Inflow In Bangladesh

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High cost of doing business due to huge transaction

Poor infrastructure facilities
A high degree of political instability and intolerance
Weak law and order situation
Corruption and lack of good governance
Narrow market size due to low per capita income
Inadequate and outdated business law and improper application.
Lack of local partners with adequate initiatives for joint ventures.

Conclusions
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Bangladesh has a number of positive attributes that can successfully

attract the attention of foreign investors from both developed and

developing countries but the total amount of FDI is still unsatisfactory.
Over the last decades, almost all developing Asian economies including
Bangladesh have progressively adopted more open policies toward FDI
and this trend is likely to continue in the foreseeable future.
The general conclusion of this study is that FDI brings net benefit to
Bangladesh. These benefits appear to be important for integrating the
domestic economy with the global economy and in the area of
technology and skill transfer.

Recommendations
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Quality of bureaucracy and governance Improvement of law and order situation
Development of infrastructure and human resources
Privatization and further reforms
Modernization of business law
Setting up of new EPZs
Improving the countrys image abroad
Policies regarding macroeconomic stability
Economic and commercial diplomacy

Thank You
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