In the first four months of the current financial year, Foreign Direct Investment (FDI) has reached the country, totalling 128 crore dollars. Despite various measures taken to encourage foreign investment, the investment in this sector has practically stagnated.
According to the latest report from Bangladesh Bank, in the first four months from July to October of the current financial year, foreign investment of 128.17 crore dollars has arrived in the country, which is 20 crore dollars less than the same period of the previous financial year. In the same period of the last financial year, foreign direct investment came in at 148 crore dollars.
The European country Netherlands is leading in FDI so far this year. The country has invested more than 18.90 crore dollars, with significant investments in the food and power sectors. Next is the United Kingdom, which has invested a total of 13.40 crore dollars. Additionally, 6.54 crore dollars came from Norway, 6.33 crore dollars from Korea, and 6.26 crore dollars from the USA.
A top official of the central bank told The Daily Messenger, “In the first four months of the current year, around 110.15 crore dollars in interest and principal has been repaid. On the other hand, the investment came in at 128 crore dollars. More loans need to be paid this year, and more dollars will be needed to repay the debt from next year. The debt repayment of some mega projects will have to start from 2024-25.”
In this regard, Ahsan H Mansur, Executive Director of Policy Research Institute (PRI) and former chairman of BRAC Bank, told The Daily Messenger, “Earlier, we used to get more loans at fixed interest rates, which was beneficial for a country like ours. But now we need to take more loans at market-based interest rates, where the interest rate is never fixed. Sometimes, this results in lower interest rates, but currently, it is more than 5 percent, which will increase our interest payments.”
He also said, “Borrowing for unplanned projects should be reduced, and project loans should be prioritised. Since we are no longer a low-income country, loans are not available on as easy terms as before. Therefore, we have to be more careful and cautious in taking loans.”
Meanwhile, disbursements have decreased compared to last year despite increased loan and grant commitments. As of October this year, international development partners disbursed 162.62 crore dollars, which is 17.5 percent less than the same period last year. Bangladesh received more than 197 crore dollars in loans at the same time last year, indicating a decrease of 34.50 crore dollars in one year. Donations for this year have reached 6.53 crore dollars, which is 2.50 crore dollars less than the previous year.
According to the data, the interest paid in the first four months of this year was 46.74 crore dollars. However, the interest paid during the same period last year was 18.77 crore dollars. Interest payments have increased by more than 280 crore dollars over the course of a year. The central bank expects this rate to increase to 100 crore dollars next year.
In this regard, Zahid Hussain, the former chief economist of the World Bank’s Dhaka office, said, “Bangladesh has always received less FDI than its rival countries. Bangladesh receives much less FDI than countries like Vietnam, India, and Pakistan.”
“In this case, not being able to create a one-stop service is considered the main obstacle. Although BIDA is now taking some initiatives, those initiatives should be made easier,” he added.