FDI inflow on slippery slope even before COVID-19 strike

Reopening amid worsening pandemic would not ensure increased FDI: economist

HM Murtuza | Published: 22:45, May 28,2020

 
 

A file photo shows a man counting US dollar notes. The net foreign direct investment in the country dropped by 7.35 per cent in the first eight months (July-February) of the current fiscal year 2019-2020 even when the country was not hit by the coronavirus pandemic. — AFP photo

The net foreign direct investment in the country dropped by 7.35 per cent in the first eight months (July-February) of the current fiscal year 2019-2020 even when the country was not hit by the coronavirus pandemic.

As per the latest Bangladesh Bank data, the net inflow of FDI dropped to $1.71 billion in July-February of FY20 against $1.85 billion in the same period of last fiscal year.

The country first announced the outbreak of the virus in March 8 this year and since then the number of cases of coronavirus infections has been rising. The pandemic has hit most of the countries across the globe.

The other countries have recently been reopening their economies in phases, but the coronavirus situation in Bangladesh is still deteriorating. Despite the fact, the government has announced the withdrawal of the coronavirus-induced shutdown from May 31 after two months of its imposition.

Asked whether the reopening amid the rising cases of coronavirus infection would bring any good to the country’s economy at a time when a number of investors were planning to leave China and shift their investments elsewhere, Policy Research Institute executive director Ahsan H Mansur told New Age, ‘The reopening would not be beneficial unless the coronavirus situation becomes satisfactory to the potential investors.’

The investors would be scared of visiting the country due to the deteriorating coronavirus situation, and they would prefer to avoid Bangladesh, said Ahsan, also the chairman of BRAC Bank.

Even the existing buyers would not consider travelling to Bangladesh if the situation remains unchanged, he said, adding that although the country was going through a shutdown but the situation continued to deteriorate because of poor handling of the issue.

‘On the other hand, our businesses would not be able to visit any country and that’s why the economic state would remain unchanged until the coronavirus situation comes under control,’ Ahsan said.

Speaking about the fall in export and import in July-January period of FY20, he mentioned that Bangladesh’s economy was weak even before the coronavirus outbreak began in the country and that had collapsed after the outbreak.

‘We have to go through a rebuilding process in the coming days after tackling coronavirus situation effectively,’ he added.

In July-February of FY20, the country’s overall export dropped by 4.85 per cent to $25.6 billion against $26.9 billion in the same period of the previous year.

The country’s import payments dropped by 3.87 per cent to $36.37 billion in the eight months of current fiscal year from $37.84 billion in the same period of the previous year.

As a result, the country’s trade deficit eased by 1.48 per cent, or $162 million, to $10.77 billion from $10.94 billion.

In the period, the situation of current account balance improved as the deficit dropped to $1.84 billion from $3.97 billion in the same period of last fiscal year as the remittance inflow was high till that time.

The country’s overall balance turned $214 million positive in July-February from $499 million deficit in the same period of FY19.

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