BANGLADESH, which is said to be a good destination of foreign direct investment, has largely failed to live up to its potential for lack of good governance, accountability and transparency, which have bred corruption. In a situation like this, peer countries with similar potential have drawn in foreign direct investments and Bangladesh has, thus, failed to play the role that it needs to do to achieve the UN 2030 Agenda. The Seventh Five-Year Plan that ended in June had a target to increase foreign direct investment inflow to 3 per cent from 1 per cent of the gross domestic product in view of the improvement that Bangladesh has made in power generation and in the absence of political violence and frequent general strike for a long time that are said to be harming the development process. But Bangladesh could achieve only a half of the target, with the foreign direct investment having reached $9.5 billion in the first four years of the plan until 2019. Yet, the amount includes $1.5 billion acquisition of United Dhaka Tobacco by Japan Tobacco from the Akij Group in 2018.
Provisional data on foreign direct investment in 2019 show that the inflow of the investment declined to $.16 billion that year while the amount was slightly higher than $2 billion in 2017 and 2016. While this happens to Bangladesh, India drew in $51 billion and Pakistan $2.2 billion in foreign direct investments in 2019. Bangladesh has lagged behind competitors in South Asia and Vietnam despite having abundant work force and tariff concession in major markets such as the European Union. In 2019, Bangladesh slid up the global index of doing business by eight notches among 190 countries but lagged behind all South Asian neighbours but for Afghanistan. Corruption in the absence of good governance, and lack of accountability and transparency is, as experts say, the main reason for a declining foreign direct investment scenario for Bangladesh. When Vietnam and Singapore can settle a proposal for foreign direct investment in one year, it takes three years for Bangladesh. Bangladesh had scored below 25 per cent on an average on the World Bank index on governance until 2018, which was much lower than the global average. Accountability, political stability, the absence of violence, government effectiveness, regulatory quality, the rule of law and the control of corruption are of utmost importance in attracting foreign direct investments. Complex administrative requirements and a weak entrepreneurial culture have also coupled with all areas in question where Bangladesh has to improve to effectively explore its potential for foreign direct investments.
While the government has failed to control corruption, uphold the rule of law and bring about good governance, largely leading the foreign direct investment scenario to such a pass, the Bangladesh Investment Development Authority and the Bangladesh Economic Zone Authority are no less to blame as they are known to have been talking tall for long but they have hardly tried to come out of this situation. The government must shore up all these issues largely left neglected so far.
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