Prospects of Foreign Direct Investment in Bangladesh

 In early part of 1990’s Bangladesh introduced various reforms for liberalizing its trade and investment policies with necessary protection and alternative incentive package. As a result, potential investors from local and foreign countries have grown substantially in Bangladesh. A number of multinational companies are operating in various sectors in Bangladesh for decades. Among these sectors manufacturing, telecommunication, energy and gas sectors attract the foreign investment most in addition to this, the following sectors or sub sectors are very promising for potential private investment.

 Composite textiles and linkage industries: In the last two decades, the RMG (Ready Made Garments) of Bangladesh have grown substantially and now constitute 70% of total exports of Bangladesh. Currently, 2500 RMG units spend approximately 60% of their export earning on import of fabrics. To meet the import requirements of the RMG industries additional investment in spinning, weaving, dyeing, printing and finishing is required on a top priority basis.

 Telecommunication:

In Bangladesh, the systems and services of telecommunication have been expanded. Government has already allowed private operation in this sector and has plans to increase the number of fixed telephone lines by 1.6 million. As a result, it has emerged as one of the largest sectors having huge growth potential in the reform environment of telecom sector.

 Information and Telecommunication Technology (ICT):

Bangladesh has the scope of profitable investment of ICT. Bangladesh IT firms are interested to join in with foreign investors. In accordance with greater interest with the Government it would be given the highest level of support from the government.

 Energy and Gas sector:

The energy sector of Bangladesh has remained the chief recipient of FDI inflow up to the period 1988-1990. In the 1988-1990 fiscal more than half of the dollar 380 million of the FDI came to the gas sector alone. But, after that a share of energy and gas sector has sharply declined. This sector was able to attract 10.6% of FDI during January-June 2003. However, given the present utility infrastructure situation of the country and projection faster growth of industries in recent years, energy and gas could be attractive sector for investment in future.

 Infrastructure:

Bangladesh needs to develop its infrastructure facilities and a service in various sectors and in this context has encouraged private participant with a number5 of policy initiatives. The potential areas are:

Ø  Power generation.

Ø  Exploration and exploration of gas and other mineral resources.

Ø  Highway development including bridge, express-way and tunnels.

Ø  Port infrastructure facilities.

Ø  Industrial parks/private export processing.

 In addition to this sector, the following sectors are considered to be potential for investment in Bangladesh.

Ø  Computer software and electronics.

Ø  Diversified jute goods and jute based pulp and study.

Ø  Chemicals and petrochemicals.

Ø  LP gas, Environment friendly insecticides etc.

Ø  Leather and leather goods.

Ø  Tourism.

Ø  Food processing, Fruit canning and allied products.

Ø  Sports goods.

Ø  Light, Engineering and agro-based industry.