• Thursday, May 28, 2020

High hope comes crashing down

Discussion in 'Bangladesh Defence Forum' started by Homo Sapiens, Feb 19, 2020.

  1. Homo Sapiens

    Homo Sapiens SENIOR MEMBER

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    https://www.dhakatribune.com/business/2020/02/19/high-hope-comes-crashing-down

    High hope comes crashing down
    Ibrahim Hossain Ovi
    • Published at 12:22 am February 19th, 2020
    [​IMG]

    FDI inflows fall by 15.57% in 2019

    The hope was high, almost touching the sky, when in 2019 Bangladesh moved eight notches up on the ease of doing business index.

    Everybody expected that foreign direct investment (FDI), especially those shifting from China, would pour in because of the congenial atmosphere here.

    The rising FDI trend, an 19.47% rise to $1.7 billion, in the first half of the year also tallied well with the high hope.

    But, to utter dismay, the situation was just the reverse at the end of year, with the country witnessing a slump in receiving FDI despite improved infrastructure and apparent political calm.

    According to Bangladesh Bank (BB) provisional data, Bangladesh last year received $3.05 billion in FDIs, down by $562 million or 15.57% comparing to $3.61 billion in 2018, when the growth was 68%.

    Why this fall

    Economists, government officials as well as businesspeople blame this decline on slower global economic recovery, policy deficiency and readiness to welcome foreign investors here.

    “FDI inflows can be up or down as it depends on investors and the global economic status. Rise also depends on the big blow of investment in a certain sector,” Sirajul Islam, executive chairman of Bangladesh Investment Development Authority (BIDA), told Dhaka Tribune.

    Sharp rise in FDI in 2018 was a sudden rise because of a big investment by a Japanese company and Chinese investment in Dhaka Stock Exchange (DSE), which was not a regular phenomenon, Sirajul noted.

    In 2018, Japan Tobacco invested $1.47 billion to buy United Dhaka Tobacco, a venture of Akij Group, while two Chinese stock exchanges invested Tk947 crore buying 25% of DSE share.

    Businesspeople also blame slower economic recovery and deficiency in policy and infrastructure.

    “The amount of FDI is small considering the size of our economy and the GDP. As per the seventh five-year plan of the government, FDI is supposed to be 3% of GDP and it should be about $9 billion. But we are far behind that,” former DCCI president Abul Kasem Khan told Dhaka Tribune.

    For this, he blames slower growth in the last quarter of the year caused by the slower recovery of global economy.

    Kasem also finds policy faulty, which imposes higher taxes putting pressures on businesspeople in keeping the doing business cost reasonable.

    As regards infrastructure, he thinks Bangladesh failed to reap benefits of investment relocation from China because of inadequate infrastructure.

    Lack of readiness to attract foreign investment is another reason.

    “To take the inflow of FDI to a sustained level, Bangladesh needs to reach a certain level readiness in terms of infrastructure and business climate,” former World Bank lead economist in Dhaka office Zahid Hussain told Dhaka Tribune.

    "We are now failing to meet the target. If there was diversified industrial base in the country, it could be met," he added.

    Policy unpredictability a barrier

    In the recent time, there was tussle between the government and the telecommunication companies, which give a bad signal to potential investors.

    “Regulatory predictability is a key indicator for attracting investment. The recent dispute over the audit claim with telephone companies gave the global investors a bad impression," Centre for Policy Dialogue (CPD) Distinguished Fellow Mustafizur Rahman told Dhaka Tribune.

    How to achieve target

    Bangladesh needs to gear up its domestic investment to give a message to the global investors that business is happening here in suitable climate, experts say.

    “To lure foreign investors, the government has first to make the special economic zones (SEZs) ready," said Rahman.

    If the government could complete the projects within the deadline, FDI inflow would increase as targeted, observed Rahman.

    "There is progress in hard infrastructure, though not enough. To make the business process quicker, the government has to concentrate on soft infrastructure such as efficiency of port and other services to ensure smother delivery," said the economist.

    The government has taken initiatives to establish 100 special economic zones (SEZs) by 2030.
     
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  2. Nilgiri

    Nilgiri BANNED

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    [​IMG]

    and now RMG declining as well. Ouch!

    This is what happens when you project things on unicorn farts.
     
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  3. UKBengali

    UKBengali ELITE MEMBER

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    Tell you the truth, does BD want FDI for it's own sake or actual need?
    3-4 billion US dollars a year could be sufficient as long as it is the right kind of FDI and enough investments are being made by domestic sources.
     
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  4. bluesky

    bluesky ELITE MEMBER

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    Do not worry. No new FDI is going to India instead of BD.
     
  5. fallstuff

    fallstuff SENIOR MEMBER

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    It will go up and down. Keep up the good work with economy, investors will take time to find you !
     
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  6. Tanveer666

    Tanveer666 FULL MEMBER

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    Grapes are sour
     
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  7. Turingsage

    Turingsage FULL MEMBER

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    Such unsubstantiated optimistic forecasting is a deep disease amongst the sub-continental politicians.
    Indians draw a straight graph of India becoming a "superpower" in just a few years. NO, NOT GOING TO HAPPEN. Vast amounts of luck and undigestable reforms and a focus away from identity politics MAY help india get there half way in twice the time.
    Pakistans problems are endemic and cannot be cured without multi generational effort and a pursuit of a different non-ideology. That with luck may take 50 years
    Bangladesh's remarkable growth IS NOT A GUARANTEE of continuing growth in a straight line. A lot can, and probably will go wrong.
     
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  8. Bilal9

    Bilal9 ELITE MEMBER

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    While I realize there are ups and downs on every country's development trajectory, I wouldn't call "fall by 15.57% in 2019" something that came crashing down. Blame the sensationalist media, trying to milk every opportunity to make a headline...

    FDI inflow depends on a lot of factors, most important among them the global economic trends and also economic outlook in the country the investors themselves come from. Since a lot of investors are coming from East Asia, fall in FDI levels is not surprising since those countries are all facing more or less a market downturn...
     
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  9. Turingsage

    Turingsage FULL MEMBER

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    Exactly Bilal. The search for the next sensational headline does not enlighten but just gives a instant snap of a moment in time. Nothing more.
     
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  10. Nilgiri

    Nilgiri BANNED

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    2.3 trillion market cap eats 30 billion one for breakfast. FDI is just top off for us, not the case for you with 1 sector exports running purely on globalist exhaust fumes.

    Now enjoy even more loan pressure and even upcoming financial sector collapse as result....given absolute zilch is being reformed in BD still.
     
  11. bluesky

    bluesky ELITE MEMBER

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    You are writing in a too pessimistic future line at a time when Uncle Trump is planning to export US farm goods in bulks on the expectations of a rising BD living standard. Oh!! BD will soon become full of American honey, fruits, and beef for human consumption and it wants to sell us maize and soybean to fatten our animals.

    BD will soon become flooded with high-quality American foods though you fear BD has no money to buy these luxury imports.

    As per claims by @TopCat, BD has finished 100 SEZs already.
     
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  12. Al-Ansar

    Al-Ansar FULL MEMBER

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    Could be a blessing in disguise.
    I am sick of our export basket being clogged with lint. This is bound to send shivers down the government's spine and provoke meaningful reforms.
    They can't data-fudge their way out of forex inflow dips.
     
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  13. Nilgiri

    Nilgiri BANNED

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    I am far less optimistic on the chances given the misalignment of needs/demands of the people compared to needs/demands of political nepotism....and the fact that "good enough trickle down" is enough to buy and sustain a 95% rigged result in 3rd phase downstream anti-incumbency environment.

    There is 3 basic reforms of note (regarding standards, ease of doing business and price measuring) that should have been done (at little to no cost on nepotism stream) couple years ago itself or earlier even....esp if plan was to not respect democratic system anyway (so might as well push long term gain stuff with some short term transient pain)

    I mean one would expect frequency of articles/debate to increase as deadline of base year shift (later this year I believe) approaches. Instead its the opposite ( I see deadpan silence). I see no white paper released or submitted to IMF (in proactive way, given its no requirement for BD since it stays with lower standards regime) for example on what kind of survey methodology is being implemented to better gather data for supposed new domestic sector growth....which should have been done last year for comment, review and analysis.

    These are all fairly easy meaningful reforms that wont attract bad media drama or affect nepotism/corruption streams for the current top level status quo benefactors that much at all. Only reason I suspect for gumming it up this much is lot of middle order corruption chips given to mid-size oligarchs and bureaucracy too to buy off their silence/pressure too.

    But lets see.
     
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  14. BL33D

    BL33D FULL MEMBER

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    These flooding of american goods is the worst scenario for your FMCG industries. I dont know why you are happy about screwing your own industry. America will try to sell to any country with a huge population. And its only gonna drain your Forex.
     
  15. Nilgiri

    Nilgiri BANNED

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    He is being sarcastic and drole. Bluesky is one of best posters here heh.