Photo: Messenger
In the country's labour sector, workers are available at low prices, which is one of the reasons for attracting foreign investors. However, this opportunity is no longer as useful in recent times. Foreign Direct Investment (FDI) decreased by 694 million or 69.4 crore dollars in the first six months of the current financial year, which has an impact on foreign exchange reserves.
According to the balance of payment data of Bangladesh Bank (BB), foreign direct investment in the six months from July to December of the current fiscal year 2023-24 was 1827 million or 182.7 crore dollars, which is 694 million dollars less than the same period of the previous fiscal year. Earlier, foreign direct investment in the same period of the 2022-23 financial year was 2521 million or 252.1 crore dollars.
According to sources, Bangladesh received 319.5 crore in FDI during the entire fiscal year 2022-23. BB expects to exceed this number in the current financial year.
Meanwhile, in the first half of the current financial year, FDI liabilities have decreased by 15.55 percent compared to the previous year. Last July to December, FDI liabilities were 755 million or 75.5 crore dollars, which was 894 million or 89.4 crore dollars in the same period of the previous year.
According to sources from the Economic Relations Department (ERD) of the Finance Ministry, foreign aid increased by 7.41 percent in the first six months of the current financial year. Foreign donors disbursed $4.06 billion in aid from July to December, which was 378 crore dollars in the same period last year. That is, foreign aid has increased by 28 crore dollars this year. Of this, $3.88 billion was a concessional loan, and the remaining $18 crore was a grant.
However, most donations have been pledged. Commitments rose nearly 300 percent to $5.23 billion in the July-December period. In the first half of this year, foreign donors have pledged about 7 billion dollars in grants, which was 176 crore dollars in the same period of the previous year. Besides, from July to December, the government paid a total of 157 crore dollars of foreign debt and interest. Of this, 926 million or 92.6 crore is principal, and 641 million or 61.4 crore dollars as interest.
Meanwhile, remittance or expatriate income has also increased in the first six months of the current financial year, that is, 300 million or 30 crore dollars more than the same period of the previous financial year. In the financial year 2023-24 from July to December, the expatriate income came worth $10.79 billion, which was $10.49 billion in the previous financial year 2022-23. That is, 2.89 percent more remittances have come at this time.
When asked about this, a senior official of BB told The Daily Messenger, “Bangladesh's position is good in all sectors except Foreign Direct Investment. Increasing FDI is also underway. All the organs of the government are working together. The condition of this sector will also improve soon. By doing this, the crisis of foreign exchange reserves will end.”
The former lead economist of the World Bank's (WB) Dhaka office, Zahid Hossain, told The Daily Messenger, “The economy of Bangladesh mainly depends on two things: one is remittance, and the other is garments. Apart from this, the main sector of the country's economy, especially foreign exchange earnings, is Foreign Direct Investment or FDI. Relying on these three issues, the country's reserves increase. In the last two years, there was a big impact due to less remittances. The main reason for this was the price difference between the dollar's bank rate and the open market. It has reduced a lot now. As a result, remittances in the banking channel have increased.”
He also said, “Exports this year are also getting better. The only concern is FDI. It is expected that it will also increase. I know that foreigners are enthusiastic about investing in various sectors of the country. But they will not come if they cannot be assured of uninterrupted gas, electricity, and water facilities. The government should pay attention to this area. Only then will foreign investment come.”
Messenger/Disha
