Download to start foreign Investment in Bangladesh

Names of group members:
Rezaul Hasan - 122200029
 Rupanti Zaman - 122200026
 Nowrin Salauddin -122200098
 Lutfor Rahman - 122200010
 Chadni Khanam - 122200036

What is Foreign Direct Investment

A direct investment into production or business in a country by an
individual or company in another country.

Company acquiring or merging with a firm in a different country.

As a result The firm has significant control of its foreign operation.
 Firm can affect managerial decisions of the foreign operation.

Mergers and acquisitions, building new facilities, reinvesting profits
earned from overseas operations and intra company loans.
Why is FDI important ?
Firms want a presence in foreign markets
 Advances in technology and process and it improves
competitiveness of a country.
 Can improve the quality of products in particular sector.
 Can create jobs, in an effort to increase productivity.
 Expertise transfer, research and development.
 Increase attempt to better human resources.

Disadvantages of FDI
Economically backward host country are always
influenced when FDI is affected.
 The host country has number of state secrets that
should not exposed to the world.
 Defence is at risk because of FDI in the country.
 Require a higher travel and communication expenses.
 Language and cultural difference and influence.

Components of FDI

Equity Capital

Reinvested Earnings

Intra-Company Loans
FDI flows by region
Economy of Bangladesh
Rapidly developing market-based economy.
 According to the International Monetary Fund,
Bangladesh ranked as the 44th largest economy in the
world in 2011.
 Exports of textiles and garments are the largest source
of foreign exchange earnings.
 But still it’s a developing countries with the numerous
potential of foreign investment.

Economy Overview
GDP total:
$100.00 bn(2010-11)
 GDP per capita:
$664 bn (2010-11)
 GDP growth rate (%):
$6.0 bn(2009-10)
 Total exports:
$16.20 bn (2009-10)
 Total imports:
$23.74 bn (2009-10)
 Total FDI:
$0.913 bn (2010)
 Forex reserves:
$10.700 bn(2010)
 Currency: BDT (1 BDT= $0.01438) (avg 2009-10)

GDP at current price (bn US$)
5
4.5
4
3.5
3
2.5
GDP at current price (bn US$)
2
1.5
1
0.5
0
2011-12
2012-13
2013-14
2014-15
Figure : Line charts showing projected GDP at current price
comparisons over years.
Figure : Pie chart showing sector wise contribution to GDP
Key sectors:
Agribusiness
Ceramics
Electronics
Frozen Foods
Garments and Textiles
ICT and Business Services
Leather and Leather Goods
Life Sciences
Light Engineering
Power Industry
Sector wise foreign investment (CY 1971-2010)
Agro Based
Chemical
Engineering
Food & Allied
Glass & Ceramics
Printing Publishing & Packaging
Tannery & Rubber Products
Textile
Services
Miscellaneous
Figure 14: Pie chart showing percentage of sector wise foreign Investment (CY 1971-2010)
No. of Industries in EPZs
180
160
140
120
100
No. of Manufacturing Industries
Industries under implementation
80
60
40
20
0
Chittagong
Dhaka
Comilla
Mongla
Uttara
Ishwardi
Adamjee
Karnaphuli
Figure : Bar chart showing number of manufacturing industries and industries under
implementations in EPZs.
Why would foreign investors come to
Bangladesh?
o The country has cheaper labor force.
o Bangladesh allows 100% foreign ownership.
o Lower inflation rate compared to other Asian countries.
o Bangladesh has two seaports for export and provides relatively low cost
establishment.
o A wide range of tax exemptions.
o Permanent residentship for foreign nationals investing more than US $
75000 or equivalent amount.
o Reinvestment of reportable dividend treated as new investment.
Who improved the most in starting a
business?
It’s a good indicator that Bangladesh is in
number 9 among the countries which
have improved significantly in starting a
new business. These types of factors
work as positive motivators to the
foreign investors.
Impediments of FDI in Bangladesh:
Complicated Bureaucracy
Political Unrest
 Corruption
 Absence of Autonomous Regulatory Bodies
 Differential Treatment
 Insufficient Power Supply
 Inconsistent Policy Implementation
 Tax Authority’s Discretion
 Lack of effective cooperation of Board of Investment (BOI)
 Disrupting Fiscal Policy
 Administrative coordination problem
 Time wasting customs processing


RECOMMENDATIONS
Ensure of Good Governance.
 Coordinated Government Agencies.
 Dynamic and Independent Govt. Agencies.
 Accountability and Transparency.
 Bring back JSP facility.
 Developing Diplomatic Relation.
 Ensuring Power and Energy.
 Political Reformation.

Please feel free to ask any
question . . . . . . . . . . . . . . . . . . 