Bangladesh overtakes Pakistan in attracting foreign investors

Bangladesh has overtaken Pakistan in attracting foreign investors, according to the 2021 Milken Institute Global Opportunity Index.

Despite a seven-notch improvement in the 2021 outlook, the country still remains the second worst destination after Pakistan in the South Asian region in terms of attracting foreign investment. 

Out of 145 countries, the country has been ranked at 114th in the latest index while Pakistan is at the 115th.

Appreciating the improvement, Dr Ahsan H Mansur, executive director of Policy Research Institute, said, "We have been fairly successful so far in attracting foreign investment."

He, however, added Bangladesh needs to emphasise making progress in the Ease of Doing Business index, and should focus on boosting national productivity. 

To assess the foreign investment prospects in a certain country, Milken assessment uses 96 variables such as its macroeconomic outlook, potential for future innovation and development, and access to financial services.

In the latest report published on 4 February, the California-based independent economic think tank labelled India as the most potential country in attracting foreign investors in the South Asian region.

India is followed by Bhutan (87th), Sri Lanka (95th), and Nepal (103rd) – excluding Maldives and Afghanistan from the assessment.  

Milken published its first assessment in 2017, with Bangladesh at the lowest scorer in South Asia. The country in 2019 ranked third among the neighbours, the best ever performance for Bangladesh.

The 96 variables are put in five categories – business perception, financial services, international standards and policy, economic fundamentals, and institutional framework.

Bangladesh 20 notches up in International Standards and Policy

Bangladesh improved 20 notches up to be 103rd in the International Standards and Policy category of the index.  

This category measures how integrated a country is within the international community and the likelihood it will conform to international standards.

The country improved to 99th position from previous 112th in the economic fundamentals category, which gauges a country's macroeconomic outlook, workforce talent, and potential for future innovation and development.

The country also advanced in the Business Perception category that measures the constraints facing businesses and the ease for businesses to resolve disputes. Meantime,Bangladesh fell five notches down from its previous position in the Financial Services and Institutional Framework categories.

Sweden ranked the top in the index,followed by the UK at second and the US at third place. The assessment said high-income countries have historically performed well in the index, underlining their overall resilience, strength in their economic institutions, and rule of law. 

FDI inflow to Pakistan still better

Despite being ranked below Bangladesh in the Milken index, Pakistan is still getting more foreign direct investment (FDI),specifically from the Middle Eastern countries,than Bangladesh, said Policy Research Institute Executive Director Ahsan H Mansur.

"Our FDI growth has been negative for the last two years, while India has seen a double digit growth," he said.

Ahsan H Mansur commented as Bangladesh could not gain the trust of foreign investors, its FDI performance remains sluggish.

"Ease of Doing Business, productivity index and logistic index are crucial for Bangladesh. But there are numerous issues pulling down Bangladesh in those assessments, and the obstructing matters are quite interrelated," he added.

Mansur believes if Bangladesh can make substantial progress in one assessment especially in ease of doing business, its position in other indexes will automatically improve.

It can be noted that Pakistan was 60 notches ahead of Bangladesh in the World Bank's Ease of Doing Business Index-2020.