Foreign investment registrations under Bangladesh Investment Development Authority (Bida) have decreased by about 93% in the first quarter of the current fiscal year compared to the same period last year as a result of adverse impacts of the Covid-19 pandemic.
Also, domestic investment registrations fell by more than 61% during this period.
The total domestic and foreign investment registrations dropped by about 72%, according to a Bida press release issued recently.
However, investment registrations increased significantly since the beginning of the coronavirus outbreak.
Investment proposals of Tk13,951.73 crore were registered between July and September of this fiscal year. During the same period of the last fiscal year, the amount was Tk50,117 crore.
During April to June this year, investments of Tk5,976.53 crore were received.
From July to September, investment proposals increased by Tk7,975.20 crore (133%) compared to the previous three months.
A total of 213 proposals were registered from July to September, which was 249 during the same period last year.
Foreign investment proposals of Tk1,285.27 crore registered between July and September this year came from 20 firms. Of them, nine are fully foreign-owned and 11 are joint ventures.
The amount was Tk1,7400.19 crore in the same period of last fiscal year. At the time, proposals were received from 44 firms, with 20 being fully foreign-owned while the remaining 24 were joint ventures.
In July-September of this fiscal year, the highest number of investment proposals came in chemical industry, which accounted for 29% of the total domestic and foreign proposals.
Besides, 26% of investments were registered in industrial sector, and 19% in engineering sector.
A total of 26,505 people will be employed in these industries, said Bida.
Domestic investment turning around
Bida found some signs of recovery in domestic investment registrations in the first quarter of the current fiscal year compared to April-June period of the last fiscal year when all economic activities were shut down due to the pandemic.
Domestic investment registrations increased significantly in July-September period compared to the previous three months.
Such investments dropped to Tk1,826.23 crore in April-June period and reached Tk12,666.45 crore in the first quarter of this fiscal year, a six-fold increase.
The number of domestic investment proposals reached 193 in July-September period, five times than that during April-June period.
No recovery sign in foreign investment
Bida observed no recovery sign in foreign investments in July-September period as both the amount of registered investments and the number of projects declined compared to April-June period.
Foreign investments worth Tk4,150.30 crore were registered in April-June period, which dropped by Tk2,865.02 crore in July-September period, a 69% reduction.
Bida Executive Chairman Md Sirazul Islam told The Business Standard the number of new investment proposals came down to almost zero due to the Covid-19-induced lockdown.
Domestic entrepreneurs expressed interest in investing in several proposals after the lockdown, but the state of foreign investment was dire, he said.
"Most of the foreign investments came from profits of previous investments while a little amount was received from intra-company loans, but no significant equity investment came from abroad," said the Bida official.
He said air transport was almost closed for a long time in the first quarter of this fiscal year. "No one would want to invest without a physical inspection."
Investments and the flow of foreign direct investment declined worldwide due to adverse impacts of Covid-19 and Bangladesh was no exception, Sirazul said, adding it would take foreign investments a long time to recover.
He said the number of investment proposals in the first quarter of the current fiscal year was almost the same compared to that of the previous fiscal year, and the amount of investments would be the same when proposals would be implemented.
Former lead economist of the World Bank's Dhaka office Dr Zahid Hussain said a large part of the registered investments was not realised, but it was a matter of concern that proposals were declining.
He said the amount of investments would decrease in the future if the number of investment proposals fell this time.
The economist thinks Bangladesh has to face several obstacles to foreign investments in addition to the impacts of the pandemic.
"Foreigners will invest based on the confidence of domestic investors. For this, we have to improve the investment environment."
Zahid said various initiatives, including a one-stop service and 100 economic zones, had been discussed for long to create an investment environment, but the pace of their implementations was very low.
"In Bangladesh, weak infrastructures and a lack of skilled manpower are the major obstacles to investment. Apart from that, reforms are needed in several sectors. If there is no improvement in these issues, neither domestic nor foreign investment will increase at the expected rate," he explained.
Dr Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue, said the amount of investments at present was low all over the world.
"Investments are not increasing in any sector, except for information technology. Traders are using unused capacity to retain their old investments."
But a large segment of the business community, he said, was exploring potential investment opportunities, and they would invest once the pandemic situation became normal.
"Rather than expressing frustrations over low investments in last quarter, it is important to consider how much of the future investment will come here," Moazzem noted.
He said the government, especially Bida, lacked preparations for attracting new investments.
"Under the one-stop service, 100% of services needs to be launched fast," he said.
Apart from that, Moazzem urged to remove political obstacles and reluctance of various ministries and departments in order to facilitate investment.