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FDI drops 6pc in first half of 2013

Md Fazlur Rahman
The actual flow of foreign direct investment to Bangladesh dropped 6.22 percent to $933.09 million in the first half of 2013 from the same period a year ago, due to a gloomy global economic climate and volatile domestic politics, according to official figures.
Bangladesh received $995.02 million in foreign investment in January-June of 2012, according to data from the Board of Investment.
Despite the fall, the state-run agency said Bangladesh might well be on course for the highest level of foreign investment in 2013.
"If the flow of investment continues in the second half of 2013, it will be the highest recorded figure for Bangladesh," the government agency said in a statement on Tuesday.
Zahid Hussain, lead economist at the World Bank in Dhaka, said over $900 million in FDI is more than "one could expect given the ground situation."
Bangladesh received $1,292 billion in FDI in 2012, which is the highest the country has received to date, surpassing $1,136 billion in
2011.
Bol has not yet disclosed the amount of real FDI in the second half of 2013 as the central bank is yet to total the amount received through extensive survey, said Nabhash Chandra Mandal, executive member ofBoI.
The additional secretary however hoped that FDI flow could surpass
$1.5 billion in 2013.
Official figures showed that investors made commitments to invest Tk 13,826 crore in 269 projects in October-December, 2013.
Investment proposals from foreign investors or joint ventures dropped in the last quarter of 2013; only six wholly foreign-owned investment proposals and 15 joint venture proposals were registered at an investment value ofTk 787.20 crore. It was Tk 16,070 crore in July-
September.
The number of projects registered with Bol however fell by more than a third or 34.61 percent last year compared to 2012.
Local entrepreneurs proposed to invest Tk 42,488 crore in 2013 in 1,197 projects, which is 15.15 percent lower in monetary value than in 2012, when they had proposed to invest Tk 50,078 crore in 1,655 projects.
On the other hand, foreign investors and joint ventures registered to set up 181 projects worth $2,621 billion in 2013, up 0.40 percent from 2012, when they had committed to invest $2,611 billion.
The declining number of projects also hit job creation.
Industrial projects, from local entrepreneurs, joint ventures and foreign investments, were supposed to generate jobs for 211,695 people last year, which was 368,930 in 2012.
A number of economists point out that the violence in the last quarter of 2013 could disrupt the FDI flow to the country.
"The investment flow might slow down, as the preconditions to woo foreign investors have not improved much. The fundamental problems that are holding investment back Although there might be some stability in the political scenario in the next six months, investors universally tend to look at long-term stability, he said.
"After the last four general elections, one could easily predict that the economy will function properly. But it is uncertain this time around. So, uncertainty lingers," added the economist.
The economist said a scarcity of land for industrial plants, the lack of smooth road connectivity and failure of the power sector to keep pace with rising demand, which is growing at least 10 percent a year, are major barriers.
However, Mandal of Bol said: "The foreign investors are never the target of the political parties in the country. Some scattered incidents might happen."
" No investor has ever come to Bol and said that they are withdrawing their investment due to attacks on them."
fazlur.rahman@thedailystar.net