In Bangladesh, FY 2016-17 and FY 2017-18 were the first two years when the gross investment of Bangladesh was higher than the gross savings of the country. The public investments in terms of GDP have risen from 7% to 9.1% in the recent years while the national public savings stand at around 2.3% and the private public savings is around 27%. The private investment in the country has been stagnant at around 23% over the past few years.
Public and private investment were important contributors to the high GDP growth rate in 2018. Real investments increased by 10.5% compared to FY 2016-17. Public investment to GDP ratio increased while private investment to GDP ratio decreased. However, Foreign Direct Investment (FDI) declined to USD 1.6 billion in FY 2017-18 from 1.7 billion in FY 2016-17. Net foreign direct investment flow was recorded as USD 3.2 billion for the July to March period of FY2018-19.
The newly reformed BIDA has been making efforts to attract investments. Although a decrease in FDI amount has been observed from the previous years, BIDA confirmed a 13.3% growth in FDI in the third quarter of 2018, and by the end of September, it received proposals amounting USD 3.2 billion, indicating the continuous interest of foreign investors in Bangladesh. China, South Korea, India, Egypt, Egypt, the United Kingdom, the United Arab Emirates and Malaysia have been some of the main investors in Bangladesh.¹² In 2018, Japan automobile giant Honda set up a 25-acre motorcycle manufacturing plant in the Abdul Monem Economic Zone of Munshiganj. In 2017, USD 4.5 billion credit line was offered by the Indian government to Bangladesh for infrastructure development. In October 2017, Bangladesh Petroleum Corp (BPC) signed a 15-year deal with Indian oil refiner Bharat Petroleum Corp Ltd (BPCL) for importing gas and oil to meet the country’s energy demand.
Low savings rate causing inadequate investments is leading the government to seek international investments in an attempt to grow the domestic economy. Certain initiatives are currently being taken by the government of Bangladesh in order to attract foreign investments in the country. Although, investing in Bangladesh is an opportune prospect, it requires a thorough understanding of certain intricacies related to opening a business, documentations and taxation policy among others.