Regulatory uncertainty deterring FDI in Bangladesh: World Bank

BDApparelNews Desk
4 April 2019  

Graphics Courtesy: Simple. Thrifty. Living.

Graphics Courtesy: Simple. Thrifty. Living.

What is discouraging foreign investors from investing in Bangladesh now? World Bank says it is a lack of confidence rooted in Bangladesh government’s regulatory unpredictability.

Regulatory uncertainty makes property rights insecure, which is a deterrent to investment, the global lender said in its report titled ‘The Bangladesh Development Update April 2019: Towards Regulatory Predictability’, published in Dhaka on April 4, 2019.

More concretely, World Bank has pointed out that complexities in tax structure, process of starting a business, repatriating profits, changes in energy prices, limitations in the governance framework, risk of cyber-attacks, and skill shortages are the key impediments.

Though the World Bank shed bright light on the prospect and growth of Bangladesh, it said that there is major lacking in the private sector investment.

It said, foreign direct investment (FDI) remained low at less than 1 per cent of the GDP. Net FDI inflow amounted to US $910 million in the first half of fiscal 2018-19, compared to US $823 million in the first half of 2017-18.

Perceptions of unpredictable and opaque administrative processes, as well as the uneven enforcement of regulations, can deter firm creation and investment, push them towards informality and ultimately impede productivity in the formal sectors, it said.

Shedding light on the source of this regulatory unpredictability, the global lender identified discretionary behaviour by regulatory officials at the core of uncertainty, including non-uniform interpretation of rules and requirements.