Names of group members: Rezaul Hasan - 122200029 Rupanti Zaman - 122200026 Nowrin Salauddin -122200098 Lutfor Rahman - 122200010 Chadni Khanam - 122200036 What is Foreign Direct Investment A direct investment into production or business in a country by an individual or company in another country. Company acquiring or merging with a firm in a different country. As a result The firm has significant control of its foreign operation. Firm can affect managerial decisions of the foreign operation. Mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations and intra company loans. Why is FDI important ? Firms want a presence in foreign markets Advances in technology and process and it improves competitiveness of a country. Can improve the quality of products in particular sector. Can create jobs, in an effort to increase productivity. Expertise transfer, research and development. Increase attempt to better human resources. Disadvantages of FDI Economically backward host country are always influenced when FDI is affected. The host country has number of state secrets that should not exposed to the world. Defence is at risk because of FDI in the country. Require a higher travel and communication expenses. Language and cultural difference and influence. Components of FDI Equity Capital Reinvested Earnings Intra-Company Loans FDI flows by region Economy of Bangladesh Rapidly developing market-based economy. According to the International Monetary Fund, Bangladesh ranked as the 44th largest economy in the world in 2011. Exports of textiles and garments are the largest source of foreign exchange earnings. But still it’s a developing countries with the numerous potential of foreign investment. Economy Overview GDP total: $100.00 bn(2010-11) GDP per capita: $664 bn (2010-11) GDP growth rate (%): $6.0 bn(2009-10) Total exports: $16.20 bn (2009-10) Total imports: $23.74 bn (2009-10) Total FDI: $0.913 bn (2010) Forex reserves: $10.700 bn(2010) Currency: BDT (1 BDT= $0.01438) (avg 2009-10) GDP at current price (bn US$) 5 4.5 4 3.5 3 2.5 GDP at current price (bn US$) 2 1.5 1 0.5 0 2011-12 2012-13 2013-14 2014-15 Figure : Line charts showing projected GDP at current price comparisons over years. Figure : Pie chart showing sector wise contribution to GDP Key sectors: Agribusiness Ceramics Electronics Frozen Foods Garments and Textiles ICT and Business Services Leather and Leather Goods Life Sciences Light Engineering Power Industry Sector wise foreign investment (CY 1971-2010) Agro Based Chemical Engineering Food & Allied Glass & Ceramics Printing Publishing & Packaging Tannery & Rubber Products Textile Services Miscellaneous Figure 14: Pie chart showing percentage of sector wise foreign Investment (CY 1971-2010) No. of Industries in EPZs 180 160 140 120 100 No. of Manufacturing Industries Industries under implementation 80 60 40 20 0 Chittagong Dhaka Comilla Mongla Uttara Ishwardi Adamjee Karnaphuli Figure : Bar chart showing number of manufacturing industries and industries under implementations in EPZs. Why would foreign investors come to Bangladesh? o The country has cheaper labor force. o Bangladesh allows 100% foreign ownership. o Lower inflation rate compared to other Asian countries. o Bangladesh has two seaports for export and provides relatively low cost establishment. o A wide range of tax exemptions. o Permanent residentship for foreign nationals investing more than US $ 75000 or equivalent amount. o Reinvestment of reportable dividend treated as new investment. Who improved the most in starting a business? It’s a good indicator that Bangladesh is in number 9 among the countries which have improved significantly in starting a new business. These types of factors work as positive motivators to the foreign investors. Impediments of FDI in Bangladesh: Complicated Bureaucracy Political Unrest Corruption Absence of Autonomous Regulatory Bodies Differential Treatment Insufficient Power Supply Inconsistent Policy Implementation Tax Authority’s Discretion Lack of effective cooperation of Board of Investment (BOI) Disrupting Fiscal Policy Administrative coordination problem Time wasting customs processing RECOMMENDATIONS Ensure of Good Governance. Coordinated Government Agencies. Dynamic and Independent Govt. Agencies. Accountability and Transparency. Bring back JSP facility. Developing Diplomatic Relation. Ensuring Power and Energy. Political Reformation. Please feel free to ask any question . . . . . . . . . . . . . . . . . .