Attracting a significant amount of foreign direct investment (FDI) for the country's rapid economic growth has been one of the government's priority considerations for long. All concerned including experts and our international development partners have time and again reiterated the point. However, the inflow of FDI in the economy recorded so far did hardly match the enthusiasm expressed over it. The latest figure about the FDI inflow in the economy in proportion to the country's gross domestic product (GDP) as provided by the World Bank in 2019 was 0.53 per cent where the global average based on 97 countries in that year was 4.17 per cent. As the World Bank data of the same year further show, our regional neighbours such as India and Sri Lanka or Malaysia and Vietnam in Southeast Asia, all of them fared better than Bangladesh in drawing FDI.
Of the bottlenecks coming in the way of smooth inflow of FDI to the country, the policy areas relating to foreign investment came under the spotlight at a recent webinar. Inconsistencies in the existing investment policies, according to some experts at the event, were found to be a major roadblock to foreign investment. Also, the policies at some points appeared to be unpredictable. Needless to say, in a competitive market, any potential investor, whether of domestic or foreign origin, would first look at what opportunities for them in terms of ease of doing business are on offer from the government concerned. And of course, the less cumbersome and control-free they are, the more interested entrepreneurs would be to invest their money in that economy. That our trade and business policies are outmoded and complicated is undeniable and those have their link to our colonial legacy. But successive governments even long after the country's independence could not do much to revamp the deeply entrenched rules and regulations that dictate trade, commerce and investment.
It is time the government took a long hard look at those age-old rules and opened them up for businesses ---both local and foreign. That would require them to revisit and reform some of the conservative and protective trappings of the present policies. The importance of having a more open and forward-looking investment policy had never been more pronounced than now. That is especially so because of the ongoing trade war between the two mammoth global economies, the USA and China. Bangladesh could well be an alternative destination for a considerable chunk of the investments now leaving China. The trend will increase phenomenally as soon as the world is able to effectively contain the prevailing pandemic.
As such, Bangladesh has to be fast in grabbing the opportunity through reforming trade policies and making them more FDI-friendly. What holds back FDI does also affect further development and expansion of the export sector. Local entrepreneurs feel more comfortable about doing business at home since the country's business policies are protective in nature. Small wonder that we have a very narrow export basket dominated mainly by one industry ---the garments. But this is neither healthy nor safe for the economy. To diversify the export base, incentives in the form of letters of credit, tax holidays and other facilities should be extended also to other potential sectors including agro-based industries. Hopefully, the government will begin to effect reforms in the trade and investment policies in earnest so as not to be left out in the relocation race. There is still a lead time to secure a sizeable chunk of relocation bonanza.