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Investment proposals drop 34% in Q1

Investment proposals in different sectors fell 34 percent to about Tk 20,962 crore during the July-September period of the current fiscal year, according to the Bangladesh Investment Development Authority (Bida).

Of the total proposed investment, around Tk 10,869 crore came from local sources while roughly Tk 10,093 crore came from abroad.

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Of the 227 industrial establishments that were registered with Bida during the first quarter of the current fiscal, 203 are local enterprises while 12 are foreign owned and the rest are joint initiatives.

Also, data shows that most foreign investment received during the first three months of fiscal 2023-24 came in the services sector.

Meanwhile, a significant amount of investment proposals came periodically in the chemical, food and allied, engineering, and textile sectors.

It is expected that 57,937 new jobs will be created by the 227 industries recently registered with Bida.

"It seems there is a decline in investment proposals this fiscal year, which will lead to either a fall in investment or very slow growth in this regard," said Selim Raihan, executive director of the South Asian Network on Economic Modeling.

Raihan, an economics professor at the University of Dhaka, explained that there are various factors behind the current scenario.

First, the high inflationary pressure has escalated business costs. Second, restrictions on opening letters of credit and the ongoing US dollar shortage led to lower imports of capital machinery and raw materials, which are essential parts of investment.

Third, this is an election year, when investors generally take a "wait and see" approach.

Ferdaus Ara Begum, chief executive officer of Business Initiative Leading Development, said more focus should be placed on implementation.

"Whatever investment proposals we receive from local and foreign investors, we need to concentrate on implementation as improved efficiency to this end would help avoid losses," she added.

She also said the statistics of Bida reflect that foreign investment proposals amount to just one-tenth of that received from local sources, which is a serious concern.

With this backdrop, she suggested that Bida should carefully check foreign investment proposals to identify their preferred sectors and thereby grab the opportunities that come along.

Ferdaus informed that some Chinese companies are interested in investing in the country and so, their proposals should not be left unattended, especially those in the apparel and textile sectors.

It was also seen that some investors are anxious about their existing and new investments for basic infrastructural support as the supply of gas and electricity has become a concern for them.

"Even though we have sufficient generation capacity now, production is being hampered by the high import cost of raw materials," she said.

"So, we need to have a long-term policy for continuous support of raw materials for electricity production," Ferdaus added.