1. Our Presentation About

2. FDI?Foreign Direct Investment 3. TYPES OF FDI 4. DETERMINANTS Of FDI FLOWS 5. Are there have Any Benefit of FDI? FDI is instrumental in bridging resource gaps that existin host countrys economy: Resource gap Skill and knowledge gap Gap between targeted foreign exchange Create demand in other industries through backwardand forward linkages etc 6. Are there have Any Cost of FDI? MNEs by using their economic clout influence hostgovernment policies in such a way that it is inimical to the development of the country Due to their preponderant influence the development thattakes place tends to be lopsided as the dualistic economicstructure is reinforced Sometimes control of MNEs over local assets is increasedto such an extent that they start exerting influence overpolitical decisionsExample In Bangladesh: KAFCO 7. ROLE OF FDI IN ECONOMIC DEVELOPMENT Provides different support Filling the saving gap More employment Revenue to Government Encourage entrepreneur Infrastructural development Raising productivity and real wage To brings superior technology Increase competition Increase domestic investment Give opportunity to enter export market Foreign Currency Earning Ensure favorable balance of payment and many more 8. FDI target and actual inflow (millions$)12001000800600 Target400 Actual2000 20052006 200720082009 9. TRENDS OF FOREIGN DIRECT INVESTMENT INBANGLADESH Foreign Investment project Rej with BOI during July 1991 - July 2007 $3,500 $3,000 $2,500Million $ US $2,000 $1,500 $1,000$500$01991-921992-931993-941994-951995-961996-971997-981998-991999-002000-012001-022002-032003-042004-052005-062006-07Year 10. Some notable foreign investment either in implementation or under discussionCompany /GROUP Amount Industry/sector StatusOrascom300Telecommunication In implementationSing Tel 185Telecommunication In implementationDhabi Group1000 Telecommunication,Already invested 17Banking million dollar in bankPharmaceuticals and Alfalah And 10 milliontourism in Warid TelicomTATA 2500 Steel, power, and Under discussionFertilizerGlobal Vulcan energy 1600 Energy and powerSubmitted proposal,under discussion 11. The incentivesFiscalNon-fiscal1. The tax holiday for 10 years followed by 1. Investment protected under foreignreduced rate of next 5 yearsprivate investment act 19802.duty free import of consumer materials2. 100% foreign ownership is permissiblemachinery/spare parts/Equipments3.Relief from double taxation 3. Enjoy MEN status4. exemption from dividend tax4. No ceiling on foreign investment5.Gas facility available5. Full repatriation of capital and dividend6. Duty free import of 3 vehicles 6. Foreign currency loan from abroad under7.Expartiates exempted from income tax for direct automatic route3 years 7. Non resident Foreign currency deposit8. Accelerated depreciation on machinery(NFCD) allowed of A type industryor plant allowed8. Operation of fc account by B type9. Remittance of royalty, Technical and industries allowedconsultancy fees allowed9. Residency /citizenship10. Duty and quota free access to EU, , , ,etc and process 12. INDIAFDI is not permitted in the following industrial sectors: Arms and ammunition. Atomic Energy. Railway Transport. Coal and lignite. Mining of iron, manganese, chrome, gypsum, sulphur,gold, diamonds, copper, zinc. 13. Investment in India S. Korea increased its flow of investment in India from ameager U.S.$ 6.3 million in 1996-97 (0.2 per cent of totalFDI) to U.S.$ 333.1 million in 1997-98 (10.4 per cent share). There has been a sharp rise in the number of FDIsapproved in 2004. During the first seven months of 2004, between Januaryand July, Rs 5,220 crore worth of FDI was approved. Almost a third share of the investment in India is by NRI. According to the latest Reserve Bank of India figures,outflows through various NRI deposits schemes amountedto $903 million since May 2004, as against net inflows of$1.2 billion in the corresponding period last year. 14. NEPAL Up to 100 per cent equity participation by foreigners is allowed intoalmost all the sectors except those in cottage industry, arms andammunition industries, energy, real estate business, securityprinting, currency and coinage, retail business, travel and trekkingagencies, consultative services; Non-discriminatory treatment for foreign investment; Full repatriation of equity, profits or dividends and interest on loans; A guarantee against nationalization; Generous and attractive income tax allowances with minimum fiveyear tax holiday for most of the industries; No tax on dividends, export earnings and interest on foreign loans Corporate tax rate of 33 per cent and income from royalty andtechnical management services is taxed at a standard rate of 15 percent; Only 1 percent duty on import of capital goods; Residential and business visa is provided for foreign investors andtheir dependants; Bonded warehouse and duty-draw back facilities on export 15. PAKISTAN Relaxation of foreign exchange controls, and a general policy ofpermitting foreign investors to participate in local projects on a 100 percent equity basis; Allowing of foreign companies registered in Pakistan to undertakeexport and import trade; Provision of full safeguards to protect foreign investment; Withdrawal of work permit restrictions on expatriate managers andtechnical personnel working in an industrial undertaking and easing ofremittance restrictions; Abolition of the ceiling on payments of royalties and technical fees; Elimination of the requirement of obtaining a "No ObjectionCertificate" (NOC) from the appropriate provincial government, exceptfor areas which are classified as negative areas; No requirement of government approval to set up an industry in anyfield, place and size, except for the following industries: Arms andammunition; High explosives; Radio-active substances; Securityprinting, currency and mint. Exemptions or relief from import duties has been allowed on importedplant and machinery Tax relief in shape of first year allowance has been provided for anumber of industries. 16. SRILANKA 17. MALDIVES Area (000 km2): 0.3 Population (millions): 0.3(2000) Capital city: Male Official language: Dhivehi Currency: Maldivian rufiyaa Exchange rate (period average): 1999 Rf11.8=$1 GDP in current prices (millions of dollars): (1999) 348.6 Exports of goods and services (millions of dollars): (1998) 426.7 Imports of goods and services (millions of dollars): (1998) 410.1 Official development assistance (millions of dollars) :( 1999) 25.5 External debt (millions of dollars): (1998 ) 179.9 18. BHUTANBhutan has the potential to improve her FDI performance. The main Advantagesof Bhutan are:1. Privileged access to a neighboring country like India and Bangladesh with largemarkets; If FDI can reach Indian shore, given the attractiveness it can alsotravel a few miles to Bhutan;2. Best Political stability in the region as compared to India, Bangladesh, andNepal3. Almost negligible social problem with strong social bond and patriotic feeling4. corporate like Government structure with non-existent political Party systemand Low corruption level. The countrys political set-up is gradually movingtowards participative representation of the common people in the countrysassembly with decentralized development and authority structure.5. Least Power Cost in the region equivalent to INR 0.90 per KWH and abundantpower supply6. A low wage, trainable English-speaking workforce;7. A flourishing local entrepreneurial culture in both small and large business;8. A growing international recognition in terms of tourist landmarks9. Unique temperate climate suitable for work and also ideal for cultivatingmedicinal herbs and horticulture with great market potential. 19. Policies and Incentives of Foreign Direct Investment in South Asia in comparison with Bangladesh 20. PROBLEMS FOR INFLOW OF FDI IN BANGLADESH Bureaucratic red tapism Weak domestic court system Inadequate infrastructure facilities Excess procedure formalities Poor economic performance Political instability Inadequate privatized industrial base 21. SUGESSION(s)Tax exemptionsDutyLocationNatural resourcesSocial stabilityLanguageMarket accessGSP facilityCost of business 22. POLICY RECOMMENDATION TO ATTRACT FDIImprove quality of bureaucracy and governanceCoordinated government agenciesDynamic and independent government agenciesPolitical reformationImprovement of law and order situationDevelopment of infrastructure and human resourcesEnsuring power and energyImprovement of port services 23. POLICY RECOMMENDATION TO ATTRACT FDI Privatization and further reforms Modernization of business law Revision of tax law Setting up of industrial parks and new EPZs Improving the countrys image abroad Policies regarding macroeconomic stability Economic and commercial diplomacy Devoting efforts to shift FDI track 24. CONCLUSION 25. The role of FDI has become increasingly important, during the first three decades, FDI turnedout to be the major dynamo for stimulating international resource flows from thedeveloped countries to the developing and underdeveloped ones. In Bangladesh there areno specific FDI. It is include with foreign investment. So the current foreign investmentsituation in Bangladesh does not a clear and confident picture. It is short out by thestatistics presented by the BOI itself. However the country must be an attractive locationfor foreign investors. An FDI enabling framework is a precondition. The administrativesystem for FDI also needs to be effective in dealing with foreign investors and their needs.Economic conditions conductive to investment are the key determinants but they rely moreon political stability and dissemination of facts. However, most of the developing countriesincluding Bangladesh have been realizing the importance of FDI for the industrialdevelopment, employment generation and correcting adverse balance of trade of a country.An enormous number of policies are formulated, reforms in the sector of economic, legal,administration and fiscal have been made and various facilities and incentives have beenprovided by the Govt. of Bangladesh to create a favorable climate of foreign investment inthe country. But the inflow of FDI in the country over the last few years is not remarkableand it is very much insignificant in comparison to the inflow of FDI in other developingcountries as well as neighboring countries. A number of reasons are identified for the poorinflow of FDI in the country. Among them bureaucratic red-tapism, inadequateinfrastructural facilities, excessive procedural formalities, weak domestic court system,poor economic performance, political instability and inadequate privatization base arenote-worthy. In order to overcome these problems as well as to create a congenialenvironment for foreign investment some strategic measures have been recommended.These are development of adequate infrastructural facilities, reduction of proceduralformalities, reform in public administration, easing of legal system, re-design of taxationsystem, creation of EPZs, regional zones, improvement of law and order situation, ensurepolitical stability, aggressive privatization programs, strengthening the capital market,empowering of BOI. The implementation of these suggestions would help to a large toboost FDI inflows in Bangladesh.