The New Nation - Internet Edition

ACCORDING to Bangladesh Bank data published in the media, the foreign direct investment (FDI) recorded a fall by 11.11 per cent in 11 months of the last 2007-08 fiscal year as FDI dropped to US $ 648 million in the July-May period in the last fiscal year from US$729 million during the same period in the previous 2006-07 fiscal year. Foreign investors always monitor the internal situation and the investment climate in the country seriously before they come for investment. Under the existing circumstances when the business confidence of the local investors is 'low', none can expect that of a foreign investor to be otherwise.

Portfolio investment has also dropped by 10.81 per cent to US $66 million during the 11 months from US $74 million in the same period of the previous year. The foreign investors are as before reluctant to invest in the capital market. Inability to 'restore business confidence' before the national elections in December will widen the gap between the domestic production and the rising demand. The trade deficit rose to US$ 5 billion in the July-May period, which was US$ 3.2 billion in the same period of the previous year.

Import is growing alarmingly faster than the growth of the country's export and this may put pressure on the foreign exchange rate adversely. During the period, export earnings stood at US$12.5 billion against the import bills of US $17.5 billion. Bangladesh Bank data, however, revealed that the current account was positive standing at US$ 456 million due to robust remittance from the expatriates. The overall balance of payments in the 11 months period in the last fiscal year was a meagre US$ 105 million, which was US $ 1 billion in the same period in the previous fiscal year.