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The Financial Express

Bangladesh among nations at bottom in greenfield FDI index

| Updated: November 15, 2020 17:38:25


Lankabangla and Fianancial Express Lankabangla and Fianancial Express
Bangladesh among nations at bottom in greenfield  FDI index

Bangladesh has been ranked the third worst-performing country in the world in terms of attracting green-field foreign direct investment (FDI), according to a global ranking.

"Greenfield" investment is a type of FDI in which a parent company creates a subsidiary in a different country, building its operations from the ground up.

In addition to the construction of new production facilities, these projects can include the building of new distribution hubs, offices and living quarters.

Bangladesh has scored 0.31 and it has 18 green-field FDI projects as of 2020, according to the 'Greenfield Performance Index-2020'.

A score of 1.0 indicates a country's share in global inward green-field FDI matches its relative share of global GDP. A score greater than 1.0 indicates a larger share than indicated by its GDP and a score of less than 1.0 indicates a smaller share.

"Bangladesh is attracting much less FDI in proportion to the size of the economy [Bangladesh]," the report, a publication of the FDI Intelligence said.

The 10 worst-performing nations are Japan, China, Bangladesh, Iraq, South Korea, Norway, Pakistan, United States, Italy, and Ecuador.

Japan and China are poor performers in the index as they stand out as the lowest-performing countries, given the size of their economies, and also for their typical hard and soft barriers to foreign investment.

On the other hand, African country Togo topped the list of best-performing nations in attracting such FDI.

The other best performers are: Rwanda, Costa Rica, Mozambique, Serbia, Lithonia, Senegal, Zimbabwe, Georgia and Singapore.

Of the world's 10 largest economies, five had an index score above 1.0--the UK (2.5), France (1.4), Germany (1.3), India (1.2) and Canada (1.08).

The global outlook has analysed 101 locations in 2020 while preparing the Greenfield Performance Index. Of them, 75 had an index score greater than 1.0, while 26 had a score of 1.0 or less.

The Greenfield Performance Index uses a methodology devised by Unctad for overall FDI, and applies it to only green-filed FDI, excluding M&A, intra-company loans and other forms of cross-border investment.

The Bangladesh Bank said the gross FDI in April-June was US$742 million, which was $803 million in January-March.

Component-wise, FDI stock amounted to $18.7 billion at the end of June 2020. Of the total stock, equity capital is $12.6 billion, reinvested earnings $3.2 billion and intra-company loans $2.9.

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