Chinese FDI showing strong growth

Bangladesh has seen rapid growth in foreign direct investment (FDI) from China ever since the country joined its Belt and Road Initiative (BRI) in 2016, according to a report by the Chinese embassy in Dhaka.

Besides, Chinese investors have started coming to Bangladesh as the country has a favourable investment climate, it said.

Bangladesh received more than $2.6 billion in FDI from China over the past 10 years while the total FDI from Japan stands at just $380 million till date, according to data of Bangladesh Bank.

The Chinese FDI was made in industries such as garments, telecommunications, energy, manufacturing, infrastructure, leather and leather goods, chemicals, and so on.

Bangladesh and China also witnessed sharp growth in bilateral trade, which amounted to $25 billion in 2022 compared to $6.77 billion in 2013.

Goods imported from China to Bangladesh mainly consist of capital machinery and raw materials.

Meanwhile, Bangladesh's exports to China are mostly comprised of vegetables, frozen and live fish, leather and leather goods, paper, and garment items such as yarn and woven fabrics.

Bangladesh received more than $2.6 billion in FDI from China over the past 10 years. The investment was made in industries such as garments, telecom, energy, manufacturing, infrastructure, chemicals and so on

The report, released on July 2 earlier this year, provides an assessment of the overall investment by Chinese investors in Bangladesh as well as the barriers they face.

Styled "Invest Social Responsibility Report of Chinese Enterprises in Bangladesh", the report said that Chinese enterprises in the country have made significant contributions to its economic development.

For example, nearly 1,000 Chinese enterprises are currently operating in the country, creating approximately 5.50 lakh employment opportunities in the process.

However, these companies face challenges in doing business because of cultural differences while Bangladesh's sub-par public safety conditions and infrastructure levels also play a part.

"So, we can invite experts and scholars who are familiar with the regional culture to provide special training to employees of Chinese-funded enterprises stationed in Bangladesh," the report said.

This way, the Chinese firms will be able to understand Bangladesh's cultural characteristics, habits and religious values to ensure that all work is carried out in accordance with laws and regulations, it added.

The Chinese embassy pointed out that as economic globalisation continues to advance, Bangladesh is becoming increasingly integrated with the world.

As a result, more foreign companies are setting up shop in the country's domestic market.

The report also said Chinese companies in Bangladesh should leverage their advantages in professional fields, actively expand operations, and improve their project management and contract execution levels.

In addition, they should enhance their international compliance, and cultivate specialised, refined, and simplified high-quality project teams.

Bangladesh's government has created a relatively investment-friendly climate for foreign investors and actively provides assistance to this end.

So, it is important to seize the opportunities presented by the country's commitment to development and willingness to provide favourable conditions in this regard, the Chinese embassy said in its report.

However, Chinese companies must establish a comprehensive self-regulation and cooperation mechanism at the government and industry levels in order to achieve healthy development.

The Chinese embassy added that there is a clear demand for the upgradation of industrial technology in Bangladesh, with strategies such as "Smart Bangladesh" being implemented.

The report also said Chinese companies need to actively integrate into Bangladesh's market and improve their localisation at the management level.

This can be done by actively selecting and cultivating a group of responsible and capable personnel among foreign employees considering the language barriers and cultural differences.

Through them, information and ideas can be conveyed, enhancing communication and stimulating the enthusiasm and creativity of foreign workers to achieve healthy and stable development for their firm.

"We hope Bangladesh can provide more policy support for foreign investment and construction projects, such as reducing or exempting related taxes and providing preferential loans," the report said.

The embassy also hopes that Bangladesh's government can increase dialogue and coordination mechanisms with Chinese enterprises to address the difficulties encountered in their projects.

Additionally, it urged the government to attach greater importance to security issues at project sites.

This includes increasing police patrols to ensure the safety of enterprise assets as well as the personal safety of their employees.