The country needs qualitative foreign direct investment (FDI) in manufacturing sector rather than quantitative one in services sector, speakers said at a seminar Saturday.
"Without denying the increasing significance of FDI in the country's economy that currently does not generate much savings for making adequate investment, we should draw FDI into the productive sectors applying proper judgement and being aware of its consequences," said Former Finance Minister A.M.A. Muhith.
The seminar on 'FDI and its impact on national economy' was organised by Campaign for Good Governance (SUPRO), which was moderated by its secretary Rezaul Karim Chowdhury, president Abdul Awal and treasurer Rafiqul Islam.
MP Shakawat Hossain Bakul, MP Merina Rahman, MP Tasmin Rana, Former Director General of Family Planning, Abdul Latif Mallik, NGO activists Monowar Mostafa and Zayed Iqbal and Trade Union Leader Abul Hossain also addressed the seminar.
"For the sake of opposition or debate, we cannot undermine the significance of FDI in our economy when the country's savings rate is significantly low. The FDI flow is a must but its qualitative aspect in the country's economy should be examined carefully " said Bakul.
He suggested for gradually transforming the country's agro-based economy into knowledge-based economy through imparting sophisticated know-how and morality and ethics-based education which will increase savings rate and subsequently enhance economic welfare.
A country like Bangladesh with only 23 per cent rate of national savings and having its 48 per cent people under poverty line cannot meet its investment demand. After the Second World War trade growth increased manifold than output growth but this has not shown much of any positive impact on the economies of the developing countries, added Muhith.
To fill the gap between the savings rate and the required investment for the expansion of the country's economy and its market it is now receiving 0.3 per cent Official Development Assistance (ODA) of its total national income from donor agencies against 12 per cent in the past, mentioned the former minister.
Suggesting area-based manpower development for gradual industrialisation and ways of attracting more FDI, he said discriminatory system of export subsidy must be removed and the country should take precautionary steps before providing this facility to multinational companies (MNC).
The country attracted $ 660.8 million FDI in 2004 of which $ 237 million was in telecommunications sector and this indicates the growing reluctance of foreign investors toward our manufacturing sector, said Mohammad Zakaria, coordinator of CGG.