Bangladesh yet to get benefit of South-South FDI flows

Bangladesh Bank Governor Dr. Atiur Rahman said Bangladesh is yet to get benefit significantly from recent surge in South-South FDI flows, despite being a low wage manufacturing location.

He said that Bangladesh’s joining in the Asian Infrastructure Investment Bank (AIIB) as a founder member will hopefully widen infrastructure investment inflows into Bangladesh in the near future; but existing institutions like the ADB, the SAARC Development Fund and the sovereign wealth funds in the South also have more than adequate fund pools for expanded infrastructure investments in Bangladesh and other Southern economies.

Dr Atiur said this while speaking at UNOSSC GOB UNDP High Level Meeting session on ‘Complementing ODA: new opportunities in South South and Triangular Financing for Development’ at a city hotel in Dhaka on Monday.
He said that developing economies in the South will need to foster channels of South-South and Triangular FDI and development cooperation to substitute for traditional Official Development Assistance and other development support from the advanced North now in prolonged growth slowdown.

Bangladesh is already in substantial extent of South-South and triangular engagements in trade and development cooperation, he said.
The country is active in fostering intraregional trade settlements minimising involvement of external currencies, and swap support lines for members in temporary difficulties while its imports from other ACU partner economies remain around twenty fold larger than her exports to them.

Urging for further openness in South-South goods trade particularly of the larger, faster growing ones, to exports from Bangladesh and other Southern partners in terms of tariff and non tariff barriers and value chain linkages, Atiur said that the same asymmetry prevails also in openness for South South services exports.

Manufacturing establishments in Bangladesh employ substantial number of middle and higher tier experts and managers from fast growing developing economies of the South, but among the later only Malaysia has extended significant openness to (mainly low skilled) job seekers from Bangladesh, he said.

Advanced economies in the North have significant IT-enabled services outsourcing to Bangladesh, while such outsourcing or value chain linking to Bangladesh from fast growing developing economies in the South remains insignificant, he opined.

South-South knowledge sharing cooperation is far in fostering inclusive, environmentally sustainable growth, Atiur said informing one such event is due next month in Dhaka bringing together central bank governors and senior officials from 11 SAARC Finance forum member countries.

He also said that large Non Government Organisations in Bangladesh like BRAC, ASA and Grameen have also fostered significant and growing South-South engagements in social and economic inclusion and empowerment initiatives for the poor in many developing economies in Asia, Africa and South America.