Foreign investment key to curb inflation: Lutfey Siddiqi
Without FDI, only option is to print money, he says
Foreign direct investment (FDI) is essential to curb inflation in Bangladesh, Lutfey Siddiqi, special envoy to the chief adviser on international affairs, has said.
"Foreign investment is a 'mathematical reality' for Bangladesh's economy," he said at a conference titled "Future Outlook of Bangladesh Economy: FDI, Financial Reforms and LDC Graduation", in Chattogram yesterday (12 December).
Explaining the term, he said, "Bangladesh has vast investment opportunities and a young, capable workforce. To align these two, foreign investment is indispensable."
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He warned that without FDI, the only option is to print money. "This will inevitably drive up inflation, increase debt, and keep interest rates high. There is no room for debate. Bangladesh's longstanding failure to attract FDI is a matter of shame."
Siddiqi also cautioned that the largest portion of the current government budget is spent on interest payments. Around 21% of the National Board of Revenue's total revenue is consumed by interest alone, amounting to roughly Tk14 crore every hour.
"Borrowing is not inherently bad, but it must be channelled into productive investment rather than mere expenditure," added Lutfey Siddiqi.
To illustrate the impact of inefficiency and corruption on the economy, he cited a garment factory operating in both Vietnam and Bangladesh.
Despite paying nearly 50% higher wages in Vietnam, the factory earns more profit there. In Bangladesh, he said, half of the lost potential profit is eaten up by inefficiencies in logistics, roads, and port operations, while the remaining half disappears into corruption.
"These problems are solvable, and we must not confine reforms to institutional discussions. The entire system needs transformation," he said.
The conference was organised by the Chattogram branch of the Institute of Cost and Management Accountants of Bangladesh (ICMAB) at a hotel in the port city.
NBR Chairman Md Abdur Rahman Khan and Eastern Bank's Additional Managing Director Ahmed Shaheen attended as special guests.
In his speech, the NBR chairman highlighted government measures on tax policy, structural reforms, and steps to attract foreign investment.
Keynote papers were presented by Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue (CPD), and Professor SM Shohorabuddin of the Finance Department at Chattogram University.
