Bangladesh is increasingly becoming an attractive location for investment of the International Finance Corporation (IFC), with the global financial institutions lending commitment showing a 45 per cent rise since the fiscal 2005. The IFC, the private sector arm of the World Bank, approved loans worth US$161 million in the fiscal 2006, up from the last fiscals $111 million, for the promotion of the countrys private sector, according to official figures.

The country is the second largest recipient of the IFC loans and equities in South Asia, only after India that attracted more than $1.2 billion from the global financial institution last year. Officials of the IFC said its programmes in Bangladesh increased substantially since the opening of an office of the organisation in 1995.

Unlike India, where IFCs lending portfolio showed slight downturn, Bangladesh continues to receive substantial funding from the Washingtonbased agency. Sri Lanka also saw its loans from the IFC declining from $102 million in the fiscal 2005 to $90 million in the fiscal 2006.

In the financial sector, IFC invests in, and provides technical assistance to, private financial institutions that extend services to underserved markets, including small businesses. IFCs contribution to Bangladeshs financial sector is noteworthy, as two local private commercial banks Dhaka Bank and Eastern Bank joined its global trade finance programme. Similarly, the South Asia Enterprise Development Facility (SEDF) worked with knitwear exporters last year to help local manufacturers expand their market shares.

Changes in trade agreements on textiles, particularly the multifiber agreement, have created an increasingly competitive environment for the garment industry, which accounts for more than 75 per cent of the countrys export earnings. The SEDF arranged a trade mission to take knitwear manufacturers to the United States, helping them develop market contacts, export opportunities and marketing skills. The SEDF is implementing a followup development programme to enhance collaboration and competitiveness in the industry, an IFC official said.

The IFC has also begun providing its technical advisory services for designing a 450 MW independent power producer (IPP) project. According to its annual report, in South Asia, the IFC committed $507 million from its own account and mobilised $200 million in loan syndications in the fiscal 06. Its investments in South Asia in 2006 were designed to support clients expansion capacity and develop new products and services.

Technical assistance for small business development is the IFCs main contribution to private sector development in areas where investment opportunities remain limited.