FDI increased from US$ 522 million attracted in 2006 to US$ 600 million attained last year, according to the 2008 World Investment Report.
Launching the report, the Executive Director of the Tanzania Investment Centre (TIC), Emmanuel Naiko, said last year`s performance was a record.
Tanzania has ranked number 12 among the major FDI receiver African countries after Nigeria, Egypt, Morocco, Sudan, Equatorial Guinea, Algeria, and Tunisia. Other countries ahead of Tanzania are Madagascar, Zambia, Ghana, the Democratic Republic of Congo and Kenya.
However, Naiko said, "There is no reason why on earth countries like Zambia and Madagascar should surpass Tanzania, particularly when one looks at the natural resources endowments the country enjoys. He said Tanzania's problem had been engagement in too many debates, which inhibited some the making of quick and timely decisions.
Naiko gave the example of the newly settled countries such as Mozambique, which he said although it was devastated by war, had managed to successfully develop its coal mines, leaving Tanzanians to debate on who should develop Mchuchuma coal or Liganga iron ore deposits.
Some of the natural resources that Tanzania has in abundance include nickel, cobalt, iron ore, gold/silver, and industrial mineral like soda ash, and petrochemical minerals like coal.
He said although Tanzania had been ranked number 65 out of 178 economies accessed in the report, deliberate measures were needed to address issues that had affected the country`s quick improvements in attracting FDI.
The factors that Tanzania should address for increased foreign investment inflow include laxity and slow implementation of investment policy reform. The policy reforms was echoed during 2002 government-private sector dialogue which resulted into development of an action plan for identifying and removing investment impediments by different government departments as well as other stakeholders.
As a result of government and other stakeholders' laxity to address the identified obstacles, both 2007 and 2008 business reports ranked Tanzania negatively in the areas of doing business, starting business, employing workers, and paying taxes. "In my opinion, there is too much debate when it comes to removing investment impediments as we talk without taking actions," he said.
Naiko said in order to increase their shares in the global FDI, countries such as Rwanda and Mauritius had started taking drastic reforms which have resulted in great increment of their FDI attraction.
Rwanda, a country which in 1983 witnessed genocide which wiped out about 800,000 people, managed to attract investment worth USD 16 million in 2007. However, as a result of aggressive reforms and timely decision making undertaken by the country, last year`s figures shot up to USD 67 million.
Asked why despite intensive dialogues and agreements between the government and private sector on methods and timeframe for removing barriers to foreign investments, Tanzania was still viewed as an expensive country to do business, Naiko said that quick and timely decision making was still a major problem.
The World Investment Report is prepared by the United Nations Conference on Trade and Development (UNCTAD) to access the world pattern of investment flow as well as recipients in different sectors and the role they play in countries' development.
This year`s report focused on investment in infrastructure and among the East African states, Uganda had its share of investment inflow reduced from US$ 400 million attained in 2006 to US$ 368 million last year.
According to UNCTAD Secretary General Dr Supachai Panitchpakdi, world wide stock of FDI had increased by 30 percent from US$ 1.8 trillion recorded in 2006 to US$ 15 trillion last year.
Developing countries enjoy a 21 percent increase in FDI inflow to US 50 billion, reflecting booming commodity prices and an improving policy investment environment.