FDI on upward trend despite pandemic

Foreign investment in Bangladesh grew by 1.64 percent to $592 million during the January-March period of 2021 despite the prolonged global pandemic.

According to Bangladesh Bank data, the net inflow of foreign direct investment (FDI) stood at $592 million, up by 1.64 percent in the first quarter of 2021, compared to $582.17 million of 2020.

The amount is lower than the pre-Covid period, when Bangladesh received $1.03 billion in the first quarter of 2019.

As per the BB data, equity investment declined by 21.57 percent to $140.47 million, which was $179 million.

While reinvestment fell by 7.32 percent to $381 million against $411 million in the same period of the previous year.

However, intra-company loans rose sharp and it stood at $70.47 million, which was $7.74 million in the negative.

Of the investment, $167.22 million was made in the power sector while the textile and weaving sector received $97 million followed by telecommunication $69.28 million and the food processing sector $49.46 million. The trading sector received an investment of $44 million it was followed by gas and petroleum with $38 million, and chemicals and pharmaceuticals attracted an investment of $22 million.

Singapore was the top investor with an investment of $95.42 million, while the United Kingdom was the second largest investor with $76 million followed by the United States with $66 million.

FDI inflow in Bangladesh declined by 10.80 percent to $2.56 billion in 2020 as the global investment was hit hard by the Covid-19 pandemic.

“A 1.64 percent growth in overseas investment cannot be considered as a big one but it gives a positive indication that investors’ confidence is regaining,” Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue said.

There is negative growth in reinvestment, while the existing investors are not making fresh investments. But with improvement in the Covod-19 pandemic situation, the investment from both home and abroad will increase, he said.

Investors are focusing on both domestic and export markets, which is a good sign for days to come as it would attract investment from different segments as the demand will continue to grow, said Moazzem.

Another good sign is the investors are shifting investment from capital incentive sectors to labour incentive ones.

For retaining the growth, Bangladesh has to complete the ongoing reforms and improve ease of doing business to ensure a friendly business climate, he added.