The inflow of foreign direct investment (FDI) from the United States (US) to Bangladesh has decreased by 11 per cent at the end of 2023, compared to 2022.
Inflow from the USA reached $314.90 million in 2023, compared to $354 million in 2022. This figure stood at $585.88 in 2021, show data published by the Bangladesh Bank on Tuesday.
Commenting on the issue, Policy Research Institute Executive Director Ahsan H Mansur said, “Bangladesh’s overall macroeconomic situation is not good, and this is the key reason behind the decline in FDI inflow.
“On the other hand, interest rates have also increased globally. All in all, it is not a good time to invest, and this is reflected in the Bangladesh Bank data.”
He added, “Foreign investors are losing investment in Bangladesh due to volatility in the USD market. Countries such as the USA and Korea are always good investors for Bangladesh, The inflow of FDI from these nations was better in the previous FY.
“But the country has failed to attain the foreign investments from these countries.”
Total foreign direct investment decreased by 13 per cent in 2023, compared to the previous year, according to central bank data.
The inflow of FDI from the Republic of Korea has already decreased by 42 per cent in 2023, compared to the 2022. FDI inflow was $181.43 million in 2023, $313 million in 2022, and $299 million in 2021.
FDI inflow from Singapore has increased by 37 per cent to $169.81 million in 2023, which was $270 million in 2022.
Though, FDI inflow continues increasing from the United Kingdom (UK). At the end of 2023, the inflow of FDI from the UK stood at $ 614 million in 2023, which was $560 million in 2022.
Commenting on the issue, former lead economist of World Bank Dhaka Office Dr Zahid Hossain said, “Foreign investors are concerned over providing loans to Bangladesh due to the declining trend of forex reserves.
“Businessmen from several sectors from Bangladesh have been seeking foreign investment, but despite the offering of high interest, inflow has dried up. These investors have to be paid over 8.5 per cent as per the SOFR rule.”
In addition, there is a rule to pay the maximum Secured Overnight Financing Rate (SOFR) plus 3.5 per cent interest against foreign loans. SOFR is now over 5 per cent. In 2020, it was below 1 per cent.
The SOFR is a benchmark interest rate for USD-denominated derivatives and loans that replaced the London Interbank Offered Rate.
