FDI up 50% in Q1 of 2022

Foreign Direct Investment (FDI) in Bangladesh increased by 50.14 per cent to $888.48 million in the first quarter of this year.

The Bangladesh Bank data shows the net inflow of overseas investment stood at $888.48 million during the January-March period, which was $592 million in the same period a year ago.

Besides, FDI in the form of equity capital increased by 105.26 per cent to $288.33 million during these months, up from $140.47 million in the same period of the previous year.

The reinvestment of earnings stood at $613.53 million in the said quarter, up 61.11 per cent compared to $381 million a year ago, while intra-company loans declined by 119 per cent.

After recording a 10.8 per cent decline in 2020 year-on-year, FDI in Bangladesh rose by 13 per cent to $2.89 billion in 2021.

The sharp growth in FDI inflow is attributed to the easing of Covid-19 restrictions and the resumption of economic activities.

“In the first quarter of 2021, the impacts of Covid-19 were severe and investments were hit hard. But the economy turned around this year, with the export-import trade showing a sign of recovery,” Sirazul Islam, executive chairman of Bangladesh Investment Development Authority (BIDA), told The Business Post.

As a result, the companies recorded profits and also reinvested from their earnings, he said.

On the other hand, economic recovery fuelled the confidence of overseas investors and they made new investments, he added.

Economists echoed the same view.

“Investors who are already here reinvested their profits instead of sending the money home. With the reopening of economic activities, the profits of companies rose,” Zahid Hussain, former lead economist of the World Bank’s Dhaka office, told The Business Post.

The growth rate is good but the amount did not reflect the full potential of Bangladesh, he said.

Moreover, the rise in investment does not mean the ease of doing business has improved and the hurdles are over, he added. To attract foreign investment, local investors have to welcome foreigners and partner with them, the economist further said.

Meanwhile, the positive sides of Bangladesh’s economy promoted among investors also helped attract investment.

“The Bangladesh economy is growing, reaching $416 billion in FY22.

This gave investors a message about our potential,” said Sirazul.

“But the figures are small than our potential. By the end of this year, we are expecting $3 billion in FDI,” he said.

The BIDA official said Bangladesh is working to make policies and processes easier to attract new investors.

He further said a good number of infrastructure projects are ready to be opened to the public while a few, such as the Padma Bridge, are already in operation. “That is why FDI inflow will continue to grow.”