Netherlands replaces China as top foreign investor in Bangladesh

The Netherlands overtook China to become the top foreign direct investor in Bangladesh in 2020 in what economists described as an “encouraging pattern of investment”.

According to Bangladesh Bank (BB) data, the country received $2.56 billion foreign direct investment (FDI) last year, of which 15.61 per cent or $400.21 million came from Netherlands.

The central bank data showed that investors from Netherlands invested $183.47 million in food processing, $174 million power sector, $12.42 million in cement, $11.25 million in trading, $6.18 million in textile and weaving and $2.23 million in leather and leather goods.

“It is a good sign for Bangladesh that a country from Europe is taking lead in investment here. A change in investment pattern is also encouraging. It reduces dependency on big countries and diversifies investments,” Dr Khondaker Golam Moazzem, research director at Centre for Policy Dialogue, told The Business Post.

China was the top investor in Bangladesh in 2018 and 2019 when it invested $1 billion and $625.92 million respectively. Netherlands had the second highest investment in 2018 with $692 million. It invested $192 million the following year, the sixth-highest that year.

In 2017, the UK was the top investor with an investment of $313 million, while the Netherlands was eighth with $114 million.

In 2016, the United States was the number one investor with an investment of $450 million, while Netherlands was ninth with $79 million.

“In the past, the UK, the USA, Singapore, and China mostly occupied the top position in terms of foreign investment here but now some other countries are making investment,” Moazzem said.

A single county and single sector-based investment meant that there is a huge domestic market, while the investors are thinking about taking the advantage of export facilities from here, he explained.

Another positive aspect is collaboration with local investors, which would help transfer technology and share experiences, he added.

“As the amount of Bangladesh’s FDI is small, a sudden rise in a certain sector of a country can push the country’s position to the top. But gradual rise of Netherlands’ investment is definitely a good sign for Bangladesh,” Sirazul Islam, executive chairman of Bangladesh Investment Development Authority (BIDA), told The Business Post.

With the economic growth, there is a big consumer market in Bangladesh. The foreign investors want to take advantage of available human resources to access global export markets by manufacturing here, he noted.

Economists said that the government should take steps to attract foreign investors, which would help increase investment volume and decrease dependency on few countries.

Even if a good number of countries make small amounts of investment, it would be a big amount for Bangladesh, Ahsan H Mansur, executive director of Policy Research Institute, told The Business Post.

“The government should offer supports based on the country so that we can accommodate every single country to invest here,” he said. “My suggestion is to complete the one-stop services to improve business climate. If we can offer a conducive investment environment, there will be enough investment.”