Foreign Direct Investment (FDI), which increased by 37% year on year (YoY), reached $3.44 billion thanks to significant success in international funding for numerous projects.
The Bangladesh Bank reports that new investments or equity capital increased by 65% year over year to $1.35 billion.
Reinvestment of earnings, which increased by 29% to $2.04 billion from the previous year, demonstrates foreign investors' willingness to expand their businesses with the money from current operations.
However, compared to $105 million in FY21, intra-company loans decreased to $48 million in FY22.
Net FDI inflows are the sum of all inward direct investments, including intra-company loans and reinvested earnings, made by non-resident investors.
This excludes the amount that goes out of a country through the repatriation of capital and repayment of loans.
Data analysis also revealed that, although FDI has increased over the last two fiscal years, it is still well below the pre-pandemic levels.
In FY19, Bangladesh's FDI was $3.889 billion.
But during Covid-19 in FY20 and FY21 this amount was $2.370 and $2.507 billion respectively.
Economists think several factors are an obstacle, including the fact that one-stop service has not yet become a truly one-stop service.
Renowned Economist Debapriya Bhattacharya, distinguished fellow, Centre for Policy Dialogue (CPD) earlier told Dhaka Tribune earlier that: “Many foreign investors register after overcoming various hurdles, but few of them invest in the end. According to us, not even a third of what is registered in Bangladesh can effectively invest.”
The main reason for this difference between the final investment and the registered person is the lack of a proper one-stop service, for getting all the services needed to set up a factory in one place, he also pointed out.
Biggest FDI Recipients
Central Banks data shows that the textile sector was the biggest gross FDI recipient, netting $1.166 billion in the last fiscal year, and its YoY growth was around 81%.
The power, gas and petroleum received $911 million from $693 million earlier while bank and non-bank financial institutions secured $314 million and $7.92 million compared to $390 million and $267 million a year ago respectively.
Economic zones, a positive sign
At least 29 industrial units have begun their production in some of the country's economic zones, and another 61 units are scheduled to go into production.
The investors have come from countries such as Japan, China, India, Australia, the Netherlands, the US, the UK, Germany, Singapore, South Korea and Norway.
However, the government plans to establish about 100 economic zones across the country.
Unctad Report
According to the World Investment Report 2022, prepared by the United Nations Conference on Trade and Development (Unctad) released on June 9, 2022.
In the 2021 calendar year, about $2.89 billion in FDI had come into Bangladesh. It rose by 12.9% in comparison to the previous year and the number of international projects in the country has tripled during that time.
At the same time, the flow of investment of Bangladeshi entrepreneurs and investors abroad has increased by 766.67% or more than seven times than the previous year to $92 million, which was $12 million in 2020.
