No good news on foreign investment front, FDI dives 71% in July-September

Experts warn that unless the business climate improves, investment could continue to shrink

Foreign direct investments, or FDI, in Bangladesh have nosedived by 71 percent in the first quarter of the fiscal year 2024-25 compared with the previous year.

The decline reflected the impact of the political unrest that plagued the country during that period.

Bangladesh Bank’s latest report published on Tuesday, shows that foreign investments totalled $969 million between July and September.

However, foreign investors withdrew $865 million, leaving a net investment of just $104 million.

In FY 2023-24, during the same period, foreign direct investments amounted to $907 million.

At that time, $546 million was repaid from previous investments, resulting in a net investment of about $360 million.

This year, the net investment fell by $256 million compared with the last year.

The decrease is also stark compared with the previous quarter of FY 2023-24 (April-June), where net FDI was $272.2 million.

During the period, foreign inflows totalled $1.08 billion, with $810 million repaid.

This represents a 61.74 percent decline in net foreign investment in the July-September period.

Zahid Hussain, former lead economist at the World Bank’s Dhaka office, told bdnews24.com that the political instability during that time caused the reduction in foreign investments.

“Such a political situation hasn’t occurred in the last 15 years. As a result, foreign investors are closely evaluating the political climate before investing in Bangladesh,” he said.

The economist added that the business climate remains unfavourable, and if the situation does not improve, overseas investment may continue to decrease.

He concluded, "Whichever political party comes to power, if they can create a conducive business environment, investment will increase."