FDI in Bangladesh continues to dip in pandemic

The flow of foreign direct investment or FDI into Bangladesh has continued to plummet amid the coronavirus crisis after FDI dropped by over 50 percent in 2019 from the previous year.

FDI in Bangladesh in the 11 months of the fiscal 2019-20 to May dropped by 14 percent year on year to $3.73 billion, according to Bangladesh Bank data.

Analysts believe the situation did not improve in the last month of the fiscal year in June as the pandemic has continued to shatter the global economy.

They think the drop in FDI will impact domestic investment as well, weakening the economy further.

“FDI has remained between 31 and 33 percent of the GDP over a few years. Government investment has increased a little, but private investment has not,” said Ahsan H Mansur.

“It’s natural that FDI will decrease due to the pandemic. Now we are concerned how much the FDI will fall,” the executive director of Policy Research Institute said.

Despite a lack of infrastructure and other disadvantages, FDI in Bangladesh jumped to record $4.5 billion in 2018-19 thanks to Japan Tobacco’s investment in Akij Group.

The amount started dropping afterwards and has not bounced back as the pandemic hit.

Syed Ershad Ahmed, president of the American Chamber of Commerce in Bangladesh or AmCham, said the main hurdle for Bangladesh to getting FDI is problem in branding.

He described the failure to automate Chattogram seaport, telecom regulator BTRC’s row over audit demand with Grameenphone, and a lack of financial diplomacy as the other problems in getting FDI.