Bangladesh FDI inflow continues its downward trend in pandemic

The flow of foreign direct investment into Bangladesh is plummetting at an alarming rate as the global economy continues to reel from the coronavirus pandemic.

In the first four months (July-October) of the fiscal year 2020-21, the country raked in $720 million worth of foreign investment, marking a drop of 31 percent year-on-year, according to the latest data from Bangladesh Bank. The figure was $1.04 billion over the same period in 2019.

The net FDI has declined even further in these four months, dropping by 50.16 percent to $153 million. The figure stood at $307 million at the same time last year.

The total amount of foreign direct investment that comes in various sectors, after the investor takes the profit money to the country, the remaining amount is called net FDI.

"It's not just Bangladesh, most other countries are facing a crisis of foreign investment during the pandemic. Everyone is monitoring the situation,” Ahsan H Mansur, executive director of the Policy Research Institute, said.

“Prolonged lockdowns have reduced the profit margins of large businesses in many countries. Some have suffered huge losses. In this situation, no-one is investing in another country. Its impact has also been felt in Bangladesh. It will take time to overcome this situation.”

Syed Ershad Ahmed, president of the American Chamber of Commerce in Bangladesh (AmCham), said the state of FDI in Bangladesh was "never satisfactory". Due to issues over gas, electricity, ports and other infrastructural problems, foreign investors were not too keen to invest in the country in the past.

"The situation has improved a lot. Various initiatives have been taken by the government to increase foreign investment, including the establishment of special economic zones. A favourable environment for FDI growth was also being created. But the pandemic has put paid to that. FDI is now on the decline instead.”