Foreign investment weakens sharply as investor withdrawals remain high

An economist says signs of political stability under the new government could help attract more foreign investment through joint public-private efforts

Bangladesh's foreign direct investment (FDI) deteriorated sharply again in the first quarter of the calendar year, with net inflows falling 43.84 percent from a year earlier.

Net FDI stood at $447.3 million between January and March, down from $796.6 million in the same period of 2025, according to updated Bangladesh Bank data released on Tuesday.

The central bank said total FDI reached $1.10 billion during the three months, but foreign investors repatriated more than half of that amount -- $657 million -- leaving net inflows at $447.3 million.

A year earlier, total FDI was $1.58 billion, with investors repatriating $781.7 million.

After years of decline, net FDI rose 39.35 percent in 2025 to $1.77 billion, largely driven by reinvested earnings and inter-company loans, compared with $1.27 billion in 2024.

During the latest quarter, net equity investment fell to $78.2 million from $263.9 million a year earlier.

Reinvested earnings contributed $342.9 million, up from $191.2 million, while inter-company loans plunged to $26.1 million from $341.5 million.

Bangladesh has long relied on reinvested earnings from existing foreign companies rather than attracting substantial new investment.

Policy Exchange Bangladesh Chairman M Masrur Reaz said weak investment conditions and prolonged political uncertainty had discouraged both domestic and foreign investors in recent years.

He said the new government's arrival and signs of political stability offered an opportunity to boost foreign investment through coordinated public and private initiatives.

Foreign Investors' Chamber of Commerce and Industries President Rupali Haque Chowdhury said attracting fresh investment required improvements in logistics, infrastructure, gas and electricity supplies, and policy consistency.

She added that Bangladesh lagged behind competing countries in most areas except low-cost labour, while economic zones could play a key role once existing constraints were addressed.

FDI Rises in 2025, but Behind Uganda and Ghana

The UN Conference on Trade and Development (UNCTAD) published its World Investment Report 2026 on Tuesday, showing that Bangladesh attracted $1.78 billion in foreign direct investment (FDI) in 2025, up from $1.23 billion a year earlier.

According to the report, FDI inflows to Bangladesh rose 44.7 percent year-on-year, but still lagged behind several African economies, including Uganda, Ghana and the Democratic Republic of the Congo.

Uganda attracted $3.4 billion in FDI in 2025, while Ghana and the DR Congo each received $1.9 billion.

Elsewhere in South Asia, India drew $38.89 billion in FDI last year, a 43.6 percent increase.

Pakistan received $1.85 billion, down 30.5 percent, while Sri Lanka attracted $1.04 billion, up 37.5 percent.