Desk Report:
Despite global economic uncertainty and geopolitical tensions, net foreign direct investment (FDI) in Bangladesh has increased. In the April–June quarter, net FDI rose by 12.78 percent year-on-year to reach US$346.94 million. Reinvested earnings by foreign investors were the primary driver of this growth.
According to the latest Bangladesh Bank report, net reinvested earnings surged by 55.08 percent to US$260.91 million during the quarter. This reflects a growing trend among foreign companies operating in the country to reinvest their profits within Bangladesh.
However, a downward trend was observed in new equity capital investment. Net equity capital stood at US$77.42 million for the April–June quarter, a 4.77 percent decline compared to the same period the previous year. Global geopolitical uncertainty, the conflict in the Middle East, and rising fuel prices have created challenges in attracting new investments.
Meanwhile, the net flow of inter-company loans dropped by 85.17 percent to US$8.61 million. Although the sector saw a gross loan inflow of US$333.80 million, the net flow declined due to the repayment of a significant amount of existing debt.
Significant Growth in Investment Outside EPZs
According to data from ‘Invest Bangladesh,’ net FDI in sectors outside Export Processing Zones (EPZs) rose by 20.75 percent year-on-year to US$280.88 million in the April–June quarter.
Conversely, net FDI in economic zones stood at US$4.51 million, marking a 25.33 percent decrease compared to the same period the previous year. However, investment in this sector stood at only $0.42 million in the previous quarter. Consequently, the volume of investment in economic zones has risen significantly during the current quarter.
Emphasis on Retaining Investor Confidence
Nahian Rahman Rochi, a member (Investment Promotion) of Invest Bangladesh, stated that the rise in foreign investment in Bangladesh—despite global economic uncertainties, geopolitical tensions, and high energy prices—is a positive development. However, attracting new equity investment remains challenging due to the cautious stance investors are adopting amidst the current global climate.
He noted that foreign companies already operating in Bangladesh are showing significant growth in reinvested earnings. This serves as a crucial indicator of their confidence in the country’s business environment and long-term potential, paving the way for business expansion, increased production capacity, and the creation of new employment opportunities.
Nahian Rahman Rochi further mentioned that efforts are underway to address fundamental issues within Bangladesh’s investment climate to attract greater volumes of high-quality foreign investment. Recent announcements of new investments by several major international firms are promising. Additionally, Invest Bangladesh is actively working to convert projects currently in the pipeline—valued at approximately $1.3 billion—into actual investments.
Hopes for Progress on the Chinese Economic Zone Project
Highlighting the priority placed on making economic zones more investment-ready, Nahian Rahman Rochi stated that although the Chinese Economic and Industrial Zone project had been stalled for over a decade, development work is now progressing. A target has been set to complete the project by 2028, with the zone offering potential investment opportunities worth around $500 million.
He added that Invest Bangladesh’s 180-day progress report outlines the work completed so far and identifies areas requiring further advancement. Future progress on these activities will also be communicated regularly.
According to Nahian Rahman Rochi, the key objective now is to move beyond mere discussions and announcements, transforming investor interest into tangible investments, the establishment of new industrial plants, and the creation of jobs. According to stakeholders, while the rise in reinvested earnings is a positive signal for Bangladesh, attracting new equity investment, ensuring the infrastructural readiness of economic zones, and implementing projects in the investment pipeline will play a crucial role in sustaining the country’s long-term foreign investment growth.
