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The country received foreign direct investment (FDI) worth $888.48 million in the first quarter (January-March) of the ongoing 2022, fetching a positive growth of 50.14%.
According to the recently-published Bangladesh Bank data, net influx of foreign investment during the same period last year was $592 million.
Moreover, FDI in the form of equity capital also skyrocketed 105.26% to $288.33 million during the first three months of the current calendar year, an increase from $140.47 million of the same period last year.
The central bank data also said that the reinvestment of earnings rose to $613.53 million in Q1 of 2022, registering a growth of 61.11% from last year’s $381 million.
Moreover, intra-company loans declined by 119% in the mentioned quarter, said the Bangladesh Bank data.
As per the data, FDI inflow in Bangladesh had declined 10.8% in 2020 year-on-year due to the global outbreak of Covid-19.
However, the inflow of the FDI in Bangladesh then increased by 13% to $2.89 billion next year.
Experts said that after the spread of the Covid-19 pandemic, economic activities around the world picked up after lock downs were removed.
Moreover, because of things returning to normal, businesses logged profits which stimulated them to reinvest from these profits, they added.
The economic recovery from the pandemic also boosted the confidence of foreign investors, which accelerated new investment in the country.
Talking to Dhaka Tribune, Sirazul Islam, executive chairman of Bangladesh Investment Development Authority (BIDA), said that investment increased due to global economic activities returning to normalcy amid the pandemic.
In the first quarter of 2021, the impacts of Covid-19 were severe and investments were hit hard. But the economy turned around this year, and so did investments, he also said.
Islam further mentioned that investment inflow marked a significant growth in the previous two years.
“The positive sides of Bangladesh’s economy promoted among investors also helped attract investment. However, a major portion of the FDI is reinvestment. But it also signals the resilience of our country and confidence of the investors,” he added.
Bangladesh’s economy is growing, reaching $416 billion in FY22 and this gave investors a message about its potential, he added.
Regarding the ongoing Ukraine-Russia crisis, he said that the world economy is going through a turbulent state due to the conflict.
“Transport costs have soared; fuel and electricity shortages have emerged around the world. Our economy was recovering in a positive manner, but the war slowed down that pace. If the war is not prolonged, our recovery will continue at the same pace,” he added.
Recently, the US Department of State reported that corruption, inadequate infrastructure, limited financing instruments, bureaucratic delays, lax enforcement of labour laws continued to hinder foreign investment.
Regarding the statement, the BIDA executive chairman said that the government was relentlessly working to address those obstacles.
Tremendous developments have occurred in the infrastructure sector, namely the Padma Bridge, deep sea port, third terminal of the airport, and tunnels, which are all evidence of this, he added.
He considered the electricity disturbances temporary, due to the global supply chain disruption.
“If the war is not prolonged and the global economic crisis comes under control, I am hopeful that Bangladesh will get $3 billion in FDI by the end of this year,” he said.
The BIDA official also said that Bangladesh was working to formulate progressive policies and simplified processes to attract new investors.
However, talking to Dhaka Tribune, Zahid Hussain, former lead economist of the World Bank’s Dhaka Office, said that the increase in the FDI did not mean that foreigners suddenly became more interested in doing business in Bangladesh, nor did it mean that ease of doing business had improved.
A number of large companies have transferred their ownership at different times which influenced such growth, he added.
For example, JTI Group acquired all tobacco businesses of Akij Group and a company made a large investment in bKash last year.
There might be such large transactions which impacted the FDI growth, he added.
The economic zones have not yet been ready and the regulation complications still remain, for which Vietnam is ahead of Bangladesh, he added.
The growth rate is good, but the amount did not reflect the full potential of Bangladesh, the economist added.
