Why Is Bangladesh Called Land Of Miracle For Foreign Direct Investment?

Diasporas of Bangladesh send money to Bangladesh through formal and informal channels for investment. Bangladesh, a land of wonders, has achieved incredible success in a variety of fields, garnering unprecedented interest from the rest of the world. It has outperformed most of its Asian rivals in terms of textiles and readymade garments (RMG). Bangladesh is the world’s second-largest exporter of RMG goods, with a total value of USD 26.1 billion exported from January to September of this year. In addition, the country has seen significant growth in sectors such as telecommunications, food manufacturing, power and electrification, and banking.

What Is The Trend Of Flow Of Fdi To Bangladesh During The Recent Couple Of Years?

According to the recent stats released by the central bank this week, Bangladesh’s net money transfer to Bangladesh from abroad or foreign direct investment (FDI) decreased by 39% in the past fiscal year (FY20) compared to the previous one (FY19). The drop is primarily due to the detrimental effects of the deadly coronavirus spreading across the globe in the first half of the current calendar year (2020), which also happens to be the second half of FY20. During the January-June cycle of this year, Bangladesh and the rest of the world enforced lockdowns for three to five months to stop the spread of Covid-19.

Even though online money transfer to Bangladesh is increased during the lockdown as a remittance. But lockdowns hindered global economic activity and pressured multinational corporations (MNCs) to reduce or remove their global investments. According to Bangladesh Bank statistics, net FDI inflows fell to $1.19 billion in the first half of 2020 (calendar year) from $1.70 billion in the same time of 2019. The net FDI inflow in the second half of 2019, as well as the first half of FY20, was $1.18 billion. Thus, the total net FDI inflow into the country in the previous fiscal year was $2.37 billion, compared to $3.89 billion in FY19.

The banking system had projected gross FDI inflow at $3.23 billion in FY20, based on FDI survey data, while disinvestment was estimated at $0.86 billion. The gross inflow of FDI is described by the Bangladesh Bank as the total inward direct investment made in the reporting economy by non-resident investors. Capital repatriation, reverse acquisitions, loans to parent companies, and repayments of intra-company loans to parent companies are all examples of disinvestment. Gross inflow minus disinvestment equals net inflow.

Lockdowns around the world slowed ongoing investment programs in the aftermath of the pandemic, according to the UN agency, and the possibility of a deep recession prompted multinational corporations to reconsider new projects. Foreign investment during the pandemic was only expatriates send money to Bangladesh online to support families and keep running their local businesses and assets in different sectors.