Covid causes nearly 40pc decline in FDI inflow into Bangladesh

November 24, 2020 15:21:03

| Updated:

November 24, 2020 20:15:55

The net inflow of foreign direct investment (FDI) in Bangladesh declined by 39 per cent in the past fiscal year (FY20) over the previous one (FY19), according to the latest statistics released by the central bank this week.

The decline is mainly due to the negative impact of the spread of deadly coronavirus across the world in the first half of the current calendar year (2020), which is also the second half of FY20.

To contain the spread of Covid-19, Bangladesh, as well as the rest of the world, imposed lockdowns for three to five months during the January-June period of the current year.

Lockdowns slowed down the global economic activities and forced the multinational entities (MNEs) to cut down or withdraw their investments across the world.

Bangladesh Bank statistics showed that the net inflow of FDI in the first half of 2020 (calendar year) declined to $1.19 billion from $1.70 billion in the same period of 2019.

Again, the net inflow of FDI in the last half of 2019, also the first half of FY20, was recorded at $1.18 billion. 

Thus, the total amount of net inflow of FDI in the country stood at $2.37 billion in the past fiscal year against $3.89 billion in FY19.

Gross inflow of FDI, as estimated by the central bank on the basis of FDI survey, was recorded at $3.23 billion in FY20 when disinvestment amount was estimated at $0.86 billion.

Bangladesh Bank defined the gross inflow of FDI as the total inward direct investment made by the non-resident investors in the reporting economy. Disinvestment includes capital repatriation, reverse investments, loans given to parent firms and repayments of intra-company loans to parent firms. Net inflow is the gross inflow minus disinvestment.

Earlier, at the end of last month, United Nations Conference on Trade and Development (UNCTAD) estimated that inflow of FDI in Bangladesh declined by 19.0 per cent. UNCTAD estimation was based on the first-quarter data of FDI inflow in the country.

The Global Investment Trends Monitor, released by the UNCTAD, showed that inflows of global FDI fell 49.0 per cent in the first half of the current year ‘due to the economic fallout from Covid-19’.

The UN agency said that in the wake of the pandemic, lockdowns around the world slowed existing investment projects and the prospects of a deep recession led multinational enterprises to reassess new projects.

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