Foreign direct investment (FDI) in Bangladesh experienced a 7% decline, falling to $3.2 billion during FY23, as revealed in data reportedly released by Bangladesh Bank on Tuesday. The ongoing instability in the local foreign exchange market compounded the challenges.
Economists underscored the pressing requirement to bolster foreign exchange reserves, while the troubling development centered on a notable decline in equity investments, further burdening the nation’s already strained economy. The rise in disinvestment, involving asset sales and liquidation, during FY23, was attributed to the potential withdrawal of funds.
Per the report from Bangladesh Bank on Tuesday, there was reportedly a significant 40.91% drop in equity investments, and intra-company loans declined by 40.14%. Conversely, reinvestment by existing foreign-owned enterprises witnessed a notable 16% increase over the fiscal year in review. The United Kingdom took the lead in FDI inflow with $622 million, closely followed by South Korea at $603 million. Other prominent contributors included the Netherlands ($512 million), Hong Kong ($371 million), the United States ($347.2 million), Singapore ($330.62 million), and China ($232 million).
In terms of sectors, non-export processing zones (non-EPZ) attracted the largest net FDI inflows, reaching around $2.8 billion in FY23. Export processing zones (EPZs) received $406 million, while economic zones (EZ) gathered close to $4.2 million. During the fiscal year, disinvestment reached a total of $1.2 billion.
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