Covid has an adverse effect on global trade and foreign investment in Bangladesh. In comparison with 2019, 2020 saw a significant decrease of 31 crore 4 lakh dollars in the foreign direct investment (FDI). The amount in local currency roughly translates at 2,670 crores. In percentage the figure stands at 10.8 percent.
New investments are low
In 2019, Bangladesh had FDI of 287 crore 40 lakh US dollars. In local currency, the amount can be converted as 24,716 crore Takas. In 2020, the amount reduced to 256 crore 36 lakh dollars, in local currency which is 22,047 crore takas.
However, the investment from companies which were already in the country remains undeterred. Consequently, the total investment has increased. There has been a foreign direct investment (FDI) of 350 Crore 10 Lakh in the country. Earlier in 2019, the FDI was 323 Crore, 30 Lakh dollars. That means, the country has recorded an increase of 8.3 percent in FDI.
This information was revealed in the Bangladesh Bank reported titled: Foreign Direct Investment and Foreign Loans.
Foreign investment comes in three ways
According to international models of foreign direct investment, foreign companies can bring capital to the country in three ways.
They are:
1. Cash as capital or as industrial equipment.
2. Profits earned by running business in the country shall not be not be taken abroad and invested back in the country.
3. One company/organization can invest with a loan from another company.
Investing in any of these three methods shall be regarded as FDI, according to Bangladesh Bank.
Re-investments have gone up by 6.5 percent
Compared with 2019, capital investments have accelerated by 4.8 percent in 2020. Re-investments from profits earned by companies have increased by 6.7 percent. Meanwhile, loans from one company to another have decreased by 74.3 percent.
Primarily, due to low profits in comparison to capital investment and a massive decrease in loans from one company to another has resulted in poor overall investment.
In 2019, loans from one company to another were 60 crore 29 lakh dollars. Last year’s decrease has made the figure 15 crore 52 lakh US dollars. During the periodic review, FDI had decelerated to 44 crore 77 lakh dollars.
Top Foreign Investors
Currently, the United States (US) is one of the top foreign investors in Bangladesh. The US have made 16.6 percent of the total investment. Followed by US, Singapore is in the second top foreign investor. They have made 16.1% of the total investment. Taking up the third position, the investment of the Netherlands is 7.3 percent.
The United Arab Emirates (UAE) has 6.7 percent, Malaysia 6.3 percent, China 6.3 percent, Egypt 6.2 per cent, the United Kingdom (UK) 6.1 percent, Hong Kong 3.9 per cent and other countries account for 24.5 per cent.
