Covid-19 fallout: FDI in Bangladesh drops by 40% in FY2019-20

The net inflow of foreign direct investment (FDI) in Bangladesh fell 40 percent in the last fiscal year (FY2019-20) compared to the immediate past one, due to the economic fallout from Covid-19, according to the Bangladesh Bank.

As per the statistics of the central bank released this week, the pandemic across the globe contributed to this decline in the second half of the last fiscal year.

In Bangladesh, the fiscal year is counted between July of a year and June of the next year.

The central bank statistics show that the net inflow of FDI in the second half of FY2019-20 (January-June, 2020) declined to $1.19 billion from $1.70 billion in the corresponding period of the immediate past fiscal.

In the first half of FY2019-20 (July-December, 2019), the net FDI inflow stood at $1.18 billion.

So the total amount of net FDI inflow in the country reached $2.37 billion in the FY2019-20 against $3.89 billion in FY2018-19.

The gross inflow of FDI was recorded at $3.23 billion in FY2019-20 when disinvestment amount was estimated at $0.86 billion.

As per the central bank definition, gross inflows are the total inward direct investment made by 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 inflows are the gross inflows minus disinvestment.

Earlier, the United Nations Conference on Trade and Development (UNCTAD) in the last month estimated that inflow of FDI in Bangladesh dropped by 19.0 per cent.

The Global Investment Trends Monitor, released by the UNCTAD on 27 October, showed that inflows of global FDI fell 49.0 per cent in the first half of the current year due to the pandemic.

In the wake of the pandemic, the report said, lockdowns around the world slowed existing investment projects and the prospects of a deep recession led multinational enterprises to reassess new projects.