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FDI inflow slips amid corona

  • Staff Correspondent
  • 27 July, 2021 12:00 AM
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FDI inflow slips amid corona

Net Foreign Direct Investment (FDI) inflows declined 10.8 percent year-on-year in the calendar year 2020, thanks to negative impacts of the corona pandemic that has hit hard economies across the globe.

The country’s overall net FDI inflows declined by $310.37 million to $2563.58 million last year from $2,874 million in 2019, suggests Foreign Direct Investment and External Debt report of the central bank.

“For the last few years foreign investment in country has been on the decline alongside domestic investment. But last year’s fall in FDI inflow was caused by the corona pandemic,” former Bangladesh Bank governor Dr Salehuddin Ahmed said.

Movement of capital stalled amid the pandemic that left the global trade in a stagnant situation. As a result, investment of new capital in Bangladesh remained low like other countries, he explained. 

The decrease in overall net FDI inflows during the year 2020 was mainly due to decline in one of the major components- Intra-company loans by $447.73 million or 74.3 percent, Bangladesh Bank says. 

But Equity Capital and Reinvestment earnings increased by $38.59 million or 4.8 percent and $98.77 million or 6.7 percent respectively.

Some 90.6 percent or $2,323.76 million of the total net FDI inflow went to non-EPZ areas, while 9.4 percent or $239.82 million went to EPZ areas in the year 2020, BB data showed.

In the non-EPZ areas, net FDI Inflows witnessed a fall of 14.1 percent in the year 2020 over its levels in 2019.

At the end December 2020, cumulative FDI inflows in the non-EPZ areas stood at $25.51 billion from 1996 to 2020.

Among the EPZs, Chittagong EPZ fetched the highest FDI of $72.39 million last year, followed by Karnaphuli EPZ’s $59.79 million, Dhaka EPZ’s $52 million and Adamjee EPZ’s $19.71 million. These four EPZs pulled in 85 percent FDI.

Uttara EPZ managed to attract $13.35 million FDI, Cumilla EPZ $11.89 million, Ishwardi EPZ $8.88 million and Mongla EPZ $1.82 million.

The EU topped the foreign investors’ list of 2020 with 902.08 million or 32.7 percent of total FDI. Its share rose from 22 percent of $685.87 million in 2019. 11.1 percent or $305.47 million FDI came from North American Free Trade Agreement (NAFTA) countries, up from $226.02 million or 7.2 percent a year earlier.

FDI flow from Other Asian Countries (OAC), however, dropped to $290.51 million or 10.5 percent of total investment in 2020 from $886.21 million or 28.4 percent in 2019.

Similarly, FDI from the ASEAN countries also fell from $330.93 million or 10.6 percent to $285.10 million or 10.3 percent.

In the year 2020, maximum net FDI Inflows went to $894.70 million or 34.9 percent. Of the amount, food products received $332.54 million or 13 percent, Textiles & wearing $270.83 million or 10.6 percent, and other manufacturing $132.02 million or 5.1 percent.

Second highest attracting sectors were Power, Gas and Petroleum that saw $617.19 million or 24.1 percent FDI inflow, including power sector’s $508.15 million or 19.8 percent and gas and petroleum sector’s $109.04 million or 4.3 percent.  Third highest attracting sector was Trade and Commerce that got $469.16 million or 18.3 percent, of which banking sector fetched $302.12 million or 11.8 percent and trading $121.19 million or 4.7 percent.

Transport, Storage & Communication sector got $267.93 million or 10.5 percent, including telecommunication’s $259.7 million or 10.1 percent, while $138.25 million or 5.4 percent, fifth highest FDI, went to construction sector.