FDI witnessed an upward move in Q4 FY25, driven by reinvested earnings

Business Report :

Foreign investment in Bangladesh rose by 11 percent year-on-year to $303 million in the April-June quarter of the 2024-25 fiscal year, powered by a sharp spike in reinvested earnings by existing investors as the flow of equity capital dipped.

However, net equity (new investment) dropped to $81 million in the June quarter from $214 million in the same period last year, marking a 62per cent decline, according to the latest data from the Bangladesh Bank (BB).

In contrast, net reinvested earnings rose to $168 million in the June quarter, compared to a deficit of $33 million in the same period a year ago.

Intra-company loans amounted to $53 million this quarter, down from $92 million in the previous one.

Economists said that many foreign-owned companies operating in Bangladesh have retained their profits in the country, which has made the FDI growth appear higher.

However, new foreign investments have not increased due to political uncertainty and negative ratings from credit agencies.

“Foreign investors consider a country’s overall stability before investing. Although the recent reserve growth is positive, political uncertainty persists,” they noted.

Over the past year, investor sentiment has weakened due to electoral transitions and a general ‘wait-and-see’ approach by both domestic and international players.

“When elections are uncertain and reform momentum stalls, investors tend to pause, they added.

Intra-company loans amounted to $53 million this quarter, down from $92 million in the previous one.

During the fourth quarter of FY25, areas outside the export processing zones (EPZs) and economic zones (EZs) received three-quarters of the $303 million in foreign investments.

Of the remaining 25 percent, EPZs logged 22 percent of the investment and the rest went to the EZs, BB data show.

With the fourth-quarter figure, Bangladesh recorded $1.68 billion in foreign investment in FY25, the highest in three years.

The South Asian nation, seeking to lure foreign investment to bolster its economic development, received $1.46 billion in foreign investment in FY24.