The net inflow of foreign direct investment (FDI) in Bangladesh increased by 50.71 per cent in the last fiscal year (FY’19), according to the latest statistics released by the central bank on Tuesday.
It showed that net FDI stood at $3.89 billion in FY’19 from $2.58 billion in FY’18.
Robust inflow of FDI helped ease some pressure on the country’s balance of payments (BoP) in the past fiscal year. Nevertheless, the inflow of FDI was still well below the projection made in the Seventh Five-Year Plan (7th FYP).
The 7th FYP projected that net inflow of FDI would be $7.44 billion in FY’19.
The gap between the projected and actual value of FDI stood at $3.55 billion in the past fiscal year.
The Bangladesh Bank data also put the gross inflow of FDI at $4.94 billion in the year under review. At the same time, the value of disinvestment was recorded at $1.05 billion.
Disinvestment along with repayments of loans and losses had been deducted as per the International Monetary Fund (IMF) guidelines from gross FDI to determine net FDI.
After a significant drop in equity capital in FY’18, it increased sharply in the past fiscal year. It reached $1.19 billion from $0.61 billion.
Equity capital is one of the three core components of FDI and considered as fresh injection of foreign capital in the country.
According to the official definition, it is ‘remittances received by incorporated or unincorporated direct investment enterprises operating in Bangladesh on account of equity participation in those by non-resident direct investors.’
Reinvested earnings of existing multinational entities (MNEs) stood at $1.36 billion in the last fiscal year from $1.25 billion in FY’18. It is the amount of profit retained for reinvestment.
The Bangladesh Bank data also revealed that intra-company loan almost doubled to $1.33 billion in the past fiscal year which was $0.71 billion in FY’18.
Intra-company debt transactions usually refer to short or long-term borrowing and lending of funds between direct investors (parent enterprises) and affiliate enterprises.
Like the previous year, the statistics posted on the central bank’s website, however, did not disclose the full-year data on sector-wise and country-wise FDI inflow into Bangladesh.
The central bank data also showed that net FDI in Export Processing Zones (EPZs) stood at $0.21 billion only in the past fiscal year. Thus around 95 per cent of FDI comes from non-EPZ farms.
It only provided the last quarter (April-June 2019) data on the country-wise FDI inflow. So, it is not possible to clearly get any picture on country or sector-wise FDI in the past fiscal year.
The outstanding stock of FDI in the country stood at $18.68 billion at the end of FY’19.
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