Picture this: Foreign Direct Investment (FDI) in Bangladesh skyrocketed by an eye-catching 19% in the fiscal year 2024-25, right on the heels of the dramatic July 2024 mass uprising. It feels like a beacon of hope, doesn't it? But stick around, because the real story behind this growth is far more layered than a simple success tale—and it's got everyone talking.
First off, let's break down what this 19.13% increase actually means, according to data from Bangladesh Bank. The total FDI jumped to $1.7 billion in FY25, up from $1.4 billion the previous year. Sounds impressive, right? But here's the kicker: This wasn't driven by fresh cash pouring in from overseas investors. Instead, the surge came from a whopping 23.30% rise in reinvested earnings and an astonishing 180.66% leap in intra-company loans from existing businesses. Meanwhile, equity capital—the kind of investment that truly brings new money into the country—plummeted by 17% year-on-year. As a result, equity capital's slice of the FDI pie shrank to just 33% in FY25, down from 45% in FY24.
Now, if you're new to these economic terms, don't worry—let's clarify them step by step with some everyday examples to make it easier. Think of FDI as the total foreign funds flowing into a country's businesses, often through ownership stakes or loans. Equity capital is like the initial down payment when you buy shares in a company; it's brand-new money from external investors, akin to someone investing in your startup for the first time. Reinvested earnings, on the other hand, are the profits that existing investors decide to keep and reuse within the business, rather than cashing out as dividends. For instance, imagine a multinational retailer that owns a chain of stores in Bangladesh—they earn profits from sales, and instead of sending that money back home, they reinvest it to expand their operations, like opening new outlets. Intra-company loans are even simpler: They're funds lent from the parent company abroad to its local subsidiary, like a bank transferring money from its main office to a branch here. The key difference? Equity capital injects fresh external funds to build ownership, while reinvested earnings recycle internal profits, and intra-company loans circulate money within the same corporate family.
But here's where it gets controversial: Is this 19% growth a genuine sign of economic triumph, or just a clever illusion? Many are debating whether reinvested earnings truly count as 'new' investment. Experts like Zahid Hussain, a former lead economist at the World Bank's Dhaka office, argue it's premature to celebrate. He points out that reinvested earnings are essentially non-repatriated profits retained by companies—we don't know if they're being funneled into real business growth, like hiring more workers or building factories, or if they're just sitting idle in bank accounts or invested in low-risk options like treasury bills and bonds. If the latter, Hussain says, it's not investment at all—it's more like financial hoarding. 'It's not the time to claim victory,' he warns, especially since equity capital, the truest indicator of external interest, dropped sharply. Plus, Bangladesh's FDI numbers are still relatively small compared to its economy, so even modest inflows can inflate growth percentages. As Hussain notes, countries with strong assets like land and sea connections haven't drawn big foreign crowds yet. That said, he praises the stepped-up efforts by institutions like the National Board of Revenue (NBR), Bangladesh Bank, and agencies such as BIDA, Beza, and the PPP Authority to lure investors post-uprising—and encourages them to keep at it.
Speaking of which, BIDA's executive chairman, Chowdhury Ashik Mahmud Bin Harun, took to Facebook with a post titled 'FDI Picture Post-Mass Uprising' to boast about this growth. He hailed it as proof of unwavering investor confidence amid political turmoil, crediting sound policies and the dedication of those same institutions, plus the private sector's grit. He didn't dive into the nitty-gritty of where the funds originated, though—leaving some to wonder if the post painted too rosy a picture without acknowledging the reliance on reinvested earnings and loans. And this is the part most people miss: Harun compared Bangladesh's performance to other nations hit by unrest. For example, Sudan's FDI tumbled 27.60% after 2019, Sri Lanka's dropped 19.49% in 2022, Chile's fell 15.68% in 2019, Ukraine's plunged 81.21% in 2014, Egypt's nosedived 107.55% in 2011, and Indonesia's crashed 161.45% in 1998. Bangladesh, he claimed, is the resilient exception, bouncing back thanks to economic stability and collaborative efforts. Looking forward, he cautions that FDI might dip temporarily before the next national election but should rebound afterward, urging a long-term perspective. 'We've always shown goodwill to investors, even if not everything is perfect yet,' Harun added, teasing an upcoming annual report from BIDA.
But is Bangladesh's 'bounce-back' story as straightforward as it seems? Critics might argue that touting reinvested earnings as a win could mislead investors and policymakers into complacency, ignoring the need for genuine new inflows. On the flip side, supporters could counter that any growth in FDI, even recycled, signals underlying trust and lays the groundwork for more. What do you think—does this 19% figure reflect true resilience, or is it a statistical sleight of hand? I'd love to hear your take in the comments: Do you agree with the experts that it's too soon to cheer, or do you see it as a promising turnaround?
Shifting gears to where this investment is actually landing, Bangladesh's top sectors tell an interesting tale. The textile and apparel industry, once the FDI magnet, has been on a downward slide, slipping from $530 million in FY23 to $403 million in FY25, with its FDI share dropping to 24% from 30%. It's a reminder of how global shifts—like supply chain disruptions—can affect even stalwarts. Meanwhile, food products emerged as a surprise star, leaping to second place with $379.36 million (22% of total FDI), vaulting from obscurity in FY24's top 10. Banking followed at third with $319.58 million (19%), power at $292.24 million (17%), and leather and leather products at a modest $60.16 million (4%), per Bangladesh Bank figures.
On the country front, the Netherlands stole the spotlight as FY25's top investor, surging to $453.65 million—20 times its $23 million from FY24—mainly in food and beverages ($365 million) and power ($66.7 million). It nudged out the UK, whose investments plummeted 41% to $300 million, down from over $506 million, with a heavy focus on textiles. The UK's FDI share halved to 17.81% from 34.5%. China held steady as third with $274 million, edging down from $283.55 million. Notably, the US, a former leader, vanished from the top ranks, clocking in at just $89 million in FY24 and missing FY25's top 21. Other big players included Korea, Singapore, India, Hong Kong, Malaysia, Japan, and Sri Lanka.
In wrapping this up, Bangladesh's FDI narrative post-uprising is a mix of optimism and skepticism. While the numbers show a rebound, the debate rages on about its authenticity. Does relying on reinvested earnings mean the country is innovating its way forward, or just recycling old funds in a volatile climate? And could comparisons to crisis-struck nations overlook Bangladesh's unique strengths? Share your thoughts—do you believe this growth heralds a new era for Bangladesh, or is it a cautionary tale of overlooked risks? Let's discuss in the comments!
