Foreign direct investment (FDI) in Bangladesh rose to $2.9 billion in 2021, near pre-pandemic levels, while outward FDI from Bangladesh increased seven-fold to $92 million. FDI provides economic growth, employment, technology transfer, and infrastructure development. The top sectors for FDI inflows in Bangladesh are manufacturing, power and gas, and trade and commerce. The United States, China, the United Kingdom, Singapore, and South Korea are the leading investor countries. Bangladesh provides incentives like tax holidays to attract FDI and needs to address challenges such as political unrest, corruption, and insufficient power supply to further encourage foreign investment.

1. OUR TOPIC
FOREIGN
DIRECT
INVESTMENT
(FDI) IN
BANGLADESH :
CHALLENGES &
WAYOUTS

2. According to OECD, “Foreign direct investment is a category of cross-
border investment made by a resident in one economy (the direct investor)
with the objective of establishing a lasting interest in an enterprise (the
direct investment enterprise or affiliate) That is resident in an economy
other than that of the direct investor.”
“FDI is a particular form of the flow of capital across international
boundaries, from home countries to host countries.”(Lipsey,2002)

3. According to Richard E. Caves, “ FDI Is a category of international investment that
reflects the objective of the investors obtaining a lasting interest in an enterprise
resident in another economy.”
For example, Telenor group invest in Bangladesh as Grameenphone Ltd. and started
its operation on March 1997. Telenor hold 55.8% ownership share in Grameenphone.

4. TYPES OF FDI
FDI can be mainly classified into three types :
I. Horizontal FDI
II. Vertical FDI
III.Conglomerate FDI
IV.Platform FDI

5. IMPORTANCE OF FDI
FDI has a significant impact on various sectors of the economy and
contributes to overall growth, employment general, technology transfer and
infrastructure development.
Economic Growth
Agricultural Sectors
Infrastructural Development
Transfer of Technology
Foreign Exchange Flows
Employment Opportunities

6. ADVANTAGES OF FDI
Economic Growth
Human Capital Development
Technological Development
Increase in Experts
Exchange Rate Stability
Improved Capital Flow
Creation of A New Capital Market

7. DISADVANTANGES OF FDI
Hindrance of Domestic development
Risk from Political changes
Negative Exchange Rates
Higher Costs
Economic Non-Viability
Modern Day Economic Colonialism
Poor Performance

8. PRESENT SITUATION OF FDI IN BANGLADESH
Foreign direct investment (FDI) in Bangladesh rose by 12.9% to $2.9 billion
– around the pre-pandemic level – in 2021. Meanwhile, outward FDI from
Bangladesh rose nearly seven times to $92 million in 2021. The condition is
very positive if compared with our neighbouring countries.

9. Sl No. Sector FDI inflows
(in million
USD)
Percentage
(%)
1 Manufacturing 1238.27 36
2 Power, Gas and Petroleum 768.31 22.3
3 Trade and Commerce 682.11 19.8
4 Services 315.65 9.2
5 Transport, Storage and Communication 273.33 7.9
6 Construction 112 3.3
7 Agricultural and Fishing 41.31 1.2
8 Other Sectors 8.65 0.3
Total 3439.63 100
Table : FDI Inflows by major sectors in FY 2022(in Million USD)

10. Figure: FDI Inflows by major sectors in FY 2022(in Million USD)

11. Sl
No.
Countries FDI inflows(in
million USD
Percentage(%)
1 USA 661.12 19.2
2 China 465.17 13.5
3 UK 383.96 11.2
4 Singapore 300.58 8.7
5 South Korea 215.97 6.3
7 Hong Kong 179.22 5.2
7 Norway 173.45 5.0
8 Netherlands 160.24 4.7
9 Japan 122.72 3.6
10 India 106.83 3.1
11 Other countries 670.73 19.5
Total 3439.63 100
Table: FDI Inflows by major countries in FY 2022(in Million USD)

12. Figure: FDI Inflows by major countries in FY 2022(in Million USD)

13. INCENTIVE PACKAGES FOR FDI IN BANGLADESH
Tax Holiday And Exemptions
Exemptions On Import Duties
Double Taxation Regimes
Capital Repatriation
Tariff Reduction
Accelerated Depreciation
Ownership

14. CHALLENGES
Political Unrest
Corruption
Insufficient Power Supply
Taxation Systems
Lack Of Expertise And Research

15. RECOMMENDATIONS
Ensure good governance
Coordinate government agencies
Dynamic and independent government agencies
Accountability and transparency
Developing dynamic relationships
Devoting efforts to shift FDI tracks
Political reformation
Ensuring power and energy

16. THANK YOU