Bangladesh’s Textile Sector Dominates with Record FDI Inflow Despite Overall Decrease in FY23″

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Bangladesh’s Textile Sector Attracts Record FDI Inflow Despite Overall Decrease in FY23

Bangladesh’s textile sector has emerged as a top destination for foreign direct investment (FDI) in fiscal year 2022-23, despite an overall decrease in FDI inflow. According to data from the central bank, FDI in Bangladesh contracted by over 7 percent to $3.2 billion in FY23. However, the textile sector defied this trend by attracting the highest FDI, totaling $1,229 million.

Bangladesh’s Textile Sector FDI influx was diverse, with significant contributions from various countries. South Korea led the way with a substantial investment of $435 million, followed by Hong Kong with $174 million, China with $112 million, and India with $54 million.

The United Kingdom was the largest contributor to Bangladesh’s FDI, with an investment of $622 million, followed closely by South Korea at $603 million. Other major contributors included the Netherlands ($512 million), Hong Kong ($371 million), the United States ($347.2 million), Singapore ($330.62 million), and China ($232 million).

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Additionally, the energy sector in Bangladesh received $340 million in FDI, with the Netherlands contributing $111 million and the United States contributing $202 million to this sector, as reported by local media.

During this fiscal year, disinvestment experienced an increase, primarily due to potential fund withdrawals. Equity investment witnessed a significant drop of 40.91 percent, and intra-company loans fell by 40.14 percent, as highlighted in the recent report from the Bangladesh Bank.

On a positive note, reinvestment by existing foreign-owned companies in Bangladesh saw a surge of nearly 16 percent during the fiscal year.

FDI in Bangladesh primarily focuses on three key areas: economic zones (EZ), export processing zones (EPZ), and non-export processing zones (non-EPZ). In FY23, non-EPZ areas attracted the highest net FDI inflows of around $2.8 billion, while EPZs received $406 million. The EZ areas received nearly $4.2 million.

This diversification of FDI sources and the textile sector’s strong performance underscore the resilience of Bangladesh’s investment landscape in a challenging global economic climate

More Info: Textile Industry in Bangladesh