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Bangladesh - Biz World - October 18, 2023

USA and China biggest investors in Bangladesh

Zarif Mahmud: Despite cheap labor and easy availability of raw materials, Bangladesh is not getting as much foreign investment as expected. Even 52 years after independence, the foreign investment (FDI) stock in Bangladesh is below $22 billion. Even a few years ago, it would have been difficult to get foreign investment of $1 billion a year in Bangladesh. And despite development in various sectors including infrastructure, it has been hovering around $2 to $3 billion in recent years. But many rival countries receive foreign investment of $5 billion to $10 billion a year.
Nobel laureate American economist Robert Lucas said that foreign capital can be attracted only if there are cheap labor and raw materials, it is not correct. The country’s infrastructure and environment should be investable. Above all we need fiscal policy reliance. That’s when foreign investment started coming. When a foreign company does good business, its news spreads to others. And it becomes easier for foreign investment to come. How true that saying is can be understood by looking at Bangladesh.
According to the recently published report of Bangladesh Bank, FDI stock in Bangladesh stood at $21.823 billion at the end of 2022-23 financial year. Three countries have invested the most in this. These are the United States, China and the United Kingdom. The investment of these three countries in Bangladesh is 44 percent of the total FDI. Among these, the largest investor country is the United States. The United States accounts for 18 percent of the total foreign investment in Bangladesh.
According to the report, at the end of the last fiscal year 2022-23, US investment in Bangladesh stood at $3.948 billion, which is 18.09 percent of the FDI stock. The largest US investment in Bangladesh is in the gas and petroleum sector. The country’s Chevron as a single company currently supplies the most gas to Bangladesh. Besides, several other US gas companies invested in Bangladesh.
US companies have invested $2.815 billion in Bangladesh’s gas sector, which is 71.29 percent of the country’s total investment. Besides, $271 million in insurance sector, $229 million in non-bank financial institutions, $213 million in banking sector, $151 million in electricity sector and $147 million in textile sector are significant.
China’s position is second in terms of investment in Bangladesh. At the end of the last financial year, the country’s investment status stood at $2.850 billion, which is 13.05 percent of the total FDI stock of Bangladesh. China invests the most in the power sector in Bangladesh. The country has so far invested $2.247 billion in this sector, which is 78.85 percent of China’s total investment. Apart from this, the country has invested $269 million in the textile sector, $103 million in the trading sector and $61 million in the construction sector.
At the end of the last financial year, the United Kingdom, which is ranked third, has invested $2.82 billion in Bangladesh, which is 12.92 percent of Bangladesh’s FDI stock. According to the report, the UK invests the most in Bangladesh in the banking and textile sectors. At the end of the last financial year, the amount of investment in the country’s banking sector stood at $1.464 billion, which is 51.92 percent of the total investment. And the investment in the textile and clothing sector stood at $499 million, which is 17.69 percent of the total investment. Apart from these two sectors, $315 million in food sector, $178 million in electricity sector and $141 million in chemical and petrochemical sector are significant.
Outside of the top three countries, the investment status of Singapore at the end of the last financial year stood at $1.547 billion, which is 7.08 percent of Bangladesh’s FDI stock. The country also invests heavily in the power sector. Its amount is $384 million. It has also invested $254 million in the telecom sector, $135 million in the textile sector and $91 million in the agriculture and fisheries sector.
The investment position of South Korea, which is next in position, stood at $1.483 billion or 6.79 percent at the end of last fiscal year. The highest investment in the country is in the textile sector, which is over $1 billion. In addition, there is an investment of $206 million in leather and leather products and $136 million in the banking sector.
Meanwhile, the investment status of the Netherlands is $1.32 billion or 6.04 percent and the investment status of Hong Kong is $1.309 billion or 5.99 percent. The Netherlands invested the most in the food sector at $498 million. Apart from this, the country has invested $188 million in the power sector and $103 million in the cement sector. And Hong Kong invested the most in the textile sector, $594 million. In addition, the country has invested $198 million in the power sector and about $100 million in the banking sector.
Apart from this, Malaysia’s FDI stock in Bangladesh is $851 million or 3.89 percent, India’s investment is $689 million or 3.15 percent and Australia’s investment status stands at $677 million or 3.10 percent. Besides, United Arab Emirates (UAE) has $486 million and Japan has $453 million investment.
According to the data, foreigners invest the most in five sectors in Bangladesh. These are power, textile, gas and petroleum, banking and telecommunication sectors. Out of this, the largest investment comes in the power sector. At the end of the last financial year, the investment in this sector stood at $3.951 billion, which is 18.10 percent of the total investment. After that, the amount of investment in the textile sector is $3.805 billion. you have come.

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