FDI slightly up in 2016

Dhaka,  Wed,  23 August 2017
Published : 19 Apr 2017, 00:30:57

FDI slightly up in 2016

FDI slightly up in 2016
Asjadul Kibria

The annual inflow of Foreign Direct Investment (FDI) increased by 4.40 per cent in the last calendar year, according to the latest data released by the central bank on Tuesday.

The annual statistics on FDI showed that net inflow of FDI stood at US$ 2.33 billion in 2016 while the amount was $ 2.23 billion in 2015.

Usually, net inflow of FDI is derived by deducting the value of disinvestment from the gross inflow of FDI.

As gross FDI in the past year stood at $ 2.82 billion (or $ 2828.90 million), by deducting disinvestment worth $ 496.18 million, net inflow stood at $ 2332.72 million (or $ 2.33 billion).

Bangladesh Bank has started calculating the net inflow of FDI in line with the sixth edition of the Balance of Payments (BoP) and International Investment Position Manual (BPM6) of International Monetary Fund (IMF).

The components of disinvestment were capital repatriation and repayments of intra-company loans to foreign investors. Now, according to the BPM6 gauge, the share of losses of foreign investors incurred by foreign-direct-investment enterprises is also included as a component of disinvestment.

When contacted, Mr Azizul Islam, a general manager of statistics department of Bangladesh Bank, said the latest estimation was done following BPM6 and so, there was no inconsistency in the BoP data.

"The annual inflow of FDI in 2016 is now all-time high in Bangladesh," he said while talking to the FE. "But the amount is still low, although the country is providing ample policy support to the foreign investors."

He also said FDI increased last year mainly due to fresh injection of foreign capital by a mobile phone operator.

Of the three major components of FDI, investment through reinvested earnings of the existing multinational entities (MNEs) increased to $ 1215.39 million in the past year which was $ 1144.74 million in 2015. Fresh investment or equity capital also increased from $ 696.67 million to $ 911.38 million during the period under review.

Intra-company loan, however, came down to $ 205.95 million in the past year from $ 393.95 million in 2015.

The central bank statistics also showed that the highest amount of FDI came from Singapore last year, totalling $ 673.05 million.

In fact, Singapore Telecom (Singtel) is now the largest shareholder in Bharati Airtel which brought some $ 350 million in Bangladesh last year to enhance the equity of Airtel in the country.

The United Kingdom (UK) became the second largest source of FDI which brought some $ 330.32 million last year, followed by the United States (US) from where net inflow of FDI stood at $ 217.74 million.
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