Only 45% of foreign investments qualify as actual FDI: Bida

Just 45 percent of all foreign investments in Bangladesh qualify as actual foreign direct investments (FDI), while the rest is either intercompany loans or reinvestments, according to a report by the Bangladesh Investment Development Authority (Bida).

The FDI inflow has remained stagnant in recent years, contributing a mere 0.5 percent of the country’s gross domestic product (GDP), said the report released yesterday.

Styled as “The FDI Heatmap”, it also highlighted the significant lack of structured investment promotion campaigns for domestic industries.

Furthermore, it said industry experts in various sectors emphasised the need for better strategic alignment between public and private initiatives.

Additionally, they urged the prioritisation of industrial development and targeted interventions by the government to unlock the country’s true potential in receiving FDI, it added.

“The FDI Heatmap is more than a plan; it is the blueprint for all our future touchpoints with investors,” said Bida Executive Chairman Ashik Chowdhury.

“Every roadshow we plan, bilateral investment treaty we negotiate, or policy support we provide will follow this data-driven analysis from experts,” he added in a press release on the report.

Nahian Rahman Rochi, head of business development at Bida, said FDI contributions to Bangladesh’s GDP are far below the global average of 3–4 percent despite the country’s strong economic fundamentals.

“The FDI Heatmap aims to reverse this trend by leveraging a structured approach to prioritise industrial sectors, identify high-potential investor markets, and align investment strategies with national goals,” he added.

In essence, Bida underscored the urgent need for a robust framework to attract quality investments that align with national priorities.

To this end, Bida identified 19 priority sectors for attracting FDI and driving economic growth.

These include established industries such as apparel and pharmaceuticals alongside emerging ones like renewable energy, information technology, and light engineering.

With the focus ranging from advanced textile manufacturing to agro-processing, the report showcases diverse opportunities for innovation and development.

Bida said that by prioritising these sectors, Bangladesh could enhance its competitiveness in global markets.

“This initiative aligns with the nation’s vision for sustainable growth and economic self-reliance,” it added.

Bida informed that it created the heatmap as a strategic tool to facilitate FDI by addressing challenges hindering its inflow.

Drawing inspiration from global best practices, including collaborations between investment bodies and academia, the heatmap aims to align FDI efforts with Bangladesh’s long-term economic goals.

Against this backdrop, Bida said Bangladesh must address systemic bottlenecks in investment promotion to fully capitalise on its FDI potential.

The report pointed out critical hurdles for increasing FDI, such as the lack of long-term vision in corporate planning and poor competitor benchmarking.

Ongoing efforts to increase the FDI inflow to Bangladesh are ad hoc and do not align with global trends, it said.

The report also said that industry experts have recommended a phased approach to implementing measures for increasing the FDI inflow.

Bida outlined short-term strategies for attracting FDI, such as showcasing priority sectors, leveraging success stories in this regard, and simplifying the country’s investment frameworks.

The suggested medium-term initiatives involve the development of production-linked incentives to reward measurable outcomes, including job creation and export growth.

“We need a cohesive strategy integrating public and private efforts to create an investor-friendly ecosystem,” Bida said in its report.