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June 16, 2025

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MONDAY, JUNE 16, 2025
Acquisitions gave major boost to FDI inflow

Economy

TBS Report
24 June, 2019, 11:35 am
Last modified: 25 June, 2019, 11:30 am

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Acquisitions gave major boost to FDI inflow

All of these investments were in existing businesses that did not see creation of new jobs or establishment of new plants but added value to the existing businesses

TBS Report
24 June, 2019, 11:35 am
Last modified: 25 June, 2019, 11:30 am
Salman F Rahman speaking at a media briefing on Unctad World Investment Report 2019/TBS Photo
Salman F Rahman speaking at a media briefing on Unctad World Investment Report 2019/TBS Photo

Bangladesh saw a spurt in foreign direct investment (FDI) last year, thanks to the huge inflow of funds through three acquisitions – Chinese strategic investments in the Dhaka Stock Exchange and bKash, and the acquisition of United Dhaka Tobacco by Japan Tobacco Industries.

The investments were in existing businesses that did not see creation of any new jobs or establishment of new plants but added value to the existing businesses.

If these three investments worth above $1.6 billion are discounted, then Bangladesh’s FDI inflow remains unchanged at slightly over $2 billion last year.

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The FDI inflow was $2.15 billion in 2017.

Bangladesh saw the highest 68 percent growth in FDI inflow in the world, receiving $3.6 billion last year. Of the total receipt, three acquisitions accounted for 45 percent, of which the takeover of the tobacco industry by Japan alone accounted for 40 percent.

The rest of the FDI was driven by significant investments in infrastructure and service sector with total 56 percent when manufacturing sector received 31 percent of the total foreign investment.

Japan Tobacco Inc, one of the five largest tobacco companies in the world, completed its $1.5 billion acquisition of Akij Group's tobacco business in November last year, which was the biggest ever single foreign direct investment in Bangladesh.

A Chinese consortium bought 25 percent stake of the DSE with an investment of $115 million last year. Alipay, a concern of China's e-commerce and tech giant Alibaba Group, has bought 20 percent stakes in bKash, Bangladesh's largest mobile financial service provider.

It is true that the high foreign investment could not create new jobs as the major investments were driven by merger and acquisition, said Ahsan H Mansur, executive director of the Policy Research Institute (PRI), when presenting Unctad World Investment Report 2019 at a media briefing.

The Bangladesh Investment Development Authority (Bida) organised the event at Sonargaon hotel in Dhaka on Monday.

The FDI inflow was not special economic zone centric, as a result it could not contribute much to employment generation, he said.

Stating that the infrastructure sector is an easy target for investors, he said it is a positive development that investors acquired stakes of local companies, which will be helpful to bring good governance.

Actually foreign investments came in power and infrastructure, said Salman F Rahman, adviser to the prime minister for private industry and investment.

The government will have to develop infrastructure first to bring investment in the manufacturing sector, he said while addressing the media briefing.

“Investment in manufacturing sector will not come until infrastructural development,” he said.

He said the government has set a target to improve Bangladesh's rank in the Global Doing Business Index to boost investment.

A work plan has been taken to bring the country’s doing business ranking to double digit by 12 months and below 50 by 24 months, he added.

When FDI around the world continued to decline for the third consecutive year in 2018, Bangladesh saw the highest inflow as the country’s potentials were presented to foreign investors, said Kazi M Aminul Islam, executive director of the Bida.

The global flow fell by 13 percent amid slump in investment, according to world investment report.

The total flow stood at $1.3 trillion, the lowest since the global financial crisis, according to the report.

Bangladesh ranked the top position in receiving FDI last year among the South Asian countries when neighbouring India secured third position with 6 percent growth, according the Unctad report.

Bangladesh also ranked at the top in FDI flow among the least developed countries last year, improving from fifth position in 2017.

The total amount of FDI that Bangladesh received last year was 5.9 percent of its gross domestic product (GDP), up from 5.6 percent in the previous year.

Bangladesh received the highest $1 billion investment from China.

The FDI in Bangladesh accounted for only 6.4 percent of South Asia’s total FDI inflows. India was the major recipient with 77 percent of South Asia’s total FDI inflows.

In terms of the total global FDI flows, Bangladesh accounted for only 0.27 percent.

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Bida / FDI

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