Bangladesh experienced a 13 percent decline in net foreign direct investment (FDI) inflows in the fiscal year 2026, according to data released by the Bangladesh Bank. Net FDI dropped to $1.47 billion, down from $1.69 billion in the previous fiscal year, reversing a 20 percent surge recorded in FY25.
The decrease was particularly notable in the April-June quarter of FY26, when net FDI fell 22.44 percent quarter-on-quarter to $346.94 million from $447.31 million in January-March 2026. This slowdown has been attributed to a combination of rising investment outflows and weakening intra-company financial flows, raising concerns about the resilience of foreign investment amid ongoing economic challenges.
A breakdown of the quarterly figures reveals that the largest contributor to the decline was reinvested earnings, which fell 23.92 percent quarter-on-quarter to $260.91 million. Gross reinvested earnings inflows totaled $664.35 million, with outflows of $403.45 million during the same period. Net intra-company loans also contracted sharply, plunging 67.04 percent to $8.61 million. Although gross intra-company loan inflows stood at $333.80 million, high outflows of $325.19 million limited net gains from this segment. Equity capital inflows remained relatively stable, decreasing marginally by 1.07 percent to $77.42 million.
Bangladesh Bank Executive Director and spokesperson Arief Hossain Khan said the subdued investment trend partly reflects a wait-and-see approach by foreign investors as the government implements reforms in the banking sector and fiscal policies. Khan further noted that ongoing energy shortages and broader economic uncertainties have weighed heavily on investment decisions.
While net FDI declined, gross FDI inflows remained broadly steady, edging up slightly to $1.11 billion in April-June 2026 from $1.10 billion in the previous quarter. However, a rise in total FDI outflows to $766.27 million from $656.99 million in January-March 2026 reduced the net amount retained within the economy.
Invest Bangladesh, the country’s investment promotion agency, highlighted the contrasting trends. Nahian Rahman Rochi, a member of Invest Bangladesh, acknowledged the challenges in securing new equity funding given global investor caution amid geopolitical tensions and rising energy costs. He pointed out that despite the dip in net FDI, reinvested earnings grew 55.08 percent year-on-year in the latest quarter, signaling confidence among existing investors in Bangladesh’s long-term prospects.
Rochi emphasized ongoing efforts to strengthen the investment climate and attract sustainable foreign capital, including development projects in economic zones such as the Chinese Economic and Industrial Zone, which has been revived after delays with an estimated $500 million in potential investment and a 2028 completion target.
The recent 180-day progress report by Invest Bangladesh detailed milestones achieved in improving investment readiness and underscored the agency’s commitment to boosting investment flows to foster economic growth and employment.
Despite the current decline in net inflows, analysts caution that deeper structural challenges persist, including regulatory delays, rising operational costs, currency volatility, and energy shortages, all of which could impede foreign investment unless effectively addressed.