Bangladesh draws less than 5pc of S Asia’s logistics FDI: Report

Business Desk :

Bangladesh has attracted $1.8 billion in greenfield foreign direct investment (FDI) in logistics between 2019 and 2024, accounting for 4.9 percent of South Asia’s total, according to a report by GlobalData and the International Finance Corporation (IFC).

The country registered 10 projects in logistics and warehousing operations during the period, apart from receiving $185.6 million in FDI in sales and administration business functions relating to the logistics sector, said the study.

Posted on the Bangladesh Investment Development Authority’s website, the study was published in June this year.
Of the investment, the report cited the plan of UAE-based Abu Dhabi Ports to invest $1 billion in the construction of a multipurpose terminal under the Bay Terminal project at Chattogram port.
It also cited the announcement of Denmark-based shipping company AP Moller-Maersk to invest $400 million to open a new container terminal in Laldia, Chattogram.

However, from a South Asian perspective, Bangladesh’s share in FDI projects was far below that of India. South Asia attracted 258 logistics FDI projects, with India leading at 85 percent.
The study said the global economy is changing rapidly, driven by politics, policy, and technology, and recommended that the government plan strategically.

The government should enable and encourage the development of logistics and infrastructure that can serve a dual-use function – international trade and Bangladesh’s growing domestic market, it said.
“Promote green logistics solutions to diminish environmental impact. This can connect with sustainable investment, which is pertinent for FDI,” it added.

The report suggested that the government encourage an environment that promotes smart logistics with smart technologies to reduce inefficiencies, such as reducing wastage, lowering the volume of documentation, and improving time management.

“This could be a solution to the just-in-time vs just-in-case dichotomy in supply chains,” it said, suggesting a focus on attracting logistics companies in areas that have a high volume of projects and large capital investments.

“These are core logistics companies, e-commerce, and food companies. Textiles should be another important target sector and one in which Bangladesh has a regionally competitive domestic market,” said the report.

The report on logistics said that to be regionally competitive, Bangladesh should consider an attractive incentive package for companies interested in opening logistics operations.
“Incentives have become a much more important factor in FDI in recent years,” it said, recommending identifying key source markets and companies to target for investment.