Diplomatic Correspondent :
The US Embassy in Dhaka has emphasised the significant contributions of American businesses to various sectors of Bangladesh’s economy, including energy security, data centres, and transportation.
In a statement posted on X (formerly Twitter) on Saturday, the Embassy highlighted the potential for even greater economic growth if Bangladesh implements the necessary reforms.
“From energy security to data centres to transportation, US businesses play a positive role in many facets of Bangladesh’s economy.
With the right economic reforms in place, the American private sector can help unlock Bangladesh’s growth potential through trade and investment,” the US Embassy’s statement read.
The Embassy’s message detailed how American companies have become integral to the development of Bangladesh’s critical infrastructure, particularly through energy projects that enhance the country’s energy security and advanced data centres that support Bangladesh’s ongoing digital transformation.
Additionally, US investments in the country’s transportation infrastructure have been crucial in improving logistics and connectivity, essential for a rapidly growing economy.
Reports indicate that in 2022-23 (June 2023), the stock of US Foreign Direct Investment (FDI) in Bangladesh was $3.95 billion, the highest among all sources of FDI, accounting for one-fifth of the total FDI stock.
The UK followed with $2.82 billion, and Singapore with $1.55 billion. Despite this leading position, American portfolio investment has declined significantly, from $1.05 billion in 2021 to $497 million in 2023, representing a 53 per cent drop.
However, US shareholdings as a foreign investor in Bangladesh’s capital market have decreased from 54.7 per cent in 2021 to 45.9 per cent in 2023. Net FDI inflows from the USA have also fallen, with $315 million recorded in 2024, down from $354 million in 2022 and $586 million in 2021. As a result, the
USA’s FDI stock until December 2023 is down to $3.94 billion, from $4.1 billion in 2022 and $4.33 billion in 2021.
Despite this, the USA remains the leading FDI source in Bangladesh, holding a 19.2 per cent share, with the UK and Singapore in second and third positions, respectively.
The central bank’s data shows that net FDI inflow in 2023 was $3 billion, a decrease of $475.55 million, or 13.7 per cent year-on-year, although it increased by 3.8 per cent compared to 2021.
Gross FDI inflows in 2023 were $3.97 billion, marking a decrease of $857 million or 17.8 per cent from 2022. Net FDI equity capital inflows were $705.83 million in 2023, down from $1.02 billion in 2022 and $1.14 billion in 2021.
The central bank also reported a decrease in FDI stock in Bangladesh to $20.55 billion at the end of December 2023, a 5.1 per cent decrease from the previous year.
In 2023, Bangladesh secured an International Monetary Fund (IMF) loan to bolster its foreign currency reserves, with the IMF approving USD 3.3 billion under the Extended Credit Facility/Extended Fund Facility and USD 1.4 billion under the Resilience and Sustainability Facility.
According to the IMF, Bangladesh’s robust economic recovery from the pandemic was disrupted by Russia’s war in Ukraine, leading to a widening current account deficit, depreciation of the Taka, and a decline in foreign exchange reserves.
The 42-month programme aims to preserve macroeconomic stability, protect the vulnerable, and foster inclusive and green growth.
Historically, Bangladesh experienced annual GDP growth of over six per cent between 2010 and 2020.
Its strategic location between emerging South and Southeast Asian markets and its large workforce were key reasons for US investment.
Bangladesh received USD 3.44 billion in foreign direct investment in FY 2021-2022, according to Bangladesh Bank.
However, the COVID-19 pandemic and Russia’s war in Ukraine negatively impacted demand for its main export—ready-made garments—and caused sharp rises in energy and food prices.
HIGH-LEVEL US DELEGATION ARRIVES IN DHAKA
In related news, following the formation of the interim government led by Dr Muhammad Yunus, Donald Lu, Assistant Secretary of State for South and Central Asian Affairs, arrived in Bangladesh on Saturday for his first visit under the new administration.
Lu landed at Dhaka’s Hazrat Shahjalal International Airport at 3:20 pm on an Indigo Airlines flight from Delhi. He was received by Brent Neiman, Under Secretary for International Finance at the US Treasury Department; Helen LaFave, Acting US Ambassador to Bangladesh; and Khondkar Masudul Alam, Chief of Protocol and Director General at the Ministry of Foreign Affairs.
Earlier in the day, a five-member high-level US delegation, led by Brent Neiman, arrived in Dhaka.
This marks the first US delegation visit since the formation of the Yunus-led interim government.
Among the delegation members is Anjali Kaur, Deputy Assistant Administrator for Asia at USAID.
According to the Ministry of Foreign Affairs, the visit is expected to strengthen bilateral relations, with various issues of mutual interest set to be discussed.
On Sunday, the US delegation is scheduled to meet with Chief Advisor Dr Muhammad Yunus, Foreign Advisor Mohammad Tauhid Hossain, and Economic and Trade Advisor Salehuddin Ahmed.
Later in the day, the delegation will have lunch with the Foreign Secretary and a meeting between Brent Neiman and Ahsan H. Mansur, Governor of the Bangladesh Bank.
ECONOMIC PRESSURES AND POTENTIAL SUPPORT
Since the fall of the previous Hasina government, the interim administration led by Dr Yunus has faced substantial economic challenges.
The interim government is committed to overhauling key sectors and institutions to restore economic prosperity but acknowledges that external financial support will be essential.
It is widely anticipated that the US delegation’s visit will result in various forms of support, particularly in economic collaboration between the US government and Bangladesh.
Both the United States and the World Bank have pledged support to the Yunus administration following its formation.
Foreign Affairs Adviser Md Touhid Hossain remarked, “The visit of any US delegation is always regarded as significant.”
The high-level discussions between the two nations are expected to explore further opportunities for enhancing bilateral trade and investment, aiming to solidify a stronger partnership for mutual economic growth.