Foreign Direct Investment (FDI) is crucial to maintain economic stability in a country like Bangladesh. Yet, it is unfortunate that a large portion of the total FDI that comes into the country every year is being resent abroad, either through profit repatriation or by withdrawing part of previous investments. According to recent data from the Bangladesh Bank, this outflow has tripled over the past two fiscal years, reaching around 64 per cent, whereas it was less than 27 per cent in the previous decade. This raises serious questions about investor confidence and the overall health of the economy.

The country’s economy is surely in a deplorable state, but it has not reached a stage that prompted foreign investors to withdraw their capital. The country began experiencing a dollar shortage by mid-2022, and the crisis severely eroded investor confidence. Along with unclear monetary policy and delayed repatriation permissions, the mismatch between dollar supply and demand largely created that uncertainty. Besides, investors who had previously sent illicitly transferred domestic funds back into the country as “foreign investment” may have chosen to withdraw the money after the ouster of the previous government, fearing restrictions on profit transfers.

However, the scenario is more concerning because the reason behind such a sudden rise in withdrawals remains blurred. The government must find out the answer by conducting a thorough investigation. The central bank should strengthen its monitoring, ensuring greater transparency in FDI inflows, particularly regarding the authenticity of investments (whether they are from genuine foreign sources or recycled domestic funds). Moreover, policymakers must work on restoring investor confidence through introducing reliable policies, implementing credible reforms and easing business deals.

As Bangladesh’s economic stability and growth prospects chiefly depend on foreign investments, there is certainly no room for bypassing the issue. This must be settled before the nation faces a larger economic crisis.