From attracting FDI to growing it

For years, Bangladesh’s debate on foreign direct investment (FDI) has centred on a familiar question: how can the country attract more foreign investors? That question remains important. As Bangladesh prepares for graduation from LDC status, it needs new investment to create jobs, diversify exports, introduce new technologies and strengthen its industrial base. But it is time to ask another question as well: how can Bangladesh help the foreign companies already operating in the country grow?

The answer matters because an increasingly large share of FDI appears to come not from new investors entering the market, but from companies that are already established in Bangladesh. According to the Bangladesh Bank, net FDI inflows reached $1.77 billion in 2025, up 39.4 percent from $1.27 billion in 2024. Of the 2025 total, equity capital accounted for $555 million, while reinvested earnings and intra-company loans amounted to $782 million and $434 million, respectively. Together, these two categories represented $1.22 billion, or 68.7 percent of total net FDI. While not a perfect measure, they provide a useful proxy for investment linked to foreign companies already operating in the country.

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Investment promotion should be measured not only by the number of new investors, but also by how many existing investors expand, increase exports and deepen local linkages.

Investment associated with existing foreign firms accounted for 38.1 percent of net FDI in 2021. By 2025, the share had climbed to 68.7 percent. Quarterly data tell a similar story. In the first quarter of 2026, reinvested earnings and intra-company loans represented 82.5 percent of net FDI, compared with 66.5 percent in the same period a year earlier.

Attracting investors is only the beginning. An existing foreign investor is fundamentally different from a company that has yet to enter the market. It already understands the business environment, has employees and suppliers, serves customers and has experience working within the regulatory system. Most importantly, it has already taken the initial risk of investing in Bangladesh.

When such a company expands production, adds a new product line or establishes another facility, the benefits can often materialise more quickly than those associated with entirely new investments. Existing investors can also become Bangladesh’s most credible ambassadors. A company that expands from one factory to two sends a stronger signal to prospective investors. Its decision to reinvest demonstrates confidence in the country’s business environment.

JETRO’s experience reinforces this point. The overwhelming majority of inquiries received by JETRO come not from prospective investors, but from Japanese firms already operating in Bangladesh. Many relate to business expansion and operational challenges, underscoring the importance of supporting existing investors. This suggests that investment promotion should be measured not only by the number of new investors attracted, but also by how many existing investors expand, increase exports and deepen local linkages.

For Bangladesh, this means moving from a transaction-based approach to a relationship-based one. When foreign companies face challenges related to customs procedures, taxation, licensing, energy supply, land access or foreign exchange regulations, investment promotion institutions should have the capacity to coordinate with relevant agencies and help resolve problems promptly. Effective investor aftercare is not simply about listening to investors. It is about helping them succeed.

Bangladesh is currently reforming its investment promotion architecture, creating an opportunity to place aftercare at the centre of the system. The country will continue to need new foreign investors. But it should not overlook one of its most promising sources of future investment: the companies that have already chosen Bangladesh. The next wave of FDI may not be waiting somewhere overseas. It may already be here.

The writer is the country representative for Japan External Trade Organization (JETRO) in Bangladesh