When Bangladesh is in dire need of foreign investment, American investors have been pulling out investment mostly from the energy sector causing negative inflow in foreign direct investment (FDI) from the United States after the uprising – for the first time in recent records available with the Bangladesh Bank.
The US, which had the highest FDI stock of $2.8 billion in gas and petroleum in FY23, experienced a sharp fall to $59.53 million in FY25 due to huge outflow after the uprising, according to Bangladesh Bank data.
Major investments from the US are in the energy sector, including gas and petroleum operations by companies like Chevron, which produces a significant portion of Bangladesh's gas. The banking and power sectors which also receive considerable investment from the US fell significantly in FY25.
Chevron, which is the single largest American investor in Bangladesh operating for the last three decades, halted new investments due to unpaid bills. The interim government later cleared all arrears amounting to hundreds of millions of dollars in April this year which stalled for the past two years under the previous Sheikh Hasina-led government.
Earlier in April 2024, Chevron Bangladesh had deferred the Jalalabad compression project investment proposal due to overdue payment of $280 million. Bangladesh has sought the resumption of Chevron Bangladesh's stalled investment worth around $65 million after clearing all overdue payments.
FDI inflows from the US have still experienced fluctuations, partly due to factors like the business environment and specific geopolitical events, said industry insiders.
In FY25, net FDI from the US registered negative $132 million as outflow was $669.31 million against inflow of $449.41 million, central bank data shows. Net FDI from the US was $89 million in FY24.
The US, which was the top investor in Bangladesh with holding the largest nearly $4 billion stock of FDI in FY23, saw a drastic fall in its total outstanding investment to $1 billion in FY25 becoming seventh among top 10 investor countries.
When talking with The Business Standard, Syed Ershad Ahmed, president of American Chamber of Commerce in Bangladesh (AmCham), said the US FDI stock declined due to clearing dues in the energy sector which remained stalled during the previous regime.
He said Chevron operates in Bangladesh through production sharing with the government and they are taking back their profit.
Chevron is also keen to invest in new gas exploration but Petrobangla is not allotting gas blocks yet, he said. "So, how will new investment come?" he questioned.
AKM Mizanur Rahman, director (finance) of Petrobangla, said foreign investment in energy neither increased or declined in the last one year.
However, Petrobangla cleared an overdue of nearly $250 million to Chevron after 5 August which remained pending since the Russia-Ukraine conflict due to the dollar crisis.
Overdue piled up Chevron's FDI stock but their payment is now regular since April as Petrobangla has been clearing $35 million to $40 million dues to Chevron every month.
Chevron payment includes two parts, one is cost recovery and another is their earnings, he said.
Citing an example, he said out of Tk100 investment, Petrobangla pays Tk40 as cost recovery part and Tk60 is split for production sharing between Petrobangal and Chevron, he said. This repatriation of the earning portion may hit the total stock, he added.
He said Chevron has no new investment. However, they proposed some new gas blocks but there is no chance to allocate because of unsolicited offers which the government cannot proceed with.
When contacted Eric M Walker, president and managing director of Chevron Bangladesh over email said, "We don't disclose specific financial details, Chevron Bangladesh remains committed to providing affordable, reliable and ever cleaner energy to the nation."
Earlier in July this year, during the visit of Chevron's new President of Base Assets and Emerging Countries Javier La Rosa expressed their interest to invest in further exploration of two onshore gas blocks – block-11 and block-12 – in the country's gas-rich north-eastern region along with a compression station project near Jalalabad gas field.
During the visit, Chevron officials also thanked the interim government for clearing the outstanding payments.
In a recent event organised by AmCham, Paul Frost, commercial counselor of US Embassy Dhaka, said, "We see opportunities to grow US exports to Bangladesh in many sectors. Our priority sectors include power and energy, aviation, agriculture, infrastructure and engineering, defense and security equipment, information communication technology, and healthcare.
AmCham Ershad said not only energy, investment in other sectors also remained stalled in Bangladesh. Overall investment started to fall after the 2018 election.
Referring 19% growth in overall foreign investment, he said, the growth came from reinvestment not from green investment.
He noted that FDI in Bangladesh grew by 19.13% in the fiscal 2024-25 following the July 2024 mass uprising. However, the growth was not because of fresh external injection but a sharp rise in reinvested earnings and intra-company loans by existing players.
The inflow of equity capital declined by 17% year-on-year in FY25 when reinvested earnings surged by 23.30% and intra-company loans by 180.66%, according to Bangladesh Bank data.
Share of equity capital in total FDI declined to 33% in FY25 from 45% in FY24. The total FDI inflow stood at $1.7 billion at the end of FY25, which was $1.4 billion in FY24.
Ershad said new investors are waiting as new policies are coming. Moreover, the country needs long term investment policy, improvement in law and order situation and logistic support to gain investor confidence, he said.
Not only foreign investment, domestic private sector investment remained stagnant due to various challenges, he added.
How US sees investment climate in Bangladesh after uprising
In its "2025 Bangladesh Investment Climate Statement" released in September, the US State Department said the interim government's investment climate reforms remain at an early stage.
It noted that a sluggish and reportedly corrupt judicial system, though now under reform, and limits on alternative dispute resolution continue to impede timely contract enforcement and fair settlement of business disputes.
The government is working to remove two Hasina-era practices that hinder foreign investment: delayed foreign currency payments owed by state-owned enterprises and the requirement for Bangladesh Bank approval to transfer foreign currency abroad, it said.
"The IG has prioritised banking sector reform to align the sector with international best practices," the report said.
The report added that Bangladesh has made gradual progress over the past decade, including efforts to improve electricity reliability, but investment remains constrained by inadequate infrastructure, limited financing tools, bureaucratic delays, unfair tax burdens on foreign firms, and corruption.
It also said the interim government began work on reforming the state administration, but much of the day-to-day regulatory landscape remains unchanged.
Investment from India, China, UK slowed after uprising
Net FDI inflow from India and China slowed to $105 million and $274 million respectively in FY25, down from $132 million and $283 million, central bank data show. Both countries, among the top 10 investors, saw fluctuations mainly in the power sector.
Net FDI from the UK also fell sharply by 41% to $300.32 million in FY25 from $506.53 million in FY24. However, investment from the UK in textiles and clothing, banking, and power rose slightly, making it the top investor with an FDI stock of $3.1 billion, replacing the US.
Meanwhile, net FDI from the Netherlands and Singapore surged in FY25. Net inflow from the Netherlands jumped 41% to $453.65 million, driven by strong investment in the food and products sector, making it the year's top investor. The sector became the second-largest FDI recipient with $379.36 million.
Net FDI from Singapore rose 72% to $160 million in FY25 from $94 million in FY24, boosted by power sector investment. Singapore became the second-largest investor with an FDI stock of $2 billion in FY25.