Bangladesh allows foreign investors to park dividends in FC accounts

Aiming to draw more foreign direct investment (FDI), the Bangladesh Bank has again eased its policy, allowing foreign investors to deposit their dividend incomes earned against earlier investments to their foreign currency (FC) accounts.

Besides this change, the central bank has recently made a number of other policy relaxations for foreign investors, especially those planning to leave China. It allowed them to withdraw investments made in non-listed companies without the Bangladesh Bank's approval, but complying with several conditions.

On Tuesday, the central bank issued a new circular, saying foreign investors would be allowed to leave their dividends in FC accounts opened with the country's banks and to remit the fund either to their destination country or in Bangladesh.

The encashment from the FC accounts in local currency would be treated as inward remittance while crediting to the FC accounts would be regarded as outward remittance, according to the circular.

Besides, the investors would be allowed to invest balances in their FC accounts for purchasing securities, the circular added.

Allowing foreigners to buy shares from the FC account balance would be another encouragement for them, an official of the central bank said, adding that such investments would also be treated as FDI.

Mohd Humayun Kabir, an executive director of the Bangladesh Bank, told The Business Standard that with the latest policy change, the central bank has made encashment and remittance of money by foreign investors from their FC accounts more convenient.

A recently published annual report of the United Nations Conference on Trade and Development titled "World Investment Report 2020" revealed that Bangladesh saw a record drop in FDI in 2019, with the inflow falling by around 56 percent to $1.6 billion.

The FDI inflow to developing Asian economies is projected to plunge by 30-45 percent in 2020 due to the Covid-19 pandemic, said the report.