diff --git a/.devcontainer/.dockerignore b/.devcontainer/.dockerignore
new file mode 100644
index 0000000000..cfecf53afa
--- /dev/null
+++ b/.devcontainer/.dockerignore
@@ -0,0 +1,99 @@
+*~
+_build
+*.obj
+*.out
+*.compile
+*.native
+*.byte
+*.cmo
+*.annot
+*.cmi
+*.cmx
+*.cmt
+*.cmti
+*.cma
+*.a
+*.cmxa
+*.obj
+ *~
+*.annot
+*.mj
+*.bak
+*.swp
+*.swo
+*.flambda
+*.jsx
+*.lambda
+*.rawlambda
+*.s
+*.o
+*.lam
+*.0.js
+*#
+*.log
+.#*
+*.cmj
+*.rawlambda
+*.lambda
+*.zip
+*.mlast
+*.mliast
+
+.idea
+.DS_Store
+
+node_modules
+*.dump
+coverage
+
+.ninja_log
+.bsdeps
+.bsbuild
+lib/ocaml
+tests/build_tests/*/lib/
+#ignore temporary directory
+*.goog.js
+*.jsoo.js
+*.so
+tmp/
+tracing*.json
+
+_opam
+
+.env
+playground/packages/
+playground/stdlib/
+playground/*.cmj
+playground/*.cmi
+playground/.netrc
+playground/compiler.*js
+
+rewatch/target/
+rewatch/rewatch
+
+tests/tools_tests/**/*.res.js
+tests/tools_tests/lib
+tests/analysis_tests*/lib
+tests/analysis_tests/**/*.bs.js
+
+/linux/*.exe
+/linuxarm64/*.exe
+/darwin/*.exe
+/darwinarm64/*.exe
+/win32/*.exe
+
+.yarn/*
+!.yarn/patches
+!.yarn/plugins
+!.yarn/releases
+!.yarn/sdks
+!.yarn/versions
+
+*.tsbuildinfo
+
+# package tarballs
+package.tgz
+*.exe
+
+/ninja/ninja
+/ninja/build.ninja
\ No newline at end of file
diff --git a/.devcontainer/Dockerfile b/.devcontainer/Dockerfile
index 90768e7639..f6906258a3 100644
--- a/.devcontainer/Dockerfile
+++ b/.devcontainer/Dockerfile
@@ -2,10 +2,14 @@ FROM mcr.microsoft.com/devcontainers/rust:1-1-bookworm
 LABEL org.opencontainers.image.authors="Christoph Knittel <ck@cca.io>"
 LABEL org.opencontainers.image.description="Docker image for ReScript development."
 
-RUN apt-get update && export DEBIAN_FRONTEND=noninteractive \
+RUN sudo apt-get update && export DEBIAN_FRONTEND=noninteractive \
     && apt-get -y install --no-install-recommends \
-    yarn \
-    opam \
+    cmake \
+    ninja-build \
     musl-tools \
     python-is-python3 \
     && rm -rf /var/lib/apt/lists/*
+
+# Install OPAM
+ARG OPAM_VERSION=2.4.1
+RUN printf '\n\n' | bash -c "sh <(curl -fsSL https://raw.githubusercontent.com/ocaml/opam/master/shell/install.sh) --version $OPAM_VERSION"
diff --git a/.devcontainer/devcontainer.json b/.devcontainer/devcontainer.json
index d03f934de1..d95de65de4 100644
--- a/.devcontainer/devcontainer.json
+++ b/.devcontainer/devcontainer.json
@@ -2,7 +2,11 @@
   "name": "ReScript Compiler",
   "build": {
     "context": ".",
-    "dockerfile": "Dockerfile"
+    "dockerfile": "Dockerfile",
+    "args": {
+      "USER_UID": "${localEnv:UID}",
+      "USER_GID": "${localEnv:GID}"
+    }
   },
   "features": {
     "ghcr.io/devcontainers/features/github-cli:1": {
@@ -23,5 +27,7 @@
       ]
     }
   },
-  "postCreateCommand": ".devcontainer/postCreate.sh"
+  "postCreateCommand": ".devcontainer/postCreate.sh",
+  "remoteUser": "vscode",
+  "containerUser": "vscode"
 }
diff --git a/.devcontainer/postCreate.sh b/.devcontainer/postCreate.sh
index 79db8cc4f0..c8288d1c83 100755
--- a/.devcontainer/postCreate.sh
+++ b/.devcontainer/postCreate.sh
@@ -2,14 +2,14 @@
 
 # Install dev dependencies from OPAM
 opam init -y --bare --disable-sandboxing
-opam switch create 5.3.0 --packages ocaml-option-static
-opam install . --deps-only -y
-
-# For IDE support, install the OCaml language server
-opam install ocaml-lsp-server -y
+opam switch create 5.3.0
+opam install . --deps-only --with-test --with-dev-setup -y
 
 # Add OPAM environment setup to shell startup script
 echo 'eval $(opam env)' >> ~/.zshrc
 echo 'eval $(opam env)' >> ~/.bashrc
 
-npm install --ignore-scripts
+nvm install
+
+corepack enable
+printf "\n" | yarn 
diff --git a/CHANGELOG.md b/CHANGELOG.md
index a80a23a4dc..f82d7a6234 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -85,6 +85,7 @@
 - Fix fatal error when JSX expression used without configuring JSX in `rescript.json`. https://github.com/rescript-lang/rescript/pull/7656
 - Rewatch: Only allow access to `"bs-dev-dependencies"` from `"type": "dev"` source files. https://github.com/rescript-lang/rescript/pull/7650
 - Fix comment attached to array element. https://github.com/rescript-lang/rescript/pull/7672
+- Rewatch: fix compilation of files starting with a lowercase letter. https://github.com/rescript-lang/rescript/pull/7700
 
 #### :nail_care: Polish
 
@@ -101,6 +102,7 @@
 - Rewatch: simplify getting bsc path. https://github.com/rescript-lang/rescript/pull/7634
 - Rewatch: only get `"type": "dev"` source files for local packages. https://github.com/rescript-lang/rescript/pull/7646
 - Rewatch: add support for `rescript -w` for compatibility. https://github.com/rescript-lang/rescript/pull/7649
+- Fix dev container. https://github.com/rescript-lang/rescript/pull/7700
 
 # 12.0.0-beta.1
 
diff --git a/rewatch/src/build/compile.rs b/rewatch/src/build/compile.rs
index e5816347c8..38d623f13e 100644
--- a/rewatch/src/build/compile.rs
+++ b/rewatch/src/build/compile.rs
@@ -578,7 +578,8 @@ fn compile_file(
             ast_path.to_string_lossy()
         )),
     }?;
-    let module_name = helpers::file_path_to_module_name(implementation_file_path, &package.namespace);
+    let basename =
+        helpers::file_path_to_compiler_asset_basename(implementation_file_path, &package.namespace);
     let has_interface = module.get_interface().is_some();
     let is_type_dev = module.is_type_dev;
     let to_mjs_args = compiler_args(
@@ -631,16 +632,14 @@ fn compile_file(
                         // because editor tooling doesn't support namespace entries yet
                         // we just remove the @ for now. This makes sure the editor support
                         // doesn't break
-                        .join(format!("{module_name}.cmi")),
-                    ocaml_build_path_abs.join(format!("{module_name}.cmi")),
+                        .join(format!("{basename}.cmi")),
+                    ocaml_build_path_abs.join(format!("{basename}.cmi")),
                 );
                 let _ = std::fs::copy(
-                    package
-                        .get_build_path()
-                        .join(dir)
-                        .join(format!("{module_name}.cmj")),
-                    ocaml_build_path_abs.join(format!("{module_name}.cmj")),
+                    package.get_build_path().join(dir).join(format!("{basename}.cmj")),
+                    ocaml_build_path_abs.join(format!("{basename}.cmj")),
                 );
+                println!("[rewatch] Copying file {basename} to ocaml build path");
                 let _ = std::fs::copy(
                     package
                         .get_build_path()
@@ -648,23 +647,20 @@ fn compile_file(
                         // because editor tooling doesn't support namespace entries yet
                         // we just remove the @ for now. This makes sure the editor support
                         // doesn't break
-                        .join(format!("{module_name}.cmt")),
-                    ocaml_build_path_abs.join(format!("{module_name}.cmt")),
+                        .join(format!("{basename}.cmt")),
+                    ocaml_build_path_abs.join(format!("{basename}.cmt")),
                 );
             } else {
                 let _ = std::fs::copy(
                     package
                         .get_build_path()
                         .join(dir)
-                        .join(format!("{module_name}.cmti")),
-                    ocaml_build_path_abs.join(format!("{module_name}.cmti")),
+                        .join(format!("{basename}.cmti")),
+                    ocaml_build_path_abs.join(format!("{basename}.cmti")),
                 );
                 let _ = std::fs::copy(
-                    package
-                        .get_build_path()
-                        .join(dir)
-                        .join(format!("{module_name}.cmi")),
-                    ocaml_build_path_abs.join(format!("{module_name}.cmi")),
+                    package.get_build_path().join(dir).join(format!("{basename}.cmi")),
+                    ocaml_build_path_abs.join(format!("{basename}.cmi")),
                 );
             }
 
diff --git a/rewatch/testrepo/package.json b/rewatch/testrepo/package.json
index 34f0d22239..f42be392d8 100644
--- a/rewatch/testrepo/package.json
+++ b/rewatch/testrepo/package.json
@@ -11,7 +11,9 @@
       "packages/with-dev-deps",
       "packages/compiled-by-legacy",
       "packages/nonexisting-dev-files",
-      "packages/deprecated-config"
+      "packages/deprecated-config",
+      "packages/file-casing",
+      "packages/file-casing-no-namespace"
     ]
   },
   "dependencies": {
diff --git a/rewatch/testrepo/packages/file-casing-no-namespace/package.json b/rewatch/testrepo/packages/file-casing-no-namespace/package.json
new file mode 100644
index 0000000000..97925cdac6
--- /dev/null
+++ b/rewatch/testrepo/packages/file-casing-no-namespace/package.json
@@ -0,0 +1,9 @@
+{
+  "name": "@testrepo/file-casing-no-namespace",
+  "version": "0.0.1",
+  "keywords": [
+    "rescript"
+  ],
+  "author": "",
+  "license": "MIT"
+}
diff --git a/rewatch/testrepo/packages/file-casing-no-namespace/rescript.json b/rewatch/testrepo/packages/file-casing-no-namespace/rescript.json
new file mode 100644
index 0000000000..d1d6797059
--- /dev/null
+++ b/rewatch/testrepo/packages/file-casing-no-namespace/rescript.json
@@ -0,0 +1,21 @@
+{
+  "name": "@testrepo/file-casing-no-namespace",
+  "sources": [
+    {
+      "dir": "src",
+      "subdirs": true
+    }
+  ],
+  "package-specs": [
+    {
+      "module": "es6",
+      "in-source": true
+    }
+  ],
+  "suffix": ".mjs",
+  "dependencies": [],
+  "compiler-flags": [],
+  "jsx": {
+    "version": 4
+  }
+}
diff --git a/rewatch/testrepo/packages/file-casing-no-namespace/src/Consume.mjs b/rewatch/testrepo/packages/file-casing-no-namespace/src/Consume.mjs
new file mode 100644
index 0000000000..9f00487db9
--- /dev/null
+++ b/rewatch/testrepo/packages/file-casing-no-namespace/src/Consume.mjs
@@ -0,0 +1,10 @@
+// Generated by ReScript, PLEASE EDIT WITH CARE
+
+import * as Produce from "./produce.mjs";
+
+let x = Produce.meh(1);
+
+export {
+  x,
+}
+/* x Not a pure module */
diff --git a/rewatch/testrepo/packages/file-casing-no-namespace/src/Consume.res b/rewatch/testrepo/packages/file-casing-no-namespace/src/Consume.res
new file mode 100644
index 0000000000..e2d9a26460
--- /dev/null
+++ b/rewatch/testrepo/packages/file-casing-no-namespace/src/Consume.res
@@ -0,0 +1 @@
+let x = Produce.meh(1)
\ No newline at end of file
diff --git a/rewatch/testrepo/packages/file-casing-no-namespace/src/produce.mjs b/rewatch/testrepo/packages/file-casing-no-namespace/src/produce.mjs
new file mode 100644
index 0000000000..2dc987f1bd
--- /dev/null
+++ b/rewatch/testrepo/packages/file-casing-no-namespace/src/produce.mjs
@@ -0,0 +1,11 @@
+// Generated by ReScript, PLEASE EDIT WITH CARE
+
+
+function meh(param) {
+  return true;
+}
+
+export {
+  meh,
+}
+/* No side effect */
diff --git a/rewatch/testrepo/packages/file-casing-no-namespace/src/produce.res b/rewatch/testrepo/packages/file-casing-no-namespace/src/produce.res
new file mode 100644
index 0000000000..194a02d465
--- /dev/null
+++ b/rewatch/testrepo/packages/file-casing-no-namespace/src/produce.res
@@ -0,0 +1,3 @@
+let meh = (_: int) => {
+  true
+}
\ No newline at end of file
diff --git a/rewatch/testrepo/packages/file-casing/rescript.json b/rewatch/testrepo/packages/file-casing/rescript.json
index 50914c1025..39a3626510 100644
--- a/rewatch/testrepo/packages/file-casing/rescript.json
+++ b/rewatch/testrepo/packages/file-casing/rescript.json
@@ -1,5 +1,6 @@
 {
   "name": "@testrepo/file-casing",
+  "namespace": "FileCasing",
   "sources": [
     {
       "dir": "src",
diff --git a/rewatch/testrepo/packages/file-casing/src/Consume.mjs b/rewatch/testrepo/packages/file-casing/src/Consume.mjs
index 68f3c4874b..0603a732aa 100644
--- a/rewatch/testrepo/packages/file-casing/src/Consume.mjs
+++ b/rewatch/testrepo/packages/file-casing/src/Consume.mjs
@@ -1,8 +1,8 @@
 // Generated by ReScript, PLEASE EDIT WITH CARE
 
-import * as Produce$NamespaceCasingAPI from "./produce.mjs";
+import * as Produce$FileCasing from "./produce.mjs";
 
-let x = Produce$NamespaceCasingAPI.meh(1);
+let x = Produce$FileCasing.meh(1);
 
 export {
   x,
diff --git a/rewatch/testrepo/rescript.json b/rewatch/testrepo/rescript.json
index 008a339de5..ae437e38dd 100644
--- a/rewatch/testrepo/rescript.json
+++ b/rewatch/testrepo/rescript.json
@@ -23,6 +23,8 @@
     "@testrepo/with-dev-deps",
     "@testrepo/compiled-by-legacy",
     "@testrepo/nonexisting-dev-files",
-    "@testrepo/deprecated-config"
+    "@testrepo/deprecated-config",
+    "@testrepo/file-casing",
+    "@testrepo/file-casing-no-namespace"
   ]
 }
diff --git a/rewatch/testrepo/yarn.lock b/rewatch/testrepo/yarn.lock
index 8317e98114..808197041f 100644
--- a/rewatch/testrepo/yarn.lock
+++ b/rewatch/testrepo/yarn.lock
@@ -75,6 +75,18 @@ __metadata:
   languageName: unknown
   linkType: soft
 
+"@testrepo/file-casing-no-namespace@workspace:packages/file-casing-no-namespace":
+  version: 0.0.0-use.local
+  resolution: "@testrepo/file-casing-no-namespace@workspace:packages/file-casing-no-namespace"
+  languageName: unknown
+  linkType: soft
+
+"@testrepo/file-casing@workspace:packages/file-casing":
+  version: 0.0.0-use.local
+  resolution: "@testrepo/file-casing@workspace:packages/file-casing"
+  languageName: unknown
+  linkType: soft
+
 "@testrepo/main@workspace:packages/main":
   version: 0.0.0-use.local
   resolution: "@testrepo/main@workspace:packages/main"
diff --git a/rewatch/tests/format.sh b/rewatch/tests/format.sh
index 6520a33a42..ccfef0f4e4 100755
--- a/rewatch/tests/format.sh
+++ b/rewatch/tests/format.sh
@@ -6,13 +6,13 @@ bold "Test: It should format all files"
 git diff --name-only ./
 error_output=$("$REWATCH_EXECUTABLE" format --all)
 git_diff_file_count=$(git diff --name-only ./ | wc -l | xargs)
-if [ $? -eq 0 ] && [ $git_diff_file_count -eq 4 ];
+if [ $? -eq 0 ] && [ $git_diff_file_count -eq 8 ];
 then
     success "Test package formatted. Got $git_diff_file_count changed files."
     git restore .
 else
     error "Error formatting test package"
-    echo "Expected 4 files to be changed, got $git_diff_file_count"
+    echo "Expected 8 files to be changed, got $git_diff_file_count"
     echo $error_output
     exit 1
 fi
diff --git a/rewatch/tests/snapshots/bs-dev-dependency-used-by-non-dev-source.txt b/rewatch/tests/snapshots/bs-dev-dependency-used-by-non-dev-source.txt
index 612ef06fad..9df0205a5d 100644
--- a/rewatch/tests/snapshots/bs-dev-dependency-used-by-non-dev-source.txt
+++ b/rewatch/tests/snapshots/bs-dev-dependency-used-by-non-dev-source.txt
@@ -1,5 +1,6 @@
-Cleaned 0/56
+Cleaned 0/60
 Parsed 2 source files
+[rewatch] Copying file NS_alias-@NewNamespace to ocaml build path
 Compiled 2 modules
 
 The field 'bs-dependencies' found in the package config of '@testrepo/deprecated-config' is deprecated and will be removed in a future version.
diff --git a/rewatch/tests/snapshots/dependency-cycle.txt b/rewatch/tests/snapshots/dependency-cycle.txt
index fc917ef90a..cc25fb9c92 100644
--- a/rewatch/tests/snapshots/dependency-cycle.txt
+++ b/rewatch/tests/snapshots/dependency-cycle.txt
@@ -1,4 +1,4 @@
-Cleaned 0/56
+Cleaned 0/60
 Parsed 1 source files
 Compiled 0 modules
 
diff --git a/rewatch/tests/snapshots/remove-file.txt b/rewatch/tests/snapshots/remove-file.txt
index 44af3f1f88..a19c44e596 100644
--- a/rewatch/tests/snapshots/remove-file.txt
+++ b/rewatch/tests/snapshots/remove-file.txt
@@ -1,4 +1,4 @@
-Cleaned 1/56
+Cleaned 1/60
 Parsed 0 source files
 Compiled 1 modules
 
diff --git a/rewatch/tests/snapshots/rename-file-internal-dep-namespace.txt b/rewatch/tests/snapshots/rename-file-internal-dep-namespace.txt
index 081e01497b..d42004a89d 100644
--- a/rewatch/tests/snapshots/rename-file-internal-dep-namespace.txt
+++ b/rewatch/tests/snapshots/rename-file-internal-dep-namespace.txt
@@ -1,5 +1,7 @@
-Cleaned 2/56
+Cleaned 2/60
 Parsed 2 source files
+[rewatch] Copying file InternalDep to ocaml build path
+[rewatch] Copying file Other_module2-@NewNamespace to ocaml build path
 Compiled 3 modules
 
 The field 'bs-dependencies' found in the package config of '@testrepo/deprecated-config' is deprecated and will be removed in a future version.
diff --git a/rewatch/tests/snapshots/rename-file-internal-dep.txt b/rewatch/tests/snapshots/rename-file-internal-dep.txt
index fb5ccbd7b3..d74a045181 100644
--- a/rewatch/tests/snapshots/rename-file-internal-dep.txt
+++ b/rewatch/tests/snapshots/rename-file-internal-dep.txt
@@ -1,5 +1,6 @@
-Cleaned 2/56
+Cleaned 2/60
 Parsed 2 source files
+[rewatch] Copying file InternalDep2 to ocaml build path
 Compiled 2 modules
 
 The field 'bs-dependencies' found in the package config of '@testrepo/deprecated-config' is deprecated and will be removed in a future version.
diff --git a/rewatch/tests/snapshots/rename-file-with-interface.txt b/rewatch/tests/snapshots/rename-file-with-interface.txt
index 002228c2af..3e014015b5 100644
--- a/rewatch/tests/snapshots/rename-file-with-interface.txt
+++ b/rewatch/tests/snapshots/rename-file-with-interface.txt
@@ -1,6 +1,8 @@
 
 No implementation file found for interface file (skipping): src/ModuleWithInterface.resi
-Cleaned 2/56
+Cleaned 2/60
 Parsed 1 source files
+[rewatch] Copying file ModuleWithInterface2 to ocaml build path
+[rewatch] Copying file Main to ocaml build path
 Compiled 2 modules
 
 The field 'bs-dependencies' found in the package config of '@testrepo/deprecated-config' is deprecated and will be removed in a future version.
diff --git a/rewatch/tests/snapshots/rename-file.txt b/rewatch/tests/snapshots/rename-file.txt
index 4b0a9ca875..b2461d5e2b 100644
--- a/rewatch/tests/snapshots/rename-file.txt
+++ b/rewatch/tests/snapshots/rename-file.txt
@@ -1,5 +1,6 @@
-Cleaned 1/56
+Cleaned 1/60
 Parsed 1 source files
+[rewatch] Copying file Main2 to ocaml build path
 Compiled 1 modules
 
 The field 'bs-dependencies' found in the package config of '@testrepo/deprecated-config' is deprecated and will be removed in a future version.
diff --git a/rewatch/tests/snapshots/rename-interface-file.txt b/rewatch/tests/snapshots/rename-interface-file.txt
index a0da89ae4b..41549a4a22 100644
--- a/rewatch/tests/snapshots/rename-interface-file.txt
+++ b/rewatch/tests/snapshots/rename-interface-file.txt
@@ -1,6 +1,8 @@
 
 No implementation file found for interface file (skipping): src/ModuleWithInterface2.resi
-Cleaned 1/56
+Cleaned 1/60
 Parsed 1 source files
+[rewatch] Copying file ModuleWithInterface to ocaml build path
+[rewatch] Copying file Dep02 to ocaml build path
 Compiled 2 modules
 
 The field 'bs-dependencies' found in the package config of '@testrepo/deprecated-config' is deprecated and will be removed in a future version.
diff --git a/rewatch/tests/suffix.sh b/rewatch/tests/suffix.sh
index 4586fcb05a..aa67fcfde9 100755
--- a/rewatch/tests/suffix.sh
+++ b/rewatch/tests/suffix.sh
@@ -31,7 +31,7 @@ fi
 # Count files with new extension
 file_count=$(find ./packages -name *.res.js | wc -l)
 
-if [ "$file_count" -eq 28 ];
+if [ "$file_count" -eq 36 ];
 then
   success "Found files with correct suffix"
 else