Bangladesh continues to trail behind regional competitors in attracting foreign direct investment (FDI), according to a recent report by the United Nations Conference on Trade and Development.
While Bangladesh outperforms the average least developed country (LDC) in terms of total FDI inflows, the report highlights a significant gap when measured against key indicators such as population size, economic scale, and gross fixed capital formation. Currently, FDI accounts for just 1% of gross fixed capital formation and only 0.4% of the country’s GDP.
The findings were presented at the Bangladesh Investment Development Authority (BIDA), revealing that Bangladesh attracted an average of $1.5 billion in FDI annually between 2019 and 2024—well below regional peers such as Vietnam and Indonesia.
The report also points to a declining trend in FDI inflows since 2019, despite relatively stable overall FDI stock. Analysts attribute this slowdown to a range of macroeconomic challenges, including currency depreciation, foreign exchange shortages, energy supply disruptions, and rising inflation.
Investor sentiment has also been affected by political uncertainty and labour unrest in key sectors such as the garment industry, which remains central to Bangladesh’s export economy.
Although early data for 2025 suggest a slight recovery in FDI inflows, much of the increase has been driven by reinvested earnings rather than new greenfield investments—indicating limited fresh capital entering the economy.
To reverse the trend, UNCTAD has recommended a series of structural reforms, including the introduction of a modern investment law, streamlined regulatory procedures, and stronger investment facilitation mechanisms.
The report further emphasises the need to strengthen institutional capacity and align policies with global standards to attract more diversified and sustainable foreign investment.
Experts believe that without significant policy adjustments and improvements in the business environment, Bangladesh may struggle to compete with regional economies that are rapidly enhancing their investment ecosystems.
