National Election: Political stability, rebuilding confidence in economy imperative
Staff Reporter :
The national election scheduled to be held in February can play an important role in restoring confidence in the country’s economy.
Ahead of the election, entrepreneurs, investors, and business leaders are envisioning a prosperous Bangladesh. At this moment, domestic and foreign investment is crucial for economic growth and development, and political stability is indispensable for that.
When political uncertainty prevails, concerns and hesitation arise among domestic and foreign investors. They cannot be sure how secure their investments will be or whether there will be sudden changes in government policies in the future.
Political violence or the fear of a change in government threatens a country’s business-friendly environment. Investors generally seek stability and policy continuity so that they can undertake long-term planning and implement projects.
Therefore, it is the government’s responsibility to build a credible, transparent, and neutral administrative and legal framework where businesses can operate in a secure environment.
In this context, recently speaking to the media were Dr. Debapriya Bhattacharya, Distinguished Fellow of CPD; Sakif Shamim, Managing Director of Labaid Cancer Hospital & Super Specialty Centre and an economic analyst; and Masrur Arefin, Managing Director of City Bank PLC and Chairman of the Association of Bankers Bangladesh.
According to them, investors have lost confidence under the current situation. Domestic investment is also in a fragile state, leading to reduced industrial production. Business activities have slowed, and instead of job creation, unemployment is rising. There is no alternative to restoring investor confidence to overcome this situation.
Many expect that once an elected government comes to power, long-term policy direction and political stability will return, encouraging entrepreneurs to focus on investment. In today’s Bangladesh, the economy has become a priority for everyone, not just politicians. Despite the crisis, the economy has an inherent capacity to rebound.
To attract foreign investment, political stability must be accompanied by good governance, transparency, and accountability at the institutional level.
In this regard, Dr. Debapriya Bhattacharya said that in some areas there is a lack of internal coordination within the government, which has resulted in weak decisiveness in investment- and business-related decision-making. This indicates that without political and administrative stability, economic decisions cannot be implemented effectively.
He noted that not only voters but also politicians are currently feeling insecure—there is concern about possible violence or attacks in the context of the upcoming election, which raises serious questions about political stability. Such concerns create uncertainty in the political environment and can negatively affect investment and economic decision-making.
However, he emphasized that a politically stable government is necessary to boost business and investment. Criticizing the ousted Awami League government, he said that over the past 17 years, looting, mismanagement, and money laundering in the banking sector have broken the backbone of the country’s economy.
He expressed hope that many of the crises would be resolved if the recommendations of the Economic Reform Commission are implemented.
Sakif Shamim said that the national election scheduled for February could play an important role in restoring confidence in the economy.
If political stability emerges around the election, domestic and foreign investors may once again become interested in investing. As a result, despite various challenges, there is a possibility for the economy to rebound in the new year.
Masrur Arefin said that the first and foremost condition for investment is political stability. Businesspeople make long-term plans, so political uncertainty hinders new investment. According to him, a stable environment also reassures foreign investors.
If stability does not return, businesses remain hesitant about making large investments. A market-based interest rate is reasonable for the banking sector. Banks need to become more proactive in increasing remittances through legal channels. He added that with structural reforms, the economy can recover quickly. More than money or capital, what investment needs most is an environment of trust. If there is political and policy certainty, investment will come.
Currently, Bangladesh’s total investment-to-GDP ratio has fallen below 25 percent, whereas a minimum of 30 percent is required for sustainable growth. A major reason for this gap is the lack of investor confidence.
Sakif Shamim further said that Bangladesh’s economy is currently going through a sensitive period. On one hand, high inflation has increased the cost of living for ordinary people; on the other hand, pressure on foreign exchange reserves, rising import costs, and long-standing structural weaknesses in the banking sector have slowed economic activity. Added to this are investment stagnation and concerns over employment. However, the most influential underlying factor behind these visible problems is the crisis of confidence—and this crisis is deeply and multidimensionally linked to political uncertainty.
In this context, viewing the February national election merely as a routine constitutional process would underestimate reality. He believes this election represents a crucial turning point for the economy. Ultimately, the economy depends not only on numbers and policies, but also on expectations, confidence, and stability. When the political environment is unstable, confidence cannot be built, and without confidence, it becomes difficult to keep the economic engine running. This has been clearly reflected in recent years.
A large portion of domestic investors have currently postponed decisions on new projects. They want to expand production and create jobs, but uncertainty about the political future and policy continuity is holding them back. At the same time, foreign investors are also adopting a wait-and-see approach. Alongside global conditions, the country’s internal political realities have contributed to foreign direct investment flows not increasing as expected.
A participatory, peaceful, and credible national election could change this situation. A stable post-election political environment would send a clear message to investors that Bangladesh is returning to a path of predictability. This could encourage domestic entrepreneurs to take new risks and motivate foreign investors to move forward with medium- and long-term plans.
After the election, momentum may also return to the government’s policy-making process. Governments typically refrain from taking tough decisions before elections, but in the post-election period there is an opportunity to implement important measures such as banking sector reform, controlling non-performing loans, modernizing the tax system, restructuring subsidies in the energy and power sectors, and restoring discipline in the foreign exchange market. Although these reforms have long been discussed, their implementation has often been delayed due to a lack of political stability.
However, it would be unrealistic to assume that the election alone will solve all problems. If the election leads to violence, conflict, or prolonged instability, the expected positive economic impact will not materialize. Instead, market anxiety may increase, and consumer and investor confidence may weaken further. Therefore, ensuring the quality, credibility, and peaceful conduct of the election is extremely important from an economic perspective as well.
Another critical issue is that post-election political stability must not be short-lived. Without an effective parliament, policy continuity, and institutional strengthening over the long term, economic recovery will not be sustainable. Investors make decisions by considering not only today’s situation but also the outlook for the next five to ten years.
Considering all aspects, Sakif Shamim believes that the February national election is a kind of “confidence test” for Bangladesh’s economy. Despite multiple challenges, the economy has the capacity to recover. If political stability is ensured, if there is determination in policy reforms, and if the crisis of confidence is overcome, there is a real possibility for the economy to rebound in the new year. What is needed now is a collective sense of responsibility—because this election will determine not only the country’s political future but also its economic trajectory.
In addition, to increase industrial production, emphasis should be placed on AI technology, expanding energy capacity, building a safe food system, ensuring food security, strengthening food and medical research, fertilizer production, increasing policy support for the health sector, providing a 10-year tax holiday for the health sector, reducing bank interest rates to below 10 percent, allowing re-agent imports under duty- and VAT-free facilities, and launching Health City projects for the health sector.