Bangladesh lags far behind competing countries in FDI
Bangladesh is still far behind regional competitors in attracting foreign direct investment (FDI). The latest report shows that Vietnam, Indonesia and Cambodia are several times ahead of Bangladesh in terms of FDI stock.
The revelation was made by the UNCTAD’s “Investment Policy Review Implementation Report for Bangladesh” released on Monday in the capital.
According to the report, Bangladesh’s FDI stock stood at $1.83 billion in 2024. At the same time, Vietnam’s FDI stock was $24.9 billion, Indonesia’s $30.57 billion and Cambodia’s $5.27 b illion.
In comparison, Vietnam is about 13 times ahead of Bangladesh, Indonesia is 17 times ahead and Cambodia is almost three times ahead.
At the event, Bangladesh Investment Development Authority Executive chairman Ashik Chowdhury said that there has been no significant progress in FDI inflows compared to 2013. The investment rate as a percentage of GDP has stagnated, but has actually decreased slightly.
He said that although there are various plans and policy proposals to increase investment, they are not being implemented effectively. To get out of this situation, we need to speed up implementation along with adopting policies.
The report said that in 2019, FDI inflows in Bangladesh were more than $1.8 billion. However, in 2024, it decreased by almost one-third.
As a result, investment inflows have decreased compared to the period of the Covid-19 pandemic. Although the total FDI stock remained stable at around $18 billion during this period.
Multiple structural and macroeconomic factors have been identified behind the decline in FDI. Since 2021, the depreciation of the Taka against the US dollar by about 36per cent and the foreign exchange crisis have increased import costs.
Delays in fuel imports have affected industrial production, resulting in increased costs and uncertainty for investors.
In addition, political and social unrest in 2023-24, factory closures in the ready-made garment sector, and worker dissatisfaction have also affected the investment climate.
At the same time, pressure has also increased in the macroeconomic environment. Between 2019 and 2024, GDP growth fell from 8per cent to 4per cent . Inflation increased from 5.5per cent to almost 10per cent . This has weakened investor confidence.
However, preliminary data for 2025 suggests that the situation is improving somewhat. FDI inflows through reinvested earnings and inter-institutional loans have started to increase. Inflationary pressures are also decreasing somewhat.
The report quoted the IMF as saying that the investment situation can return to normal once macroeconomic and political stability returns.
UNDP Bangladesh deputy resident representative Sonali Dayaratne highlighted three main things to do to increase investment.
First, reform plans need to be moved from planning to implementation and a transparent and predictable environment for investors must be ensured.
Second, the capacity of state institutions to formulate policies as well as implement, coordinate, and monitor must be increased. Third, investment policies must be such that they ensure inclusive development and are not limited to attracting private capital.
