TDS Desk:

The Bangladesh Investment Development Authority, or BIDA, serves as the main entry point for domestic and foreign investors, handling all mandatory registrations. The latest Bangladesh Bureau of Statistics figures put gross domestic product for the current fiscal year at BDT 55 trillion. Yet with an economy of BDT 50 to 55 trillion, registered investment proposals totalled only BDT 1 to 1.5 trillion, or barely 2 to 3 percent of GDP. Delays in service connections, energy shortages, and wider logistical constraints mean actual investment often amounts to no more than half that figure.

After the political transition of August 5, 2024, an interim government took office. Amid concerns and a crisis of confidence in the investment climate, registration fell by nearly 58 percent in FY 2024–25.

During its tenure, the interim government organised a series of seminars and investment summits at home and abroad to attract investment, with BIDA publicly describing the investor response as positive. That enthusiasm, however, has yet to translate into actual investment.

In FY 2024–25, private sector investment proposals registered with BIDA amounted to BDT 660.57 billion, down 58 percent from a year earlier, while the number of proposed projects also declined. Analysts say the interim administration should have focused on clearing structural investment bottlenecks rather than staging promotional events or banking on a swift rebound. “The government’s priority ought to have been working on solutions to the core obstacles for attracting investment, rather than beating its own drum or expecting the situation to change overnight,” one observer said.

Registering an investment is only the first step. Investors must still secure approvals from multiple government agencies, arrange financing, and build infrastructure before a project can come on stream. Registration serves as a key gauge of investor intent. Recent data point to a sharp loss of momentum on that front. The Economic Review 2025 shows that in FY 2024–25, a total of 970 projects valued at BDT 660.57 billion were registered, compared with 1,064 projects worth BDT 1.56 trillion in 2023–24, a 58 percent drop in the value of registered proposals in just one year.

Registered investment proposals in Bangladesh fell in the last fiscal year to below even pandemic-era levels. Back in FY 2019–20, domestic and foreign investment proposals totalling BDT 1.05 trillion were registered across 905 projects, a 12 percent decline from the year prior. The following FY 2020–21, during the COVID-19 period, saw the number of projects rising to 1,095. In value terms, however, investment proposal registration declined by about 38 percent to BDT 655.66 billion. Both the number of projects and the volume of investment registration increased in the subsequent 2021–22 fiscal year, with investment proposals worth BDT 1.41 trillion registered across 1,124 projects. In 2022–23, investment proposals totalling BDT 1.15 trillion were registered across 1,016 projects. That fiscal year saw investment proposal registration falling by about 19 percent.

Domestic investors put forward 809 projects worth BDT 520.35 billion in FY 2024-25, making up most of the year’s total registered investment proposals. Services accounted for 32 percent of these local proposals, followed by chemical industries at 17 percent, textiles at 14 percent, and engineering at 10 percent.

Foreign investors registered 161 projects in 2024-25, with a combined value of BDT 140.22 billion. The chemical sector dominated this foreign interest, taking 55 percent of the total, while engineering followed at 25 percent; services and textiles accounted for only 8 percent and 5 percent, respectively.

Foreign direct investment comprises three components, with reinvested earnings and intra-company loans usually accounting for the largest share. But the clearest indicator of foreign investment is equity capital, an area where Bangladesh has struggled to maintain steady inflows. Reflecting the slide in registered proposals, equity capital inflows fell to $554.77 million in the last fiscal year, down about 17 percent from the year before.

China remains one of the largest sources of foreign direct investment stock in Bangladesh. The interim government’s chief adviser travelled to Beijing last March, ahead of a major investment summit in Dhaka the following month that drew substantial participation from Chinese investors. In July, BIDA’s executive chairman led a senior delegation to Shanghai for the Bangladesh–China Investment Seminar 2025. There, Chowdhury Ashik called on Chinese investors to channel capital into Bangladesh’s power, textile, and IT sectors, prompting visible interest and verbal pledges. Those efforts, however, have translated into few formal commitments. Registered investment proposals from China plunged 89 percent in FY 2024-25, while net FDI inflows from the country fell by 3.3 percent.

The country-wise profile of registered investment has also shifted sharply. China, Japan, Singapore, Saudi Arabia, and Germany topped the list in 2023–24; a year later, only China remained in the top five. South Korea became the largest source of registered proposals in 2024–25, amounting to BDT 18.2 billion. China followed with BDT 6.2 billion, down steeply from BDT 57.3 billion the year before. Proposals from the United States stood at BDT 4.1 billion, with the UAE following at BDT 3.1 billion and Hong Kong at BDT 2.2 billion.

Reflecting on the broader slump, Rupali Haque Chowdhury, president of the Foreign Investors’ Chamber of Commerce & Industry and managing director of Berger Paints Bangladesh, told journalists, “The depreciation of the currency and high inflation towards the end of 2023 had a severe impact on everyone’s business. On top of that, the presence of an interim government in the country can also discourage foreign investors. That’s because they always prefer a stable government. Compared with competing countries, it’s important what facilities we offer foreign investors. Are our incentives more attractive than others? Efforts must be made to attract investment in sectors that will cater not only to domestic consumption but also to exports. Setting up industries within economic zones requires paying higher prices for gas and electricity. In response to our long-standing demand, the government established economic zones. But the associated facilities and benefits that were supposed to come with them haven’t been provided. BIDA’s one-stop solution hasn’t been realised. These are the reasons why investors are not showing interest.”

Both investment and new investment proposals from many of the countries visited by representatives of the current interim government to attract investment have declined. After taking office as BIDA’s executive chairman in September 2024, Chowdhury Ashik Mahmud Bin Harun travelled to the United States, Japan, the United Kingdom, Qatar, China, Malaysia, Turkey, and South Korea by last October. Four of those trips — to the U.S. in January last year, Japan in February, the U.K. in March, and Qatar in April as part of the chief adviser’s delegation — fell within the 2024–25 fiscal year. The outcomes were stark. Qatar generated no fresh investment, net FDI from the U.K. shrank by 40.71 percent, the United States saw more capital flow out than in. Additionally, registered investment proposals from both Japan and the U.K. fell compared to FY 2023-24. Qatar, notably, recorded no new proposals at all.

The slide, said Zahid Hussain, a former lead economist at the World Bank’s Dhaka office, was hardly a surprise. “The drop in investment proposal registrations last financial year was expected,” he told journalists. “Bangladesh was undergoing a transitional process. On what assurance would investors show interest in such a situation?”

He was critical of how the interim administration communicated its message regarding the investment climate. “If the BIDA executive chairman and others had spoken with more grounding, people would have thought they were different from the rest. The current government is not a political one that needs to beat its own drum. Instead, it would have been better if the government had highlighted where the problems and obstacles lie in attracting investment.”

He further said, “White must be presented as white, black as black, and what is opaque (grey) should be shown as such. Why, then, is there a tendency to selectively present a favourable picture? If that picture reflected reality, it would be fine. There was no need to paint a picture based solely on hope and aspiration.”

Business leaders point to a convergence of domestic pressures that has stalled investment. Record-high interest rates have pushed private sector credit growth to an all-time low. At the same time, high inflation has squeezed consumers’ purchasing power, dragging down commercial activity. Persistent energy shortages add to the strain. Confronted with this combination, many investors, they say, are now waiting on the newly elected government.

Kamran Tanvirur Rahman, president of the Metropolitan Chamber of Commerce & Industry, told journalists: “There are discussions about investment in many circles. But the reality is that everyone is waiting for the election. It’s also true that investment won’t automatically flow in once the election is held. Everyone will watch what measures the government takes. The most significant issue is that the interest rates banks are offering are far too high for investment. Alongside that, another major concern is the shortage of energy supply. Any investor would think ten times before committing an investment without assurance on this. We all want investment to come. But right now, everyone is waiting for the election.”

BIDA says that the change in the volume of investment proposals submitted in FY 2024–25 compared with 2023–24 cannot simply be seen as a quantitative decline. Rather, in BIDA’s assessment, it reflects a qualitative and pragmatic adjustment in the review and screening process, aligning proposals with real investment capacity. About 52 percent of the foreign investment proposals submitted in FY 2023–24 were ultimately realised. By contrast, the authority says FY 2024–25 saw implemented investment reaching roughly 144 percent of the proposed amount. This indicates that the proposals during this period were more realistic, prepared, and implementable, according to BIDA.

Since the last fiscal year, BIDA has followed a more structured and pragmatic verification process for accepting investment proposals. According to BIDA, although the total proposed amount is lower, it provides a more accurate reflection of real investment capacity. BIDA’s current focus is not merely on the volume of proposals but on facilitating project implementation, approvals, land allocation, and financial closure from the existing investment pipeline, as well as advancing reinvestment and expansion activities of existing investors.

Nahian Rahman Rachi, an executive member of BIDA, told journalists: “The investment proposals for fiscal year 2024–25 represent a realistic reflection, aligned with actual investment capacity, implementation progress, and genuine FDI flows. Through this change, BIDA has moved towards securing real investment based on more practical proposals. Recent FDI trends support this. The results of this systematic change are also evident in FY 2025–26. Notably, in July–September of the current fiscal year, net FDI rose by about 200 percent compared with the same period last year. This reflects on-the-ground investment realities and the continued improvement of investor confidence.”

Source: Bonik Barta