Foreign direct investment (FDI) is gradually declining due to political uncertainty, deteriorating business environment and high interest and tax rates in the country. In the first 10 months of the 2024-25 fiscal year (July-April), only $910 million in foreign direct investment came to Bangladesh, which is $360 million less than the same period of the last fiscal year.
According to Bangladesh Bank, in the first six months of the last fiscal year (July-December), where FDI came in, it has come down to $210 million this time. According to economists and businessmen, if this trend of investment continues, there will be a terrible negative impact on industrial production, employment and the overall economy.
In this regard, Bangladesh Textile Mills Association (BTMA) president Shawkat Aziz Russell told The Bangladesh Pratidin, “Can anyone say whether any Chinese garments have come to Bangladesh in the last eight months? Have they made spinning mills? have we a partner? No one wants to invest in this situation, where there is no gas, no electricity and the cost of doing business is increasing day by day."
Economists also agree with this reality. According to them, political uncertainty, deterioration of law and order, lack of investment-friendly environment, and policy instability in the economy are causing foreign investors to lose confidence.
When asked, CPD research director Khandaker Golam Moazzem said, "Businessmen were in uncertainty due to various reasons including ongoing political instability and lack of personal security. As a result, the normal pace of business has been disrupted. Although the situation has stabilized somewhat, there has been no significant progress in new investments, both domestic and foreign."
Policy Exchange Chairman Masrur Riaz believes, “Political uncertainty has been increasing since February. Its impact has directly affected investment. Although stability in the exchange rate has returned to some extent, there is still no positive progress in terms of inflation. The lack of foreign investment has led to a decline in industrial production and rising unemployment, posing a long-term threat to the country's youth and economic security.”
Economists say that without new investment, production will not increase, nor will employment. Analysts have suggested ensuring political stability, creating an investment-friendly environment, bringing tax and interest rates to reasonable levels, increasing industrial production capacity by ensuring energy supply, and reforming infrastructure and policy support systems.
They say that foreign investment is the main driving force of a country's economic growth. But currently, Bangladesh's investment situation is suffering from a crisis of confidence. It is not possible to overcome this crisis without political stability, neutral economic policies, and an investment-friendly environment. Now is the time to take constructive steps to restore investor confidence. Otherwise, a long-term collapse in both the industrial and labor sectors is inevitable.
(Translated by Lutful Hoque)
