As the 13th national parliamentary election was held peacefully on Thursday (February 12). Businesspeople and industrialists are now looking to the new government for how quickly it ensures policy stability and law and order and resolves the energy crisis.
With a clear majority, the BNP has the opportunity to form the government. The country is therefore set to have a fully elected government soon—an important signal for the economy.
Over the past year and a half, political uncertainty, high inflation, elevated bank lending rates, and energy shortages caused stagnation in private investment. Private sector credit growth fell to single digits, and registrations of domestic and foreign investment proposals declined sharply.
According to industrialists, the election has ended at least one major uncertainty. What is now required is swift policy clarity and close engagement with stakeholders following a smooth transfer of power.
Message of confidence
Business leaders say political stability plays a major role in investment decisions. There is now hope that longstanding complaints over policy uncertainty, administrative complexities, and slow foreign investment will be addressed by the new government.
Economists believe quick policy decisions may follow to revive industry, exports, and infrastructure development. A stable political framework also sends an important message to foreign investors.
Former director of the Bangladesh Garment Manufacturers and Exporters Association, Mahiuddin Rubel, told Dhaka Tribune that businesspeople have long awaited such an environment, ensuring policy continuity, rule of law, and administrative transparency.
“We are not just somewhat hopeful; we are clearly optimistic. The stagnation and uncertainty that existed in areas such as investment, trade, and law and order are expected to improve. Investors were observing the situation cautiously. That stagnation will now ease, and business activity will gain new momentum.”
To enhance Bangladesh’s global competitiveness, policy continuity, supply chain stability, and an investment-friendly environment are essential, Rubel added.
Dhaka Chamber of Commerce and Industry (DCCI) president Taskin Ahmed said the three main obstacles to business at present are weak law and order, instability in the banking sector, and the energy crisis.
According to him, alongside immediate crises, structural issues such as weak logistics, corruption in the National Board of Revenue, tax and VAT complexities, and infrastructure limitations require coordinated and long-term measures to ensure sustainable growth.
When the interim government took office in August 2024, inflation was above 11%. To curb it, Bangladesh Bank raised the policy rate to 10%, pushing lending rates to around 15%.
Despite this, inflation control has not seen significant success over the past year and a half. In January, inflation stood at 8.58% and has been rising since October. The interim government had hoped to reduce it to 6.5%.
Business leaders believe combining government policy with business participation can ease inflationary pressure and restore economic dynamism.
Expectations
Analysts say prioritizing banking reform, transparency in revenue management, and export diversification could accelerate economic momentum.
Prof. Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD), said the absence of an elected government had led to stagnation in investment. Private credit growth was declining, imports of capital machinery were falling, and industrialization slowed, reducing production and negatively affecting employment.
He told Dhaka Tribune that political uncertainty has eased, sending a positive signal for the economy. Business activity may gradually increase, and GDP growth could turn upward.
However, he cautioned that the mere formation of an elected government will not automatically increase investment and employment. The new government must understand existing structural problems and undertake effective policy and reform measures. Improving ease of doing business, reducing bribery and corruption, and cutting unnecessary costs are essential to enhance the investment climate.
After two decades of rule under ousted prime minister Sheikh Hasina, the banking sector faces unprecedented challenges. Central bank audits indicate that more than Tk500,000 crore in assets were looted from the sector. The default loan rate has reached nearly 35%, and over half of public and private banks are burdened with irregularities and corruption.
Syed Mahbubur Rahman, managing director of Mutual Trust Bank (MTB), said he hopes the elected government will attempt change, but discipline has yet to return to the banking sector, and banking law amendments have not been made.
Though the situation is difficult, positive intent could bring improvements. He noted that Tk14,000–Tk18,000 crore remains unpaid in the energy sector. Failure to clear these dues could create electricity shortages during Ramadan and even in summer.
Investment conditions during the interim government deteriorated sharply. Private sector credit growth was limited to 6%.
Over the past 18 months, a drought in domestic and foreign investment has contracted employment, limited new jobs, and forced many industries to suspend operations.
According to the Bangladesh Investment Development Authority, in FY25 registrations of domestic and foreign investment proposals declined by 58%, actual foreign investment fell by 57%, and new foreign investment dropped by 16%.