A predictable, transparent, and stable business environment is an absolute prerequisite for attracting global investors to Bangladesh, especially in the highly competitive arena of foreign direct investment (FDI).
In today’s interconnected world, international business leaders look for countries where policies are consistent, processes are clear, and commitments are honoured without ambiguity.
If we aspire to position Bangladesh as a preferred global investment destination, we must urgently strengthen these pillars of predictability and reliability.
To remain competitive in the global marketplace, we need to identify and implement the right mechanisms that ensure policy consistency, institutional efficiency, and long-term clarity for businesses. Predictability is a powerful signal of trust, professionalism, and readiness for global partnership.
Our multinational company friends, those who are already operating in Bangladesh, are, in fact, our most credible ambassadors. Their satisfaction, success, and confidence in the local environment speak louder than any promotional campaign.
Thus, if they feel genuinely supported, respected, and well-served, they will naturally project Bangladesh as a dependable investment hub to the rest of the world.
Therefore, our immediate and most strategic responsibility is to make these companies confident in their operations here. By demonstrating committed, proactive, and problem-solving service attitudes, we not only help them grow but also unlock a powerful channel for attracting new investors.
In an era where global capital flows are increasingly mobile, for a country like Bangladesh, striving to accelerate economic growth, establishing a predictable, transparent and stable business environment is vital. Achieving that is not just about regulations, but about signalling to foreign investors that Bangladesh is serious about reliability, institutional integrity and long-term partnership.
FDI in 2024: A sluggish year
According to the latest data from United Nations Conference on Trade and Development (UNCTAD) and Bangladesh Bank, Bangladesh attracted a net $1.27 billion in foreign direct investment (FDI) in 2024 -- down about 13.2% from $1.464 bn in 2023.
The decline reflects weakening investor confidence, influenced by political turbulence, macroeconomic uncertainty, foreign exchange volatility, and institutional concerns.
Equity capital inflows, a key indicator of new investor commitments also fell, suggesting that established investors may still be present, but few new big-ticket projects were initiated.
By the end of 2024, the cumulative stock of FDI in Bangladesh reached roughly $18.30 bn.
But compared to many regional peers, the quantum of annual inflow remains modest and, as a share of gross fixed capital formation, fell below 1% last year.
This slump in FDI suggests that structural weaknesses, unpredictability in policy, institutional inefficiency, and concerns over stability continue to hamper Bangladesh’s attractiveness as an investment destination.
How Bangladesh compares
While Bangladesh struggled to attract fresh investment, several neighbouring and regional economies delivered strong FDI inflows in 2024.
Singapore, with $143.35 bn was the second-largest FDI recipient globally after the United States, and leading among Asean nations.
Indonesia with $24.2 bn had a 13 % increase in 2024, the second-highest in its history, reflecting rising investor confidence.
Vietnam with $20.17 bn had a 9 % growth over 2023, marking its third consecutive record year for FDI inflows.
Malaysia with approximately $11.26 bn had a 33% jump in 2024.
Thailand with around $10.58 bn was up 31% in 2024, as the country attracted investment driven by supply-chain diversification, digitalization, and greenfield manufacturing projects.
Cambodia had $4.395 bn representing a stable upward trend and reflecting growing investor interest in the country.
China’s $116.24 bn, though considerably lower than its 2023 peak, was still a large absolute amount reflecting global investor confidence in its scale and market.
India at $27.556 bn had a slight dip of 1.9% from 2023, yet the figure signals robust overall investor interest given India’s market potential and reforms.
It is instructive to consider that, while global FDI flows saw a second consecutive year of decline (especially after excluding conduit-based investments), the region of developing Asia, which includes many of these countries, remained the largest recipient of global FDI in 2024.
Thus, while Bangladesh’s FDI fell, many of its neighbours scaled up investment, often significantly, by leveraging stronger institutional frameworks, competitive incentives, and clearer long-term strategies.
What differentiates high-performing FDI recipients
The contrast between Bangladesh and higher-performing peers reveals some common enablers of FDI:
- Strong institutional credibility and consistency
Countries like Singapore, Vietnam, Indonesia, and Malaysia have maintained stable policy regimes, transparent regulatory frameworks, and efficient administrative procedures, which reduce investor uncertainty.
- Active economic reforms and supply-chain repositioning:
Many Southeast Asian economies have benefited from global efforts to de-risk supply chains, drawing firms seeking alternatives to China. This has translated into manufacturing, electronics, and digital-economy investments.
- Market scale, strategic positioning, and integration:
Large domestic markets (India, China, Indonesia) or strategic regional-gateway status (Singapore, Vietnam, Malaysia) attract investors seeking long-term scale and connectivity.
- Targeted sectoral focus:
Many inflows concentrated on manufacturing, processing, digital economy, and other high-growth sectors. In Vietnam, for example, more than 66 % of 2024 FDI went into processing and manufacturing.
These features send a strong signal of predictability, competitiveness, and long-term vision qualities that foreign multinational corporations value highly when deciding where to commit capital.
What this means for Bangladesh
The disappointing FDI performance of 2024 sends a clear warning: Bangladesh is losing ground in the fierce regional competition for global capital.
Without urgent policy-level and institutional reforms, the country risks marginalization, particularly as its neighbours escalate efforts to attract manufacturing and digital-economy investment.
Favourable rhetoric alone about market potential or political goodwill does not suffice. Instead, what global investors demand is predictability, institutional efficiency, and consistent regulatory frameworks.
Attracting more FDI, especially of the greenfield, high-value variety requires a determined push to strengthen governance, streamline bureaucracy, secure the rule of law, and ensure that commitments made to investors are honoured without delay or ambiguity.
In the meantime, Bangladesh must do better in marketing, not just its low labour costs, but also the reforms it is willing to implement: Faster approvals, clear land and power policies, trade facilitation, protection of investor rights, and a stable macroeconomic environment.
Our peers in Asia have shown that success in FDI is not just about geography or labour cost, it is fundamentally about building a reliable ecosystem that foreign investors can trust for the long haul.
If Bangladesh aspires to convert its vast potential into real economic transformation -- job creation, industrial growth, export diversification -- it must urgently embed predictability into its policy and institutional DNA.
As stated earlier, the multinational companies already operating in Bangladesh should not merely be treated as investors but as ambassadors. Their satisfaction, trust, and success will speak far louder globally than any promotional campaign.
If we get this right, a business-friendly Bangladesh built on integrity and institutional strength can truly alter its economic destiny and fulfil the aspirations of our people.
A Gafur is Former Executive Director, The American Chamber of Commerce in Bangladesh.
