Bangladesh remains significantly behind regional competitors such as Vietnam, Cambodia and Indonesia in attracting foreign direct investment (FDI), according to a new report released by United Nations Conference on Trade and Development (UNCTAD).
The findings were unveiled in Dhaka on Monday during the launch of the “Investment Policy Review Implementation Report for Bangladesh.”
The report shows that in 2024, Bangladesh’s total FDI stock stood at $18.29 billion, far behind its regional peers.
In comparison, Vietnam’s FDI stock reached $249.14 billion—around 13 times higher—while Indonesia’s stood at $305.66 billion, nearly 17 times greater. Cambodia, too, surpassed Bangladesh with $52.66 billion in FDI stock, roughly three times higher.
The relatively low FDI stock in Bangladesh reflects weak inflows in recent years. Although the country received more than $1.8 billion in FDI in 2019, inflows declined by nearly one-third by 2024, falling below levels seen even during the early phase of the COVID-19 pandemic.
Despite this, overall FDI stock remained largely stable at around $18 billion over the period.
Speaking at the programme, Ashik Chowdhury, executive chairman of the Bangladesh Investment Development Authority, said Bangladesh has made limited progress in attracting investment over the past decade.
“Since 2013, we have not moved significantly forward. Investment as a share of GDP has remained stagnant and, in some cases, declined,” he noted, adding that while numerous plans and policy reports are produced, implementation remains a major challenge.
He stressed the need for a shift in approach, emphasizing stronger execution and coordination to turn policy into results.
The report identified several structural and macroeconomic factors behind the slowdown in investment. Since 2021, the Bangladeshi taka has depreciated by around 36 percent against the US dollar, while foreign exchange shortages have delayed import payments.
Disruptions in energy imports have also affected industrial supply chains, increasing operational costs and uncertainty for investors.
In addition, political and social developments in 2023–24, including factory closures and labour unrest in the country’s key export-oriented ready-made garment sector, contributed to a less favorable investment climate.
Macroeconomic pressures further compounded the situation. Bangladesh’s GDP growth slowed from 8 percent in 2019 to around 4 percent in 2024, while inflation rose from 5.5 percent to nearly 10 percent, undermining investor confidence.
However, early indicators for 2025 suggest a modest recovery. FDI inflows have begun to pick up, driven by reinvested earnings and intra-company loans.
The report, citing the International Monetary Fund, noted that a gradual return of macroeconomic and political stability could help restore investment momentum.
Referring to UNCTAD’s recommendations, Ashik Chowdhury said Bangladesh is now entering a “second phase” of reforms, which must focus on targeted planning, effective implementation, and coordinated institutional efforts.
At the event, Sonali Dayaratne, deputy resident representative of United Nations Development Programme in Bangladesh, outlined three priority actions to improve the investment climate.
She emphasized the need to move beyond reform commitments to actual implementation, ensuring transparency, predictability, and stronger coordination among government agencies.
She also highlighted the importance of building institutional capacity for planning, execution, and monitoring of reforms, and aligning investment policies with inclusive development goals.
“Investment is not just about attracting private capital,” she said, underscoring the broader role of policy in ensuring sustainable and inclusive economic growth.