Despite its strategic location, large domestic market and globally competitive manufacturing sector, Bangladesh continues to struggle to attract significant foreign direct investment (FDI) compared to many of its regional peers. According to the Foreign Investors’ Chamber of Commerce & Industry (FICCI), the country attracted only $1.78 billion in FDI, far behind India, Vietnam and Indonesia.
In its report, “FDI for a New Bangladesh: Roadmap for a $15 Billion Vision,” FICCI identifies nine major structural barriers that discourage foreign investors throughout the investment cycle—from business entry and operation to expansion and exit.
One of the biggest challenges is the lengthy and complex regulatory approval process, with investors often waiting several months, and sometimes up to a year, to obtain essential business approvals. The absence of a truly effective one-stop service forces investors to navigate multiple government agencies, increasing both time and compliance costs.
Policy inconsistency and regulatory uncertainty further weaken investor confidence. Frequent changes in policies and the lack of predictable implementation make long-term investment planning difficult for multinational companies.
The report also highlights logistics and infrastructure bottlenecks. Congestion at ports, inadequate transport infrastructure and persistent shortages of gas and electricity increase production costs and disrupt supply chains. Bangladesh’s port turnaround time remains significantly longer than that of competing investment destinations in South and Southeast Asia.
Another major concern is the fragility of the financial sector. Banking sector challenges, limited access to financing, foreign exchange constraints and complexities in repatriating profits create additional uncertainty for international investors.
FICCI also points to a complex tax regime, fragmented institutional coordination, shortages of highly skilled human resources and relatively low labour productivity as factors reducing the country’s attractiveness for high-value investments.
Finally, reputational challenges—including perceptions regarding governance, ease of doing business and dispute resolution—continue to influence investment decisions despite Bangladesh’s strong export performance and growing industrial base.
To achieve its ambition of significantly increasing FDI inflows, experts suggest Bangladesh should accelerate regulatory reforms, simplify investment procedures, strengthen infrastructure, ensure uninterrupted energy supply, improve the financial sector and establish a more predictable, transparent and investor-friendly business environment. Addressing these structural challenges will be critical for positioning Bangladesh as a preferred destination for global investors and supporting sustainable industrial growth.
