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Although Bangladesh has achieved remarkable progress in economic growth, poverty reduction, and human development over the last two decades, at least five key constraints have affected its investment scenario, a World Bank (WB) Group report said.
"The top five investment obstacles in the country are electricity supply, access to finance, corruption, informal sector, and tax rates. These are the key reasons behind the poor business climate in Bangladesh," the report titled "Bangladesh: Country Private Sector Diagnostics (CPSD)" said.
The WB Group prepared the report based on the investment scenario and business climate in Bangladesh's four key sectors - ready-made garment (RMG), paint and dyes, housing for middle-income households, and digital financial services.
The report was presented on Tuesday by Martin Holtmann, International Finance Corporation's (IFC) country representative for Bangladesh, and his team at an event on the sidelines of the Bangladesh Investment Summit 2025 organised by Bangladesh Investment Development Authority (BIDA) at InterContinental Dhaka.
Lutfey Siddiqi, special envoy to the chief adviser, BIDA Executive Chairman Chowdhury Ashik Mahmud Bin Harun, BRAC Bank Managing Director Selim RF Hussain, bKash Chief Executive Officer Kamal Quadir, World Bank Interim Country Director for Bangladesh Gayle Martin, and others participated in the discussion on the report.
The report said, "The interim government is working to restore macroeconomic stability and protect jobs and development gains."
Despite current truculence, Bangladesh's underlying fundamentals are strong, it said.
To encourage private sector investment, the country needs to tackle several obstacles, including the top five ones, to its business environment, the report further said.
"Corruption is a major impediment to doing business for firms operating in Bangladesh. It needs to overhaul the customs procedure and tariff," it said.
When asked, BIDA Executive Chairman Ashik said they are working to overcome the challenges reflected in the report in attracting businesses and investors across the globe.
"We are working closely with responsible government agencies to improve services to the investors. And we are trying to inform our actions and plans to improve the business climate in the country," he said.
The WB Group report also hailed Bangladesh's population dividend, which could be a big opportunity for the country to attract more investment, he added.
The report showed that with targeted policy actions, Bangladesh could create 2.37 million jobs annually in the construction industry by supporting the construction of new housing units, generate over 664,000 formal jobs by expanding domestic paint and dye production, and create between 96,000 and 460,000 new jobs through digital financial services reforms.
It outlined specific, near-term steps that the government can take to attract investment in these sectors, generate jobs, remain competitive after graduating from the least developed country (LDC) status, and strengthen the domestic economy.
Some of the specific actions include upgrading production in the RMG sector to comply with the European Union (EU) requirements; focusing on greening, sustainability, and labour standards; and strengthening the regulatory framework for digital mapping and property registration to improve access to mortgages by ensuring properties are valued at market rates rather than outdated tax-assessed values.
Other actions include digitising customs classifications on imported inputs for paint and dyes to expedite clearance; enabling businesses to more easily comply with the customs regulations; and establishing protocols to enable mobile financial services for merchant wallets with higher transaction limits to facilitate wholesale transactions and make digital payments more accessible for businesses.
"The World Bank Group's findings offer valuable guidance for shaping policies and strategies that promote private sector-led growth and establish the institutional foundations essential for sustainable economic progress in Bangladesh," said Ashik.
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