The Bangladesh government is determined to build a US$1 trillion economy by 2034, and Prime Minister Tarique Rahman has invited foreign investors to partner in the country's economic transformation.
Highlighting Bangladesh's strengths, the Prime Minister emphasised that the country's large and expanding domestic consumer market, sizeable young workforce, and strategic geographical location offer significant opportunities for investors. He also noted that the government is modernising the regulatory framework by strengthening investor protection, improving the legal system for business dispute resolution, simplifying tax and VAT administration, and enhancing the overall ease of doing business.
The Prime Minister further reiterated that both foreign and domestic investors are being offered attractive incentive packages for investments in priority sectors, including renewable energy, electronics, digital services, pharmaceuticals, agro-processing, advanced textiles, healthcare, and logistics.
Economists believe that Bangladesh will require substantial domestic and foreign investment to achieve the government's ambitious economic targets. According to Rupali Chowdhury, President of the Foreign Investors' Chamber of Commerce and Industry (FICCI), quality foreign direct investment (FDI) will be critical for sustaining economic growth, generating employment, and strengthening Bangladesh's global competitiveness.
However, Bangladesh continues to lag behind many of its regional competitors in attracting foreign investment. Published reports indicate that the country received only US$1.78 billion in FDI during the last fiscal year, compared with US$38.89 billion in India, US$21.44 billion in Indonesia, US$20.35 billion in Vietnam, US$5.10 billion in Cambodia, and US$1.85 billion in Pakistan.
FICCI has identified nine major barriers that foreign investors commonly encounter throughout the investment lifecycle-from market entry and business establishment to operations and eventual exit. According to FICCI officials, these challenges stem from an "interconnected web of obstacles."
Among the most significant impediments are lengthy approval processes, port inefficiencies, and chronic natural gas shortages. Business approvals often take between six and twelve months, while land title transfers typically require around 260 days. Shipping containers remain at Chattogram Port for eight to ten days between unloading and exit, compared with only three to four days in Vietnam.
The country's persistent natural gas shortage has become one of the most serious constraints on industrial expansion. Daily demand is estimated at 3,800-4,000 million cubic feet (mmcfd), whereas supply remains limited to approximately 2,500-2,800 mmcfd. The situation has worsened following a technical failure at the Moheshkhali Floating Storage and Regasification Unit (FSRU), which has removed an additional 450 mmcfd from the national gas grid.
The resulting gas shortages have led to low gas pressure, power disruptions, lengthy queues at CNG filling stations, production interruptions across industries, idle imported machinery, and rising operational risks for businesses.
Trust Bank Managing Director Ahsan Zaman Chowdhury estimates that the gas crisis has left Tk. 7,000-8,000 crore in stranded industrial loans and warns that the prolonged energy shortage could eventually affect the banking sector.
Similarly, Mostofa Kamal, Chairman of MGI Group, argues that the gas crisis, combined with administrative bottlenecks, is discouraging new investment while threatening the viability of existing industries. He noted that delayed gas connections and inadequate supply have stalled project implementation despite nearly US$600 million in financing from the International Finance Corporation (IFC), the World Bank, and other international lenders.
Titas Gas Transmission and Distribution PLC Managing Director Shahnewaz Parvez has acknowledged that the company cannot provide new industrial gas connections until the national gas supply situation improves.
The Bangladesh Investment Development Authority (BIDA) also identifies energy scarcity as the single largest deterrent to both domestic and foreign investment. According to Simeen Rahman, CEO of Transcom Group, modern manufacturing requires not only sufficient energy availability but also reliable and quality power supply.
FICCI further points to weaknesses in Bangladesh's financial sector. Investors continue to face challenges arising from banking sector fragility, where non-performing loans have reached 32.26 percent.
Institutional coordination remains another major obstacle. Investors often need approvals from 23 separate government agencies, making the investment process slow, uncertain, and burdened by excessive bureaucracy and red tape.
The chamber also highlights a significant skills and productivity gap. Bangladesh ranks 96th out of 100 countries on the relevant global productivity index, undermining its competitiveness as an investment destination. Furthermore, although the statutory corporate tax rate stands at 27.5 per cent, FICCI estimates that the effective tax burden on foreign investment companies can rise to 43-48 per cent, significantly reducing investment attractiveness.
Beyond these structural challenges, Bangladesh also suffers from a perception problem that negatively influences investor confidence and investment decisions.
Nevertheless, FICCI believes these challenges are far from insurmountable. With focused, sequenced, and sustained reforms, Bangladesh can transform its existing constraints into competitive advantages and establish itself as a credible destination for quality foreign investment.
Achieving the government's vision of a US$1 trillion economy by 2034 will depend not only on ambitious policy commitments but also on the successful implementation of reforms that improve energy security, streamline regulations, strengthen institutions, and restore investor confidence. If these challenges are effectively addressed, Bangladesh will be far better positioned to attract the scale of domestic and foreign investment necessary to sustain long-term economic growth.
Mushfiqur Rahman is a mining engineer. He writes on energy and environment issues.
mushfiq41@yahoo.com