[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Govt focuses on 4 priorities to ensure business-friendly environment: BIDA chief

Executive Chairman of Bangladesh Investment Development Authority (BIDA) and Bangladesh Economic Zones Authority (BEZA) Chowdhury Ashik Mahmud Bin Harun has said the government is focusing on four priorities to ensure business-friendly environment. "BIDA and BEZA are focusing on four main prioriti

thefinancialexpress.com.bd

Govt focuses on 4 priorities to ensure business-friendly environment: BIDA chief

BSS
Published :
Jun 21, 2025 16:34
Updated :
Jun 21, 2025 16:34

Executive Chairman of Bangladesh Investment Development Authority (BIDA) and Bangladesh Economic Zones Authority (BEZA) Chowdhury Ashik Mahmud Bin Harun has said the government is focusing on four priorities to ensure business-friendly environment.

"BIDA and BEZA are focusing on four main priorities: fast-tracking high-impact investment projects, expanding and improving One-Stop Services, solving problems faced by investors, and creating a strong pipeline of major investments," he said.

Ashik Chowdhury said this while talking to BSS in an interview at the Investment Building in the city.

The BIDA chief said the government's goal is to continue the momentum, notwithstanding the fact that this is an interim administration.

"We are putting in significant efforts to ensure that investors do receive comprehensive support and the assurance that their investments in Bangladesh will be secured and profitable," he added.

Responding to a question on 'Bangladesh Investment Summit 2025', Ashik Chowdhury mentioned that it was quite successful for the government against its planed objectives.

"We received a very positive response from international and local investors, development partners, and stakeholders. Many investors showed their strong interest in exploring opportunities in Bangladesh across sectors like renewable energy, information technology, manufacturing, infrastructures, and healthcare," he said.

He stated that this summit clearly demonstrated that the global business community sees Bangladesh as a promising and reliable investment destination.

"It also allowed us to highlight the government's efforts in building an investor-friendly environment and world-class infrastructures. In continuation of this, we were able to generate a pipeline of potential investors. We are highly encouraged by the outcomes and fully committed to converting this strong interest into real, on-the-ground investments," he explained.

The BIDA chief, however, said the government's top priority after the 2025 Bangladesh Investment Summit is to stay in close contact with the potential investors.

"We have built a comprehensive database of the participants and are now engaging with customized support based on their investment lifecycle. We have plans to continue building relationships with these investors throughout their decision-making journey to eventually convert their interest into active investments," he added.

Responding to another question on whether the government would follow up and act on the policy suggestions made by the investors and the various stakeholders in different sessions of the summit, he said, "Of course, yes. Investors, in our opinion, are our partners. Their opinions are highly valuable to us."

During the summit, he said, they carefully recorded all the suggestions made during the sessions.

"The key points highlighted were very similar to our initially identified priority areas: Renewable Energy & Green Growth, Digital Economy & Tech Transformation, Textile & Apparel (Advanced & Sustainable), Healthcare & Pharmaceuticals, and Agro-processing & Food Value Chain. We plan to expedite initiatives to address these areas," he added.

A four-day 'Bangladesh Investment Summit 2025' was held from April 7 to April 10 to showcase the country's evolving investment opportunities and economic reforms.

The summit has yielded initial investment proposals worth Tk 3,100 crore (Tk 31 billion). Several additional investment proposals are currently in the pipeline.

A total of 415 foreign delegates from 50 countries attended the event.​

 

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Bangladesh to get $500m from WB to boost governance, financial sector stability

World Bank has approved $500 million loan to help improve trust in Bangladesh’s public institutions through increased accountability and transparency and enhance corporate governance and stability in the financial sector.

en.prothomalo.com

Bangladesh to get $500m from WB to boost governance, financial sector stability

UNB Dhaka
Published: 21 Jun 2025, 22: 53

World Bank has approved $500 million loan to help improve trust in Bangladesh’s public institutions through increased accountability and transparency and enhance corporate governance and stability in the financial sector.

The Strengthening Governance and Institutional Resilience Development Policy Credit supports public and financial sector reforms, which are key for sustained economic growth, according to a press release.

The reforms will also lay the foundations for improved services for vulnerable households.

Bangladesh has one of the lowest revenue-to-GDP ratios among middle-income countries, significantly limiting the government’s ability to deliver quality services to its people, said the press release.

This programme supports reforms aimed at improving domestic revenue mobilisation.

The reforms would make tax administration and policy-making more transparent and efficient aligning with international best practices.

Further, it will support reforms to move to a more strategic, systematic, and transparent approach to managing tax exemptions that will require Parliamentary approval for all exemptions, which would be a significant step away from current ad hoc practices.

The financing will also strengthen corporate governance and risk management frameworks by aligning financial reporting with international standards and increasing transparency.

It will help improve financial sector stability by providing the Bangladesh Bank with a complete range of resolution powers to address vulnerabilities in the banking sector.

A third strand of reforms will improve transparency, accountability and efficiency across the public sector.

By 2027, all government project appraisal documents will be required to be made public. Public procurement system will be required to use electronic government procurement (e-GP), disclose of beneficiary ownership, and remove price caps to foster competition and reduce corruption risks.

To improve financial accountability and transparency in the public sector, the Office of the Comptroller and Auditor General’s auditing capacity will be strengthened.

The independence of the Bangladesh Bureau of Statistics will improve data transparency, leading to better service delivery for citizens.

Finally, cash transfer programs for the poor and vulnerable will be made more effective with the operationalisation of a dynamic social registry.

World Bank Interim Country Director for Bangladesh Gayle Martin said that Improvements in how public finances are managed are important for Bangladesh’s economy to grow sustainably.

“The government is taking ambitious steps to make its institutions more open and answerable, so they can serve the people better,” he said.

He mentioned that this financing will support the government's efforts to strengthen its policies and regulatory framework to build a stronger, more inclusive economy that benefits everyone.

“Through another project that was approved last week, we are supporting the government to implement these reforms.”

World Bank Senior Economist and Task Team Leader for the project Dhruv Sharma said that This Financing is closely aligned with the citizen’s desire for transparency and accountability and will support Bangladesh’s ambitious reform agenda for improving domestic revenue mobilization, financial sector stability and governance, and public sector performance.

“Improving data systems and moving towards improved selection of beneficiaries will ensure that government resources effectively reach poor and vulnerable households, especially during economic shocks and natural disasters.”​

 

[Saif]

From Promise to Prosperity

Foreign direct investment (FDI) has been a cornerstone of economic transformation in many developing countries. It brings not only capital but also global market access, cutting-edge technology, managerial know-how, and integration into international production networks. Countries like Vietnam and

thefinancialexpress.com.bd

From Promise to Prosperity
Getting FDI Right in Bangladesh

M G Quibria
Published :
Jun 24, 2025 00:58
Updated :
Jun 24, 2025 00:59

Foreign direct investment (FDI) has been a cornerstone of economic transformation in many developing countries. It brings not only capital but also global market access, cutting-edge technology, managerial know-how, and integration into international production networks. Countries like Vietnam and Mexico have harnessed FDI to build dynamic industrial bases, diversify exports, and sustain robust growth trajectories. An important feature of the FDI inflow into these two countries has been the type of FDI - the majority being platform FDI, an investment mainly geared to export to third countries. By contrast, Bangladesh's experience has been far more modest. Despite its notable gains, until recent reversals, the country has remained a peripheral player in the global FDI landscape in poverty reduction and macroeconomic stability. This failure is neither accidental nor inevitable. It reflects deep-rooted structural weaknesses, policy inertia, and strategic misalignments.

The numbers alone are stark. Bangladesh has attracted less than $3 billion in annual FDI inflows in recent years, amounting to under 1 per cent of gross domestic product (GDP). This places it well behind its successful peers. Vietnam draws around $20 billion annually, while Mexico receives between $35-40 billion, despite its proximity to the turbulent United States (US) political and trade environment. More troubling than the quantity is the quality of investment. In Bangladesh, although there has been a change in direction, FDI was traditionally channelled into non-tradable sectors such as telecommunications and energy. These sectors, while important, do not catalyze export growth, industrial upgrading, or widespread employment.

In contrast, Vietnam and Mexico have consistently drawn FDI into globally competitive, export-oriented sectors, including electronics, automotive, textiles, and, increasingly, high-tech industries such as semiconductors and aerospace. Some other Asian countries that successfully attract FDI are more import-substituting than export-promoting. India's Production-Linked Incentives (PLI) policy has positively incentivised FDI toward exports, yet its success has been, at best, limited.

Why has Bangladesh lagged so far behind? The answer lies in a combination of institutional, infrastructural, and human capital deficiencies, compounded by policy inconsistency and weak governance. While some reforms have been introduced recently, they remain piecemeal and often poorly implemented.

A key obstacle is the country's weak institutional framework for investment promotion. Although the Bangladesh Investment Development Authority (BIDA) was created to serve as a one-stop shop for investors, it remains burdened by slow, opaque, and often arbitrary administrative processes. Investors report long delays in project approvals, inconsistent regulatory enforcement, and difficulties in obtaining land and utility connections. The country's poor rankings in the now-discontinued World Bank Doing Business Index-particularly in contract enforcement, cross-border trade, and dealing with construction permits-underscore these challenges.

In contrast, Vietnam has taken a proactive, coordinated approach to investment facilitation. Special economic zones (SEZs) there are not mere geographic enclaves but fully integrated industrial ecosystems offering streamlined services, legal clarity, and infrastructure linkages. Mexico, too, provides a more mature investment regime bolstered by a relatively independent judiciary, clear rules for dispute resolution, and a deep network of bilateral investment treaties. These frameworks reduce uncertainty and reassure investors. Despite recent policy documents such as the FDI Heat map 2025 identifying priority sectors, Bangladesh has yet to develop a comprehensive, investor-friendly institutional architecture with teeth.

Infrastructure gaps pose another critical constraint. Bangladesh's logistics network remains underdeveloped, with congested ports, limited container-handling capacity, and unreliable power supplies. Transport connectivity between industrial hubs and ports is weak, raising costs and reducing competitiveness. Although the opening of the Padma Bridge has improved regional connectivity, broader infrastructure bottlenecks persist-hampering not only trade but also the movement of labour and capital.

Vietnam's ports are now among the most efficient in Southeast Asia, and the country's emphasis on physical infrastructure has dramatically reduced logistics costs. Due to its proximity to the United States, Mexico benefits from extensive highway and rail corridors that connect seamlessly with North American value chains. Bangladesh, lacking such locational advantages, must compensate through aggressive investment in transport, logistics, and energy infrastructure. Initiatives such as the Economic Zones (Amendment) Bill 2023 and new G2G industrial parks are promising -but their sluggish execution undermines their potential impact.

Compounding these physical bottlenecks are protectionist trade policies that discourage export-oriented investment. Bangladesh maintains high average tariff rates and a dense web of para-tariffs. While these may protect domestic firms in the short term, they deter foreign firms seeking to use Bangladesh as a base for regional or global exports. Moreover, the country has remained relatively isolated from regional and bilateral trade agreements. It is not a member of any major economic bloc comparable to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) or the Regional Comprehensive Economic Partnership (RCEP), which have been instrumental in driving FDI into Vietnam.

Mexico's membership in the USMCA (formerly NAFTA) has provided it with privileged access to the vast U.S. market, a magnet for global investors. For Bangladesh, the challenge is not just negotiating new trade agreements but undertaking the internal reforms-such as customs simplification, reduction of non-tariff barriers, and harmonisation of standards-required to benefit from them.

The country's labour market is another area of concern. Bangladesh often touts its large labour force as an asset, which hides a serious skills deficit. The education system, particularly technical and vocational training, is poorly aligned with labour market demands. Institutions remain underfunded, teachers under-qualified, and curricula outdated. As a result, even in labour-intensive sectors like garments, productivity remains low compared to peers. Foreign investors are often compelled to provide extensive on-the-job training or import higher-end skilled workers -both costly propositions that circumscribe Bangladesh's competitiveness.

Vietnam, by contrast, has made targeted investments in technical education, working closely with the private sector to design training programs. Mexico, too, has fostered a skilled workforce in niche areas such as automotive engineering and aerospace technology. For Bangladesh, the path forward requires a national skills strategy that integrates education, industry, and investment planning. Piecemeal projects will not suffice; a coordinated, adequately resourced push is needed.

Governance also looms large as a deterrent. Investors consistently cite concerns over regulatory unpredictability, legal opacity, and corruption. While Bangladesh has achieved some measure of macroeconomic stability-evident in moderate inflation and a growing GDP-it has not translated into a stable business environment. Political volatility, weak contract enforcement, and perceptions of favouritism erode investor confidence.

Efforts to liberalise the financial sector, such as the Offshore Banking Act of 2024, are steps in the right direction. However, without improvements in regulatory quality, judicial independence, and anti-corruption enforcement, these reforms are unlikely to alter perceptions in a meaningful way. In contrast, Vietnam offers a relatively predictable investment climate, and even Mexico, despite facing security challenges, provides legal protections under a network of international agreements that mitigate investor risks.

Another underappreciated factor is the lack of export diversification. Over 80 per cent of Bangladesh's exports come from ready-made garments (RMG), a sector that, while successful, is increasingly vulnerable to automation, environmental scrutiny, and shifting global demand. Vietnam and Mexico have diversified aggressively, attracting investment in high-tech sectors. Vietnam has become a manufacturing base for global electronics giants such as Samsung and Intel. Mexico, meanwhile, has emerged as a competitive hub for aerospace and automobile production. These countries offer not just low costs but ecosystems of suppliers, skilled labour, and logistics that reinforce FDI flows.

Bangladesh's efforts to emulate this model-such as the One-Stop Banking Service (2023) launched by BIDA and BRAC Bank-are helpful but far too limited in scope. It has been argued that a broader industrial policy framework is needed, one that actively supports the emergence of new export sectors through targeted infrastructure, tax incentives, and R&D support.

Geographic disadvantage is another oft-cited explanation for Bangladesh's FDI underperformance. The country is remote from major global markets and surrounded by challenging neighbours with whom it shares complicated political and logistical relationships. While there is an element of truth to this explanation, this truth is not immutable to time and effort. Vietnam, too, once suffered from isolation and conflict but overcame it through strategic investments in connectivity, openness to trade, and deep institutional reform. Bangladesh can follow a similar path-if it has the will.

Crucial to this transformation is a decisive commitment to education. Despite broad acknowledgment of its importance, the education sector remains chronically underfunded and politically manipulated. Public schools suffer from poor facilities, low teacher morale, and weak oversight. University curricula are often out of sync with market needs. Even more troubling is the politicisation of student life: student groups, historically agents of progressive change, have become tools of political patronage, undermining the development of a forward-looking, employable youth population.

This long-standing neglect has created a large pool of low-skilled labour-unsuited for a knowledge-intensive, globally competitive economy. Unless Bangladesh radically improves the quality and relevance of its education system, it will fail to generate the human capital necessary to attract high-value FDI.

Bangladesh's disappointing FDI record is not a function of bad luck or immutable geography. It is the product of avoidable policy failures. The experiences of Vietnam and Mexico demonstrate that with strategic vision, institutional reform, trade openness, and investments in human capital, countries can transcend initial disadvantages and become investment hubs. Bangladesh must shed its complacency and embrace a reform agenda that is bold, sustained, and coherent.

The window of opportunity is narrowing. As global value chains reorganise in response to geopolitical shifts and technological disruption, investors are scouting for reliable, efficient, and responsive partners. Bangladesh has the potential to be one of them. But potential means little without execution. Reform-not resignation-is the only viable path forward.



Dr M G Quibria is a development economist and former Senior Advisor at the Asian Development Bank Institute. His academic career spans institutions across three continents.​

 

[Saif]

IMF board okays $1.3b payout to BD

Bangladesh is receiving US$1.3 billion from the International Monetary Fund in its lending programme's latest two tranches trapped in unmet reform-related conditions as the IMF board finally nods the payout, sources said. Finance Division officials in Dhaka said the executive board of the Wash

thefinancialexpress.com.bd

TAGS BINDING LENDING PACKAGE BENT
IMF board okays $1.3b payout to BD

Syful Islam
Published :
Jun 24, 2025 00:49
Updated :
Jun 24, 2025 00:49

Bangladesh is receiving US$1.3 billion from the International Monetary Fund in its lending programme's latest two tranches trapped in unmet reform-related conditions as the IMF board finally nods the payout, sources said.

Finance Division officials in Dhaka said the executive board of the Washington-based Fund cleared the credit release as the deadlock over the two instalments of the $4.7 billion worth of lending package was over.

The approval follows a staff-level agreement reached in mid-May for the fourth review of the credit programme. The IMF staff and the Bangladesh authorities had reached staff-level agreement for the third review in December last year.

However, citing Bangladesh's repeated failure in fulfilling prerequisites, the IMF board held back approval for the loan's fifth and fourth tranches expected to be available in February and May respectively.

Two unmet tags, which stood as big barriers to approval for both the loan tranches, were enhancing revenue mobilisation and ensuring exchange-rate flexibility.

The dispute over the release of the loan tranches deepened after the country's revenue board had declined to set a larger revenue target for the forthcoming fiscal year 2025-26. Also, the central bank showed unwillingness to make exchange rate flexible as suggested by the IMF.

In the first week of April, an IMF team, led by Chris Papageorgiou, the agency's Mission Chief for Bangladesh, visited Dhaka for the fourth review of the credit programme.

However, after ten days of reviewing the progresses made under loan programme, the IMF team on April 17 announced that the staff-level agreement with Bangladesh authority had been delayed due to the existence of some differences over the exchange- rate flexibility and higher revenue-generation target.

"Discussions are continuing with the objective of reaching a staff-level agreement in the near term -- including during the April 2025 IMF-World Bank Spring Meetings in Washington, DC -- to pave the way for completion of the combined third and fourth programme's review," Mr Papageorgiou said at a press conference in Dhaka.


Later, the two sides discussed the issue in Washington on the sidelines of the Spring Meetings. However, a consensus eluded the parties. Back to Dhaka, a Bangladeshi team, led by central bank governor Dr Ahsan H Mansur, continued discussion virtually with IMF officials in Washington.

After series of parleys the central bank governor in mid-May agreed to go for market-driven exchange rate to remove roadblock to IMF loan payout worth $1.3 billion.

Thereafter, the IMF on May 14 announced reaching staff-level agreement with the Bangladeshi authorities and said the "agreement is subject to approval by the Executive Board of the International Monetary Fund, contingent on the completion of prior actions related to tax-revenue mobilisation and full implementation of exchange-rate reforms".

The Fund granted the $4.7 billion loan to Bangladesh in January 2023 to help support the country's sluggish economy and slim foreign-exchange reserves. The loan was scheduled to be given in seven instalments by May 2026.


Until now, the country has received $2.295 billion under this loan programme.​

 

[Saif]

$400m more comes from AIIB

Assistance worth US$400 million is forthcoming from the Asian Infrastructure Investment Bank (AIIB) in a latest flow of foreign aid for bankrolling Bangladesh's budgetary programmes--this one for climate-centric reforms. This amount comes under a credit deal signed Monday in Dhaka between Econom

thefinancialexpress.com.bd

Budget support
$400m more comes from AIIB
Reforms regarding climate resilience in focus

FE REPORT
Published :
Jun 24, 2025 00:55
Updated :
Jun 24, 2025 00:55

Assistance worth US$400 million is forthcoming from the Asian Infrastructure Investment Bank (AIIB) in a latest flow of foreign aid for bankrolling Bangladesh's budgetary programmes--this one for climate-centric reforms.

This amount comes under a credit deal signed Monday in Dhaka between Economic Relations Division (ERD) under the Ministry of Finance (MoF) and the China-based AIIB.

Additional Secretary of the ERD Mirana Mahrukh and the AIIB Acting Chief Adviser Rajat Misra inked the deal. Under terms of funding laid down in the 'Climate Resilient Inclusive Development Programme-Subprogramme-2', Bangladesh has to conduct different climate-related reforms, officials said.

The AIIB's $400-million budget support would be the co-financing with the Asian Development Bank (ADB) where the Manila-based lender provided a $400 million to help Bangladesh enhance its resilience against climate impacts, cut emissions in climate-critical sectors, and promote inclusive development.

With AIIB and ADB's financial supports, the Ministry of Finance (MoF) would establish "environment for climate priorities across the ministries, facilitate climate-adaptation priorities, and accelerate climate-change-mitigation actions".

Meanwhile, the World Bank on June 21 confirmed US$500 million worth of budget support and the Asian Development Bank another $500 million on June 20.

The $500-million budget support from the ADB would be utilised to stabilise and reform the banking sector by strengthening regulatory supervision, corporate governance, asset quality, and stability.

The AIIB will charge SOFR-plus a variable spread and a 0.25-percent front-end fee for the $400 million loan confirmed Monday, ERD officials said.

The maturity of the loan will be 35 years with a grace period of five years.

Under the 'Climate Resilient Inclusive Development Program- Subprogramme-1' last year, the AIIB also provided another $400 million to Bangladesh in budget support for implementing some climate-related reforms.​