Tough repatriation policy discourages foreign direct investment: IFC

Foreign investors find it extremely difficult to repatriate their profits from Bangladesh, making the country a less attractive destination for foreign direct investment (FDI), International Finance Corporation (IFC) Country Manager Martin Holtmann said today (2 July).

"Investing in Bangladesh is a nightmare for foreign investors as it is very tough to repatriate their profit," Holtmann said, criticising the existing policy. "This discourages investors from financing any project here."

He was speaking at an event held at the Radisson BLU Bay View in Chattogram this afternoon, where the IFC presented the Bangladesh Country Private Sector Diagnostic (CPSD) report.

The report is a joint initiative by the IFC and the World Bank aimed at identifying investment opportunities and removing key regulatory and policy bottlenecks.

Holtmann also highlighted power and energy scarcity as another significant barrier to attracting FDI.

"The government should ease the process for repatriating investment and formulate long-term policies to ensure clean energy to attract foreign investment," he recommended.

The CPSD report paints a comprehensive picture of Bangladesh's private sector landscape and offers a roadmap for private sector-led growth. While acknowledging the country's achievements in economic growth and poverty reduction — with an average GDP growth of 6.4% from 2010 to 2023 — the report also flags persistent challenges such as energy shortages, trade inefficiencies, and weak financial sector governance.

Hosna Ferdous Sumi, senior private sector specialist at the World Bank, along with IFC officials Miah Rahmat Ali and Noor Ahmed Naveed, jointly presented the findings. The report identifies four key sectors with high growth potential: green ready-made garments (RMG), housing for middle-income households, paint and dyes, and digital financial services.

In the RMG sector, the CPSD recommends a shift toward sustainability and diversification into man-made fibers to retain competitiveness after Bangladesh graduates from the Least Developed Country (LDC) category. It also calls for revising import duties and harmonizing labor standards with international norms.

On housing, the report notes a rising demand among middle-income households and suggests reforms such as digitizing land registration, utilizing unused government land, and improving access to mortgage financing.

For the paint and dyes sector, the report proposes easing raw material import restrictions and streamlining customs procedures to boost domestic production.

It also underscores the transformative potential of expanding digital financial services, which could enhance financial inclusion and help formalize informal businesses—potentially generating up to 460,000 new jobs.

"The report underscores the need for bold reforms if Bangladesh is to sustain growth and employment amid macroeconomic uncertainty and its upcoming LDC graduation," Holtmann said, urging immediate policy attention to unlock the country's private sector potential.