Bangladesh's fundamentals strong, can provide opportunities to investors, despite current turbulence: World Bank Group

Bangladesh is set to see substantial population growth over the next two decades resulting in a surge in domestic demand and increased opportunities for private sectors in a range of sectors, the World Bank Group has said in a report.

In the report titled "Bangladesh: Country Private Sector Diagnostic", jointly prepared by the World Bank, IFC and MIGA, it said Bangladesh's population growth would surpass most other middle-income countries. 

The demand surge would prove to be an opportunity for private investment in sectors such as manufacturing, housing construction, consumer goods, and services, it said.

The report was published during a session of the ongoing Bangladesh Investment Summit at InterContinental Dhaka today (8 April).

"Moreover, the readymade garments sector demonstrates that with the right policies, Bangladesh can successfully export manufactures and attract foreign direct investment [FDI]. It will need to do this in more sectors to create jobs for the many young Bangladeshis entering the labor force," the report says.

Pointing out the unemployment rate of 28% of youth with tertiary education, it, however, warned that "Bangladesh is at risk of wasting part of its demographic dividend."

The report also identified where Bangladesh needs to work to encourage private-sector investment. 

It said corruption was a major obstacle to doing business for firms operating in Bangladesh, adding, "It is notable that the interim government has pledged to improve governance and transparency and made this one of their core objectives."

In addition, Bangladesh needs to overhaul its customs procedures and tariff structure, it added.

"Long clearance times can lead importers to stockpile inventory which can be costly," it said.

Other obstacles include access to finance, tax rates, electricity supply and the informal sector. 

The report also identified four sectors where reforms could serve as a "signal of commitment to a more transparent and competitive economic model". 

The four are the green ready-made garments sector, housing for middle-income households, paint and dyes and digital financial services. 

For the green RMG sector, it recommended adapting the labour law to maintain EU market access after LDC graduation, removing the 10% cash incentive on polythene and flake export, equalising the duty of solar inverters and panels, and introducing water efficiency certification, among others. 

The report also recommended using vacant government land for residential housing construction, raising the floor area ratio, digitising land registration and enacting legal and regulatory framework to establish a mortgage refinance company, among others, for utilising the need for middle-income housing. 

For paints and dyes, it suggested digitising customs classification and equalising relevant duties. 

Finally, for digital financial services, it urged establishing a protocol to enable mobile financial services to issue and validate merchant/corporate wallets that have higher transaction limits, enabling their use for wholesale transactions, publishing the Bangladesh Bank methodology if it sets any limits on merchant discount, interchange, or other fees and eliminating transfer taxes on assets moved from originator to structured finance vehicles, among others. 

The full report can be viewed here: https://www.ifc.org/en/insights-reports/2025/bangladesh-private-sector-d...