Weak business climate, structural bottlenecks hinder FDI flow: Experts

Foreign direct investment (FDI) in Bangladesh continues to face significant hurdles due to weak business climate indicators, structural bottlenecks and political uncertainty, according to experts at a roundtable discussion held in Dhaka today (23 August).

The event, titled "Global Trade in the Post-Trump Tariff Era and Bangladesh," was organised by the Bangladesh Research Analysis and Information Network. 

Participants included Chief Adviser's Press Secretary Shafiqul Alam, Dhaka University's Professor Rashed Al Titumir, US-based Cadmus Group Director Shamarukh Mohiuddin, economists Jyoti Rahman and Zia Hasan, businessman and politician Israfil Fashru, and US-Bangladesh United Initiative (UBUI) co-founder Mohammed Mia, among others.

Joining online, Shamarukh Mohiuddin argued that the Trump administration's tariff and tax policies had fuelled inflation in the United States rather than addressing the country's $1.9 trillion budget deficit. She cautioned that Bangladesh risked losing export markets if it relied solely on tariff concessions without addressing its own structural weaknesses.

Zia Hasan observed that although the interim government had managed to secure a favourable US tariff position, political instability in Bangladesh remained a major deterrent. "FDI does not flow into countries plagued by political conflict. Even with zero tariffs, uncertainty will drive investors away," he said, stressing the need for stability, improved business climate, and lower costs. 

Zia also called for lower tax rates, noting that Bangladesh imposes a 15% levy on most goods, while India is moving towards 5%.

Mohammed Mia emphasised the importance of equity investment partnerships between local and foreign firms. "If investors have a stake, they themselves will lobby against higher tariffs abroad, since both sides would be equally affected," he said, adding that profit repatriation remained complex, creating insecurity among foreign investors.

Rashed Al Titumir highlighted the need to generate employment in line with Bangladesh's position as the world's 34th largest economy. He stressed industrial progress, export diversification, and enhanced productivity as the next phase beyond consumption-driven growth.

Shafiqul Alam acknowledged concerns about port inefficiency, noting that while capacity at Chattogram Port had been increased, it must be upgraded to match Singapore's standards to attract investment in high-value industries. He said the government had successfully addressed US tariff challenges, upgraded labour laws to global standards, and strengthened the Bangladesh Investment Development Authority (Bida) with dedicated relationship managers for multinational investors.

Israfil Fashru said foreign buyers came to Bangladesh expecting ultra-cheap labour, which drove down prices and profitability. He urged a shift towards an investment-based economy rather than competing solely on low-cost labour.

The speakers at the discussion also cited gas and electricity shortages, rising production costs, bureaucratic delays, and the lack of skilled workers as persistent barriers to FDI inflows.