Political instability, uncertainty major problems for investment: South Korean ambassador

Political instability and uncertainty in Bangladesh are creating challenges for investment and economic growth, said South Korean Ambassador to Dhaka Park Young-sik today (27 February).

"Bangladesh is currently under an interim government, and whenever I speak with businessmen, they tell me they are holding back on investment. They are waiting and observing to see how the situation unfolds," he said.

His remarks came during an event titled "Meet the OCAB," organised by the Overseas Correspondents Association Bangladesh (OCAB) at Dhaka Club. The event was presided over by OCAB President Nazrul Islam Mithu, with a welcome speech delivered by General Secretary Julhas Alam.

"So, if you look at the data, you'll see that private investment and consumption are growing very slowly. The shrinking of private investment and consumption will lead to slower economic growth in Bangladesh," he added, in response to a question about whether the recent political tensions in both Bangladesh and Korea would affect cooperation.

"Anyway, political instability and uncertainty are causing problems for the host country [Bangladesh]. It is necessary to clear the political issues," he said.

Regarding South Korea's own political situation, Park mentioned that the country's president has been impeached, and they are awaiting the final decision from the Constitutional Court. 

However, he assured that South Korea's overseas trade and investment would not be affected due to strong internal mechanisms.

Focus on the quality of economic growth

Mentioning that his country is ready to support Bangladesh's efforts to achieve quality economic growth, Ambassador Park Young-sik said, "Bangladesh should focus not just on the quantity, but the quality of its economic growth."

"The quality of economic growth must be driven by innovation, knowledge and technology – areas where foreign companies can make substantial contributions," he added.

He also highlighted the need to reduce high tariffs on raw materials and intermediate goods to boost domestic manufacturing.

Attracting more FDI

Speaking about Bangladesh's trade sector, Park stressed the need for Bangladesh to expand its existing trade sectors, including RMG, jute, footwear, pharmaceuticals, and light industrial goods. 

"New items can be added, and trade can also be diverted from other countries due to the FTA (Free Trade Agreement) that Dhaka is negotiating with South Korea and several other countries," he said.

On Foreign Direct Investment (FDI), he pointed out that Bangladesh's FDI-to-GDP ratio is only 0.75%, compared to India's 1.7% and Vietnam's 4.7%.

"Mere offering incentives is not enough," he said, adding that Bangladesh needs to simplify visa procedures, customs clearance, and rational tax and tariff policy.

It also needs to allow profit repatriation without holding taxes, and take strong measures against corruption, he added.

He suggested Bangladesh target FDI from China and Middle Eastern countries, as their companies are less reliant on international financial markets compared to Western, Japanese, and South Korean firms as they do not have sufficient capital and have to borrow from banks.

EPA Negotiations

Regarding the Economic Partnership Agreement (EPA) negotiation, the envoy said, "Bangladesh has not much time, because the graduation of LDC is going to be effective on 24 November 2026."

He said both countries should shorten the negotiation period by referring to existing FTA texts from other countries and fast-track key discussions on market liberalisation, investment, and services.

"Korea has been offering duty- and quota-free access to 95% of Bangladeshi products since 2008, but bilateral trade has not increased since its peak of $3 billion in 2022. Now is the best—perhaps last—opportunity to finalise an EPA agreement," he added.