Policy unpredictability, energy crisis deterring investment: Business leaders

Business leaders and economists have stressed that the country needs major reforms to improve investment, describing complex bureaucracy, an unpredictable tax system and the ongoing energy crisis as the main barriers discouraging both local and foreign investors. 

The country's goal of becoming a trillion-dollar economy by 2035 is at risk unless the government moves beyond routine consultations and takes real action on policies, they warned at a policy dialogue organised jointly by the Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka and Policy Exchange Bangladesh in the capital yesterday (29 April).  

Bangladesh Garment Manufacturers and Exporters Association President Mahmud Hasan Khan said lending rates hovering around 13-14% remain a major barrier to both new and existing businesses.

He attributed this to structural weaknesses in the banking sector, including high non-performing loans, and said the private sector's input could help design more effective, market-oriented financial policies.

The business leader also called for private sector representation on the board of Bangladesh Bank, arguing that such inclusion is essential to ensure more practical and business-friendly policymaking.

MCCI Secretary General Farooq Ahmed said for the last two decades, Bangladesh's foreign direct investment has hovered between $1 billion and $1.8 billion. "Compared to countries like Vietnam, where FDI has surged to around $17 billion, our performance clearly shows we have not made the progress we aspired to." 

"We have some of the best policies on paper, but when it comes to implementation, we stand nowhere. Unless we address the real gaps, barriers and complexities, both foreign and local investment will not increase," he added.

Expressing frustration over the lack of implementation, Nuria Lopez, chairperson of the European Union Chamber of Commerce in Bangladesh, said, "The root of the problem is that Bangladesh does not attract FDI even when investors are eager to enter this region. Why? Because we do not have the trust of the investors," she explained.

"Bangladesh is always starting and regulating, but never implementing. Would you invest in a country that cannot even ensure you have energy for your factory?" she raised questions.

Delivering the keynote speech, M Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh, highlighted the widening gap between Bangladesh and its regional competitors.

"If you look at port efficiency, the Chattogram Port ranks 356th globally, while Mundra in India is 25th. This inefficiency, combined with a total tax incidence of nearly 45%, is holding us back," he said.

Unilever Bangladesh Limited Chief Financial Officer Zinnia Huq said, "The biggest competitor for us is not other market players; it is entry into the market itself. Unless you are ready to stay here for 50 years, you should not even think of entering Bangladesh."

"We face months-long delays for basic approvals, contradictions in policies, and a lack of coordination among authorities. Even a simple dividend remittance can turn into a compliance risk due to conflicting rules," she added.

On legal issues, Barrister Margub Kabir said, "One of the pillars of investor trust is dispute resolution; how quickly and effectively problems are solved when things go wrong. In Bangladesh, that remains a major concern."

"Bangladesh ranked 189 out of 190 countries in contract enforcement. This reflects the reality of our slow judicial system, which discourages both foreign and local investors."

The Commercial Court Act is a positive step, as it brings commercial disputes under a single stream and aims to expedite resolution. But unless properly implemented, it will not deliver results, the lawyer noted.

The event, supported by Australia's Department of Foreign Affairs and Trade, concluded with a call for a national three-to-five-year investment climate reform programme to align tax, trade, and industrial policies ahead of the upcoming national budget.