The Singapore Lesson: What Bangladesh can learn about diplomacy, investment and consistency

Infograph: TBS

Bangladesh stands at a rare moment of opportunity. Prime Minister Tarique Rahman enters office with a decisive mandate, a reform-minded coalition and the legitimacy of the July Uprising, which ended a decade of one-party rule. 

Guided by the July National Charter and his "Bangladesh First" doctrine, he has pledged an inclusive state, an end to politics driven by fear and an economy that creates opportunities for the country's young majority.

His early instincts mirror the principles behind Singapore's success. The prime minister has sought to repair ties with India without compromising Bangladesh's position on the Teesta and Padma waters, courted Chinese investment while reviewing trade arrangements with the United States through the lens of sovereignty, and insisted that Bangladesh pursue its own national interests. 

Combined with the institutional reforms enabled by the July Charter, this approach offers Bangladesh an opportunity to build a stronger and more resilient state.

Singapore and Bangladesh began from modest circumstances. Singapore emerged as a resource-poor island state in 1965 with no hinterland and a divided population. 

Six decades later it is the world's third-largest recipient of foreign direct investment (FDI), behind only the United States and China, with an inward FDI stock of $2.63 trillion. 

Bangladesh, despite having nearly thirty times the population, has an inward FDI stock of roughly $20 billion. The difference reflects two enduring disciplines: a balanced foreign policy and an investment regime built on consistency.

Fifty years, measured in capital

Singapore's inward FDI stock grew from only a few billion dollars in 1980 to around $30 billion in 1990, $111 billion in 2000, $633 billion in 2010 and $2.63 trillion by 2023, when it attracted nearly $160 billion in fresh investment. 

Bangladesh's inward FDI stock remains roughly 128 times smaller. On a per capita basis, Singapore hosts about $430,000 of foreign investment per resident, while Bangladesh attracts just over $100.

The first discipline: a foreign policy that refuses to choose

Singapore has built its diplomacy on strategic balance. It maintains one of Southeast Asia's closest defence relationships with the United States while China remains its largest trading partner and partner in projects such as the Suzhou Industrial Park. 

At the same time, it has maintained independent positions on Taiwan and supported the 2016 South China Sea arbitration without rupturing relations with either power.

The principle is simple: Singapore acts according to its own interests through a rules-based foreign policy. That consistency allows a small state to disagree with major powers without becoming trapped by them. 

For investors, it provides confidence that their capital is located in a country unlikely to be drawn into geopolitical confrontation and able to maintain access to major global markets.

The second discipline: a compact with investors that never changes

Foreign policy provides stability; investment policy converts it into capital. Since establishing the Economic Development Board in 1961, Singapore has made one promise to investors and kept it: "Invest here, and the rules will not change."

Foreign companies are not forced into joint ventures or required to surrender management control. Domestic and foreign firms operate under the same laws. Capital and profits can be repatriated freely, company registration is streamlined through a single window, and incentives are transparent and based on published criteria rather than political connections.

These policies rest on strong institutions. Lee Kuan Yew regarded clean administration, enforceable contracts, protected property rights and an honest civil service as non-negotiable. Capital may not be sentimental, but it consistently rewards predictability.

Consistency as the asset itself

The common thread behind Singapore's success is continuity. Its one-party dominance is not a model Bangladesh should emulate, but the policy consistency beneath it is. 

Through successive leaders – from Lee Kuan Yew to Goh Chok Tong, Lee Hsien Loong and Lawrence Wong – foreign policy and investor protections remained national assets rather than partisan projects. Investors making thirty-year commitments could trust the rules to outlast the governments that introduced them.

Bangladesh has too often sent the opposite signal. Incentives have been introduced and withdrawn, regulations revised with each administration, and special economic zones left underutilised because credibility, not infrastructure, has been lacking. 

Frequent changes to tax and duty structures have further eroded investor confidence.

Bangladesh cannot replicate Singapore's geography or political system, nor should it try. But the disciplines behind its $2.63 trillion FDI stock are choices, not geography. 

In foreign policy, Bangladesh should maintain balanced relations with Washington, Beijing and Delhi while acting consistently in its own national interest. 

In investment policy, it should establish a durable framework based on equal treatment of investors, unrestricted capital repatriation, transparent incentives and taxation, a genuine single-window system, efficient courts and an honest bureaucracy – and preserve those rules across electoral cycles.

Bangladesh also enjoys advantages Singapore never had: a domestic market of about 170 million people, a large young workforce and favourable demographics. Those strengths will translate into sustained growth only if matched by credible, consistent and investor-friendly policies.

Tarique Rahman has inherited what few Bangladeshi leaders have enjoyed: a powerful reform mandate, institutional backing through the July National Charter and a strategic position sought by every major power. 

By institutionalising a balanced foreign policy and consistent, investor-friendly rules that endure across governments, Bangladesh can emulate the enduring principles behind Singapore's success. The blueprint exists; the challenge is to implement it with discipline and continuity.

The author is the Director, Putnam Capital Advisory Pte Ltd, Singapore.