FDI into Bangladesh declines, UNCTAD says

Foreign Direct Investment (FDI) inflows to Bangladesh have declined over the past six years, but early 2025 data point towards a rebound, according to a report by the United Nations Conference on Trade and Development (UNCTAD).

“After peaking at over US$1.8 billion in 2019, inflows declined by nearly one-third in 2024, falling below levels observed at the onset of the COVID-19 pandemic. The stock of inward FDI remained stable at about US$18 billion since 2021. Investor confidence during this period was affected by several elements,” UCTAD said in its report on the implementation of the Investment Policy Review.

“Starting in 2021, the depreciation of the taka (about 36 per cent against the US dollar), combined with foreign exchange constraints, contributed to payment delays and import restrictions, particularly for fuel. This, in turn, affected energy availability and cost, thus increasing operational challenges for investors.

“The country also saw socio-political developments in 2023–2024, associated with the parliamentary election cycle and constitutional reform process, as well as labour-related disruptions in the garment sector, the largest FDI recipient. Macroeconomic pressures, including a slowdown in gross domestic product (GDP) growth from 8 to 4 per cent, and a rise in inflation from 5.5 to close to 10 per cent between 2019 and 2024, also weighed on the broader investment climate.”

In 2025, the Bangladesh Investment Development Authority (BIDA) requested UNCTAD to assess the implementation of the IPR recommendations. This report analyses the progress made in strengthening the investment climate, including amid various global crises. It also highlights further actions to support the country’s development objectives, particularly considering its scheduled graduation from least developed country (LDC) status in November 2026.

Looking ahead, early data for 2025 suggest a rebound in FDI inflows, supported by higher reinvested earnings and intra-company loans, alongside indications of stronger GDP growth and easing inflationary pressures, as macroeconomic and political conditions gradually stabilize (IMF, 2025), the report says.

Investment attraction remains modest relative to other export oriented peers in Asia. The country’s absolute performance is stronger than that of the average LDC. The relative performance (in terms of population, GDP and gross fixed capital formation) is weaker than that of individual comparators, the average LDC and the average for the Association of Southeast Asian Nations (ASEAN) and the Regional Comprehensive Economic Partnership (RCEP), the two regional groupings it aims to join. FDI represents 1 per cent of total gross fixed capital formation and 0.4 per cent of GDP.