The Bangladesh Investment Development Authority (BIDA) is stepping up efforts to attract both foreign direct investment (FDI) and local investment, with a view to generating employment and expanding Bangladesh’s footprint in the global market.
With job creation closely tied to the scale of investment, BIDA believes that increasing capital inflow – both domestic and international – is vital for sustainable economic growth.
“Investment is the main driver of employment. The more investment we get, the more production and jobs are created,” said a senior BIDA official, speaking to Daily Sun on Monday.
While both domestic and foreign investment are important, an analysis by the Daily Sun reveals that domestic investment has historically contributed more to employment generation than FDI.
Nonetheless, foreign investors have shown strong interest in Bangladesh’s key sectors, particularly during the recent four-day investment summit held in April. Major focus areas included the consumer market, textiles, pharmaceuticals, light engineering, and renewable energy.
The summit served as a critical platform for investors to explore new opportunities, address sector-specific challenges, and align strategies for sustainable development. BIDA is hopeful that the momentum from the event will translate into thousands of new jobs and a notable contribution to the country’s GDP over the coming years.
Looking ahead, BIDA forecasts more than $2 billion in FDI in the next fiscal year, which is expected to further stimulate employment.
“Foreign investment brings advanced technology and technical expertise, along with fostering healthy competition in trade and commerce. Often, these investors also contribute to the development of essential infrastructure such as roads, electricity, and communications,” the BIDA official added.
The official also highlighted the link between foreign investment and export growth, noting that increased FDI boosts the international market presence of Bangladeshi products and earns valuable foreign currency.
However, experts cautioned that domestic investment must grow in parallel, “If local investment doesn’t pick up pace, foreign investment won’t either.”
According to BIDA, foreign investors are granted relatively greater privileges to encourage capital inflow.
Economist Dr Mustafa K Mujeri, former director general of the Bangladesh Institute of Development Studies (BIDS), urged the government to ensure a peaceful and secure environment to attract both foreign and local investors.
“Investors want to place their funds in secure environments. The government should prioritise safety, reliable infrastructure, and utility services to encourage investment,” he told the Daily Sun.
Dr Mujeri also stressed that political stability is crucial, as “investors want the continuation of a political government”.
Despite these ambitions, the country experienced a sharp decline in FDI in the first half (July-December) of the 2024-25 fiscal year (FY25).
According to Bangladesh Bank data, net FDI stood at $490.4 million in the October–December quarter. During the period, total inflows reached $1.162 billion, but $671.6 million was repatriated by foreign investors.
The United Kingdom emerged as the largest FDI source during this quarter, investing $150.1 million in Bangladesh.
Meanwhile, figures from previous years show a fluctuating trend.
Bangladesh recorded $1.4 billion in net FDI in FY24, $1.6 billion in FY23, and $1.7 billion in FY22.
A recent report by the International Finance Corporation (IFC), a part of the World Bank, noted that FDI in Bangladesh accounts for only 0.4% of the GDP (as of 2023). Total investment – both public and private – represents about 30% of GDP.
Released during the BIDA Investment Conference, the IFC report identified five major barriers to improving the country’s investment climate: electricity shortages, limited access to financing, corruption, a large informal economy, and high tax rates.
Employment data from BIDA also highlights the disproportionate role of domestic investment in job creation.
In FY10, local investment of $3.931 billion generated 291,418 jobs, while foreign investment of $890 million created 39,245 jobs.
In FY21, $6.66 billion in domestic investment resulted in 160,100 new jobs, compared to 20,686 jobs from $1.05 billion in foreign investment.
Over a 12-year period (FY10 to FY21), local investment of $105.75 billion created 2,817,902 jobs, whereas $59.43 billion in FDI led to the employment of 545,875 people.
