Foreign Direct Investment (FDI) in Bangladesh dropped by 13% in 2024, highlighting growing investor concerns over the country’s economic and political landscape. According to the World Investment Report 2025, published by the United Nations Conference on Trade and Development (UNCTAD), Bangladesh received $1.27 billion in net FDI last year-down from $1.464 billion in 2023.
The net inflow amounts to approximately Tk 15,500 crore, a figure that pales in comparison to the country’s monthly remittance inflows or export earnings. To put it into perspective, the total annual FDI received in 2024 was about half the monthly remittance inflow and only one-fourth of monthly export earnings. This ongoing underperformance raises serious questions about Bangladesh’s ability to attract sustainable foreign capital amid shifting global dynamics.
The UNCTAD report, released from Geneva on Thursday, also presented a cautious view of the global investment outlook. It noted that net global FDI declined by 11% to $1.5 trillion in 2024, primarily due to escalating trade tensions, policy uncertainty, and growing geopolitical fragmentation. Despite a 4% rise in total FDI-driven by temporary financial flows-underlying investment activity remains sluggish.
In South Asia, FDI inflows remained flat at $34.57 billion, with India seeing a slight 2% drop. In contrast, Bhutan experienced a six-fold increase in FDI, attributed to greater investor confidence and a stable regulatory environment. In Bangladesh, the total FDI stock-the cumulative value of foreign investments-stood at $18.29 billion by the end of 2024, representing just 4% of the country’s GDP. This is significantly lower than the South Asian average of 13%, with India’s ratio at 14% and Bhutan’s at 17%.
Observers point to deeper structural barriers behind the country’s FDI shortfall. According to one senior business leader who is also the head of a leading multinational company operating in Bangladesh, investor confidence hinges on policy transparency, regulatory continuity, and institutional credibility-areas where Bangladesh has historically struggled.
“An investor chooses to invest when there’s trust in the system, clarity in regulations, and consistency in government policy. Unfortunately, Bangladesh has fallen short in all three areas,” he said.
“Lack of credible state commitments, abrupt policy shifts, and limited administrative capacity are deterring long-term investment.”
“In addition, economic uncertainty and political instability have further eroded the investment climate in recent years.”
While recent reforms have been introduced over the past 10 months, the official warned that it may take considerable time to see tangible results. He stressed that law and order, economic recovery, and political stability are essential prerequisites for reviving investor interest.
“Bangladesh has undeniable advantages-a robust domestic market and a competitive export sector. However, without addressing these fundamental issues, investor confidence will remain low.”
Further compounding the concern, greenfield investment announcements-which indicate future FDI flows-plummeted in 2024. New project commitments fell to $1.75 billion, down from $2.7 billion in 2023, representing a 35% year-on-year decline. Greenfield investments are typically associated with setting up new production or service facilities and are vital for employment generation and technology transfer.
The sharp fall suggests not only a retreat in current investment activity but also weakening interest in future engagement by foreign investors.
Efforts to obtain comments from the Executive Chairman of the Bangladesh Investment Development Authority (BIDA) regarding the UNCTAD report were unsuccessful. However, in a recent public statement, he outlined measures undertaken over the past eight months to improve the investment climate.
He stated that foreign investment flows from October 2023 to April 2024 remained stable compared to the same period a year earlier, despite various global and domestic uncertainties. He described the relatively quick return to previous levels following recent instability as “a positive signal,” provided that current reforms are sustained and reinforced.
UNCTAD also tracks outbound FDI-investments made by Bangladeshi businesses abroad. In 2024, such investments totalled only $7 million or approximately Tk 85 crore, marking the lowest figure in the past five years. The highest outbound investment in recent years was recorded in 2021 at $80 million. As of the end of 2024, Bangladesh’s total outward investment stock stood at $322 million, down 8% from the previous year.
As global capital flows become more cautious and selective, Bangladesh’s ability to capture FDI is increasingly being tested. Although the country boasts favourable demographics, strategic location, and low production costs, these advantages are undermined by weak institutions, policy inconsistencies, and a fragile political environment.
Experts agree that addressing these challenges will require more than rhetoric or promotional campaigns. Comprehensive structural reforms, policy continuity, and institutional strengthening are critical to restoring investor confidence and reversing the ongoing decline in foreign direct investment.
