Investment in Bangladesh has plunged to its lowest level in 14 years, as prolonged political instability, mob violence, and economic volatility have eroded both foreign and domestic investor confidence. The sharp downturn comes in the wake of the July uprising and the fall of the Awami League government in August 2024, which triggered a cycle of unrest and governance paralysis.
According to the latest data from Bangladesh Bank, Foreign Direct Investment (FDI) dropped to just $910 million during July–April of the ongoing FY2024–25, compared to $1.27 billion during the same period in the previous fiscal year. This marks a 28% year-on-year decline, the steepest fall since FY2011–12, when FDI stood at $1.2 billion. By comparison, FDI inflows were $3.48 billion in FY2018–19, before the pandemic, indicating the extent to which investor confidence has deteriorated.“Investment has collapsed, plain and simple. The situation is more dire than it appears on the surface,” said M Masrur Reaz, Chairman of Policy Exchange Bangladesh. “The prolonged political deadlock, combined with economic uncertainty and inflation, is discouraging investors from making any forward-looking decisions.”
Mob Violence, Labour Unrest, and Fear Push Investors Out
The political vacuum created by the fall of the ruling party and the delays in holding national elections have created a power vacuum, leading to a spike in mob violence, labour protests, and a sense of lawlessness across industrial and urban zones.
“A businessman who previously had to pay Tk1 lakh in bribes is now paying Tk5 lakh,” BNP Secretary General Mirza Fakhrul Islam Alamgir said in a recent speech. “There is no governance or control anymore.” 
Factories in Gazipur, Narayanganj, and Savar have faced repeated worker agitation over unpaid wages, unsafe conditions, and job losses. The combined impact of political turbulence and rising crime has made business continuity increasingly difficult.
“Our foreign buyers are alarmed. Even local investors are holding off until things stabilize,” said Rupali Chowdhury, former president of the Foreign Investors’ Chamber of Commerce and Industry (FICCI). “Without a credible and peaceful political transition, the situation won’t improve.”
FDI Inflows, Reinvestment in Steep Decline
According to central bank data:FDI inflow in Q1 FY2024–25 was just $104.3 million, Total inflow for the first six months stood at $590 million, Direct FDI (greenfield/brownfield) dropped 37% to $210 million. Reinvestment was relatively stable at $400 million, reflecting a tendency by existing investors to maintain but not expand operations
This also places Bangladesh behind regional competitors like Vietnam, India, and Sri Lanka, which have recovered or surpassed their pre-pandemic FDI levels.
“The reinvestment figures show investors are not exiting entirely—but they’re not expanding either. They’re in wait-and-see mode,” said Dr. Mustafizur Rahman, Distinguished Fellow at CPD.
Capital Machinery Imports, Credit Growth Signal Industrial Slowdown
The fall in investment is also evident in the financial and trade indicators:
Capital machinery LCs dropped 27%, LC settlements for machinery fell 22%, Private sector credit growth during July–May was 6.95%, well below the normal range of 10–12%, Bank lending rates have surged to 16%, making borrowing for new projects prohibitively expensive. “High interest rates, rising inflation, and a dollar crunch have collectively stalled industrial expansion,” said Ahsan H. Mansur, Executive Director of Policy Research Institute (PRI).
Election Delay Fuels Policy Uncertainty
With the national election delayed amid tensions between rival political factions, the country is now being run by a caretaker government with limited authority. This has cast a shadow over long-term policy direction and undermined the credibility of investment-promoting institutions.
Despite the April Investment Summit 2025, where the government promised tax reform, infrastructure investment, and streamlined regulations, few commitments have materialized. “Even those who made pledges during the investment summit have gone silent. The lack of political legitimacy and bureaucratic instability is driving away capital,” said Rupali Chowdhury.
Global Headwinds Add to Domestic Pressures
The global economic climate has also taken a toll. Tariff threats from the United States, ongoing war risks in South Asia, and stricter foreign loan conditions by th    e IMF and World Bank have compounded Bangladesh’s domestic troubles.
“Trump’s tariffs might put us in big trouble ahead,” warned Mirza Fakhrul, referencing fears of new trade barriers for Bangladesh’s key exports. Meanwhile, remittance growth has stalled, the taka has depreciated by over 12% against the dollar, and foreign exchange reserves remain under pressure.
A Downward Spiral of Employment and Growth
According to the Bangladesh Investment Development Authority (BIDA): In FY2010–11, Bangladesh attracted $12.85 billion in investment, generating 500,000+ jobs.In FY2020–21, investment dropped to $7.99 billion, creating just 180,000 jobs. FY2024–25 projections suggest job creation will fall even further if the investment climate remains stagnant. This is particularly alarming as the country faces a youth unemployment crisis, with an estimated 2.5 million young people entering the job market annually.
IFC Identifies Five Key Obstacles to Investment:In its recent country report, the International Finance Corporation (IFC) identified five core challenges that are deterring both foreign and local investors: Unreliable power supply, especially in industrial belts. Limited financing options for long-term capital projects. Corruption at all levels of government, from customs to licensing. Dominance of informal sector, limiting traceable economic activity.
High tax rates and discretionary tax exemptions
These issues, coupled with poor ease-of-doing-business rankings, have left Bangladesh struggling to compete with regional investment destinations.
What Needs to Be Done? Experts Offer a Roadmap
Economists, business leaders, and civil society figures are united in one demand: restore democratic stability to rebuild investor confidence. “Bangladesh must return to a system where democratic institutions function, rules are followed, and businesses feel protected by the law,” said Dr. Salehuddin Ahmed, former Bangladesh Bank Governor.
Other recommendations include: Immediate announcement of a national election roadmap with a clear and inclusive timeline. Reactivation of investment-friendly reforms, including digitization of BIDA services and NBR automation.Power sector restructuring to ensure uninterrupted energy to factories. Legal and policy certainty to protect long-term investments.Transparent enforcement of anti-corruption laws, particularly in customs and licensing offices
Clock Ticking for Course Correction    
Bangladesh’s economic future now hinges on how quickly political order is restored and confidence rebuilt. With FDI at a 14-year low, local investment stagnant, and job creation shrinking, the country is at a critical crossroads.
Unless the government and political actors move toward dialogue, reform, and free elections, the damage to investor sentiment may become long-lasting, pushing Bangladesh further away from its vision of achieving middle-income status by 2031. “The situation demands urgency, not complacency,” said Masrur Reaz. “The longer we delay political resolution, the deeper the investment crisis will go.