conomists stress political stability, long-term planning, and governance reforms as key to reviving local and foreign investment
As Bangladesh approaches a crucial national election, leading economists and business leaders say the country stands at an inflection point. After months of political uncertainty, investment stagnation, and severe disruptions across industries, experts believe that the formation of an elected government will be essential to restore confidence among both local and international investors.
Stakeholders contend that political stability, institutional accountability, and a long-term investment strategy-especially in the form of a Five-Year Action Plan-are indispensable to reversing the ongoing investment drought. Without such assurances, analysts warn, Bangladesh risks falling behind on economic growth targets, missing the opportunities ahead of LDC graduation, and losing out in the battle to attract global investors.
Recently, Dr. Debapriya Bhattacharya, Distinguished Fellow at CPD; Shawkat Aziz Russell, presidential candidate of the Progressive Business Panel in the upcoming FBCCI election; and Sakif Shamim, vice-president candidate from the same panel and Deputy Managing Director of Labaid Group, shared detailed insights with the media about how political stability is intertwined with the country’s economic revival.
Their message was clear: investment will not recover until an elected government takes over with a clear commitment to reform, transparency, and business-friendly governance. Political Stability Seen as the Foundation of Investment Growth: According to experts, Bangladesh’s investment climate has suffered significantly from recent political turbulence. While local businesses remain hesitant, foreign investors are reportedly evaluating risks more cautiously than ever.
Dr. Debapriya Bhattacharya pointed out that an interim government has limited mandate and capacity to carry out deep reforms. He argued that several reform initiatives-formulating a national white paper, restructuring institutions, establishing task forces-did not gain the expected momentum.
“The interim government cannot do everything,” he said. “The chief adviser’s aspirations and reform initiatives were not adequately carried forward by the bureaucracy. These commitments must now be included in election manifestos so that a new government can continue them.” He stressed that only a politically stable, elected authority can ensure long-term policy continuity that reassures investors. “Reforms are a continuous process,” he added. “Some have been initiated, some remain incomplete. But the country will remain-and so must the reform agenda.”
As Bangladesh prepares for the next national election, he urged political parties to publish credible and detailed manifestos. Civil society, entrepreneurs, and the media, he said, should scrutinize these manifestos to ensure they address governance, investment, and economic resilience. Businesses Warn: Without Elections, Economy Cannot Recover: For Bangladesh’s private sector, the message is even more urgent.
Shawkat Aziz Russell argued that the current transitional arrangements have not improved the investment climate. Instead, he believes an elected government is necessary to restore investor confidence, strengthen institutions, and address governance failures.
“The economy and entrepreneurs need to be freed through elections,” he stated. “Business environment has not improved to the expected level under the interim government. Without an elected government, economic momentum will not return.”
Russell criticized the government’s failure to address long-standing inefficiencies in sectors such as banking and energy. He described the existing situation as hostile to foreign investors: “Who will invest in a country where the airport catches fire? There is no environment for foreign investment.”
He also emphasized the need for urgent policies-particularly uninterrupted gas supply for industries and at least USD 500 million in export incentives-warning that delays will push the country behind its competitors.
Governance Failures in the Banking Sector Raise Alarms: Russell delivered some of the strongest comments on Bangladesh’s troubled banking sector. “Those who plundered the banks-defaulters and complicit bankers-have not been held accountable,” he said. “Instead, they are being compensated through capital injections. This only encourages more looting.”
He questioned the rationale behind merging banks with over 90 percent non-performing loans. He added that banks involved in money laundering should be forced to return depositors’ funds and subsequently closed: “The ownership of these banks will never disappear. They will return and cause damage again.”
Business leaders attempted multiple times to meet relevant advisers of the current administration to discuss trade-related crises, he said, but received no response.
Infrastructure for Business Still Weighed Down by Bureaucracy: Progressive Business Panel vice-president candidate Sakif Shamim described bureaucratic obstacles as one of the most damaging constraints on investment. He highlighted how setting up a hospital requires 27-28 different licenses, which can take 2 to 3 years due to administrative bottlenecks. “The One-Stop Service system exists only by name,” he said. “Every business faces the same bureaucratic hurdles.”
Such inefficiencies, he argued, make Bangladesh uncompetitive in the race to attract foreign direct investment. He also stressed the need to strengthen financial discipline, maintain policy continuity, and eliminate year-on-year uncertainty in investment guidelines.
FDI: The Missed Opportunity That Keeps Shrinking: Foreign Direct Investment (FDI) has been severely affected by political instability, energy shortages, and disruptions in production.
Data from Bangladesh Bank shows: FDI inflow in Jan-Mar 2025: USD 1.58 billion. FDI repatriated during the same period: USD 710 million. This indicates that investors are not only hesitant to invest but are actively withdrawing capital.
Shamim noted that FDI plunged 71 percent during the final six months of last year.
Even though interest from investors surged after the July citizen uprising and the subsequent installation of a new political administration, the unrest that followed forced many to withdraw again.
Why an Elected Government Matters for Investors: Shamim explained that elected governments, unlike unelected administrations, are accountable to the public and therefore more motivated to deliver a business-friendly environment.
“If they fail to ensure the right investment climate, they face criticism and consequences,” he said. “This accountability creates more stability for business.”
Investors-both domestic and foreign-prioritize a predictable, safe, corruption-free environment. Without it, he said, no investor will risk capital, regardless of incentives offered.
Five-Year Action Plan Seen as Crucial for Industrial Expansion: Analysts and business leaders overwhelmingly support the idea of a Five-Year Action Plan to guide investment priorities.
Such a plan would allow investors to see: Which sectors the government will prioritize,
What incentives will remain stable, What regulatory changes are expected, How infrastructure and energy supply will be improved: Without such clarity, investment decisions are delayed-particularly for large-scale manufacturing and export-oriented industries.
Shamim emphasized that once a new elected government is in place and outlines a credible five-year strategy, industrial investment will accelerate, creating a multiplier effect across the economy.
Impact on Employment, Inflation, and Revenue: Experts predict several positive outcomes if investment resumes after the elections: Job creation will increase, reducing existing unemployment pressures. Economic activity will expand, boosting government revenue collection. Product supply will increase, helping control inflation. xport diversification will improve, particularly ahead of LDC graduation.
Shamim warned that political instability has already forced factories to reduce production or remain idle, making investment too risky for many entrepreneurs.
“Investors cannot run factories during unrest. Without income, they still must pay salaries, bonuses, and overhead. Who will bear such losses?”
He expressed optimism, however, that an elected government will stabilize the situation and encourage investors to proceed with projects they have already registered.
Institutional Reform is No Longer Optional: All three experts stressed that political stability alone is inadequate. Bangladesh must urgently reform: Banking governance, Licensing and regulatory systems. Energy supply management.
Investment promotion agencies: Anti-corruption mechanisms: A stable government must ensure transparency and enforce accountability across public service institutions so that investors no longer face harassment, delays, or unpredictable rules.
Election Is the Turning Point: The investment drought will only end once an elected government takes office and commits to a stable, predictable, and reform-oriented economic agenda.
The coming months will determine whether Bangladesh can restore investor confidence, capitalize on its strategic advantages, and chart a path toward sustainable growth.
For now, the anticipation of elections-and the hope of political stability that follows-appears to be the strongest catalyst for investment recovery.
