Foreign investors express reservations about political instability impacting foreign direct investment during Dhaka summit discussions
In the heart of South Asia, Bangladesh is making strides towards political and economic stability, attracting the attention of foreign investors. The interim government, led by Chief Advisor Muhammad Yunus, has set a clear timetable for national elections in February 2026, a key step towards restoring electoral politics and reducing political uncertainty.
The government's efforts to improve political stability and inclusivity are closely linked to the transitional period following the ouster of former Prime Minister Sheikh Hasina in August 2024. Notable achievements include the July Declaration and July Charter, agreements that emphasize preventing the return of authoritarianism and promoting shared political reform commitments. These agreements indicate a concerted effort to institutionalize more inclusive governance and prevent political monopolization.
On the economic front, the interim government has taken decisive actions to stabilize the country’s financial system, which was previously weakened by corruption and politicization. Collaboration with international partners like the World Bank, Asian Development Bank, and International Monetary Fund to shore up the banking sector is another critical factor reinforcing political and economic stability.
Foreign investors have highlighted several key areas of focus. They emphasize the importance of a clear and credible election timeline to reduce political risk. Additionally, they stress the implementation of political reforms promoting inclusivity and preventing authoritarian relapse. Efforts to depoliticize the civil service and restore institutional integrity are also crucial. Economic stabilization measures supported by international financial institutions are also seen as essential.
Takao Hirose, managing director of Contextual Investment LLC, spoke at the Foreign Investors Summit 2025 in Dhaka, emphasizing the need for Bangladesh to attract long-term foreign capital. Hirose praised Bangladesh's economic growth, crediting microfinance pioneers like BRAC and Grameen Bank for early momentum. He called for inclusive growth, emphasizing the importance of technology in democratizing investment and ensuring broad participation in wealth creation.
Ruchir Desai, fund manager at Asia Frontier Investments Limited, echoed these sentiments, drawing comparisons between Bangladesh and Sri Lanka. Desai sees positive signs in Bangladesh, including easing inflation, rebounding exports, strong remittances, and low valuations. However, he noted that Bangladesh's foreign investor confidence began waning around the 2018-19 fiscal year due to regulatory overhangs, interest rate caps, and stock market shutdowns.
Amir Khasru Mahmud Chowdhury, a BNP Standing Committee Member, stated that the news of the upcoming election has spread, and domestic and foreign entrepreneurs are gearing up for investment. He emphasized the need for deregulation to attract investments. Dhaka Stock Exchange (DSE) Chairman Mominul Islam stated that the government has shown a strong commitment to capital market development. Anisuzzaman Chowdhury, the chief adviser's special assistant for economic affairs, stated that Bangladesh's capital market performance showcases the economy's stability.
If voted to power, the BNP has pledged to steer Bangladesh towards an investment-driven economy. M Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh, delivered a keynote presentation to foreign investors highlighting Bangladesh's economic progress. He warned global investors can be capricious and can act as a "tremendously disruptive negative force" if instability takes root.
In conclusion, Bangladesh's efforts to improve political stability and inclusivity, coupled with economic stabilization measures and international partnerships, are attracting foreign investors. The country's commitment to capital market development and deregulation is also seen as essential for long-term foreign investment. As Bangladesh continues to progress, it is poised to become a significant player in the global economy.
- The interim government's focus on political stability, economic reforms, and capital market development in Bangladesh has sparked interest among global investors, especially those in the finance and investing sectors, as they seek long-term investments in a growing economy.
- Recognizing the importance of political and economic stability, foreign investors are closely monitoring Bangladesh's political landscape and the BNP's potential impact on the country's investment-driven economy, paying particular attention to the pledge of institutionalizing more inclusive governance and preventing political monopolization.
