Bangladesh must urgently undertake ambitious reforms to attract more foreign direct investment (FDI) and revitalise domestic private investment, the Asian Development Bank (ADB) has said.

ADB Country Director for Bangladesh, Hoe Yun Jeong, warned of eroding investor confidence, as FDI inflows fell to just 0.4% of GDP in FY2024—a 71% drop between July and November last year.

He called for simplified licensing and regulatory procedures and greater policy coordination among government agencies. Key reform areas include business setup, dispute resolution, infrastructure, cross-border trade, labour laws, and taxation.

Over the past decade, Bangladesh’s FDI averaged only 0.8% of GDP, far below Cambodia (9.4%), Vietnam (4.6%), and Indonesia (1.9%).

Jeong also stressed the need for Bangladesh to meet international standards on labour, human rights, and environmental practices to enhance global investor confidence.

The ADB has downgraded Bangladesh’s FY2025 growth forecast to 3.9% from 5.1%, citing political uncertainty, industrial unrest, flooding, inflation, and financial sector weaknesses.

As the country approaches its graduation from Least Developed Country (LDC) status in 2026, Jeong warned of a potential 1–2% decline in GDP growth due to lost trade preferences and concessional finance.

He called for an economic stabilisation plan, enhanced governance, infrastructure investment, and improved interagency coordination to manage the transition and accelerate progress on the Sustainable Development Goals (SDGs).