Dhaka hopes to lift foreign direct investment relative to the country’s gross domestic product to “about 4%” over the next three to five years, Ashik Chowdhury, executive chairman of the Bangladesh Investment Development Authority, said during his recent visit to Japan.
This FDI ratio for Bangladesh came to around 0.3% in 2023, below the 0.8% global figure, according to the World Bank.
The new government’s planned reforms include streamlining permit and customs procedures as well as fighting corruption. The agency surveyed over 200 domestic and foreign companies on ways to improve the investment environment, Chowdhury said.
“So this year we fix the problems,” Chowdhury said. “I don’t expect the FDI number to shoot up this year, but I do expect the FDI number to change dramatically from next year.”
The South Asian nation is undergoing a political transition after weeks of student-led protests led to the fall of longtime Prime Minister Sheikh Hasina in August. An interim government led by microcredit pioneer and Nobel Peace Prize laureate Muhammad Yunus is preparing to hold elections.
Chowdhury, a former investment banker with international experience, was tapped by Yunus to lead the investment agency.
Bangladesh’s garment industry accounts for more than 80% of its exports. © ReutersBangladesh faces the challenge of diversifying an economy that relies on the garment industry for over 80% of its exports. The government has identified promising sectors such as electronic parts and pharmaceuticals. Chowdhury said he sees leather and leather products as a promising idea for a first step beyond the garment industry.
Bangladesh recorded a trade surplus of $4.2 billion against the U.S. in 2023, International Monetary Fund data shows. The U.S. accounts for roughly 20% of Dhaka’s exports and is the largest destination.
U.S. President Donald Trump has called for imposing “reciprocal tariffs” on many countries to fix what he calls trade imbalances.
“We haven’t ever heard President Trump talking about Bangladesh specifically yet in terms of tariffs,” Chowdhury said.
“I think the way he has strategized so far, it may work in our favor,” the said. “The tariffs he has put on China, for example, make us a lot more attractive as a country.”
Chowdhury said Dhaka wants to increase imports of U.S. wheat and liquefied natural gas (LNG).
Chowdhury also said Bangladesh is considering establishing special economic zones for Chinese companies, as these businesses are “interested in relocating their own production hub to Bangladesh.”
Japan is Bangladesh’s largest aid donor. With a population of of 170 million, the South Asian country has appeal both as a market and as a labor pool. The number of Japanese companies operating in Bangladesh has tripled over the past 10 years to around 350.
After the political turmoil in 2024, the pace of companies entering Bangladesh slowed. But Chowdhury stressed that the political situation has stabilized.
Bangladesh’s interim government chose Japan as the first country to which to send a delegation seeking investment “because we do believe that Bangladesh and Japan have strengths that are complementary,” Chowdhury said. “My expectation from Japanese companies is to come and experience Bangladesh properly and take an informed decision about whether Bangladesh is the right destination for them.”
The article appeared in the asia.nikkei