Bangladesh is facing a widening disconnect between strong investment interest and the actual flow of capital for new ventures, with investors slowing the release of committed funds as “they wait for an elected government to take office”.

Government officials concerned and economists note that while there is a recent uptick in reinvestment by existing players, investors are reluctant to release new money without political stability, regulatory predictability and assurance of policy continuity.

Between January and August 2025, the country received investment proposals worth $1.85 billion, including $650 million from foreign sources. Of this, the Bangladesh Investment Development Authority (BIDA) registered around $1 billion, while the Bangladesh Export Processing Zones Authority (BEPZA) recorded nearly $500 million.

Yet not a single dollar has been disbursed so far this year, officials confirmed to the Daily Sun.

“There is no fixed timeframe for disbursing funds,” a BIDA official said, noting that most foreign investors remain cautious until political stability is restored.

Another BIDA representative noted that much of the recent activity stems from previously committed projects rather than fresh ventures. “New disbursements will likely start after the forthcoming general election – slated for February 2026,” the official said.

Humayun Rashid, immediate past president of the International Business Forum of Bangladesh, said foreign investors had become “distinctly hesitant”.

“Several foreign investors recently asked me whether Bangladesh’s national election will be held soon,” he told the Daily Sun, adding, “Both local and foreign investors want an elected government. The country’s business is dormant now, and they are waiting for a confident and stable environment.”

Humayun, who is also the managing director and CEO of Energypac Power Generation Ltd, added that although Bangladesh remains an attractive destination for many international firms, confidence has weakened because of ongoing political uncertainty.

FDI growth driven by reinvestments rather than new capital

Despite the slowdown in new disbursements, Bangladesh recorded a 61.5% year-on-year increase in net foreign direct investment, rising to $1.09 billion in the first half of 2025.

However, most of this growth came from reinvested earnings and intra-company loans rather than fresh equity inflows.

Economists say this suggests existing investors are keeping their operations running, but new ventures are being delayed.

Economists call for stability and reforms

Former World Bank lead economist Dr Zahid Hussain said Bangladesh must bolster political stability, regulatory reform and economic zone readiness if it is to unlock major foreign investment.

“Investors always want stability for long-term investment,” he told the Daily Sun.

“We now hope the parliamentary elections will be held, and the new government will present its economic plans. But unless we ensure stable politics, regulatory predictability, and ready economic zones, no major investment will come.”

He noted that the investment summit held earlier this year had generated interest, but intent would not translate into capital flows without clearer policy direction and stronger governance.

Election timeline seen as pivotal to investor decisions

The 13th parliamentary election is expected in the first half of February 2026.

Although the interim administration has sought to reassure the business community, uncertainty around the political transition continues to weigh on investor sentiment.

Policy analysts say that without consistent signals on policy continuity and regulatory reform, both foreign and domestic investors are likely to maintain a wait-and-see stance.

Outlook

Analysts note that Bangladesh’s long-term prospects remain supported by reinvestment from existing companies and sustained interest in sectors including technical textiles, pharmaceuticals, IT and medical devices.

However, they warn that the absence of new disbursements – despite billions of dollars in proposals – shows investors are prioritising political clarity before releasing fresh funds.

Industry observers expect the investment pipeline to remain sluggish until an elected government takes office and policy direction becomes clearer.

The reporter can be reached at: [email protected]