The entrepreneurs noted that while political stability is not the only factor for attracting investment, it remains a critically important one. When political stability is absent, the continuity of investment policies is disrupted, and private sector entrepreneurs lose the motivation to invest.

This issue is even more relevant for foreign investors. Domestic investors cannot easily move their capital abroad due to legal constraints, but foreign investors face no such limitations. They are free to decide whether or not to invest in a country. In that sense, foreign investors are like “migratory birds”—they will not settle in a place unless they find both safety and sufficient returns. If local investors themselves are not investing, foreign investors also tend to stay away.

Foreign investment generally takes two forms: direct capital investment and joint ventures with local entrepreneurs. The latter often proves difficult when trustworthy local partners are hard to find. A lack of credibility among domestic entrepreneurs raises the risk of foreign investors being defrauded.

Bangladesh’s poor investment environment is also reflected in its low private investment-to-GDP ratio, which has stagnated around 23–24% for years—well short of the 28% target set in the Seventh Five-Year Plan. Despite various efforts, private investment has failed to increase, while public sector investment surged during the previous government’s term through the implementation of numerous megaprojects. These projects, often financed through heavy foreign borrowing, have raised concerns over corruption and misuse of funds. As a result, Bangladesh is increasingly becoming dependent on external debt, which has surpassed the $100 billion mark for the first time.

Foreign investment plays a vital role in the development of any country, particularly for Bangladesh, where domestic capital is limited. Without sufficient private investment, GDP growth slows, industrialization stagnates, job creation declines, and poverty reduction becomes difficult. Moreover, foreign investment strengthens foreign exchange reserves and brings in technology, machinery, and expertise, contributing directly to employment generation.

Bangladesh has the potential to become a major destination for foreign investment due to its strategic location as the gateway to South Asia, a large domestic market of over 170 million people, and a rapidly growing middle class. The country also enjoys preferential trade benefits such as the EU’s GSP scheme and offers abundant low-cost labor. However, low labor costs alone are not enough—foreign investors increasingly seek skilled and trained workers.

To accelerate economic growth, Bangladesh must focus on boosting both domestic and foreign investment. For that, it is crucial to hold the next national election on schedule and ensure that it is free, fair, and credible. Once a new government is elected with legitimacy, both local and foreign investors will be more confident to invest. Above all, the country must ensure good governance across service sectors so that investors can access necessary services without harassment or bureaucratic barriers.

The author is a former Vice-Chancellor of the University of Dhaka