Bangladesh’s strategic location between South and Southeast Asia and its vast labour force have long attracted US businesses and investors. However, persistent constraints have led to a 5% decline in American investment, according to a recently released US government report.
The 2025 Investment Climate Statements: Bangladesh noted that the country received $4.18 billion in foreign direct investment (FDI) during 2023-24, down from $4.4 billion in 2022-23, according to Bangladesh Bank figures.
The report acknowledged that Bangladesh has made gradual progress in easing some barriers – such as improving electricity reliability – but said foreign investment continues to be hampered by inadequate infrastructure, limited financing options, bureaucratic red tape, an uneven tax regime for foreign firms, and corruption.
“Bangladesh’s investment climate reform efforts remain in the early stages of implementation,” the report said, noting that a sluggish and reportedly corrupt judiciary, along with limited options for alternative dispute resolution, still obstruct the fair and timely enforcement of contracts.
Discrimination against foreign firms
While discrimination against foreign investors is not pervasive, the report highlighted that the government tends to favour domestic industries.
For example, imported medicines face stricter approval requirements if they compete with locally manufactured products, while new shipping and insurance companies must maintain majority local ownership.
In practice, foreign firms often find it necessary to partner with local businesses, even when such arrangements are not legally mandated.
Transparency concerns
The report observed that regulatory authority is concentrated within ministries, with many key decisions made by the Chief Adviser’s Office. Although digitalization has improved some government services, regulations are often unclear, inconsistently applied, or not widely publicized – creating barriers for investors.
“Some investors have cited unclear regulations and lack of implementation as key obstacles,” the report noted, pointing to protectionist policies and subsidies in select industries.
Judicial Independence
The weak and slow legal system remains a major deterrent for investors, the report said.
Although based on English common law, Bangladesh’s judiciary suffers from limited enforcement capacity and a lack of independence, as the government controls judicial appointments. Courts tend to favour state-owned enterprises, especially those with government-appointed leadership.
Reforms aimed at granting greater independence to the judiciary are under consideration, but progress has been slow.
Intellectual property concerns
The report also flagged Bangladesh’s weak protection of intellectual property rights (IPR). Counterfeit clothing, pharmaceuticals, software, and consumer goods are widely available.
Although Bangladesh was not listed in the 2025 USTR Special 301 Report, it was cited as one of the world’s top five sources of counterfeit apparel.
Public awareness of IPR is gradually increasing through advocacy by groups such as the Intellectual Property Association of Bangladesh and the American Chamber of Commerce. However, the government has yet to make significant investments in enforcement.
