UNCTAD sets 5 priority reforms for Bangladesh ahead of LDC graduation

The United Nations Conference on Trade and Development
(UNCTAD), in a report, has identified five key priority reform areas for
Bangladesh to strengthen its investment climate, enhance competitiveness, and
support sustainable, investment-led growth in the years ahead.
The
report highlights both progress and persistent challenges in Bangladesh's
investment climate since the 2013 Investment Policy Review (IPR). While
acknowledging important reforms, it stresses the need for deeper and more
sustained structural changes—particularly as the country prepares to graduate
from Least Developed Country (LDC) status.
It
also underscores the importance of ensuring a smooth transition as Bangladesh
faces the gradual withdrawal of preferential treatment under various
international agreements, amid evolving global trade and geopolitical dynamics.
The United Nations Development Programme (UNDP), UNCTAD and
the Investment Development Authority (Bida) jointly launched the UNCTAD
Investment Policy Review (IPR) Implementation Report for Bangladesh at Bida
building in the capital yesterday (27 April).
The
high-level dialogue brought together senior government officials, private
sector representatives, and development partners to discuss strengthening the
country's investment framework in preparation for LDC graduation.
To
strengthen the investment climate, the report outlines five priority reforms as
below:
Firstly,
the report calls for the development of a national investment policy
alongside a consolidated investment law to bolster investor confidence and
support a coordinated, whole-of-government approach to attracting and
effectively utilising foreign direct investment (FDI) in line with national
development objectives.
Secondly,
the report put emphasis on enhancing investment promotion and facilitation to
improve service delivery and attract higher-quality investments.
Thirdly,
it focuses on sectors identified in the Foreign Direct Investment (FDI)
Heatmap, recommending targeted interventions to drive growth and stronger
institutional coordination to ensure alignment on sectoral priorities.
Fourthly,
the report underscores the need for mitigating the effects of losing
preferential Least Developed Country (LDC) status by engaging key trade and
investment partners and strengthening the competitiveness of the domestic
private sector in the post-LDC context.
And
lastly, the UN report stresses on removing key bottlenecks to investment by
improving access to land and infrastructure, which remain critical constraints
for the potential investors.
The
report also found that Bangladesh lags significantly behind its regional peers
in attracting foreign direct investment (FDI). According to the findings,
Vietnam's FDI stock is approximately 13 times higher than Bangladesh's,
Indonesia's nearly 17 times higher, and Cambodia's about three times higher.
This relatively low FDI stock highlights weaker inflows and several underlying
structural constraints.
In
2024, Bangladesh's FDI stock stood at $18.29 billion, compared to $249.14
billion in Vietnam, $305.66 billion in Indonesia, and $52.66 billion in
Cambodia, says the report.
Presenting
the findings of the report, Legal Officer of UNCTAD's Investment and Enterprise
Division Kiyoshi Adachi noted that most of the Investment Policy Review
recommendations for Bangladesh have only been partially implemented.
"It
is a somewhat subjective grading, but most recommendations fall into the
partially implemented category," he said, adding that systematic tracking
of progress remains essential.
He
also highlighted weak inter-agency coordination, pointing to a mismatch between
the sectors identified in Bida's FDI Heatmap—such as semiconductors, electric
vehicle batteries, and technical textiles—and their reflection in the national
industrial policy.
Adachi
also noted that the Investment Act of 1980 is outdated, lacking clear
consolidation of FDI rules and well-defined investor treatment provisions. He
pointed out that entry procedures still involve multiple approvals and suffer
from limited transparency. Although digitalisation efforts are underway, they
remain constrained by continued reliance on manual processes.
He
further highlighted ongoing challenges related to foreign exchange
repatriation, land access, infrastructure limitations, and restricted skilled
labour mobility, including the absence of a dedicated personal visa scheme.
Bida
Executive Chairman Chowdhury Ashik Mahmud Bin Harun stressed that Bangladesh
must "shift gears" to attract global investment. "If we have
been operating in second gear so far, we now need to move into fifth
gear," he said, underscoring the importance of competitiveness and
alignment with global standards.
UNDP
Resident Representative in Bangladesh Stefan Liller emphasised that coherent
policies and strong institutional capacity are critical to attracting
responsible investment that generates employment and promotes inclusive growth.
Chief
Executive Officer of BUILD Ferdous Ara Begum said "Her organisation has
compiled an updated business licensing guidebook covering more than 600
licences. Including renewals, the total number of licences may range from 500
to 1,200."
She
also noted that starting a business in Bangladesh—across manufacturing,
services, or trade—initially requires around 23 licences. Based on data from
citizen charters, obtaining these approvals takes an estimated 477 days.
Referring
to a Cabinet Division directive issued in 2000, Begum further explained that
ministries were instructed to publish timelines for administrative procedures.
BUILD's analysis, based on these official timelines, shows that completing the
required processes to start a business takes approximately 477 days.
She
said that if starting a manufacturing business alone takes this long, other
sectors may require even more time. "In that respect, the top priority
should be reducing the number of steps, shortening the time, and simplifying
the process," she said, adding that this remains one of the private
sector's biggest challenges. She also noted that the private sector has already
submitted several recommendations to address these issues.
Ferdous
Ara Begum also commented on the proposed plan to merge five investment-related
regulatory and promotional agencies with Bida, PPP, Beza, Bepza, BHTPA and BSIC.
She
said such institutional consolidation could help improve coordination, reduce
duplication, and streamline investment services. However, she stressed that its
success will depend on how effectively the reform is implemented and whether
the merged structure can ensure faster and more efficient decision-making for
investors.
Regarding
the National Board of Revenue (NBR), Ferdous Ara Begum said the tax system
remains one of the biggest challenges for Bangladesh's private sector. She
noted that although various reforms are underway, significant issues persist in
tax policies.
The
report concludes that key achievements include the establishment of Bida as the
lead investment facilitation agency and the expansion of digital investment
services. However, it recommends adopting a unified national investment policy,
enacting a consolidated investment law, and fully digitalising investment
procedures to enhance competitiveness ahead of LDC graduation.
















