Energy shortages, especially the lack of natural gas, present a significant obstacle for both local and foreign investors in Bangladesh, according to Ashik Chowdhury, the executive chairman of Bangladesh Investment Development Authority (Bida). Addressing reporters at a workshop, Chowdhury highlighted that both domestic and foreign investors encounter similar challenges, with energy, particularly gas, being a primary concern.
Gas shortages have notably impacted factories, while investors also grapple with issues related to electricity supply and regulatory complexities at the National Board of Revenue (NBR). Bida has dedicated considerable efforts to energy-related initiatives as energy constraints hinder investment and economic growth significantly.
Despite government efforts to address the crisis through renewable energy projects and enhancing gas supply infrastructure, Chowdhury acknowledged that resolving the energy crisis will take time. Initiating projects, such as a new floating storage and regasification unit (FSRU), will take at least 18 months, with anticipated relief from the energy crunch by 2027-28.
Challenges in the existing gas infrastructure pose additional hurdles, as the capacity to import and distribute gas remains a government-dependent factor even if private investors establish gas-fired power plants. The government aims to boost foreign direct investment to 2.7 percent of GDP by FY31 and increase total investment substantially over the next five years, as outlined in the proposed budget for FY2026-27.
Bida’s strategic focus spans the investment lifecycle, encompassing promotion, policy support, approvals, service delivery, and aftercare. The agency’s one-year work plan includes 25 initiatives categorized under infrastructure development, investment facilitation, and investment development, targeting industrial park development, progress on the Chinese Economic Zone, intellectual property reforms, overseas Bida offices, and industry mapping.
In a bid to attract investments, Bida has secured a substantial investment pipeline, with plans to add another $1.5 billion this year. Recent milestones include cabinet approvals for the Chinese Economic Zone and a fintech zone, alongside ongoing efforts on e-visas, intellectual property reforms, and establishing Bida’s office in Guangzhou, China.
Highlighting the significance of foreign direct investment (FDI), Nurjahan Akter, an additional director at the Bangladesh Bank, noted that Bangladesh reports FDI on a net basis, which may understate actual inflows. FDI comprises equity capital, reinvested earnings, and inter-company loans, aiding foreign-owned firms in managing liquidity pressures.
The government, through Bida, is implementing reforms to enhance the investment climate by streamlining visa, work permit, and business registration services via the Bangladesh One Stop Service platform. The introduction of a new investment incentive policy and ongoing reforms is expected to drive increased investments, including from non-resident Bangladeshis.
