Bangladesh Faces Lowest Investment in a Decade

Staff Reporter

Bangladesh’s economy is currently grappling with its lowest investment crisis in a decade, a situation that has worsened since the interim government took charge. Experts attribute this to political instability, unreliable statistics, and complexities in the tax system.

In the first quarter of the 2024-25 fiscal year, the country’s GDP growth plummeted to just 1.81%, the lowest post-pandemic figure. Political unrest and violence have disrupted production, eroding investor confidence.

Questions have long been raised about the GDP statistics published by the Bangladesh Bureau of Statistics (BBS). There are allegations that the previous administration inflated GDP growth figures. Professor Selim Raihan of Dhaka University’s Economics Department stated, “We’ve criticized BBS’s GDP calculation methodology in our reports. Much of their data doesn’t align with ground realities.”

Complex tax regulations and harassment are discouraging business investments. Former Dhaka Chamber President Abul Kasem Khan noted, “NBR’s tax audits and harassment during tax payments persist. Many entrepreneurs wonder whether to focus on business or resolving audit issues.”

The dollar market has become volatile, causing foreign exchange reserves to shrink. By July 2023, reserves dropped by $1.3 billion to $20.48 billion. The dollar crunch has increased import costs while reducing export earnings, negatively impacting the economy.

Experts emphasize that restoring economic stability requires accurate statistics, tax system reforms, and investment-friendly policies. Ahsan H Mansur, Executive Director of Policy Research Institute, observed, “Law and order must improve first. Otherwise, any economic measures will prove ineffective.”

This presents a major challenge for the interim government. However, proper policies and effective actions can potentially revitalize the investment climate.