Bangladesh Defense
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A paradigm shift in investing
Bangladesh has a history of sacrificing the growth of both foreign and local investment at the altar of bureaucratic red tape and corruption at various stages of the investment process, political rent-seeking, infrastructural weakness, and inefficiency. On the first day of the four-day Bangladesh I
A paradigm shift in investing
Atiqul Kabir Tuhin
Published :
Apr 09, 2025 22:50
Updated :
Apr 09, 2025 22:50
Bangladesh has a history of sacrificing the growth of both foreign and local investment at the altar of bureaucratic red tape and corruption at various stages of the investment process, political rent-seeking, infrastructural weakness, and inefficiency. On the first day of the four-day Bangladesh Investment Summit on April 07, while debriefing journalists, BIDA Executive Chairman Chowdhury Ashik Mahmud Bin Harun cited the case of how complexities over the land right issue of Korean Export Processing Zone (KEPZ) in Chattogram have led to the withdrawal of substantial amount of foreign investment over the decades. Korean entrepreneur Kihak Sung, Chairman of Youngone Corporation, bought 2,500 acres of land in Anwara, Chattogram and established the KEPZ in 1999. In spite of setting up the country's single largest private export processing zone, Sung has been facing persistent delays in securing mutation documents.
The BIDA Chairman revealed that in 2012 Samsung proposed to invest $22 billion and required land documents as part of their due diligence, which KEPZ was unable to provide, leading Samsung to shift the investment to Vietnam. Sung himself had also moved some of his ventures out of Bangladesh due to the lack of these mutation documents.
However, the good news is, that the land rights issue of the KEPZ which had been unresolved for over two decades has been resolved within the past two months following the intervention of Chief Advisor Dr. Muhammad Yunus. The government has already provided Sung with the mutation documents, which has encouraged him to bring in 31 Korean investors to participate in the four-day Bangladesh Investment Summit, which was attended by over 500 foreign investors from some fifty countries and around 2,500 local investors. Not only Sung brought some of his foreign investor friends along with him to the investor summit, but also he reportedly accompanied them to EPZ visits and highlighted the progress Bangladesh made under the current government in ease of doing business.
The resolution of the KEPZ land rights issue demonstrates that with strong political will and inter-agency cooperation-where government agencies and ministries prioritise national interest over bureaucratic rivalries-significant positive outcomes are achievable for businesses and service delivery alike. This is the kind of decisive action Bangladesh must replicate across various sectors to remove investment hurdles and build the confidence of foreign investors. Bangladesh has been an attractive destination to foreign investors for its cheap and trainable labour, comparatively cheaper utility services such as land and water, a vibrant consumer market and a thriving middle class. Over the years, great strides have also been made in developing infrastructure. The mega investment summit is a significant initiative to showcase the country's investment prospects and the progress it has made in making business easier.
The interim government, since assuming power nearly eight months back, has been working painstakingly to clean the Augean stables left behind by the corrupt and autocratic rule of the Hasina administration. Over the past decade and a half, the country's economy created a boom-and-bust cycle and remained trapped in stagnation, weak financial institutions due to ballooning non-performing loans, and debt. In the first quarter (Jul-Sep) of current FY 25, according to the latest BBS report, the GDP growth had plummeted to 1.96 per cent. Now, it is forecasted to grow to 4.48 per cent in the Q2 (Oct-Dec). To absorb the 2.4 million young people entering its labour market every year, Bangladesh needs a consistent economic growth rate exceeding 7 per cent. This higher growth rate is crucial not only for job creation but also for maintaining social stability and capitalising on the country's demographic dividend.
The median age in Bangladesh is only 27. That means Bangladeshis on average are a decade younger than the Thai people and two decades younger than Germans. Equipping this burgeoning youth demographic with relevant skills and generating meaningful employment opportunities represents one of Bangladesh's most pressing challenges at this critical juncture.
The much-touted economic growth during the Hasina regime's so-called development boom failed to generate sufficient employment, largely because it was driven by large-scale public sector development projects-many of which were wasteful, politically motivated, and served as avenues for siphoning off state resources through inflated costs. This infrastructure-heavy approach contributed to widening budget deficits and a rising public debt burden. Furthermore, the government's overwhelming focus on physical infrastructure came at the expense of human capital investment, resulting in a sharp decline in the quality of education and labour productivity. It has already been evident that the construction of mega-bridges, flyovers, expressways, and other large infrastructure alone cannot drive long-term economic growth. Rather, as global experience shows, sustainable economic development hinges on investment in human capital, innovation, and robust institutional reform.
So, there must be a paradigm shift from public sector mega infrastructural development to investment focused on human capital, technology, and institutional reforms. This requires a substantial investment in expanding cutting-edge technical and vocational training programmes, in partnership with esteemed international institutions. Also, there is a need to update the curricula of existing science and technology universities, establish more IT institutes in strategic cities if necessary, offer seed funding or low-interest loans to graduates, and provide comprehensive support for youth in project design and implementation. To attract a diverse talent pool, these initiatives must be implemented on a significant scale. Ideally, the private sector has to invest more motivated by the zeal for entrepreneurship and innovation. The government, for its part, must take determined steps to clear investment hurdles and reduce businesses' cost of operation to make them more competitive.
That said, earning investors' confidence in the country's political stability and law and order remains a major challenge for the government. The deplorable incident of vandalism targeting several outlets of Bata, KFC and Pizza Hut by unruly mobs during a pro-Palestine rally in several parts of the country, which coincided with the investment summit, has dealt an embarrassing blow. This recurring issue of lawlessness must be resolved to instill the confidence necessary to encourage domestic and foreign investment.
Atiqul Kabir Tuhin
Published :
Apr 09, 2025 22:50
Updated :
Apr 09, 2025 22:50
Bangladesh has a history of sacrificing the growth of both foreign and local investment at the altar of bureaucratic red tape and corruption at various stages of the investment process, political rent-seeking, infrastructural weakness, and inefficiency. On the first day of the four-day Bangladesh Investment Summit on April 07, while debriefing journalists, BIDA Executive Chairman Chowdhury Ashik Mahmud Bin Harun cited the case of how complexities over the land right issue of Korean Export Processing Zone (KEPZ) in Chattogram have led to the withdrawal of substantial amount of foreign investment over the decades. Korean entrepreneur Kihak Sung, Chairman of Youngone Corporation, bought 2,500 acres of land in Anwara, Chattogram and established the KEPZ in 1999. In spite of setting up the country's single largest private export processing zone, Sung has been facing persistent delays in securing mutation documents.
The BIDA Chairman revealed that in 2012 Samsung proposed to invest $22 billion and required land documents as part of their due diligence, which KEPZ was unable to provide, leading Samsung to shift the investment to Vietnam. Sung himself had also moved some of his ventures out of Bangladesh due to the lack of these mutation documents.
However, the good news is, that the land rights issue of the KEPZ which had been unresolved for over two decades has been resolved within the past two months following the intervention of Chief Advisor Dr. Muhammad Yunus. The government has already provided Sung with the mutation documents, which has encouraged him to bring in 31 Korean investors to participate in the four-day Bangladesh Investment Summit, which was attended by over 500 foreign investors from some fifty countries and around 2,500 local investors. Not only Sung brought some of his foreign investor friends along with him to the investor summit, but also he reportedly accompanied them to EPZ visits and highlighted the progress Bangladesh made under the current government in ease of doing business.
The resolution of the KEPZ land rights issue demonstrates that with strong political will and inter-agency cooperation-where government agencies and ministries prioritise national interest over bureaucratic rivalries-significant positive outcomes are achievable for businesses and service delivery alike. This is the kind of decisive action Bangladesh must replicate across various sectors to remove investment hurdles and build the confidence of foreign investors. Bangladesh has been an attractive destination to foreign investors for its cheap and trainable labour, comparatively cheaper utility services such as land and water, a vibrant consumer market and a thriving middle class. Over the years, great strides have also been made in developing infrastructure. The mega investment summit is a significant initiative to showcase the country's investment prospects and the progress it has made in making business easier.
The interim government, since assuming power nearly eight months back, has been working painstakingly to clean the Augean stables left behind by the corrupt and autocratic rule of the Hasina administration. Over the past decade and a half, the country's economy created a boom-and-bust cycle and remained trapped in stagnation, weak financial institutions due to ballooning non-performing loans, and debt. In the first quarter (Jul-Sep) of current FY 25, according to the latest BBS report, the GDP growth had plummeted to 1.96 per cent. Now, it is forecasted to grow to 4.48 per cent in the Q2 (Oct-Dec). To absorb the 2.4 million young people entering its labour market every year, Bangladesh needs a consistent economic growth rate exceeding 7 per cent. This higher growth rate is crucial not only for job creation but also for maintaining social stability and capitalising on the country's demographic dividend.
The median age in Bangladesh is only 27. That means Bangladeshis on average are a decade younger than the Thai people and two decades younger than Germans. Equipping this burgeoning youth demographic with relevant skills and generating meaningful employment opportunities represents one of Bangladesh's most pressing challenges at this critical juncture.
The much-touted economic growth during the Hasina regime's so-called development boom failed to generate sufficient employment, largely because it was driven by large-scale public sector development projects-many of which were wasteful, politically motivated, and served as avenues for siphoning off state resources through inflated costs. This infrastructure-heavy approach contributed to widening budget deficits and a rising public debt burden. Furthermore, the government's overwhelming focus on physical infrastructure came at the expense of human capital investment, resulting in a sharp decline in the quality of education and labour productivity. It has already been evident that the construction of mega-bridges, flyovers, expressways, and other large infrastructure alone cannot drive long-term economic growth. Rather, as global experience shows, sustainable economic development hinges on investment in human capital, innovation, and robust institutional reform.
So, there must be a paradigm shift from public sector mega infrastructural development to investment focused on human capital, technology, and institutional reforms. This requires a substantial investment in expanding cutting-edge technical and vocational training programmes, in partnership with esteemed international institutions. Also, there is a need to update the curricula of existing science and technology universities, establish more IT institutes in strategic cities if necessary, offer seed funding or low-interest loans to graduates, and provide comprehensive support for youth in project design and implementation. To attract a diverse talent pool, these initiatives must be implemented on a significant scale. Ideally, the private sector has to invest more motivated by the zeal for entrepreneurship and innovation. The government, for its part, must take determined steps to clear investment hurdles and reduce businesses' cost of operation to make them more competitive.
That said, earning investors' confidence in the country's political stability and law and order remains a major challenge for the government. The deplorable incident of vandalism targeting several outlets of Bata, KFC and Pizza Hut by unruly mobs during a pro-Palestine rally in several parts of the country, which coincided with the investment summit, has dealt an embarrassing blow. This recurring issue of lawlessness must be resolved to instill the confidence necessary to encourage domestic and foreign investment.
