Corruption remains a serious impediment to investment and economic growth of Bangladesh, according to the 2025 Investment Climate Statements: Bangladesh, published by the United States Department of State on Friday.
The report also stated that Bangladesh is a party to the United Nations Convention Against Corruption and has laws to combat bribery, embezzlement, and other forms of corruption, but enforcement is inconsistent.
‘Despite the interim government’s efforts to combat corruption, it remains common in public procurement, tax and customs collection, and among regulatory authorities,’ the report added.
Off-the-record payments by firms reduce Bangladesh’s GDP by 2 per cent-3 per cent, the report estimated.
The previous Awami League government publicly stated its commitment to fighting corruption, but opposition parties claimed that the Anti-Corruption Commission, the main institutional anti-corruption watchdog and investigator, was instead used to harass political opponents.
‘Government efforts to liberalise public procurement rules and a constitutional amendment that diminished the ACC’s independence undermined institutional safeguards,’ the report stated.
The interim government has signalled a stronger anti-corruption stance since taking office.
‘It reconstituted the ACC with new leadership, published a white paper detailing high-profile corruption cases, and formed a new anti-money laundering commission headed by the Bangladesh Bank governor,’ the report added.
The interim government’s investment climate reform efforts remained in the early implementation stage.
‘A sluggish and reportedly corrupt judicial system (currently subject to reform efforts) and limits on alternative dispute resolution mechanisms continue to impede the timely enforcement of contracts and the fair resolution of business disputes,’ the report said.
Apart from the corruption, the report also identified another four key barriers that continue to impede foreign investment in Bangladesh, despite gradual progress in improving the country’s investment climate over the past decade.
Bangladesh made gradual progress over the past decade to reduce constraints on investment, such as efforts to better ensure reliable electricity service, but foreign investment continues to be hindered by the mentioned issues, the report added.
The foreign investors still face significant challenges, including inadequate infrastructure, limited access to financing, bureaucratic delays, and heavy tax burdens on foreign companies.
The report also stated that the interim government’s enforcement of intellectual property and labour rights remains ineffective, and the government does not devote adequate resources to IPR protection.
‘Although Bangladesh made progress over the past decade to improve fire and building safety standards in the export-focused ready-made garment industry, workers face significant legal barriers in exercising their rights to organise and collectively bargain,’ the report added.
The interim government is working to remove two Hasina-era practices that hinder foreign investment: delayed foreign currency payments owed by state-owned enterprises and a requirement that the Bangladesh Bank approve the transfer of foreign currency from the country.
The foreign currency shortage coincided with a banking scandal in which several major Bangladeshi banks made large, questionable loans to companies linked to members of the ruling Awami League party that later defaulted on the loans.
By December 2024, the value of non-performing loans rose to $28.57 billion, and the interim government has prioritised banking sector reform to align the sector with international best practices, the report added.