Bangladesh will stay resilient, continue to attract foreign direct investment (FDI) and live up to its image of a favourite destination for global investors despite the pandemic-induced economic downturn, according to a new report released by the US Department of State, which mentioned about the country’s large, young, and hard-working workforce and strategic location.

The ‘2021 Investment Climate Statements’ report, which analyses the investment climate in more than 170 economies that are current or potential markets for US companies, said Dhaka’s efforts to improve the domestic business environment in recent years show promise but implementation is yet to materialise.

Despite gradual progress in reducing some constraints on investment, including taking steps to better ensure reliable electricity, inadequate infrastructure, limited financing instruments, bureaucratic delays, lax enforcement of labour laws and corruption continue to hinder foreign investment, the report said.

Slow adoption of alternative dispute resolution mechanisms and sluggish judicial processes impede the enforcement of contracts and the resolution of business disputes.

Buoyed by a young workforce and a growing consumer base, Bangladesh has enjoyed consistent annual GDP growth of more than six percent over the past decade, with the exception of the Covid-induced economic slowdown in 2020, the report mentioned.

Much of the over 6 per cent growth over the past decade continues to be driven by the readymade garment (RMG) industry, which exported $28 billion of apparel products in fiscal 2019-2020, and continued remittance inflows, reaching a record $18.2 billion in that fiscal, the US government report said.

However, the country’s RMG exports dropped by more than 18 per cent year on year in that fiscal as the pandemic resulted in reduced global demand for apparel products.

Bangladesh’s FDI stock was $16.9 billion in 2019, with the United States being the top investing country with $3.5 billion in accumulated investments.

Bangladesh received $1.6 billion FDI in 2019. The rate of FDI inflows was only 0.53 percent of the gross domestic product, one of the lowest rates in Asia, according to the US report.

The report, however, highlighted the “diminishing space for the political opposition, undermining judicial independence, and threatening freedom” of the media and NGOs.

International retail brands selling Bangladesh-made products and the international community continue to press the government of Bangladesh to meaningfully address worker rights and factory safety problems in Bangladesh, said the report.

Critical work remains on safeguarding workers' rights to freely associate and bargain collectively, including in export processing zones (EPZs), it said.

The Bangladesh government has limited resources devoted to intellectual property rights (IPR) protection and counterfeit goods are readily available in Bangladesh, the report added.