March 1, 2025
2 mins read

South Korea Warns of Investment Risks in Bangladesh

South Korea has raised concerns over Bangladesh’s political instability, warning that ongoing uncertainty is discouraging foreign investment and slowing economic growth.

Speaking at the Meet the OCAB event in Dhaka, organised by the Overseas Correspondents Association Bangladesh (OCAB), South Korean Ambassador Park Young-sik highlighted the reluctance of investors to commit funds amid the prevailing political climate.

“Bangladesh is currently under an interim government, and whenever I speak with businessmen, they tell me they are holding back on investment. They are waiting and observing to see how the situation unfolds,” Park said on Friday.

The ambassador noted that instability is detrimental to Bangladesh’s economic progress, calling for urgent measures to resolve the country’s political turmoil.

FDI Concerns and Economic Slowdown

Park pointed to Bangladesh’s declining private investment and consumption, warning that this trend would further slow the nation’s economic growth.

“Private investment and consumption are growing very slowly. This will inevitably lead to slower economic growth in Bangladesh,” he stated.

Citing comparisons with regional economies, the ambassador noted that Bangladesh’s Foreign Direct Investment (FDI) to GDP ratio lags behind India and Vietnam, indicating a lack of investor confidence.

“Mere offering of incentives is not enough. Bangladesh needs to simplify visa procedures, customs clearance, and rational tax and tariff policy,” Park added.

He also called for: easier profit repatriation without holding taxes; stronger anti-corruption measures; reforms in trade policies to facilitate smoother foreign investments

Economic Challenges Amid Political Unrest

Bangladesh has been grappling with severe economic challenges as political unrest intensifies. Since August 2024, the country has faced widespread protests, strikes, and violent confrontations.

In February, reports emerged that businesses across various sectors were suffering from a liquidity crisis, forcing many commercial and industrial establishments to shut down.

Entrepreneurs are also struggling to import raw materials, further straining businesses already under financial pressure.

Adding to concerns, Bangladesh’s readymade garments sector, the country’s primary export industry, is facing increasing security threats.

Several attacks on business owners have been reported in recent months, prompting calls from industry leaders for the interim government to ensure safety and stability.

Uncertainty Clouds Economic Outlook

With foreign investors hesitating and domestic businesses struggling, Bangladesh’s economic future remains uncertain. South Korea’s warning underscores the urgent need for political stability to restore investor confidence and sustain economic momentum.

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