The need for coordinated investment governance framework in Bangladesh

Bangladesh has long sought to attract higher levels of foreign direct investment (FDI) to support industrialisation, export diversification, and economic transformation. Yet, despite significant improvements in investor facilitation and the business environment, the country continues to face structural investment bottlenecks. In my opinion, the main problem is a fragmented legal and institutional framework that scatters the powers of facilitating investment among several bodies with overlapping jurisdiction but weak coordination mechanisms.

The existing architecture is mainly guided by the Bangladesh Investment Development Authority (BIDA) Act 2016, Bangladesh Economic Zones Act 2010, the Bangladesh Hi-Tech Park Authority (BHTPA) Act 2010, and the Public-Private Partnership (PPP) Act 2015. Each law has created different regulatory system, and each institution operates under different statutory framework, approval procedures, administrative jurisdictions, and sectoral mandates. This has created multiple investment regimes rather than converging into a cohesive national investment system.

For example, BIDA is mandated to attract and promote investment in areas outside the scope of other specialised authorities. On the other hand, digital investments are overseen by Bangladesh Economic Zones Authority (BEZA) for economic zones, while BHTPA look after high-tech park investment. The laws governing Investment Protection Agencies (IPA) puts in place these institutions but do not prescribe a binding coordination mechanism amongst them. Rather, statutes craft institution-specific mandates and siloed approval structures that frequently force investors to negotiate multiple compliance systems based on where or what they invest in. That often means overlapping mandates for investors, competing procedures and layered approval houses based on where and how investments are made. These parallel legal structures reduce regulatory certainty, raise transaction costs, and harness unnecessary administrative discretion.

This fragmentation of institutions is compounded by the lack of an integrated national investment code. Currently, Bangladesh is relying on a fragmented network of laws, namely the Foreign Private Investment (Promotion and Protection) Act 1980, BIDA Act 2016, and One Stop Service Act 2018, along with numerous sector-specific economic zone legislation within multiple legal frameworks such as company law, and regulatory guidelines being issued from different agencies like Bangladesh Bank, National Board of Revenue (NBR), various ministries, etc. As these laws were enacted independently and without an integrated governance framework, investment regulation has often been reliant on administrative coordination rather than enforceable institutional integration.

The government has been trying to merge several investment-related agencies, including BIDA, BEZA, BHTPA, and PPP Authority now for some time. At its core, it is a reform agenda on the legal and institutional side. In this regard, the proposed unified IPA structure should be backed by an overarching investment law that integrates investment functions and sets out parametric institutional mandates. Amendments to a number of existing statutes would likely be needed under this reform framework. This is why a unified national investment law should accompany the much-discussed merger plan. It could align approval procedures, streamline investor services, clarify government jurisdiction, and bring stronger coherence among investment-related institutions.

Despite significant improvements in investor facilitation and the business environment, the country continues to face structural investment bottlenecks. The main problem is a fragmented legal and institutional framework that scatters the powers of facilitating investment among several bodies with overlapping jurisdiction but weak coordination mechanisms.

Most importantly, legal harmonisation would require conscious amendments to existing statutes, including the BIDA Act, BEZA Act, BHTPA Act, and PPPA Act. Moreover, the One Stop Service Act 2018 needs to be revised in order to go beyond integration at the level of process or procedure and into substantive regulatory integration. The amended law may require a system of interoperable approvals, enforceable service-level commitments between agencies, and automatic information sharing protocols across ministries and regulators. Institutional consolidation will not likely be enough to remedy the longstanding governance fragmentation without such reforms. Finally, the challenge is not merely attracting more FDI but creating and maintaining a coordinated policy and institutional environment that supports diversification, investment in technology and human capital, development of domestic supply-chains, participation in higher value segments of global value chains.

In the end, of course, reforms of the investment climate cannot be untangled from legal and institutional reform. The fate of Bangladesh’s proposed IPA restructuring rests on its ability to get past shuffling the bureaucracy towards a coherent, rule-driven and strategically-coordinated investment governance approach.

The writer is Deputy Director, Bangladesh Investment Development Authority (BIDA), Prime Minister’s Office, and PhD candidate at National Graduate Institute for Policy Studies (GRIPS), Tokyo.