World Bank urges reforms in 4 sectors to boost investment in Bangladesh

The World Bank Group has stressed policy reform, fixing weaknesses in the banking sector and improving the business environment to attract long-term foreign investment and create jobs in Bangladesh.

In its assessment, the organization said that removing investment barriers in green garments, middle-income housing, dyes and pigments manufacturing, and digital financial services could create a large number of jobs.

These prospects were outlined on Wednesday (October 14) in a discussion of the World Bank’s 2025 private sector assessment report on Bangladesh, the Country Private Sector Diagnostic (CPSD).

As part of the World Bank’s 2026 Annual Meetings underway in Bangkok, an online Q&A session titled “Unlocking Investment for Jobs” discussed Bangladesh’s investment situation and employment. The questions were put by Golam Moula, business editor of Bangla Tribune, and answered by World Bank Group expert Sebastian Boatro.

According to the World Bank’s assessment, increasing investment in middle-income housing could create 2.37 million jobs a year in the construction industry. Expanding dyes and pigments manufacturing in the country could create more than 664,000 formal jobs. Implementing the necessary reforms in digital financial services could generate between 96,000 and 460,000 new jobs. The organization also identified the green garment industry as an important area for expanding investment and employment.

In the World Bank’s view, realizing these prospects will require more than increased financing: policy and business obstacles in the relevant sectors must also be removed. Ensuring a stable, investment-friendly environment for domestic and foreign investors is essential. In particular, structural reforms could play an important role in maintaining competitiveness in international markets after Bangladesh graduates from least developed country (LDC) status.

The discussion also raised questions about weaknesses in Bangladesh’s banking sector. Golam Moula asked how high non-performing loans, governance deficits and a crisis of confidence in the banking system could be addressed. In response, the World Bank Group expert said the organization has approved $450 million in financing to strengthen the country’s financial sector.

Under the “Financial Sector Support Project-2,” support will be provided to strengthen the deposit protection system, build Bangladesh Bank’s supervisory capacity, lay the groundwork for restructuring weak banks, and reform state-owned banks. The initiative also includes increasing the capital of the deposit protection fund and building an effective framework for emergency liquidity support.

Meanwhile, the International Finance Corporation (IFC), a World Bank Group institution, is working to increase international investment in Bangladesh’s private sector. Under its “originate-to-distribute” approach, the IFC provides part of a project’s financing and tries to bring in international investors for the rest. The IFC’s participation can help build confidence among other investors.

The World Bank discussion said political and policy uncertainty, credit risk, currency volatility and weak institutional structures are major obstacles to international investment. To reduce these risks, the organization launched a guarantee platform in 2024, aimed at bringing various guarantee facilities for investors together in one place.

According to the World Bank, its support for mobilizing private sector investment has more than tripled over the past four years, reaching $112 billion in fiscal 2026. But the organization considers it equally important to look beyond the amount invested and assess how many jobs and economic opportunities that money creates. To achieve this, it emphasized investment in human capital and infrastructure, a business-friendly regulatory environment and support for expanding the private sector.