One clear message from the Asian Infrastructure Investment Bank’s (AIIB) 10th Annual Meeting held in Beijing in June – attended by over 3,500 participants from around the world – was that unlocking private capital is critical for inclusive and sustainable growth.
As an economist from Bangladesh with a passion for development, the discussions inspired me to rethink the importance of the private sector in emerging economies, especially in my own country, and how similar approaches could help accelerate its development journey.
Bangladesh has experienced robust economic growth since its independence in 1971, making remarkable strides in infrastructure and social progress; it has often been cited as the next “Asian Tiger.” However, recent challenges – both economic and political – have highlighted the need to mobilize new sources of financing. While transformational infrastructure investments, such as the Padma Bridge, reflect Bangladesh’s commitment to development, they also require substantial public resources, strengthening the case to mobilize private capital.
Meeting the country’s ambitious development goals – including the Sustainable Development Goals (SDGs), national climate commitments and Vision 2041 – demands significant additional resources. As of 2019, there was an infrastructure gap of 1.9%, which is substantial and growing. With a General Government Debt of 40.3% of GDP, it is evident that traditional public financing alone will not suffice. Private capital is no longer optional and is needed to help bridge critical infrastructure gaps, support the green transition and restore investor confidence in the country’s long-term prospects.
Unlocking private capital starts with building trust, and the three pillars of stability, predictability and transparency are essential to build that foundation. Additionally, investments need to be attractive to the private sector, offering clear value for money.
For Bangladesh to continue attracting meaningful private-sector investment, ongoing efforts to strengthen the business environment will be key. The Bangladesh Investment Summit, held in April in Dhaka and hosted by the Bangladesh Investment Development Authority, addressed that concern and reinforced the investment momentum. Stakeholders from across the world highlighted Bangladesh’s ambitions to engage the private sector more actively, expand investment opportunities and rebuild investor confidence. Sustained efforts to mobilize private capital – complemented by strategic partnerships with multilateral development banks (MDBs) and policy reforms – will be key to translating this momentum into long-term, impactful investments that support inclusive and resilient growth.
Some key areas that could help include:
- Restoring macroeconomic stability. Investors need a stable currency, controlled inflation and judicious use of tax and expenditure measures. A stable macroeconomic environment is the basis for long-term investment decisions.
- Developing domestic capital markets. A robust local financial ecosystem (without exposing local banks only) capable of providing long-term financing is essential to complement foreign capital and reduce overreliance on external borrowing.
- Strengthening regulations: Well-structured public-private partnership models for large-scale projects, promoting blended finance solutions and transparent procurement processes reduce risks and enhance investor confidence.
- Conducive business environment: Improving the ease of doing business, ensuring regulatory consistency and promoting good governance are critical signals for both domestic and international investors.
Beyond technical reforms, strong government leadership – together with broad-based political consensus on key economic objectives – sends a powerful signal that Bangladesh remains an attractive destination for investment.
Mobilizing private capital is central to AIIB’s mission of Financing Infrastructure for Tomorrow – infrastructure that is sustainable, resilient, technology-enabled and inclusive. As a relatively young (nearly 10 years old) MDB with over 100 members worldwide, AIIB plays a distinct role in bringing in private-sector resources to support its members in addressing their infrastructure and development needs.
My work at AIIB’s Strategy, Policy and Budget Department has allowed me to see how well-designed policies and rigorous project screening help ensure that projects are robust and bankable, building investor confidence and attracting private capital. This is particularly important for emerging economies like Bangladesh, where every dollar of infrastructure funding counts.
For Bangladesh, a founding member of AIIB, partnerships with MDBs are more critical than ever. AIIB has already demonstrated its commitment to the country through initiatives such as the Climate Policy-Based Financing program, approved in June 2024 and designed to support policy reforms to mainstream the country’s climate change adaptation and strengthen mitigation actions for sustained growth.
Such reforms not only contribute to Bangladesh’s climate resilience but also create a more predictable and attractive environment for private investors. AIIB’s experience with non-sovereign-backed financing and results-based financing operations in other members has shown how innovative instruments can help hedge risky investments, crowd in private capital and support complex large-scale infrastructure and climate projects.
As a trusted development partner, AIIB can support members like Bangladesh by:
- Providing support to improve the investment climate. Through dialogue, knowledge-sharing and technical support, AIIB works with members to help strengthen the foundations to attract private capital.
- Bringing together public and private financing. By collaborating with stakeholders across the globe as well as development partners, AIIB helps mobilize resources to support priority infrastructure and climate-resilient projects.
- Ensuring projects meet global benchmarks. AIIB supports sustainable, climate-friendly projects that follow international best practices, which is essential for long-term growth.
- Customized solutions based on country needs. Every country has its own challenges and opportunities. AIIB works in close partnership with its members to design approaches that reflect their specific priorities.
As Bangladesh slowly transitions from interest-free loans and concessional credits, the next phase of development requires a bold and coordinated action plan to unlock private capital. Public resources alone are no longer enough, and there are immense opportunities for mobilizing global capital. With the right mix of macroeconomic stabilization policies and constructive engagement with development partners such as AIIB, Bangladesh can enhance its positioning as a competitive, resilient and attractive destination for private investment.
Now is the time to move from vision to action, with private capital serving as a gamechanger that can drive Bangladesh’s next wave of long-term growth.
