DHAKA, July 26 (Reuters) - Cumbersome administrative processes are a major obstacle to foreign investment in Bangladesh, the German ambassador to Bangladesh said on Sunday 26 July.

Wires criss-cross a street in Dhaka, Bangladesh. Are the country's administrative policies similarly jumbled?

"Despite attractive legal frameworks, cumbersome administrative policies often discourage intending investors," Frank Meyke told reporters.

The actual foreign direct investment (FDI) in the impoverished south Asian country fell 16 percent to $666 million in 2007, due to time-consuming administrative processes, an unreliable energy supply and political uncertainties, officials from Bangladesh's Board of Investment (BOI) said.

The figure for FDI in 2008 is yet to be released.

Bangladesh, which enjoys an annual $2 billion trade surplus with Germany, has received only a modest level of German investment.

"The business environment is mainly governed by political, economic, legal and social conditions in a country," Meyke said.

In 2008 bilateral trade between the two countries reached nearly $2.84 billion, he said.

Of total FDI, textiles accounted for $102 million, trade and commerce $93 million, telecommunications $89 million and the gas sector $71 million.

Bangladesh's ranking in inward FDI dropped one point to 121st out of 141 countries, according to the World Investment Report 2008 prepared by the United Nations Conference on Trade and Development.

($1 = 0.70 euro)

(Reporting by Nizam Ahmed; Editing by Anis Ahmed/Will Waterman)