Thursday, 06 Dec 2012
Businessman and businesswoman talking
Overseas Business Risk - Bangladesh
Information on key security and political risks which UK businesses may face when operating in Bangladesh.
Political and Economic
Bangladesh became independent in 1971 following a short but bloody conflict with Pakistan. Bangladesh is a parliamentary democracy; two main parties - the Awami League and the Bangladesh Nationalist Party (BNP) - dominate the political scene. Relations between the two parties are poor and the political system remains confrontational and highly centralised. Democratic institutions, including Parliament, are weak. The current government is led by Prime Minister Sheikh Hasina. Her Awami League led Grand Alliance won an election widely regarded as Bangladesh’s freest and fairest to date on 29 December 2008, ending a two-year period of military-backed caretaker government. Her government enjoys a stable two-thirds majority in Parliament and was elected on the back of an ambitious manifesto or ‘Charter for Change’. The next election must be held by January 2014. A constitutional amendment adopted in June 2011, removing the provision for a temporary caretaker form of government during election periods, means that this election will be held under the incumbent Awami League government. In protest at this move, the opposition BNP claim that they will boycott the next election.
Economic growth remains strong. The provisional growth figure for the financial year ending June 2011 is 6.7%. Average growth for the last decade has been 5-6 % per annum.
The key ready-made garment (RMG) sector, which accounts for almost 80% of export earnings and 12% of GDP, continues to boom. Order books are full through to next spring and neither the IMF nor local analysts foresee any major impact on exports from the on-going economic woe in Eurozone or the US. The majority of RMG exports are still basic items, demand for which appears inelastic. And Bangladesh has maintained its competitiveness. Market share in the EU and US, which take account for 90% of the sector’s exports, has risen. Bangladeshi RMG manufacturers now have 8% of the European market.
The overall strength of economic growth has contributed to a substantial decrease in poverty. The latest Household Income and Expenditure Survey indicates that income poverty (based on the national poverty line) has fallen from 40% to 31.5% over the last six years. This is equivalent to 13 million people escaping from poverty. Abject poverty has also fallen to 17.5%.
Bangladesh has ratified core international human rights agreements, but implementation and enforcement under domestic law can be weak. Fundamental rights guaranteed under the Constitution include: the right to work; the right to protection and to equal treatment under the law; and equal opportunities for women. Freedom of assembly and freedom of association are guaranteed “subject to any reasonable restrictions imposed by law”.
Trade unions do exist but are subject to a number of restrictions and alleged harassment. Only workers’ welfare associations are permitted in Export Processing Zones. Child labour is prohibited under the Labour Act of 2006 but remains a significant concern, particularly in the informal employment sectors.
Access to justice in Bangladesh can be difficult. Implementation and enforcement of laws can be weak, and the court system faces a significant backlog.
Bribery and Corruption
Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world. In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.
Bribery and corruption are well entrenched in Bangladesh and, despite the Government’s best efforts, pervades many aspects of daily life. Corruption is often cited as a barrier to the effective development of the private sector and poses business risks that require pro-active management in the form of regular due diligence exercises and up-to-date risk strategies. Procurement practices often lack transparency and are usually coupled with a significant bureaucratic burden. These risks require careful management.
Politicians, bureaucrats and law enforcement officials often wield significant discretionary power and notable abuses have been brought to light. In a 2010 PEFA assessment, Bangladesh obtained the worst possible score (D or D+) out of the 26 indicators. Transparency International’s Corruption Perceptions Index for 2011 placed Bangladesh 120 out of 183 countries – compared to 134 in 2010 and 147 in 2008. The World Bank’s Ease of Doing Business survey for 2011 shows Bangladesh’s standing improving from 111 to 107 (out of 183 countries).
Businessman reading newspaper.
There is a general threat from terrorism in Bangladesh. Although there have been no significant terrorist attacks since 2005 a number of terrorist groups continue to operate within the country, with both a domestic and international focus. Attacks could be indiscriminate including in places frequented by expatriates and foreign travellers. Caution is therefore advised.
A series of simultaneous attacks by the terrorist group Jamaat-ul-Mujahideen Bangladesh (JMB) in August 2005 targeted cinemas, cultural events, religious shrines, political rallies, colleges, universities, shopping centres, NGOs, journalists, newspaper offices and the judiciary. Although resulting in a low number of fatalities, , the coordinated nature of the attacks challenged the Bangladeshi view that Islamist terrorists did not operate within the country. The Bangladeshi government has since tackled the terrorist threat with some success, arresting a large number of key individuals. However, allegations of human rights abuses by elements of Bangladesh’s security forces remain a serious concern.
Protective Security Advice
Bangladesh is a cash society. Although the use of credit and debit cards to pay for goods and services is increasing with the main hotels and restaurants accepting most credit cards. The cloning of credit cards is not as prevalent as in other markets within the region.
Meeting in the British Embassy
Bangladesh is a member of the World Trade Organisation, a member of the World Intellectual Property Organisation plus a signatory to the Paris Convention. Sadly, the government allocates too few resources to IPR enforcement and their capacity to enforce/police local laws is weak. Books and textbooks for educational purposes are frequently copied and sold for a fraction of the retailers’ recommended price. UK publishers should therefore be aware of the risk of copyright infringement. We are not aware of any trademark or intellectual property disputes other than copyright infringements from British companies currently doing business in Bangladesh.
Copyright abuse and piracy is widespread and IPR enforcement is weak. It is therefore important that the rights’ holder should develop a robust IPR strategy before entering the Bangladeshi market.
We have no evidence to suggest organised crime is affecting or involved in business with foreign companies.
Business visitors should be aware that armed robbery, pick pocketing, and purse snatching are common to Bangladesh. There have been incidents, notably in Gulshan and Banani, where resident westerners, familiar with local conditions, have been the targeted victims of armed robbery. Therefore it is advised that you do not carry a large amount of money with you or wear open displays of jewellry. We do not advise taking ''cycle rickshaws'', “CNGs” or taxis as a safe mode of transport. On arrival at Hazrat Shahjalal International Airport we recommend using company transport, if possible, or make prior pick-up arrangements with your hotel. We recommend you use such transport for the duration of your visit.