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 local politics. 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 in 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 called ‘Charter for Change’. The next election is expected to be held by 24 January 2014, although under Bangladesh’s opaque Constitution could be pushed back a further three months. A controversial 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. The Opposition BNP claims that it will boycott the polls unless they are held under a neutral interim government.
Economic growth remains strong. The provisional growth figure for the financial year ending June 2013 is 6.03%. Average growth for the last fifteen years has been 5-6 % per annum.
Bangladesh’s highly competitive ready-made garment (RMG) sector accounts for almost 80% of export earnings and 12% of GDP. Despite fall-out from the disastrous collapse of the Rana Plaza building in April 2013, which left over one thousand workers dead, the industry should continue to boom. Order books are healthy and Bangladeshi RMG exports, many of which are still items of basic apparel, increased market share in Europe and the US during the economic downturn. Collectively the EU and USA take 90% of the sector’s exports: Bangladeshi RMG manufacturers now have about 13% 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 made steady to strong progress against the Millennium Development Goals, with many of its social indicators performing better than India. The country should achieve middle-income status in the coming decade.
Bangladesh has ratified the core international human rights agreements including the International Covenant on Civil and Political Rights (ICCPR), the International Covenant on Economic, Social, and Cultural Rights (ICESCR), and the Convention on the Rights of the Child (CRC), 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”. Labour rights are subject to intense scrutiny in the wake of the Rana Plaza tragedy. 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. Bangladesh retains the death penalty, although executions are rare. There are regular allegations of abuse, including physical mistreatment and corruption, against members of the law enforcement agencies. The UK supports a number of programmes to improve access to justice and to support the ILO’s ‘Decent Work’ agenda.
Good Business: Implementing the UN Guiding Principles on Business and Human Rights makes clear the Government’s commitment to protect human rights and sets out the clear expectations for UK companies in this area.
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 best efforts of the media, civil society and the donor community, 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. Transparency International’s Corruption Perceptions Index for 2012 placed Bangladesh 144 out of 176 countries – compared to 120 in 2011 and 147 in 2008. The World Bank’s Ease of Doing Business survey for 2013 shows Bangladesh’s standing falling a little from 124 to 129 (out of 185 countries).
Visit the Business Anti-Corruption portal page providing advice and guidance about corruption in Bangladesh and some basic effective procedures you can establish to protect your company from them.
Read the information provided on our Bribery and corruption page.
There is a general threat from terrorism in Bangladesh, although there have been no significant terrorist attacks since 2005. A number of small and fragmented terrorist groups continue to have a footprint 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.
Since 2005, the Bangladeshi government has tackled the terrorist threat with considerable effectiveness, 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 international credit cards. The cloning of credit cards is not as prevalent as in other markets within the region.
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.
Bangladesh and its burgeoning capital Dhaka are safer than many countries and large cities in the developing world. Most crime is against property, opportunistic and can be mitigated with sensible crime prevention measures. Nonetheless robberies, pick pocketing, and purse snatching do occur and there are periodic incidents, notably in Dhaka’s upscale residential suburbs Gulshan and Banani, where resident westerners, familiar with local conditions, have been the targeted victims of street robbery. You should not carry large amount of money with you or wear open displays of expensive jewelry. We advise taking ”cycle rickshaws”, “CNGs” (Tuk-Tuks) or public 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.