Corruption, bureaucratic ineptitude among hurdles

Dhaka,  Mon,  21 August 2017
Published : 07 Aug 2017, 00:41:41
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Corruption, bureaucratic ineptitude among hurdles

USTR report on drawing FDI into BD
FE Report


Corruption, bureaucratic inefficiencies and lack of transparency are, among others, the major impediments in attracting foreign direct investment (FDI) in Bangladesh, according to a recent report of USTR.

The Office of the United States Trade Representative (USTR) in its report - "2017 National Trade Estimate Report on Foreign Trade Barriers" - also identified extortion of money from businesses by individuals claiming political backing as another barrier for trade and investment in the country.

"Bureaucratic inefficiencies often discourage investment in Bangladesh," the report said.

Overlapping administrative procedures and lack of transparency in regulatory and administrative systems can frustrate investors seeking to undertake projects in the country.

Besides, frequent transfers of top- and mid-level officials in various ministries, directorates and departments are disruptive and prevent timely implementation of both strategic reform initiatives and routine duties, it added.

The US and other international companies are concerned over arbitrary reopening of decades-old tax cases, particularly targeting or involving multinational companies and cumbersome process of outbound transfers from Bangladesh.

"Applications to repatriate profits or dividends can be held for additional information gathering or otherwise delayed, if tax disputes arise," the report further said.

Citing the government officials concerned, it added that allowing even limited outward transfers would lead to a flood of capital from Bangladesh.

Other impediments to doing business in the country include frequent transportation blockades called by political parties, which can both keep workers away and block deliveries, resulting in productivity losses, the USTR report mentioned.  

Regarding widespread disputes over land, the report, citing examples, explained that sellers, fraudulently claiming ownership, transferred land to good faith purchasers, while the actual owners were living outside of Bangladesh.

In other instances, US-Bangladeshi dual citizens purchased land from legitimate owners only to have third parties make fraudulent claims of title to extort settlement compensation.

"Likewise, corruption remains a serious impediment to investment in Bangladesh. While the government has established legislation to combat bribery, embezzlement and other forms of corruption, enforcement is inconsistent."

Regarding public procurement, the report noted that the government of Bangladesh publicly subscribed to principles of international competitive bidding, but charges of corruption were common.

Despite launching a national electronic government procurement portal the US companies raised concerns about use of outdated technical specifications, structuring of specifications to favour preferred bidders, and lack of overall transparency in public tenders, it added.

"Concerns over safety of infrastructure and industrial relations practices have also discouraged greater investment and trade here," the USTR report said.

Besides, lack of meaningful progress towards overall labour law reform, including in the country's export processing zones (EPZs), has also been a major point of concern for Bangladeshi and international stakeholders.

Limited protections for labour organisations, weak enforcement of existing protections, and long delays in the labour court system have led to a deep distrust of sanctioned association and bargaining processes, and a reliance on unofficial or "wildcat" industrial actions, it noted.

"Remediation of safety issues has progressed unevenly," it said, recalling the recent initiatives by Bangladesh government, global apparel buyers, and International Labour Organisation (ILO) that have led to improvements in factory safety standards and transparency over the past three years.

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