Land scarcity, depleted natural gas reserves and inadequate electricity distribution remain major impediments to investment, according to the US State Department report.
Representative image. Illustration: Pixabay
Representative image. Illustration: Pixabay
Corruption is a major impediment to foreign investment in Bangladesh, according to a US State Department report, adding that the country has made gradual progress in reducing some investment constraints.
“Bangladesh has made gradual progress in reducing some constraints to investment, including taking steps to better ensure reliable electricity, but inadequate infrastructure, limited financing instruments, bureaucratic delays, lax enforcement of labor laws and corruption continue to hamper foreign investment,” said the 2022 Investment Climate Statement issued Thursday, July 29.
The US State Department report says sectors with active investment from abroad include agribusiness, apparel, leather goods, light manufacturing, power and energy, electronics , light engineering, information and communication technologies (ICT), plastics, health, medical equipment, pharmaceutical industry. , shipbuilding and infrastructure.
The Bangladeshi government offers a range of investment incentives as part of its industrial policy and export-led growth strategy, with few formal distinctions between foreign and domestic private investors, the report said.
He added that the government’s efforts to improve the business environment in recent years are promising, but implementation has yet to materialize, saying that “corruption is also widely perceived as endemic at all levels. of society, discouraging investment and inhibiting economic growth”.
“The slow adoption of alternative dispute resolution mechanisms and the slowness of judicial processes hamper the enforcement of contracts and the resolution of commercial disputes,” the report states, adding that “land scarcity, the depletion of natural gas reserves and inadequate electricity distribution remain major impediments to investment”. ”
He also said that security issues are also hampering investment and trade opportunities in the country in some areas.
“Political unrest, largely resulting from local or national elections, has in the past disrupted business activities and impacted supply chains, but not since 2014. Security concerns have hampered some investments and opportunities commercial. Although extremist attacks remain a concern for the country, the relatively high and steady GDP growth over the past decade has shown the resilience of Bangladesh’s economy in the face of these challenges,” he added.
Deeming Bangladesh a moderate, secular, peaceful and stable country, the US State Department report states that the country has seen a decrease in terrorist activities in recent years, accompanied by an increase in terrorism-related investigations and arrests. following the terrorist attack at the Holey artisan bakery. in 2016.
Land disputes are also major barriers to investment, according to the US State Department report.
“Bangladesh continues to host one of the largest refugee populations in the world. According to the United Nations High Commissioner for Refugees, more than 923,000 Myanmar Rohingya were in Bangladesh as of February 2022. This humanitarian crisis will likely require significant financial and political support until they return home. Burma on a voluntary and sustainable basis is possible,” the report said.
The report says Bangladesh’s garment sector has made significant progress in fire and structural safety thanks to unprecedented support from the international community and the private sector.
“The Bangladeshi government has limited resources dedicated to the protection of intellectual property rights (IPR) and counterfeit products are readily available in Bangladesh. Government policies in the ICT sector are still under development. the government broad powers to intervene in this sector,” the report said.
According to the report, electricity generation capacity has increased significantly over the past decade, but transmission and distribution systems require additional work to ensure more reliable and inclusive access to electricity.
“Reputable companies have complained that the Bangladesh National Board of Revenue (NBR) has not consistently submitted company tax returns from previous years for renewed review. While this process is ongoing, business activities normal operations such as banking, immigration procedures for foreign staff and branch office licensing authorizations may be slowed down or stopped altogether,” the 2022 investment climate statement said.
Stating that the country’s financial sector is still heavily dependent on banks, capital markets in Bangladesh continue to develop, the report adds.
“Economic weaknesses also include an underdeveloped and undercapitalized financial sector, an inefficient and chronically loss-making public sector, and a decision-averse bureaucracy that often resists measures to improve the business climate,” the department added. American State.