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Bangladesh: Increasingly Competitive, Increasingly Corrupt

The good news, according to a recently issued study, is that Bangladesh is showing clear signs of improved economic competitiveness. The bad news is that its future progress is impaired by widespread corruption.

According to the Global Competitiveness Report (GCR), a study completed by the Center for Policy Dialogue (CPD), Bangladesh suffers from increased governmental instability, inefficient governmental bureaucracy and a general lack of access for business to financing.

The most troubling discovery, though, was that Bangladesh is still addled with rampant corruption. A survey of seventy-one companies unearthed complaints of bribery, tax evasion related to import and export business and the illegal awarding of contracts and licenses as a result of bribery and fraud.

After the Rana Plaza tragedy last April, which resulted in the deaths of more than 1,100 factory workers, two competing consortia of retailers who outsource apparel production to factories in Bangladesh have materialized to supervise desperately needed reforms and finance expensive factory improvements. The EU led Accord on Fire and Building Safety in Bangladesh (AFBSB) has plans to inspect the approximately 1,000 factories that directly supply them with garments while the US brokered Alliance for Bangladesh Worker Safety intends to cover another 500.

Problematically, both groups have focused on financing factory improvements and the facilitation of factory inspections, rather than the elimination of corruption that infects the governmental system necessary for overseeing both.

Khondaker Golam Moazzem, research director for CPD, said, “These indicate that Bangladesh is still struggling with structural and governance weakness. The existence of these weaknesses is pulling down the economy from attaining a higher level of competitiveness.”

The fear of pervasive graft has made banks cautious about lending, dampening the growth of business. “Banks are now cautious in trade financing after the scams of Hall-Mark and Bismillah groups,” said Moazzem.

On the positive side, Bangladesh has made great strides in attracting investment and modernizing its antiquated monetary policy, all the in the service of enlivening its competitiveness. Mustafizur Rahman, executive director of CPD, noted that it still had ample room for future gains: “To compete, Bangladesh needs to make progress in areas of innovation, technology, skilled human resource and new market creation, apart from improvement in administration and good governance.”