Corruption, labour rights
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decisions. Bangladesh does not have a separate court division dedicated to commercial cases.”
The legal system lacks independence from the government, which directs judicial appointments. Other pillars of the justice system such as the police are also closely aligned with the ruling political party.
Arbitration and dispute resolution are limited by the fact that the timeframe is unpredictable with many taking years. Moreover, arbitration results are unevenly enforced by the courts, which appear to show a bias against foreign investors, it said.
“Corruption remains a serious impediment to investment and economic growth.”
Bangladesh is a party to the UN Anticorruption Convention and has laws to combat bribery, embezzlement, and other forms of corruption, but enforcement is inconsistent.
“Corruption is common in public procurement, tax and customs collection, and among regulatory authorities. Off-the-record payments by firms reduce Bangladesh’s GDP by 2 to 3 percent, according to some estimates.”
The current Awami League-led Government publicly states its commitment to fighting corruption, but opposition parties claim the ACC is used by the government to harass political opponents, it said.
Government efforts to ease public procurement rules and a recent constitutional amendment to diminish the independence of the Anti-Corruption Commission, the main institutional anti-corruption watchdog and investigator in cases of bribery and corruption, may undermine institutional safeguards against corruption.
The report also expressed concern about the political situation in Bangladesh.
“Although Bangladesh is a traditionally moderate, secular country, political disturbances are likely to grow in size and intensity as national elections approach in late 2023/early 2024.”
In the last general election in December 2018, Prime Minister Hasina’s ruling Awami League party won 289 parliamentary seats out of 300 in an election marred by widespread vote-rigging, ballot-box stuffing, and intimidation.
“Harassment and violence during the pre-election period made it difficult for opposition candidates and supporters to meet, hold rallies, and campaign freely. Civil society groups are widely concerned about the trend toward a one-party state and the marginalisation of all political opposition groups.”
The One Stop Service Act (2018) gave responsibility for attracting foreign investments to four investment promotion agencies: Bangladesh Investment Development Authority (BIDA), Bangladesh Export Processing Zone Authority (BEPZA), Bangladesh Economic Zones Authority (BEZA), and Bangladesh Hi-Tech Park Authority (BHTPA).
“These agencies offer some streamlined services, but corruption and excessive bureaucracy have held back the complete and effective rollout of the One Stop Service Act.”
To encourage investment, the government has offered incentives, guarantees and tax breaks (e.g., no value-added tax on exports, tax holidays for certain industries).
However, several US companies have experienced difficulties securing the incentives initially offered by the government. They reported that infrastructure guarantees (ranging from electricity to gas connections) were not fully delivered and tax exemptions were delayed.
“These challenges are not specific to US companies but reflect the broader challenges in the business environment.”
The report also slammed the labour situation in the country.
The Bangladesh Labor Act specifies compensation for injured workers, employment conditions, freedom of association, health and sanitary conditions, leave policies, minimum wage setting procedures, right to join unions and working hours.
“But in practice, the government does not consistently and effectively enforce labour laws and independent trade unions face persistent barriers to registration. Charges for unfair labour practices are rarely brought against employers for violating labour rights, but workers in unions have been subjected to police violence, mass dismissals, and arrests of union leaders for asserting their rights to protest, according to labour rights groups.”
Companies frequently discourage or prevent the formation of independent worker-led labour unions, preferring pro-factory management unions.
Labour organisations reported most workers feared reprisal if they exercised their rights to form unions, attend meetings or bargain collectively with employers.
The government reports over 1,000 registered trade unions, but labour leaders estimate less than 200 active trade unions are in the country’s dominant export sector, garment, and only 30 to 40 of these engage in collective bargaining negotiations because union activities are inhibited by intimidation, corruption and violence.