Bangladesh’s economic scorecard showcases significant growth as compared with other developing countries. The current Gross Domestic Product (GDP) of the country stands 6.9 percent and has been consistently above six percent over the last three years. This progress is backed by strong private investments, substantial export figures and large remittances in infrastructure and services sectors. According to International Monetary Fund (IMF), Bangladesh is expected to rank second in the top 10 countries, with a growth rate of seven percent GDP in 2019.
The UK government also released a detailed Guide on doing business in and with Bangladesh, which highlights several strengths that this market possesses, which include:
- Stable credit rating
- Close to issuing first Sovereign Bond
- Poverty levels cut by half in the last decade
- Competitive labour force
- Ready Made Garment (RMG) export levels quadrupled in 5 years
The Bangladesh government’s strategic vision for 2021 comprises growth through massive investment in infrastructure, skills development and trade. This plan also includes co-operation with the private sector and international donor agencies.
Loose-ends and loopholes
As companies look for increased global presence and growth opportunities with a keen focus on developing nations, dealing with fraud, bribery and corruption risks are extremely crucial. The challenges are, however multi-pronged in nature, ranging from lack of transparency and enforcement to indistinct guidelines and punitive measures. These issues are typically faced by most developing nations at the onset of their spurt of growth. The UK Guide mentioned above, alternatively also highlights certain challenges in this market, while stating that corruption affects many aspects of daily life in Bangladesh and is often cited as a barrier to private sector development.
The most susceptible areas in terms of fraud and corruption stem from the lack of transparent regulatory and authoritative mechanisms, heightened levels of bureaucracy and deficient ethical enforcement measures. A few of the key risk areas include:
- Supply chain
- Hazardous work environments (with regard to health and safety, child labour etc.)
- Embezzlement and financial misrepresentation
- Excessive third-party engagement and relationships
- Dearth of good governance
While the private sector is reeling under the pressure of doing business amidst these conditions, the public sector too in embroiled in such challenges. In essence, corruption has a crippling effect on the entire economy.
Caught in a corrupt trap
A few cases that have been in the spotlight in this regard include:
- A pharmaceutical company was debarred following evidence of fraud under the Bangladesh Health Sector Development Program, by the World Bank Sanctions Board
- A multi-national oil and gas company had to compensate villagers in the vicinity who were affected by an incident which occurred at one of its plants. It was alleged that the company had paid a bribe to the authorities to decide the compensation amount, which was skewed in their favour. This prompted an investigation which resulted in the company pleading guilty to the bribery charge, and ended with them paying a high penalty.
- A multi-national company (MNC) engaged in an infrastructure project in Bangladesh was reported against for company executives allegedly paying bribes to Government officials to win contracts
- An aviation company got embroiled in a corruption case due to allegations of several irregularities. An internal probe, as well as external audit findings, did reveal corrupt elements in certain departments.
Destroying negative aspects of this paradox
Due to a growing presence of MNCs setting operations in the country, there is a positive tone in the region. Furthermore, increased public awareness due to initiatives undertaken by anti-corruption bodies such as Transparency International’s Bangladesh chapter, in collaboration with the country’s Anti-Corruption Commission (ACC) is gradually encouraging transformation of the nation’s mind-set. The corporate sector too, is more alert due to cross-border enforcement actions, sanctions by multi-lateral development banks and the soaring penalties which could be levied due to flouting of regulations. They are, therefore looking at enhancing their anti-fraud and anti-corruption efforts and are striving to drive increased compliance and build ethical businesses.