Bribery, corruption main obstacles in promoting business in Bangladesh: US report

Bribery and corruption are among the main obstacles the United States faces in promoting business in Bangladesh, according to a recent report by the United States Trade Representative (USTR).

The report "2024 National Trade Estimate Report on Foreign Trade Barriers", published on 29 March, lists obstacles in Bangladesh with regard to government procurement, intellectual property protection, digital trade, investment and labour. 

United States Trade Representative Katherine Tai released the NTE Report which provides a comprehensive review of significant foreign barriers to US exports of goods and services, US foreign direct investment, and US electronic commerce in key export markets for the United States.

Published annually since 1985, this year's NTE Report covers significant foreign trade barriers in 59 markets. 

According to the report, "Corruption is a pervasive and long-standing problem in Bangladesh, and anti-corruption law is inadequately enforced." 

"The Code of Criminal Procedure, the Prevention of Corruption Act, the Penal Code, and the Money Laundering Prevention Act criminalise attempted corruption, extortion, active and passive bribery, bribery of foreign public officials, money laundering, and use of public resources or non-public state information for private gain. However, bribery and extortion in commercial dealings are common features of business despite the illegality of facilitation payments and gifts," it said.

The report further states that there have also been efforts to water down anti-corruption safeguards of government procurement rules. 

"US companies have complained about long delays in obtaining approval of licenses and bids as Bangladeshi Government officials seek bribes.

"There have been continuous proposals to curb the independence of the Anti-Corruption Commission (ACC), the main institutional anti-corruption watchdog," it added.

It further reads, the Sarkari Chakori Ain Bill (Government Job Act), enacted in October 2018, requires the ACC to seek permission of the authorities concerned before arresting any government official and limits the ability of the ACC in investigating corruption allegations against government officials. 

"While the ACC has increasingly pursued cases against government officials [mainly lower-level officials and some higher-level officials], there remains a large backlog of cases."

Government procurement

The report states that government procurement is primarily undertaken through public tenders under the Public Procurement Act of 2006 and conducted by the Central Procurement Technical Unit. 

"Bangladesh publicly subscribes to principles of international competitive bidding; however, charges of corruption are very common. Bangladesh launched a national electronic government procurement portal, but US stakeholders have raised concerns about the use of outdated technical specifications, the structuring of specifications to favour preferred bidders, and a lack of overall transparency in public tenders. 

"Several US companies have claimed that their foreign competitors often use their local partners to influence the procurement process and to block awards to otherwise competitive US company bids. US companies have reported instances of alleged bid rigging in government tenders in Bangladesh. US companies have also alleged the use of bribery, anticompetitive practices, and a lack of transparency in the bidding process, all of which disadvantage US companies bidding on government tenders. Bangladesh is neither a Party to the WTO Agreement on Government Procurement nor an observer to the WTO Committee on Government Procurement," reads the report.

Intellectual property protection 

According to the report, Bangladesh has taken some steps in recent years to improve intellectual property (IP) protection through legislative reforms. However, the effectiveness of these changes remains uncertain. For example, counterfeit and pirated goods are readily available across Bangladesh.

"US stakeholders have reported potential IP violations in various industries, such as fast-moving consumer goods, apparel, pharmaceutical, and software industries. Stakeholders also report a growing trend of Bangladesh serving as a source country for counterfeits distributed globally. The lack of investigative expertise of the police and reluctance to initiate independent investigations further exacerbates IP right holders' ability to enforce their rights. In addition, IP right holders have raised concerns about the courts' ability to adjudicate fairly IP cases.

"Bangladesh has undertaken several legislative reforms related to IP, including the passing of a new patent law in April 2022, copyright amendments in October 2023, and the enactment of the Industrial Design Act in July 2023. However, the lack of stakeholder interaction and a public comment process in the development of these reforms remains a concern. Bangladesh needs transparent legislative and rulemaking processes that include seeking input from stakeholders in order to address the gaps in IP protection and make meaningful improvements to its IP regime."

It further said, to strengthen Bangladesh's IP regime, better coordination among enforcement authorities and other government institutions is crucial. These include Customs, the Office of the Attorney General, the Copyright Office, the Bangladesh Investment Development Authority, and the Department of Patents, Designs, and Trademarks. In addition, customs officials, police, and the judiciary would benefit from participating in available training opportunities as a means of improving Bangladesh's IP rights enforcement.

"Recognizing the challenges faced by Bangladesh, the US Department of Commerce Patent and Trademark Office and other US Government agencies regularly provide technical assistance and capacity building programmes."

Barriers to digital trade

The report mentions that the Information and Communication Technology Act of 2006, amended in 2013, authorises the Government of Bangladesh to access any computer system for the purpose of obtaining any information or data, and to intercept information transmitted through any computer resource. 

"Under this law, Bangladesh may also prohibit the transmission of any data or voice call and censor online communications. The Bangladesh Telecommunications Regulatory Commission (BTRC) ordered mobile operators to limit data transmissions for political reasons on several occasions in 2019, 2020, and 2023 ahead of politically sensitive events, including local and national-level elections. The BTRC ordered mobile operators to block all services in the Rohingya refugee camps in Cox's Bazar, except for voice calls, from September 2019 until August 2020.

"The Information and Communication Technology Division (ICT Division) of the Ministry of Posts, Telecommunications and Information Technology has made significant updates to the Data Protection Act, now called the Personal Data Protection Act, which received approval in principle from the cabinet in November 2023. As of December 2023, the measure was under review by the Law Ministry. Once adopted in final form, the law will apply to the collection, processing, use, sharing, or other processing of data of individuals within Bangladesh, as well as data outside Bangladesh that is related to citizens of, or business carried out in, Bangladesh. 

"Despite modifications to narrow the definition of the types of data to which the law is applicable, concerns remain over provisions, particularly in the context of data localization requirements that could allow access to data by Bangladeshi law enforcement.

In February 2022, the BTRC published the Regulation for Digital, Social Media and Over the Top (OTT) Platforms, 2021. The regulations were presented in their final form to a subdivision of the Supreme Court of Bangladesh on October 19, 2022. The regulations are a content governance framework for digital, social media, and media platforms operating in the country." 

The report says, "The framework seeks to introduce traceability within end-to-end encrypted services. Industry and civil society stakeholders have expressed concerns that the regulations will grant government authorities sweeping powers to dictate online content with the threat of criminal liability for firms and employees deemed noncompliant."

Investment barriers 

According to the report, repatriation of profits, revenue, and external payments is allowed. However, US and other international investors have raised concerns that the procedures and requirements for outbound transfers from Bangladesh remain cumbersome, lack transparency, and include significant delays for applications to repatriate profits, dividends, and other capital, with some companies waiting over a year for approvals. US companies report that agency-level regulators continue to present significant obstacles to securing required approvals for remittances in a timely manner, which are required before companies can seek central bank clearance.

Subsidies

"Bangladesh maintains a range of agricultural subsidies but has not submitted an agricultural subsidies notification to the WTO Committee on Agriculture since 2011. These subsidies are provided as export cash incentives for a variety of agricultural products including vegetables, fruits, and processed agricultural products. Bangladesh also provides subsidies to keep the price of production inputs within the purchasing capacity of producers. Bangladesh provides non-product-specific support through subsidised fertilisers, diesel fuel, electricity, irrigation, and agricultural machinery. The subsidised fertiliser is distributed through a controlled channel, which keeps prices reasonably stable.

"Bangladesh has never submitted a subsidies notification to the WTO Committee on Subsidies and Countervailing Measures. According to publicly available information from the Bangladesh Investment and Development Authority, industries exporting more than 80 percent of their goods, regardless of their locations (i.e., within or outside of an export processing zone), can be exempted from income tax for 50 percent of their export earnings, provided that the industry is not already paying income tax at a reduced rate. Furthermore, exporters in certain sectors may be eligible for additional benefits in the form of a subsidy or cash incentive based on certain conditions. Other publicly available information indicates that exporters in 43 sectors receive cash incentives to export, ranging from 1 percent to 20 percent of the export value, as long as the product exported contains at least 30 percent domestic value added," reads the report.

Labour

In 2013, the United States suspended all of Bangladesh's tariff benefits under the Generalised System of Preferences (GSP) program due to Bangladesh's failure to meet statutory eligibility requirements related to worker rights, particularly with regard to acceptable conditions of work in the ready-made garment sector, including fire and building safety, and freedom of association. As of December 2023, Bangladesh remained ineligible for duty-free treatment under GSP, said the report.