A US State Department report has identified corruption as a persistent and serious impediment to investment and economic growth in Bangladesh.
“Despite the interim government’s efforts to combat corruption, it remains common in public procurement, tax and customs collection, and among regulatory authorities,” said the 2025 Bangladesh Investment Climate Statement, released last Friday.
For all latest news, follow The Daily Star’s Google News channel. “Off-the-record payments by firms reduce Bangladesh’s GDP by two to three percent, according to some estimates,” it said
In its Bangladesh part, the report mentioned that Bangladesh is a party to the UN Convention Against Corruption (UNCAC) and has laws to combat bribery, embezzlement, and other forms of corruption.
“But enforcement is inconsistent,” it added.
The report helps US companies make informed business decisions by providing up-to-date information on the investment climates of more than 170 countries.
In the latest version, the report said the previous Awami League government publicly stated its commitment to fighting corruption, but opposition parties claimed the Anti-Corruption Commission (ACC) was instead used to harass political opponents.
It said the interim government has signalled a stronger anti-corruption stance. Since taking office, it reconstituted the ACC with new leadership.
It also said a sluggish and reportedly corrupt judicial system and limits on alternative dispute resolution mechanisms continue to impede the timely enforcement of contracts and the fair resolution of business disputes.
The report said the interim government’s enforcement of intellectual property (IPR) and labour rights remains ineffective.
Counterfeit goods are readily available, and the government does not prioritise or invest heavily in IPR protection.
US firms have reported IPR violations in apparel, consumer goods, movies, pharmaceuticals, and software.
Although Bangladesh is not in the 2025 US Trade Representative’s Special Report List, it is highlighted as being one of the top five source economies for counterfeit clothing.
“Although Bangladesh made progress over the past decade to improve fire and building safety standards in the export-focused ready-made garment (RMG) industry, workers face significant legal barriers in exercising their rights to organize and collectively bargain,” the report said.
The interim government’s investment climate reform efforts remain in the early implementation stage, it added.
Bangladesh made gradual progress over the past decade to reduce constraints on investment, such as efforts to better ensure reliable electricity service, but foreign investment continues to be hindered by issues such as inadequate infrastructure, limited financing instruments, bureaucratic delays, unfair tax burdens for foreign firms, and corruption.
“The interim government is working to remove two Hasina-era practices that hinder foreign investment: delayed foreign currency payments owed by state owned enterprises (SOEs) and a requirement that the Bangladesh Bank approve the transfer of foreign currency from the country,” the report said.
The foreign currency shortage coincided with a banking scandal in which several major Bangladeshi banks made large, questionable loans to companies linked to members of the ruling AL party that later defaulted on the loans.
By December 2024, the value of non-performing loans rose to $28.57 billion. The interim government has prioritised banking sector reform to align the sector with international best practices.
After the ouster of former prime minister Sheikh Hasina, the interim government began work on reforming the state administration, but much of the day-to-day regulatory landscape remains unchanged, the report said.
It said the government has made incremental progress in using information technology to improve the transparency and efficiency of some government services. Nevertheless, regulations are often unclear, inconsistent, or not publicised, making it difficult for investors to find the correct channel to address issues, such as protectionism and subsidies in certain industries.
“Some investors have cited unclear regulations and lack of implementation as key barriers to investment,” the report said.
The Right to Information Act (2009) provides for stakeholder consultations; however, this consultation process is weak and needs improvement, it added.