Business Corruption in Bangladesh

Bangladesh corruption flag

According to all major ranking institutions, Bangladesh routinely finds itself among the most corrupt countries in the world. Corruption is pervasive at all levels of society and companies have reported being subjected to costly and unnecessary licence and permit requirements. Reasons often include low salaries and weak institutional capacities. The Code of Criminal Procedure, the Prevention of Corruption Act, the Penal Code and the Money Laundering Prevention Act criminalise attempted corruptionextortionactive and passive bribery, bribery of foreign public officials, money laundering and using public resources or confidential state information for private gain. Nevertheless, anti-corruption legislation is inadequately enforced. Facilitation payments and gifts are illegal, but common in practice. 

December 2015
GAN Integrity Solutions

Bangladeshi Judicial System

Companies face a high risk of corruption in the Bangladeshi judicial system. Businesses report that irregular payments and bribes are frequently exchanged in order to obtain favourable court decisions (GCR 2015-2016). Prosecutors are susceptible to bribery as they have a low monthly income of 3,000 taka ($37.50) plus 200 taka ($2.50) per hour in court (HRR 2014). Besides corruption, the judicial systems suffers from a backlog of cases, political interference and weak institutional capacities (HRR 2014). Enforcing a contract is a big challenge for businesses as it is uncertain, takes an average of 1,442 days, and is extremely costly (ICS 2015DB 2016). Only one in ten surveyed companies consider the court system to be a major constraint to doing business (ES 2013). For companies seeking to settle disputes for export-related transactions, the Bangladesh Export Promotion Bureau may offer facilitation (ICS 2015).

Bangladeshi Police

There is a high risk of encountering corruption in the police due to low salaries, lack of training and expertise. The police force benefit from political patronage and a culture of impunity (NIS 2014). Businesses ranked the Bangladeshi police as one of the least reliable in the world and noted business costs due to crime and violence (GCR 2015-2016).

Bangladeshi Public Services

There is a very high risk of corruption and bribery for companies when acquiring licenses and other public services in Bangladesh. Bangladesh is ranked among the countries where informal payments and bribes in connection with public utilities occur the most (GCR 2015-2016). Almost sixty percent of firms expect to give gifts or pay informal payments when obtaining operating licenses or public utilities such as a water connection (ES 2013). Facilitation payments given to public officials to get things done are very common (ES 2013). Regulations are often unclear or even conflicting and are insufficiently publicised (ICS 2015). Businesses should note that registration or regulatory processes are allegedly used as rent-seeking opportunities (ICS 2015). Starting a business costs the same as elsewhere in South Asia, but takes four days longer than the regional average (DB 2016). 

Bangladesh is increasingly using information technology in order to enhance the transparency and efficiency of some government services, and has made some progress in developing independent agencies to regulate the energy and telecommunication sectors (ICS 2015). The Board of Investment (BOI) serves as a one-stop shop for companies seeking to invest in Bangladesh, but is criticised for fragmented authority. The BOI can register investors in industrial projects outside the Export Processing Zones and assist them with tax inquiries, land acquisition, utility hook-ups, and incorporation.

Bangladeshi Land Administration

There is a high risk of corruption in the Bangladeshi land administration. Most firms expect to pay informal payments or give gifts when acquiring a construction permit (ES 2013). Companies should note that land is scarce and land registration is often prone to disputes due to competing titles, especially in the Chittagong Hill Tracts (ICS 2015BTI 2014). While the right to own property is safeguarded by law, it is insufficiently enforced in practice (BTI 2014). Registering property takes an average of 244 days, compared to 98 in South Asia (DB 2016). 

Bangladesh's most important construction scandals is the collapse of an eight-story garment factory in April 2013. The factory suffered from a faulty construction that violated building codes (CNN, June 2015). The incident highlights the larger issue of a lack of good governance, corruption, limited resources, bribes involved in licensing and permits or collusion between factory owners and safety inspections, which allows facilities to remain even when dangers are identified (TI, Apr. 2015).

Bangladeshi Tax Administration

Companies face a high risk of corruption in the Bangladeshi tax administration. Bangladesh is ranked as the country where irregular payments in connection with tax payments is most common (GCR 2015-2016). Over forty percent of firms expect to give gifts in meetings with tax officials (ES 2013). A weak administrative infrastructure in the National Board of Revenue (NBR) makes for collusion and a discretionary space for granting benefits to targeted groups of taxpayers in both tax policy and administration (TI, Apr. 2015). It is common for businesses to negotiate their tax liabilities with the tax administration, whereby both parties enter into implicit agreements which involves regular informal payments (TI, Apr. 2015). This informal process is especially prevalent for small businesses due to their regular interaction with the tax collectors (TI, Apr. 2015). Accounting and audit firms are passively involved as they nominally verify tax declarations (TI, Apr. 2015). Businesses spend 302 hours per year on preparing, filing and paying taxes (DB 2016).

Bangladeshi Customs Administration

There is a high risk of corruption at the Bangladeshi border when importing and exporting, and irregular payments are common (GETR 2014GCR 2015-2016). Seventy-seven percent of firms expect to give gifts when obtaining an import license (ES 2013). 

Bangladeshi Public Procurement

There is a high risk of corruption in Bangladeshi public procurement. Nepotism, fraud and bribery in the awarding of contracts are especially common (TI, Apr. 2015). Almost half of companies expect to make irregular payments and give gifts in order to secure a government contract (ES 2013). Public funds are frequently diverted and favouritism often influences the decisions of government officials (GCR 2015-2016). Although inconsistently enforced, public procurement is regulated by the Public Procurement Act and subsequent regulations such as the Public Procurement Rules (TI, Apr. 2015). Foreign investors can generally participate in procurement under equal conditions (ICS 2015).

Bangladeshi Legislation

The Code of Criminal Procedure, the Prevention of Corruption Act, the Penal Code and the Money Laundering Prevention Act criminalise attempted corruptionextortionactive and passive bribery, bribery of foreign public officials, money laundering, and using public resources or confidential state information for private gain. Enforcement of anti-corruption legislation in Bangladesh is very weak (BTI 2014). The Money Laundering Prevention Act provides for corporate liability, which allows for both individuals and companies to be held liable for bribery (U4, Nov. 2012). Business-to-business corruption is covered by the Money Laundering Prevention Act (U4, Nov. 2012). Facilitation payments can be construed as an unlawful gratification and is thereby illegal (NRF 2014). As to gifts and hospitality, there are no specific guidelines or monetary thresholds under Bangladeshi laws and regulations. As a guideline, companies are advised to consider the Government Servants (Conduct) Rules, which stipulates that government servants may accept gifts, provided that the value does not exceed 500 taka (USD 6.50). The Anti-Corruption Commission Act provides the legal framework for the independent Anti-Corruption Commission (ACC) to ensure transparency in the public sector. The ACC is subject to political influence and has become ineffective (FitW 2015). The Right to Information Act (view a summary here) is designated to play an important role in ensuring transparency and accountability. Bangladesh has ratified the United Nations Convention against Corruption.

Bangladeshi Civil Society

The press in Bangladesh is considered to be 'partly free' (FoP 2015). The media environment is moderately active and public criticism of the government is common and vocal (FitW 2015HRR 2014). Legal and regulatory framework allows for some restrictions, and physical attacks and harassment against reporters have recently increased (FitW 2015). According to some journalists and human rights NGOs, journalists engage in self-censorship particularly due to fear of security force retribution (HRR 2014). Freedom of association and assembly is guaranteed by the constitution but is not always respected in practice (HRR 2014). Similarly, freedom of speech and expression are restricted (HRR 2014). Civil society plays a role in public debate, yet are often connected to political parties and do not always act independently (BTI 2014). 

Bangladesh Information Network

Partner Embassies  
Embassy of Denmark

dacamb@um.dk

Tel: +880 2 5566 8900
Fax: +880 2 882 3638

Local diplomatic mission of Denmark.
Embassy of Norway

emb.dhaka@mfa.no  

Tel: +880 2 5566 8570

Local diplomatic mission of Norway 
Embassy of Sweden

Tel: +880 2 5566 8500
Fax: +880 2 985 2032
Local diplomatic mission of Sweden.
British Embassy

Tel: +880 2 9842 7059

Local diplomatic mission of the United Kingdom.

Embassy of Austria in New Dheli (covers Bangladesh)

new-delhi-ob@bmeia.gv.at

Tel: (+91/11) 2419 2700
Fax: (+91/11) 2688 6929

 

Local diplomatic mission of Austria 
   
Government  
   
Export Promotion Bureau  Government agency under the Ministry of Commerce.
Board of Investment Promotion and facilitation of domestic and foreign investment.
Anti-Corruption Commission  The is a statutory independent corruption prevention and corruption detective body of the state.
   
 Organisations  
   

Transparency International Bangladesh (TIB)

National chapter of Transparency International.
Bangladesh Enterprise Institute (BEI) A non-profit, non-political research centre.
ICC Bangladesh Chamber of Commerce. Business confederation.

Bangladesh Profile Sources