Bangladesh: Polling Stations Torched Day Before Election

On the eve of Bangladesh’s general elections, at least 14 polling stations were set on fire, including one on the outskirts of the capital, Dhaka 2. This wave of attacks came after four people were killed in a suspected arson attack on a commuter train.

The main opposition party, the Bangladesh Nationalist Party (BNP), started a 48-hour general strike, calling on people to boycott the vote1.The election commission has asked authorities to increase security around polling stations1. Arsonists also attacked polling booths in the northeastern districts of Moulvibazar and Habiganj, with similar incidents reported elsewhere in the past two days1. In the coastal district of Khulna, police arrested two people accused of trying to set fire to a primary school nearby1.The BNP has asked voters to boycott the poll and called a two-day strike across the country2.

The ruling Awami League has accused the BNP of trying to disrupt the election by unleashing a “reign of terror”2. The UN Special Rapporteur, Clément Nyaletsossi Voule, said he was “deeply disturbed” by the repressive environment surrounding the polls2.Despite the attacks, the government has resorted to its old tactics of holding a one-sided election1. Authorities have heightened security in Dhaka and elsewhere to ward off any kind of violence, but the fires at over 100 polling stations were not prevented5.

What is the current political situation in Bangladesh?

Bangladesh is currently facing a political crisis ahead of the general elections scheduled for early January 20241. The opposition party, Bangladesh Nationalist Party (BNP), has called for the resignation of Prime Minister Sheikh Hasina and has been pushing for an election boycott and street blockades to unseat the ruling party1. The ruling Awami League (AL) has consolidated political power through sustained harassment of the opposition and those perceived to be allied with it, as well as of critical media and voices in civil society25. Corruption is endemic, and anticorruption efforts have been weakened by politicized enforcement2. The political impasse has exacerbated the economic downfall of the country, which is already vulnerable to external shocks due to its narrow export base and over-reliance on remittance inflows3. The ongoing political crisis is a high risk for the fragile economy of Bangladesh3. With the opposition sitting out the vote after staging major protests, Bangladesh is heading into general elections with a political deadlock4.

What is the impact of the political situation on the economy of Bangladesh?

The ongoing political crisis in Bangladesh has significant implications for the country’s economy. Some of the key impacts include:

1. Economic uncertainty: The political crisis, foreign powers’ interest in the upcoming national election, and labor and human rights issues are deepening economic uncertainty in the country1.
2. Macroeconomic instability: For the first time, political uncertainty has been added to macroeconomic instability, which has made the situation more challenging1.
3. Foreign interest: Foreign powers have shown increased interest in Bangladesh’s elections, which could influence the political landscape and potentially impact the economy1.
4. Labor issues: The government has neglected to resolve labor issues, which could further exacerbate the economic situation1.
5. Economic growth: Bangladesh’s economy is projected to grow moderately, with GDP growth between 5.3% and 6.0%4. However, the impact of monetary tightening and cooling export growth will be a major drag on economic growth in 2023/243.
6. Balance of payments and dollar reserves: The country’s narrow export base and over-reliance on remittance inflows have left it vulnerable to external shocks2. The ongoing political crisis has further weakened the economy, and the country’s balance of payments is projected to return to a deficit5.
7. Inflationary pressure and energy shortages: The economy faces considerable challenges with rising inflationary pressure, energy shortages, and a balance-of-payments deficit5.
8. Blockades and business disruptions: The political impasse has led to blockades and business disruptions, causing the economy to lose 65 billion takas ($588m) a day, according to the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI)2.

In summary, the ongoing political crisis in Bangladesh has far-reaching implications for the country’s economy, affecting various aspects such as economic uncertainty, macroeconomic stability, foreign interest, labor issues, economic growth, balance of payments, inflationary pressure, energy shortages, and business disruptions.

How has the political situation in bangladesh affected foreign investment?

The political situation in Bangladesh has significantly affected foreign investment in the country. Some of the key impacts include:

1. Political instability: The most recent investment climate report from the US State Department identifies significant challenges, including corruption, bureaucratic complexities, insufficient infrastructure, and constrained financing access1.
2. Diminishing FDI: Despite the government’s calls for increased foreign investment, there remains a paradox of diminishing investment despite abundant opportunities1.
3. Investment-friendly policies: Bangladesh needs to undertake effective promotion measures to convince potential foreign investors that they would be facing friendly regulations and could enjoy investment incentives that are competitive with those offered by other countries2.
4. Bilateral relations: Improved bilateral relations with potential investor countries can act as a catalyst to increasing inflows to Bangladesh2.
5. Economic challenges: The ongoing political crisis, foreign powers’ interest in the upcoming national election, and labor and human rights issues are deepening economic uncertainty in the country5.
6. Macroeconomic instability: For the first time, political uncertainty has been added to macroeconomic instability, which has made the situation more challenging5.
7. Foreign interest: Foreign powers did not show interest in Bangladesh’s elections in the past. However, this year, foreign interest in Bangladesh’s elections is present at different levels, which has to be tackled5.

In summary, the political situation in Bangladesh has led to a decline in foreign investment, with challenges such as political instability, insufficient infrastructure, bureaucratic complexities, and corruption deterring potential investors. The country needs to implement investment-friendly policies, improve bilateral relations, and address macroeconomic instability to attract more foreign investment.

What are the specific concerns of foreign investors regarding the political situation in Bangladesh?

The specific concerns of foreign investors regarding the political situation in Bangladesh include:

1. Bureaucratic complexities: Overlapping administrative procedures and a lack of transparency have discouraged investment in Bangladesh3.
2. Corruption: Corruption remains a serious impediment to investment in Bangladesh, with inconsistent enforcement of legislation to combat bribery, embezzlement, and other forms of corruption3.
3. Regulatory framework and business environment: The poor regulatory framework and business environment, as well as widespread corruption, have contributed to the low inflow of foreign direct investment in Bangladesh5.
4. Labor laws and enforcement: Persistent challenges such as lax enforcement of labor laws have been noted as obstacles hindering foreign capital inflow1.
5. Macroeconomic instability: The addition of political uncertainty to macroeconomic instability has deepened economic uncertainty in the country, which is a concern for foreign investors5.

In summary, foreign investors are concerned about bureaucratic inefficiencies, corruption, the regulatory framework, enforcement of labour laws, and macroeconomic instability in Bangladesh. These factors have contributed to a decline in foreign direct investment and have deterred potential investors from engaging in the country.

What are the specific investment barriers that foreign investors face in Bangladesh

The specific investment barriers that foreign investors face in Bangladesh include:

1. Bureaucratic inefficiencies: Overlapping administrative procedures and a lack of transparency have been identified as discouraging factors for investment in Bangladesh2.
2. Corruption: Corruption remains a serious impediment to investment, with inconsistent enforcement of legislation to combat bribery, embezzlement, and other forms of corruption2.
3. Regulatory framework and business environment: The poor regulatory framework, enforcement of labor laws, and widespread corruption have contributed to the low inflow of foreign direct investment in Bangladesh2.
4. Taxation system and G2B processes: The taxation system and government-to-business processes have been highlighted as unfriendly to businesses, and the speed to market process is slow in Bangladesh5.
5. Lack of expertise and research: There is a lack of expertise and research in the country, and potential investors only find the negative aspects of investment in Bangladesh5.

In summary, foreign investors face barriers such as bureaucratic inefficiencies, corruption, poor regulatory framework, unfriendly taxation system, and lack of expertise and research when considering investment in Bangladesh. These factors have contributed to the low inflow of foreign direct investment in the country.