Country Trade Risk Index (ERI) 99.71
Country Risk Reference Rating 7 (7/9)
Country risk outlook stable
Economic and trade risks
The Bangladesh government attaches great importance to economic development, implements privatization policies, and strives to improve the investment environment. At the same time, it relies on its advantages in labor resources to promote the development of the textile and garment industry. In recent years, the macro economy has achieved rapid growth. The textile and clothing industry is Bangladesh’s pillar industry and its most concentrated export industry, with its main markets concentrated in the EU and the United States.
China and Bangladesh established diplomatic relations in October 1975. In 2005, the two countries established a comprehensive cooperative partnership of long-term friendship, equality and mutual benefit, opening a new page for China-Bangladesh friendly cooperation. In 2010, China and Bangladesh issued the China-Bangladesh Joint Statement to establish and develop a closer comprehensive cooperative partnership between the two countries from a strategic perspective. In 1996, China and Bangladesh formally signed the Agreement on Mutual Promotion and Investment Protection and the Agreement on the Avoidance of Double Taxation and Prevention of Tax Evasion on Income. Due to the strong economic complementarity between the two countries, the prospects for economic cooperation between China and Bangladesh are very broad, and bilateral trade has developed rapidly. As Bangladesh accelerates its opening-up process, its market potential gradually emerges, attracting more and more Chinese companies to enter. Bangladesh has become an important market for China in Southeast Asia. At the same time, Bangladesh is also an important market and one of the important aid recipients for China’s project contracting. At present, the main problem in China-Bangladesh bilateral economic and trade cooperation is trade imbalance. Bangladesh has a large trade deficit, and the bilateral trade commodity structure is simple and has low added value.
Investment risk
Bangladesh pursues an investment liberalization policy and encourages private investment and foreign investment. It is one of the countries with the most liberal investment policies in South Asia. The business environment in Bangladesh is poor. Due to the severe shortage of electricity supply and low efficiency in property rights registration and contract execution, it ranked 129th in the “2013 Doing Business Report” released by the World Bank, which is lower than the South Asian average of 121st. However, it should be noted that Bangladesh is significantly higher than the regional average in terms of obtaining construction permits, credit access, investment protection, tax rates and burden levels, especially in investment protection, ranking 25th among 185 economies. , indicating that Bangladesh attaches great importance to the protection of investors. At the same time, government administrative corruption is relatively common, with low administrative efficiency and serious bureaucracy. In the 2012 Corruption Perception Index published by international organizations, Bangladesh ranked 144th among 176 countries.
Bangladesh’s weak transportation infrastructure, roads in disrepair, chaotic traffic, and insufficient port freight capacity are one of the main obstacles to the entry of foreign investors. The government has repeatedly promised to improve domestic transportation infrastructure through external financing and other means, but so far there has been no significant change. At present, Bangladesh has a total length of 203,400 kilometers of roads, 2,460 kilometers of railways, 3 international airports, and 2 seaports.
Legal risks
The legal system of Bangladesh is based on English law, but its development is relatively slow. The judicial system is inefficient and corruption is rampant. Although the government and the Awami League have taken many measures to govern and combat corruption, there are still many loopholes and judicial flaws that lead to greater legal risks.
Bangladesh attaches great importance to foreign investment and has promulgated a series of laws such as the “Foreign Private Enterprise Investment Law” and “Investment Law” to ensure the interests of foreign investors. According to the standards of the World Bank’s “Business Environment Report 2013”, Bangladeshi companies have filed for bankruptcy Afterwards, the average time it takes for creditors to recover relevant debts is 4 years, which is higher than the average level in South Asia. The cost of litigation related to bankruptcy is high. The proportion of debts recovered by creditors through legal actions such as restructuring, liquidation or debt enforcement is significantly lower than this. regional average.
Overall risk
Generally speaking, Bangladesh’s political security risks are relatively high. Family politics is a major feature of party politics in Bangladesh. The Awami League led by Hasina currently has an advantage, but whether this advantage can be maintained in the next general election depends on whether it can make significant progress in solving economic and social problems. The Bangladesh government attaches great importance to economic development, implements privatization policies, and strives to improve the investment environment. At the same time, it relies on its advantages in labor resources to promote the development of the textile and garment industry. In recent years, the macro economy has achieved rapid growth. However, the serious social disorder caused by the confrontation with the government and the obstruction of textile and clothing exports caused by the European debt crisis have had a large negative impact on Bangladesh’s economic development. At the same time, as one of the poorest countries in the world, Bangladesh suffers from energy shortages, a single economic structure, a weak economic foundation, and is vulnerable to external shocks.
Based on the analysis and assessment of the current overall situation, Bangladesh’s country trade risk index (ERI) is 99.71, the country risk reference rating is 7 (7/9), the country risk level is significant, and the country risk outlook is stable.
(Issuing agency: China Export and Credit Insurance Corporation)
