The United Kingdom (UK) has said corruption affects many aspects of daily life in Bangladesh and is often cited as a barrier to private sector development, reports UNB.
"One of the biggest challenges facing UK companies in Bangladesh is how to avoid paying speed money," it says in a guideline report published on Thursday highlighting the challenges in doing business in Bangladesh.
"Speed money is unofficial, under the counter payments to minor officials to expedite business. Politicians, bureaucrats and law enforcement officials often wield significant discretionary power and there have been some abuses," according to the guideline titled 'Doing business in Bangladesh: Bangladesh trade and export guide'.
Bangladesh aims to become a middle-income country by 2021. The government's strategic vision for 2021 is a plan for growth through massive investment in infrastructure, skills development and trade.
Cooperation with the private sector and international donor agencies is expected.
Almost 100 UK businesses operate in Bangladesh, including well-known companies like HSBC, Unilever and GSK.
Strengths of the Bangladesh market include annual growth rate of at least 5.3 per cent over the last 16 years, stable credit rating, close to issuing first Sovereign Bond, poverty levels cut by half in the last decade and competitive labour force, it said.
Bangladesh is 173rd in the World Bank's ease of doing business ranking.
The guideline mentioned that Bangladesh often lacks transparency and have significant bureaucratic burdens in terms of procurement practices.
Bangladesh is ranked 145th in Transparency International's Corruption Perceptions Index.
The Bangladesh market is extremely price-sensitive with low price goods from India and China dominating many sectors. UK companies should sell into the market on the basis of quality, life cycle cost and training after sales service, it said. The GDP grew by 6.0 per cent in the fiscal year (FY) 2013 (fiscal year ends in June).
Industry grew by 9.0 per cent with strong expansion in construction and small-scale manufacturing. 6.7 per cent growth is forecast for 2016. Inflation slowed to 6.41 per cent in 2015 from 7.35 per cent in FY 2014. The balance of payments was USD 5.4 billion in surplus in FY 2014 after 10.7 per cent growth in exports and only 0.8 per cent growth in imports.
Bangladesh's RMG sector is now worth almost USD 25 billion. It is the third largest apparel exporter to the European Union (EU) and fourth largest to the US.
Bangladesh, with a population of 158 million, has the highest-density population in the world. Per capita income is USD 1,190, so more than 25.6 per cent of people live below the poverty line.
There has been over 119 per cent growth in bilateral trade in goods and services between 2007 and 2012. The UK exported £450 million worth of goods and services to Bangladesh in 2013. 71 per cent of this was services. Exports of goods were £131 million in 2014.
The UK's main exports to Bangladesh in 2013 were nuclear reactors, boilers, machinery and mechanical appliances or parts of electrical machinery and equipment or parts, sound recorders and reproducers, television image and sound recorders and reproducers, waste from the food industries and prepared animal fodder.
