Bangladesh: Economic growth but at what cost?

28 April 2017

Opportunities in Bangladesh are on the rise as its economy continues to grow rapidly. However, there is also widespread corruption in its main export industry - leather. This means that while there is rapid economic growth and rising business opportunities, these opportunities may potentially come at a high social and ethical cost.

There's a new 'Asian Tiger'

The ‘Asian Tigers’ used to refer to the four countries (Hong Kong, Singapore, South Korea and Taiwan) that underwent rapid growth between the 1960s and 1990s. Now, however, there is a fifth ‘Tiger’: Bangladesh. Over the past decade, this economy has become one of the top performers in the Asian region. Most of this growth can be attributed to exports of garments which contribute to more than 80 percent of the country’s total exports. Bangladesh has also acquired two-thirds of China’s low-end manufacturing market share in Europe. Despite the rapid growth, Bangladesh needs to start diversifying into other sectors such as consumer durables in order to achieve its growth target. To successfully diversify into other sectors, Bangladesh needs to improve its investment climate and infrastructure. Corruption levels also make it harder to do business in Bangladesh. To tackle this issue, the government plans to introduce reforms such as removing red tape, speeding up the process for receiving construction permits and speeding up connection times to power grids, among other planned measures. While there are issues in Bangladesh, the rapid growth and high returns on capital in this region are already attracting foreign investors and starting to offer major opportunities for foreign businesses.

Read the full article on the Business Insider website.

Report examines grim Bangladesh leather trade, links to West

Despite the growing business opportunities in Bangladesh, the corruption in its leather trade is reaching critical levels. The major issues include heavily polluting tanneries, child labour, hazardous working conditions, and a lack of protective clothing and safety gear. The leather manufactured in Bangladesh is supplied to handbag and shoe manufacturers for many Western brands. Heavy air, soil and water pollution from the tanneries is especially high in Bangladesh’s leather industry hub of Hazaribagh. While the industry was ordered to shut down 15 years ago, there have been no repercussions for inaction. Last month, authorities were ordered to stop supplying water, electricity and gas to the tanneries but they are still in business due to high consumer demand for low-priced leather products. While Hazaribagh is viewed as an environmental and labour disaster, the owners of the tanneries deny employing child workers or exporting their leather. Due to the ongoing corruption and pollution, foreign businesses are urged to avoid trading with Bangladesh leather suppliers or face significant social costs and potential loss of business reputation.

Read the full article on the NZ Herald website.

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