Political Violence and Poor Labor Standards Threaten Bangladesh's Status as Manufacturing Hub

Political instability and poor labor standards are having deleterious impact on Bangladesh’s economy, including the vital garment export sector, according to Maplecroft’s latest Country Risk Report.

"Generally considered a poor and backward country, Bangladesh has been upgrading its manufacturing facilities big time," wrote Chris Devonshire-Ellis of Dezan Shira & Associates in an article posted on CFO Innovation Asia.

Honda is investing more into its auto manufacturing capabilities there, while it is generally not well known that the country is the world’s second largest producer of textiles.

Consequently, the Chittagong Export Processing Zone is well up to speed with numerous well known global brands established there.

Bangladeshi politics is personality-driven and marked by frequent incidents of violence. If this continues, companies will likely experience significant supply chain disruptions and decreasing productivity, according to Maplecroft.

However, Moody Investors Service in April this year reported that Bangladesh's headline growth and exports were not meaningfully impacted by heightened political turbulence over the last year in the run-up to parliamentary elections in January 2014, or by disruptions caused by industrial accidents in the garments sector.

The elections of January 2014 were boycotted by the opposition Bangladesh Nationalist Party (BNP), resulting in a near-total lack of parliamentary opposition to the government. This outcome bodes poorly for democratic governance in Bangladesh, as the ruling Awami League (AL) government has few meaningful checks and balances on its power.

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