Ready-made garments The ready-made garments (RMG) industry in Bangladesh is worth US$30 billion annually, representing the output of the more than 4,600 member companies of the Bangladesh Garments Manufacturers and Exporters Association (BGMEA) and their over 3.6 million employees. Bangladesh accounts for 6.5 percent of the global RMG market and is the second-largest apparel supplier in the world after China. Due to low wages and global demand for “fast fashion”, this sector is booming and making a significant contribution to economic development.
Foreign direct investment FDI has been accelerating at a significant pace, especially in sectors such as power, food, banking, garments and textiles, and telecommunications. Net inflows in 2019 reached US$3.89 billion, compared with US$700 million a decade earlier. In 2016, the government set up the Bangladesh Investment Development Authority (BIDA) to broaden foreign investment into sectors that could drive new growth such as agribusiness, garments and textiles, leather goods, light manufacturing, energy, information and communications technology (ICT), and infrastructure.
The significant increases recorded in these three areas coincided with the election of the still-incumbent government in 2009. Prime Minister Sheikh Hasina Wazed, her ruling Awami League and its Grand Alliance partners are the longest continuously serving government in Bangladesh history. Regime longevity means political stability, which provides the time to build reputations, relationships, confidence and trust between public- and private-sector actors. Frequent regime changes since Independence in 1971 – sometimes abrupt and violent – had hampered the country’s political development.
In 1990, Bangladesh began a transition from military dictatorship to quasi-democratic rule. The country endured several government changes, which inevitably prevented policy consistency and hampered economic development. The political and administrative stability achieved over the past decade, arguably at the expense of a weakened and suppressed opposition, has therefore been a major factor in turbo-charging Bangladesh’s economic performance.
State of corruption
Bangladesh has experienced massive corruption from the country’s start. The establishment of a Dhaka office of TI in 1996 helped shine a spotlight on the issue. From 2001 to 2006, Bangladesh received the lowest score on the TI Corruption Perceptions Index that measures perceived levels of corruption in the public sector. Corruption at both petty and grand level has become severe and the change of government in 2009 made little difference. Instead, corruption became more systematic and the volume of grand corruption increased at an alarming rate. Since 2010, there have been several major fraud and corruption cases involving a triangular nexus of politics, business and the bureaucracy, and entities such as the Bismillah Group, Basic Bank, Hallmark Group, PK Halder and the Dhaka Stock Exchange.