Business risks still exist in Bangladesh: US-based rating agency

The Fitch Ratings Inc, one of the three nationally recognised statistical rating organisations designated by the US Securities and Exchange Commission in 1975, recently issued a long-term stable outlook for Bangladesh with “BB-” rating, but found “significant political risk and weak banking-sector health” in the country.

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“Political turmoil or terrorism could inflict long-term economic harm if it deters foreign investors and buyers, especially of ready-made garments, from doing business in Bangladesh,” Fitch’s rating cautioned, adding, “Continued strong political polarisation could again lead to widespread violence and blockades, especially near the time of Parliamentary elections, which will be held no later than January 2019.”

The rating predicted Bangladesh’s economic growth for this fiscal at 6.7 per cent (somewhat below the Bangladesh Government’s growth forecast of 7.05 per cent) and maintained that Bangladesh scores poorly on a broad range of structural indicators, including the World Bank governance indicator.

“The difficult business environment is illustrated by the country’s 174th ranking out of 189 countries in the World Bank Ease of Doing Business report,” the rating agency points out in a statement issued from Hong Kong.

Also Read – Bangladesh registers over 30% rise in FDI in July-Jan period

However, a British business delegation which visited Bangladesh in March this year, reportedly hailed the business environment offered by the country and underlined that British companies were exploring new avenues of doing businesses in Bangladesh since they do not face any barriers here.

The country’s July-January FDI has also reportedly registered a substantial growth — about 30.4 per cent — compared to the net FDI received in the same period in financial year 2014-15. According to the Bangladesh Bank, the net FDI was US $1.7 billion in 2014-15 fiscal and a little over US $1.43 billion in 2013-14.

According to Finance Minister AMA Muhith, the credit for this goes to the ‘strong’ base of Bangladesh’s economy and the ‘stable’ political condition that have resulted in the rise in FDI, despite global recession.