Investing in the “One Belt, One Road” Countries: Political Risks in Bangladesh

Since China and Bangladesh established diplomatic relations in 1975, the two countries have fostered a close trade tie, and Bangladesh has become an important trading partner for China in South Asia. As China and Bangladesh are in different stages of economic development, the cooperation between them will benefit both nations. Bangladesh has sufficient labor force and lower labor cost. Also, the Bangladeshi government has taken multiple actions to improve its investment climate and to attract foreign capital, including constructing export processing zones and special economic zones, as well as formulating an ambitious economic development plan. All these are strong arguments in favor of Bangladesh as a business location. As for China, with the aid of the China-India-Bangladesh-Myanmar Economic Corridor, China anticipates a closer economic and trade cooperation with Bangladesh as long as Chinese investors are well prepared to face the following political risks:

  • Political instability;
  • Worsening public security situation;
  • Severe government inefficiency and corruption; and
  • Competition from the U.S. and India for influence in Bangladesh.
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