Bangladesh Country Brief - June 2008

Introduction

Bangladesh is a fertile alluvial plain on the delta of three main rivers, the Ganges, the Brahmaputra and the Meghna. The country covers an area of 144,000 square kilometres (which is about two-thirds the size of Victoria) and has a population of approximately 150 million, making it one of the world's most densely populated countries. Bangladesh is also one of the world's poorest countries - approximately 45 million people live below the poverty line. The tropical monsoons, with heavy summer rains, experienced in Bangladesh are generally accompanied by cyclones and floods, often with catastrophic consequences.

Bangladesh has a rich cultural heritage with literature, poetry and music all playing important roles in Bangladesh society. Folk art is also very common, with weaving and complex needlework finding its roots in traditional Bengali culture. Over 88 per cent of Bangladeshis are Sunni Muslims and the state religion is Islam. Most of the rest of the population are Hindus (10.5 per cent), with other religious minorities including Buddhists and Christians also present.

Political Overview

Formerly East Pakistan after the 1947 British partition of India, the People's Republic of Bangladesh came into existence in 1971 after a 'war of liberation' from Pakistan. Since then, Bangladesh has experienced considerable political instability.

The Awami League (AL), ('awami' means 'people's') led by the independence leader Sheikh Mujibur Rahman formed the first government of Bangladesh. The AL's rule came to an end with the assassination of Sheikh Mujib (and most of his family) by military officers in August 1975. Following a period of coup and counter coup, Major General Ziaur Rahman assumed control jointly with other officers in 1975 and independently from late 1976. Zia formed the Bangladesh Nationalist Party (BNP). He also was assassinated by military officers in 1981. Following a further period of instability, the then Chief of Army staff, Lt-General Hossain Mohammad Ershad, seized power in a bloodless coup in 1982. He established the Jatiya Party (JP - 'jatiya' means 'national'). Election boycotts, general strikes and anti-government demonstrations were widespread throughout Ershad's rule, leading eventually to his resignation in 1990.

In 1991 Bangladesh instituted a democratic parliamentary system of government, with a unicameral Parliament of 300 directly-elected members. The national Parliament serves a five-year term. The Head of State is the President who is elected by the national Parliament for a five-year term. Executive authority rests with the Prime Minister.

Since the restoration of democracy, Bangladesh politics has been dominated by two women, BNP leader Khaleda Zia (widow of General Zia), and AL leader, Sheikh Hasina Wajed (daughter of Sheikh Mujib). The 1991 parliamentary elections were won by the BNP under the leadership of Khaleda Zia. The AL won the 1996 elections, after 21 years in opposition. In October 2001, Khaleda Zia became Prime Minister again after her BNP-led four-party coalition won a landslide victory - 209 seats in a 300 seat parliament.

Whilst in power, the BNP coalition government repealed the Public Safety Act and the Special Powers Act that allowed for arbitrary detention on national security grounds. The government also gave effect to a 1980 bill introducing the institution of the Ombudsman and constituted a National Human Rights Commission and an Anti-Corruption Commission. However, the coalition's controversial Operation Cleanheart, undertaken ostensibly to improve the law and order situation in the country, was criticised for its human rights excesses and the indemnification of law enforcement agencies from civil and criminal action.

On 29 October 2006, following protracted negotiation, the President, HE Dr Iajuddin Ahmed, was sworn in as Chief Adviser of a caretaker government which was to govern Bangladesh until new elections scheduled for 22 January 2007.

On 3 January 2007, the Awami League announced that they would boycott the elections, citing concerns over the voter rolls. Negotiations to solve their concerns were unsuccessful. On 11 January, President Iajuddin declared a State of Emergency and resigned as Chief Adviser, but retained the Presidency. He was replaced as Chief Adviser by Fakhruddin Ahmed, a former Governor of the Bangladesh Bank (Central Bank), who is respected on both sides of Bangladeshi politics.

On 12 May 2008, the Chief Adviser made an address during which he committed to holding elections in the third week of December 2008. In addition to initiating the relaxation of provisions of the Emergency Regulations, he also announced the commencement of formal dialogue with the main political parties.

For further information, see the Bangladesh Virtual Library developed by the Australian National University.

Economic Overview

Real GDP growth of 5.6 per cent was achieved in 2007, although higher rates of growth will be needed to meet the millennium target of halving the number of people below the poverty line by 2015.

Sustained economic growth and inwards investment have contributed to a gradual increase in the relative weighting of manufacturing in GDP and a decline in agriculture's weighting. But Bangladesh remains an agricultural economy, with agriculture contributing over 23 per cent of GDP and employing over 60 per cent of the labour force. Rice is the dominant crop (over 70 per cent of the total value of agricultural production). Other crops include wheat, jute, sugar cane, pulses, spices, tea and various fruits and vegetables.

Bangladesh has a liberal foreign investment regime, but apart from energy exploration and production, foreign investment in Bangladesh in general is limited. Large-scale investment in the gas and telecommunication sectors peaked in 1997/98, but has since levelled out. The Privatisation Commission has listed over 90 state owned enterprises for sale or liquidation.

Another major challenge is to diversify the sources of national income. The garment industry currently accounts for over 70 per cent of total exports and is under competitive pressures. Remittances have sharply increased as the number of Bangladeshis employed abroad has risen over the last two decades.

As a result the currency remains vulnerable, although the taka has remained relatively stable since the currency was floated on 30 May 2003. The government has skillfully managed monetary policy resulting in external reserves equivalent to three months export coverage.

Foreign Relations

Bangladesh's foreign relations are strongly influenced by its dominant neighbour India as well as by its position as a major recipient of foreign development assistance (US$1.5 - 1.9 billion per annum in recent years). Talks have commenced with India on a free trade agreement. However, relations have been strained by the alleged presence of large numbers of Bangladeshi illegal immigrants in India, and by Indian moves to erect a fence along the India-Bangladesh border.

In 1991, over 250,000 Rohingya Muslims fled from the bordering Arakan State in Burma to Bangladesh. All but approximately 26,000 of the Rohingyas have returned to Burma. Those remaining in camps in the country's south-east are under the auspices of the office of the United Nations High Commissioner for Refugees (UNHCR). From 1 July 2003 UNHCR announced it will no longer assist with repatriation to Burma and will maintain a "protection only" presence at the camps.

Bangladesh plays an active role in forums such as the Commonwealth and the UN, and participates in many multilateral agencies. It has also provided large numbers of personnel to UN peacekeeping operations around the world, including in Cambodia, Bosnia, Somalia, Haiti and East Timor.

Bangladesh has long-standing ties with China. During then Premier Zhu Rongji's January 2002 visit to Bangladesh, the two countries signed seven memoranda of understanding (MOUs) covering assistance in infrastructure and culture.

Bangladesh has been active in promoting regional and sub-regional cooperation. It supported the concept of sub-regional cooperation between India, Bhutan and Nepal as a means of strengthening the South Asian Association for Regional Cooperation (SAARC).

Bangladesh is also a founding member of BIMST-EC, an association of the countries of the Bay of Bengal (Bangladesh, India, Burma, Sri Lanka and Thailand). In 2001, Bangladesh became a member of the Indian Ocean Rim - Association for Regional Cooperation.

Bilateral Relationship

Australia was the fourth country (the first from the developed world) to recognise Bangladesh's independence in 1971. A resident mission was established in Dhaka in 1972 and Australia has enjoyed good relations with Bangladesh since then.

Relations have been strengthened by high-level visits over the past decade. In April 1997 then Deputy Prime Minister and Minister for Trade, Mr Fischer, led a delegation of 16 Australian business people on an official visit to Bangladesh. He was followed in February 1998 by then Minister for Foreign Affairs, Mr Downer, and by the then Minister for Immigration and Multicultural and Indigenous Affairs, Mr Ruddock, in July 2003. Former Minister for Immigration, Senator Vanstone, visited Bangladesh in March 2006. During the visit, Senator Vanstone signed a Memorandum of Understanding on a Working Holiday Visa program for Bangladesh.

In 1999, then Prime Minister Sheikh Hasina Wajed visited Australia. Former Prime Minister Khaleda Zia visited Australia in March 2002 for the Commonwealth Heads of Government Meeting (CHOGM). Former Commerce Minister Altaf Chowdhury visited in April 2004 to open the Bangladesh Festival - a combined trade and cultural fair - in Sydney with then Minister for Trade, Mr Vaile. The Caretaker Government’s Foreign Affairs Adviser (Minister equivalent) Dr Iftekhar Chowdhury visited Australia in June 2007.

Sporting links have also played an important role in strengthening Australia-Bangladesh relations. Cricket Australia signed an MOU with Bangladesh Cricket Board in 2000 for a range of cooperation, including young players studying at the Commonwealth Bank Cricket Academy in Adelaide. The inaugural winter cricket series between Australia and Bangladesh was held in Darwin and Cairns in June and July 2003. The Australian cricket team toured Bangladesh in early 2006 for a test and a one-day series.

Bilateral economic and trade relationship

Two-way trade in 2007 totalled A$235 million with exports to Bangladesh valued at $197 million. Principal exports to Bangladesh are vegetables, plastic and wheat. The main imports are clothing and textiles. Since 1 July 2003, products from Bangladesh enter Australia duty-free and quota-free.

Bangladesh offers commercial opportunities to Australian companies operating in the energy, telecommunications, and transport sectors. Opportunities exist for Australian companies in both power transmission and distribution.

Exploration and production of natural gas has attracted a number of international oil companies, with 12 of the country's 23 exploration and production blocs currently operated jointly by international concerns.

Opportunities exist in the telecommunications industry for Australian companies to enter the market to supply mobile service equipment, consultancy and technical services. Bangladesh's railways, roads and port infrastructure are in poor condition and in need of improvement. Australian businesses are well placed to provide services and equipment.

For more information on developing commercial links with Bangladesh, please see the website of Austrade.

Development Assistance

Bangladesh has been a significant recipient of Australian development assistance since the early 1970s. Australia will provide an estimated A$52 million in total aid flows to Bangladesh in 2008-09. Ongoing initiatives will continue to focus on assistance to the ultra poor; support for education, health and health research; and on scholarships programs.