Graft affects UK firms in Bangladesh: report

Corruption affects many aspects of daily life in Bangladesh and is often cited as a barrier to private sector development, the United Kingdom has said.

"One of the biggest challenges facing UK companies in Bangladesh is how to avoid paying speed money," it said in a guideline on Thursday, highlighting the challenges in doing business in Bangladesh.

Speed money is unofficial, under the counter payments to minor officials to expedite business.

Politicians, bureaucrats and law enforcement officials often wield significant discretionary power and there have been some abuses, according to the guideline -- Doing business in Bangladesh: Bangladesh trade and export guide.

Bangladesh aims to become a middle-income country by 2021. The government's strategic vision for 2021 is a plan for growth through massive investment in infrastructure, skills development and trade. Cooperation with the private sector and international donor agencies is expected.

Almost 100 UK businesses operate in Bangladesh, including well-known companies like HSBC, Unilever and GSK.

Strengths of the Bangladesh market include annual growth rate of at least 5.3 percent over the last 16 years, stable credit rating, close to issuing first sovereign bond, poverty levels cut by half in the last decade and competitive labour force, it said.

Bangladesh, which stands 173rd in the World Bank's ease of doing business ranking, often lacks transparency and has significant bureaucratic burden in terms of procurement practices, according to the guideline. Bangladesh ranked 145th in Transparency International's Corruption Perceptions Index.

The Bangladesh market is extremely price sensitive with low-price goods from India and China dominating many sectors, it said.

Bangladesh's garment sector is now worth almost $25 billion. It is the third largest apparel exporter to the European Union and fourth largest to the US.

The UK exported goods and services worth £450 million to Bangladesh in 2013 -- 71 percent of these were services. There has been more than 119 percent growth in bilateral trade in goods and services between 2007 and 2012.