Uneven enforcement undermines our FDI aspirations

Concerns over legal unpredictability and uneven regulatory enforcement continue to cast a shadow over Bangladesh's investment climate. In recent years, several senior executives of multinational firms have been drawn into criminal proceedings over alleged labour law violations -- cases many in the business community view as excessive and disproportionate.

Such developments directly undermine Bangladesh's ambition to position itself as a competitive destination for foreign direct investment (FDI). The Bangladesh Investment Development Authority (Bida) has played a proactive role in promoting the country's potential. But investor confidence depends not just on facilitation, but on the consistent and fair application of laws -- something increasingly in question.

On the ground, many multinational corporations (MNCs), particularly in fast-moving consumer goods (FMCG) and cosmetics, report an uneven playing field. They face stricter scrutiny than local firms -- from aggressive audits and VAT refund delays to rigid enforcement of tax and labour laws. Meanwhile, domestic competitors often operate in the informal economy with minimal oversight, distorting competition and discouraging compliance.

Over the years, several global pharmaceutical companies have exited Bangladesh, citing policy inconsistency, bureaucratic red tape, and regulatory unpredictability. These quiet departures are far more telling than rankings alone, and mirror the country's low standing in international ease-of-doing-business indices.

One particularly troubling issue is the enforcement of the Workers' Profit Participation Fund (WPPF). Many local firms and even entire sectors operate without complying with this law, often without consequence. Yet foreign companies have faced swift and punitive action. In some instances, disputes over whether WPPF applies to seasonal or contractual workers have escalated into criminal charges, rather than being handled through labour courts or regulatory processes. The legal system should protect rights, not serve as a tool of pressure.

The cosmetics sector highlights this imbalance even further. MNCs face unclear and shifting regulations regarding product labelling, classification, and safety testing. Even items widely approved abroad must clear redundant local hurdles. Imported products are regularly delayed at customs due to discretionary value assessments or ambiguous documentation requirements. Local producers, by contrast, often bypass these same standards with little pushback, giving them a clear cost and time advantage.

The core issue is not regulation itself, but its selective and inconsistent application. Some sectors have successfully lobbied for formal exemptions from rules like the WPPF. Others simply ignore them without repercussion. Yet foreign firms are often subject to abrupt enforcement actions, reinforcing the perception that they are held to a different, and higher, standard.

Such signals do lasting damage. Legal compliance is essential, but enforcement must be transparent, proportionate, and uniform. Public threats of punitive action or comments suggesting forced exits do not enhance accountability, they erode trust and deter long-term investment.

Foreign investors exploring Bangladesh often reach out to MNCs already operating in the country. These companies effectively serve as informal ambassadors. When they share concerns about legal unpredictability, surprise inspections, and selective prosecution, it sends a discouraging message -- one that no branding campaign can override.

As Bangladesh moves toward graduating from least-developed country (LDC) status and sets its sights on upper-middle-income classification, attracting high-quality FDI becomes more critical. Incentives alone won't be enough. Investors need to see a rules-based environment where laws are applied fairly and disputes are resolved through proper legal channels.

To build a credible and enabling investment climate, Bangladesh must ensure all businesses, foreign or domestic, are subject to the same standards, protected by the same rights, and held accountable through the same mechanisms. A level playing field is not a branding issue; it is the foundation of investor confidence and long-term economic resilience.

The writer is the chairman of Unilever Consumer Care Limited.