Dhaka: The United States has said Bangladesh offers opportunities for investment but corruption remains a serious impediment to its investment and economic growth.

The US made the observation in its Investment Climate Statement 2015 on Bangladesh mentioning that Bangladesh witnessed over 6 per cent annual growth sustained over the past two and a half decades having a large, young and hard-working workforce, and vibrant private sector.

The Department issued the first of its 2015 Investment Climate Statements, providing country-specific information and assessments on investment-related laws and other important factors for doing business abroad.

US embassies and consulates prepare these public documents, which cover more than 175 foreign markets, to assist US companies to make informed decisions regarding investment in foreign markets.

It says Bangladesh offers opportunities for investment, especially in the energy, power, pharmaceutical, information technology, telecommunications, and infrastructure sectors as well as in labour-intensive industries such as readymade garments, household textiles, and leather processing.

Land registration has historically been prone to disputes over competing titles, and scarcity of land is a significant investment constraint, said the statement adding that political turmoil in the aftermath of the January 2014 elections and subsequent one year anniversary in January 2015 has resulted in some investment delays or cancellations.

While the government has established legislation to combat bribery, embezzlement and other forms of corruption, enforcement is inconsistent, it said.

The current Awami League-led government has publicly underscored its commitment to anti-corruption efforts and reaffirmed the need for a strong ACC.

However, efforts to ease public procurement rules and a recent constitutional amendment that reduced the independence of the ACC may undermine institutional safeguards against corruption.

Corruption, including bribery, raises the costs and risks of doing business. By some estimates, off-the-record payments by firms may result in an annual reduction of two to three percent of GDP, said the statement.

‘Corruption has a corrosive impact on the broader business climate market and opportunities for US companies in Bangladesh. It also deters investment, stifles economic growth and development, distorts prices, and undermines the rule of law,’ it says.

The government of Bangladesh actively seeks foreign investment, particularly in the apparel industry, energy, power, and infrastructure projects.

According to the central bank of Bangladesh, the country received USD 1.5 billion in foreign direct investment (FDI) FY 2013-14, up from USD 990 million in the previous year.

Bangladesh has made gradual progress in reducing some constraints on investment, but inadequate infrastructure, financial constraints, bureaucratic delays, and corruption continue to hinder foreign investment.

The lack of effective alternative dispute resolution mechanisms and slow judicial processes impede the enforcement of contracts and the resolution of business disputes.

There was significant political violence and uncertainty during the first quarter of 2015 following the one year anniversary of controversial national elections held in January 2014, said the statement.

While this raised concerns of a short-term, adverse impact on business and investment, growth forecasts for 2015 remain above 6 percent.

On 27 June 2013, President Obama announced his decision to suspend Bangladesh’s trade benefits under the Generalized System of Preferences (GSP) in view of insufficient progress by the government of Bangladesh in affording Bangladeshi workers internationally recognized worker rights.

At the time of the announcement, the Administration provided the government of Bangladesh with a 16-point action plan outlining next steps as part of a longstanding effort to address in a meaningful way worker rights and safety problems in Bangladesh.

If implemented, the plan would provide a basis for the President to consider reinstating GSP trade benefits, said the statement.

While discrimination against foreign investors is not widespread, the government frequently promotes local industries and some discriminatory policies and regulations exist.

For example, the statement said, the government closely controls approvals for imported medicines that compete with domestically-manufactured pharmaceutical products and it has required majority local ownership of new shipping companies, albeit with exemptions for existing foreign-owned firms, following a prime ministerial directive.

In Bangladesh, FDI increased by 50 per cent from FY 2013 to FY 2014. Sustained economic growth, a demographic dividend, and increased reforms of the RMG sector are resulting in substantial interest in investing in Bangladesh.

Government policies are generally in favour of increased economic growth, but are hampered by slow and incomplete implementation issues involving the regulatory and rule of law environment.