* Exchange rates of BDT against the USD for the last 5 years. Fluctuations (if any). Factors those are responsible for the fluctuations or lack thereof of the BDT against the USD.

Exchange Rates of BDT against the USD (last 5 years)

Starting off with 1st January 2009 and until October 2010, we have found that the exchange rate of Bangladesh against the USD have remained promisingly stable. The rate has been seen to be in between the intervals of 68.00-69.00. In the month of October, BDT first raise to 70 Tk per USD.Next, 2011, the year, can be said to have the major fluctuation ever in the history of Bangladeshi currency against the USD. The early 2011(January) rate was around 70, which finally stood up to 81.82 (as of 30th December 2011). And that accounts for an increase of over 10 Tk per dollar. In other words, people who were holding dollars for profit received over 10Tk per dollar as earnings, which can be said as a very higher yield.

Taking the effects from the previous year 2011, the year, 2012, had always over Tk. 80 per USD. That is, in the year 2012, the dollar was seen to soar up higher relative to past 4years history. In January 2012, the rate was 84 per USD, which remained almost the same for some days and eventually falls to 79 at the last month of 2012, December. The factors those are responsible for the fluctuations or lack thereof of the BDT against the USD Differentials in InflationAs a general rule, a country with a consistently lower inflation rate exhibits a rising currency value, as its purchasing power increases relative to other currencies.

Differentials in Interest RatesInterest rates, inflation and exchange rates are all highly correlated. By manipulating interest rates, central banks exert influence over both inflation and exchange rates, and changing interest rates impact inflation and currency values. Higher interest rates offer lenders in an economy a higher return relative to other countries. Therefore, higher interest rates attract foreign capital and cause the exchange rate to rise. The impact of higher interest rates is mitigated, however, if inflation in the country is much higher than in others, or if additional factors serve to drive the currency down. The opposite relationship exists for decreasing interest rates

Current-Account DeficitsThe current account is the balance of trade between a country and its trading partners, reflecting all payments between countries for goods, services, interest and dividends. A deficit in the current account shows the country is spending more on foreign trade than it is earning, and that it is borrowing capital from foreign sources to make up the deficit. In other words, the country requires more foreign currency than it receives through sales of exports, and it supplies more of its own currency than foreigners demand for its products. The excess demand for foreign currency lowers the country's exchange rate until domestic goods and services are cheap enough for foreigners, and foreign assets are too expensive to generate sales for domestic interests.

Public DebtCountries will engage in large-scale deficit financing to pay for public sector projects and governmental funding. While such activity stimulates the domestic economy, nations with large public deficits and debts are less attractive to foreign investors. A large debt encourages inflation, and if inflation is high, the debt will be serviced and ultimately paid off with cheaper real dollars in the future.

Terms of TradeA ratio comparing export prices to import prices, the terms of trade are related to current accounts and the balance of payments. If the price of a country's export rises by a greater rate than that of its imports, its terms of trade have favorably improved. Increasing terms of trade shows the greater demand for the country's exports. This, in turn, results in raising revenues from exports, which provides increased demand for the country's currency (and an increase in the currency's value). If the price of exports rises by a smaller rate than that of its imports, the currency's value will decrease in relation to its trading partners.

Political Stability and Economic PerformanceForeign investors inevitably seek out stable countries with strong economic performance in which to invest their capital. A country with such positive attributes will draw investment funds away from other countries perceived to have more political and economic risk. Political turmoil, for example, can cause a loss of confidence in a currency and a movement of capital to the currencies of the more stable countries.

* The inflation rate, the interest rates and the income levels in Bangladesh for the last 5 years. The trend in inflation rates, interest rates & income levels. Theories of IRP, PPP and IFE and their impact on BD currency. Inflation in BangladeshInflation is defined as a sustained increase in the general level of prices for goods and services. It is measured as an annual percentage increase. In Bangladesh, it fluctuates not too much. After a short spell of benign trend in terms of lower inflation and prices during 2008 and 2009, Bangladesh has again started to feel the pinch of high inflation. Since the second quarter of FY2009-10, inflation started rising and the uptrend continued throughout FY2009-10 and FY2010-11. During the first five months of FY2011-12 there has not been any change in the direction of inflationary movement. The 12-month point-to-point consumer price index (CPI) inflation has reached as high as 11.58 per cent in November 2011 compared to 7.54 per cent in November 2010. As in most years, food inflation was higher than general inflation reaching 12.47 per cent in November 2011 as opposed to 9.8 per cent in November 2010. In 2011 the inflation was about 8.56. But it increases too much in 2012. At 2012 the inflation rate was 9.78. At one point of time it was above 10. In 2013 the rate was decreased and rate was 7.88. In 2014 January the rate was 7.40. From 2012 to 2013 the inflation rate doesn't fluctuate too much and this is a good sign for any country.A widely discussed plausible cause of high inflation in Bangladesh is the impact of global price hike. As a food and petroleum importing country, Bangladesh has to bear the brunt of global price hike of these items. Since the beginning of the current decade and up to 2008 global prices of fuel and food followed an increasing trend which got transmitted into the country's domestic economy. There has been some respite from high inflationary pressure towards the end of 2008 and 2009 due to the global meltdown and the resultant price fall of major commodities in the global market. With the turnaround of the global economy from the recession towards the end of 2009 and beginning of 2010, inflation started to shoot up. This trend was also observed in Bangladesh. In a move to control diversions and unproductive use of funds Bangladesh Bank has been using its monetary policy tools more frequently in recent times than before. The Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) were increased twice, and rates of repo and reverse repo rose thrice in the last fiscal year. To discourage loans to unproductive sectors and to control inflation, Bangladesh Bank has also withdrawn the lending cap for most sectors. Increased borrowing by the government from domestic sources has contributed to continuing high inflationary trend notwithstanding the reduction in money supply. In the end, monetary policy will have to be implemented in tandem with effective fiscal management to reduce the inflationary pressure, ensure food security and achieve economic growth

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Interest rate:Interest rate is a rate which is charged or paid for the use of money. An interest rate is often expressed as an annual percentage of the principal. The benchmark interest rate in Bangladesh was last recorded at 7.25 percent. Interest Rate in Bangladesh is reported by the Bangladesh Bank. Interest Rate in Bangladesh averaged 7.25 Percent from 2009 until 2014, reaching an all time high of 8.75 Percent in September of 2009 and a record low of 4.50 Percent in October of 2010. In Bangladesh, interest rates decisions are taken by the Bangladesh Bank. The Bangladesh Bank controls two policy interest rates: the repo rate (repurchase rate), which it uses to inject money into the banking system, and the reverse repo rate. From 2012 and 2013 was moderately constants rate.

Income levels: Personal Income in Bangladesh increased to 31079.56 BDT THO in 2013 from 29606.81 BDT THO in 2012. Disposable Personal Income in Bangladesh averaged 18543.01 BDT THO from 2010 until 2013, reaching an all time high of 31079.56 BDT THO in 2013 and a record low of 6808 BDT THO in 2010.

Interest rate parity (IRP) If covered interest arbitrage is no longer feasible, and the equilibrium state achieved is referred to as interest rate parity (IRP).End-value of a $1 investment in covered interest arbitrage = (1/S) (1+iF) F = (1/S) (1+iF) [S (1+p)] = (1+iF) (1+p)(Where p is the forward premium)Equating the two and rearranging terms: P =(1+iH) -1(1+iF) Forward premium = (1 + home interest rate) -1 (1 + foreign interest rate)

This is the method that is used to calculate interest rate parity (IRP). Market forces cause the forward rate to differ from the spot rate by an amount that is sufficient to offset the interest rate differential between the two currencies. Then, covered interest arbitrage is no longer feasible, and the equilibrium state achieved is referred to as interest rate parity (IRP). When IRP exists, the rate of return achieved from covered interest arbitrage should equal the rate of return available in the home country. Interest rate parity (IRP) basically influences the interest rate and interest rate is related to inflation rate. Thus it makes a great effect on exchange rate of two currencies.

Purchasing power parity (PPP) The theory of purchasing power parity (PPP) attempts to quantify this inflation - exchange rate relationship. Home countrys price index (Ph) = Foreign countrys price index (Pf)When inflation occurs, the exchange rate will adjust to maintain PPP:Pf (1 + If ) (1 + ef ) = Ph (1 + Ih )Where, Ih=inflation rate in the home countryIf=inflation rate in the foreign countryef=% change in the value of the foreign currency

Since Ph = Pf , solving for ef gives: ef = (1 + Ih ) 1 (1 + If ) If Ih > If , ef > 0 (foreign currency appreciates) If Ih < If , ef < 0 (foreign currency depreciates) When one countrys inflation rate rises relative to that of another country, decreased exports and increased imports depress the countrys currency. The theory of purchasing power parity (PPP) attempts to quantify this inflation - exchange rate relationship. There are two forms of purchasing power parity (PPP): (1) The absolute form of PPP, or the law of one price, suggests that similar products in different countries should be equally priced when measured in the same currency. (2) The relative form of PPP accounts for market imperfections like transportation costs, tariffs Empirical studies indicate that the relationship between inflation differentials and exchange rates is not perfect even in the long run. However, the use of inflation differentials to forecast long-run movements in exchange rates is supported. It also influences tariffs, and quotas. It states that the rate of price changes should be similar. So we can see that PPP will influence the inflation rate of both home and foreign countries. It also affects the critical issues like tax, tariffs, quota and also the transportation cost of a country as well as the MNCs.

International Fisher effect (IFE)According to the Fisher effect, nominal risk-free interest rates contain a real rate of return and an anticipated inflation. According to the IFE, E(rf ), the expected effective return on a foreign money market investment, should equal rh , the effective return on a domestic investment.rf = (1 + if ) (1 + ef ) 1Where, if=interest rate in the foreign country ef=% change in the foreign currencys value rh = ih = interest rate in the home countryNow, rf = rh (1 + if ) (1 + ef ) 1 = ih Solving for ef : ef = (1 + ih ) _ 1 (1 + if ) If ih > if , ef > 0 (foreign currency appreciates) If ih < if , ef < 0 (foreign currency depreciates) The above process shows the method of using fisher effect. In the Fisher effect, nominal risk-free interest rates contain a real rate of return and an anticipated inflation. If the same real return is required, differentials in interest rates may be due to differentials in expected inflation. The international Fisher effect (IFE) theory suggests that currencies with higher interest rates will depreciate because the higher rates reflect higher expected inflation. Hence, investors hoping to capitalize on a higher foreign interest rate should earn a return no better than what they would have earned domestically. Thus the real interest rate and nominal interest rate are influenced by the fisher effect in order to influence the currency as well as the exchange rate.

Bangladesh, an emerging country of the South Asian Region, switched its currency management from fixed rate system to free floating system in January 2003. Since then the local currency Bangladesh Taka (BDT) is freely traded in currency markets. Therefore, an academic interest is arisen to see how a free floating system is working for a developing economy like Bangladesh. Although BDT has been made freely convertible to any currency, the exchange rate with other currencies maintains links with the exchange between BDT and USD. This is because Bangladesh maintains its total foreign reserves and settles all international transactions in USD. As a matter of fact that the effect of interest and inflation rates on the exchange rate movements are opposite to the expectation of IFE and PPP theories. This may indicate that liberalization of economy with unrestricted flow of funds may have its potential negative impacts for the developing countries like Bangladesh where demand for foreign currencies is always high due to more import payments relative to exports earning. This may be possible because Bangladesh economy yet to be fully integrated with the global financial system, with required structural changes to allow free flow of foreign and local currencies in response to the changes in the interest rate and inflation differentials. Although three major economic variables, e.g., interest rate, inflation rate, and balance of payment play major role in determining the exchange rate between Bangladesh Taka and US dollar, though the effects of interest and inflation is not consistent with the IFE and PPP theories.

Bangladesh Banks transactions with AdsBranches of foreign firms/companies including foreign banks, insurance companies and financial institutions are free to remit their post-tax profits to their head offices through banks authorized to deal in foreign exchange (Authorized Dealers) without prior approval of Bangladesh Bank.Bangladesh Bank's purchases and sales from and to the ADs are in US Dollar only, on spotbasis. All such transactions with Bangladesh Bank are required to be in multiples of US$ 10, 000, subject to a minimum of US$ 50,000. ADs are free to quote their own rates, ready and forward, for transactions in the interbank market andwith their customers.2.(a) The Central Banks of Bangladesh, India, Iran, Nepal, Pakistan, Sri Lanka, Bhutan and Myanmar have an Agreement to settle current transactions between these countries through the Asian Clearing Union (ACU) mechanism. All such payments to the ACU member countries excepting those covered by loan/ credit agreements are accordingly settled through the Asian Clearing Union (ACU) mechanism in Asian Monetary Unit (AMU, also called ACU dollar)which is defined as equivalent to theUS dollar.(b) The ACU Agreement referred to above provides for settlement of the following types ofpayments:(i) Payments from residents in the territory of one participating country to residents in the territory of another participating country.(ii) Payments for current international transactions as defined by the Articles of Agreement of the International Monetary Fund.(iii) Payments permitted by the country in which the payer resides.(c) ADs shall maintain nostro accounts in ACU dollars with their correspondent banks in ACU member countries for the purpose of settlements through ACU. Similarly ACU dollar accounts may be opened by the ADs in their books in the names of their correspondents in ACU membercountries. Ads may pay interest on the balance of Nostro A/C (ACU Dollar) as per mutual negotiation.(d) An AD needing to fund its ACU dollar nostro account with a correspondent bank in an ACU member country shall do so through Bangladesh Bank against surrender of the required amounting US dollar, or of equivalent taka at Bangladesh Bank's selling rate. Bangladesh Bank will advise the central bank of the concerned ACU member country to make the amount available to the transferee bank in that country. After making the payment, the central bank of the recipient ACU member country shall advise the GM of the ACU secretariat to credit its account by debit to Bangladesh Bank's account.CH 3 5(e) For repatriating funds from an ACU dollar nostro account with a correspondent bank in an ACU member country an AD shall advise the correspondent bank to route the payment through the central bank of that country, which will advise Bangladesh Bank to make the amount available to the recipient AD. Bangladesh Bank on receipt of the advise, shall make the fund available to the recipient AD (either in US dollar or in equivalent taka. at BB's buying rate, at the AD's option) and shall advise the GM of the ACU secretariat to credit its account by debit to the account of the central bank of the transferor ACU member country.3.(a) Bangladesh Bank operates a foreign currency clearing system enabling the AD banks to settle their mutual claims in US dollar, Pound Sterling, Euro and Japanese Yen arising from interbanktransactions;toeconomizethetimeandcostinvolvedinsettlementsthrough correspondentsabroad.Under thisarrangement,ADbanks maintain clearing accounts withthe BB in US dollar, pound sterling, Euro and Japanese yen. Apart from the purpose of settlement with other ADs, these accounts may also be used for transfers to and from correspondents abroad.(b) Settlement of the balances lying in each of the clearing accounts take place at the end of each month. The Bangladesh Bank charges interest on the debit balance in an account on dailyproduct basis and debit the bank's account at the end of each month and pays interest on the amount of credit balance at therates prescribed from time to time. (c) Operation of the clearing system is centralized in the International Department of Bangladesh Bank, Head Office, Dhaka; but the ADs in other centers may transfer funds to other banks through their head/main office in Dhaka.

After the Independence, Bangladesh adopted a policy of nationalisation of all large and medium industries. So, there was no new inflow of FDI in the country until 1977. Subsequent governments experimented with various industrial policies, but because of very uncertain political situation in the country, the FDI flows remained negligible until 1993. Only 220 FDI units were registered in Bangladesh between 1977 and 1993, but subsequently, FDI has experienced a fairly high annual growth. The number of FDI units registered in the country during the period from July 1996 to May 1999 was 425. The expected volume of total investments in these enterprises accounted for Tk 288.8 billion. These would create employment for more than 94,000 persons. Sectors that now attract FDI are readymade garments,textilesand fabrics, chemicals,paperand paper products, equipment and spares,printing, packaging, plastic products, metal industries, food processing, electrical goods, pharmaceuticals etc. Of late, oil andnatural gas, electricity,telecommunication,cement,hotels and restaurants, and hospitals and clinics have become sectors favoured by many foreign investors. The choice of FDI in initial years was limited in low investment, quick yield projects, while recent years show some diversification in lines of high-tech, capital intensive projects as well as of preferential distribution within the traditional sectors and sub-sectors. The share of agriculture, construction, storage and communication, however, remains historically low and account for less than 3% of the total FDI. Despite a continuous increase in the number of FDI projects registered with the BOI over the last few years, the net FDI flows into the country remained low and in 2005, the figure accounted for around 1.3% of the countys GDP. In 2007-08, the BOI recorded 143 proposals of FDI projects with a total FDI of Tk 54.33 billion, while the corresponding figures for 1995-96 were 127 and Tk 62.61 billion.The industrial policy of the government provides extensive incentives and facilities to attract FDI in Bangladesh. These include tax holidays, concession in import duty on machinery, repatriation of profits dividends, invested capital and capital gain, and salaries of foreign personnel and exemption of tax on these incomes, exemption of export oriented industries from paying local taxes, up to 90% financing of the L/C value of export products. The government has liberalised the trade regime and significantly reduced non-tariff restrictions. Foreign investors in Bangladesh have access to domesticcapital markets for working capital in the form of loans from commercial banks and development financial institutions. They also have access to the services of the countrysstock exchanges. Export-oriented industries of the thrust sector (toys, luggage and fashion articles, leather goods, diamond cutting and polishing, stationery goods,silkcloth, gift items, cut and artificial flowers and orchid, vegetable processing, and engineering consultancy services) are provided cash incentives, venture capital, and other facilities. The establishment ofexport processing zones (EPZ) proved to be an effective step in attracting FDI in Bangladesh and government permission to allow creation of private EPZs in the country has been a welcome decision.Problems that have restricted FDI potentials in the country include excessive bureaucratic interference, alleged irregularities in processing papers, lack of commitment on the part of local investors, inordinate delays in selecting projects for feasibility studies, and frequent changes in policies on import duties for raw materials, machinery and equipment. Overlapping administrative procedures and absence of a transparent system of formalities often confuse not only investors proposing projects, but also staff and personnel assigned for discharging procedural responsibilities. Frequent transfers of top and mid level officials in various ministries, directorates and departments affect continuity and prevent timely implementation of strategic, procedural, and even routine duties. Many foreign companies feel disturbed and ultimately are discouraged by disruptions in the production processes in the country because of frequent power failures, poor infrastructure support, and labour and political unrest. An additional problem is the lack of professional personnel, i.e., the technical, managerial and innovative skills in the country needed to efficiently handle entrepreneurial function including risk taking, planning and coordination and control.Bangladesh has an advantage in labour costs, which can be converted into an exportable product, but the advantage has many difficulties. The factories in the country have to deal with constraints beyond their control, such as, power failures, poor communications or increased transaction costs and cumbersome procedures in customs in many government offices. The political instability, including frequent hartals is a real hazard. The World Bank and IFC document named Doing Business 2009 ranked Bangladesh 110th in the list of a total of 181 assessed in terms of ease of doing business. The document however, ranked the country 18th according to the index protecting investors and 59th in availability of loan funds, which make the country relatively attractive for FDI. The situation is expected to improve if the political commitment of the government to promote and protect FDI in the country can be increased and the policy environment can be changed from one that is regulatory to one that is supportive/complementary in nature.

7.1 Barriers ofFDI in Bangladesh:Barriers restricts the flourishment of something. There are quite a few barriers in case ofFDIgrowth in Bangladesh.7.1.1 Policy legislation and implementationIn this context, the extent of theadministrative barriers is quite longwinded and inter-related.Poor policy design and implementation, competitiveweakness, structural impediments, lowquality of infrastructure and skills, weak institutions, poor governance andadministrative hasslesrepresent the administrative barriers that discourage potential FDI. But the main drawbacks inthe bureaucratic system are inefficiency and corruption,turning the whole administrativefunctionaries into a harassing experience.Administrative barriers are also translated in different forms and vary from sector to sector. InBangladesh, we are usedto face barriers in different regulatory bodies in the form of their policy,

legislation and functions. National Board of Revenue (NBR) and Board of Investment (theInvestment Promotion Agency) are two important agencies directly relatedwith FDI operations.7.1.2 Cost of inefficiency is high indeedThe governance and management of the government entities has been largely inefficient,ineffective and unresponsive. The cost of economy of inefficient services of state-owned entitiesin energy, telecommunication, ports, railways and other public utilities and banking, in terms ofincreased cost of doing business has been high indeed. Power outages and voltage fluctuations,shortage of gas supply particularly due to limited network, limited telephone services, inadequateurban water supply, and thehigh incidental and transaction costs associated with these serviceshave imposed considerable costs on entrepreneurs.In fact, the activities of the public sectorutility service providers have been inward looking andhave not worked well, whilethe rationalefor public provision has been weak or missing inmany areas. And much of theshortfall in theirperformance can be linked to ineffective and inefficient management and unresponsivegovernance.7.1.3 Corruption is a disguised form of taxationReasons for the extensiveness of official corruption can be numerous. Many of these are culturalor sociological, but the more important ones are organization-related and economic policy-related in nature. Corruption thrives in an environment of pervasive bureaucratic and regulatorycontrols. Extensive discretionary powers in the hands ofthe officials and weakness in the legalframework also induce corruption. Though corruptionafflicts different sections of the society indiverse ways, its costs fall heavily on the investors, entrepreneurs as well asthe businesscommunity. For them, corruption is a disguised form of taxation. When regulations and controlsare pervasive, and effective means of obtaining redress through legal or administrativeprocedures are absent, businessmen end up bribing officials to overcome them. Many companiesregard bribery as just one of the costs ofdoing business and show these payments as legitimatebusiness expenses.7.1.4 Policy discrepancyBangladesh offers generous opportunities for investment under its liberalized Industrial Policyand export-oriented, private sector-led growth strategy and therelevant policies are attractive inpaper. But, there are several policy discrepancies that are quite enough to discourage FDI.

7.1.5 Differential treatmentAlthough existing regulations provide for equal treatment of domesticand foreign investors,certain discriminatory rules continue with regard to foreign investment. Sanctioningrequirements for particular categories of foreign investment, restrictions against capacityexpansion, special regulations for suppliers credit and pay-as-you-earn-schemes are some of theareas of differential treatment.7.1.6 One stop service of BOIIn Bangladesh, the Board ofInvestment (BOI) has created a cell to provide all types of servicesand assistance to private investments including FDI. But, offering one stop service to the existingand prospective investors in real terms is yet to materialize. Theofficials of several state-ownedutility service providers, working for BOI one stop service, are less capableand less powered toprovide necessary service.7.1.7 LawsuitsThere are many lawsuits by taxpayers against the government and majority of which thegovernment loses. But, due to cumbersome legal procedure such lawsuits become inconvenientfor the businessmen.7.1.8 Hassles in implementationThe major quandary of administrative barriers lies in the gap between investment and traderelated policies, and lack of co-ordination between various government agencies in theimplementation process. As a result, investors face hassles and the cost of doing business goesup.7.1.9 Registration complexityThe procedure for registration with the sponsoring agency has been an annoyance toentrepreneurs and does not serve any useful purpose. With regard to registration with theInspectorate of Factories and Establishments the rules governing the role of the inspector seemto provide ample discretionary power and putindustries in a disadvantaged situation.7.1.10 Lack of coordination among state entitiesThere is a serious lack of co-ordination betweenthe policy implementing agencies of thegovernment and becauseof this investors suffering goes up. This induces lot of hassles in theimplementation process and creates barriers for the investors in getting due incentives offered bythe government and ultimately discourages foreign investors to proceed on.7.1.11 Fiscal policy changesAny change in the fiscal change after passage of Finance Act seriously disturbs any businessplan and discourages FDI in particular. In Bangladesh, quite often policies are changed throughissuance of Statutory Regulatory Orders (SROs).7.1.12 Lengthy customs processingIt takes something like 25 signatures to release a consignment from customs. And it takes morethan the stipulated time to release a consignmentsupervised by an authorized PSI firm evenwhen the consignment is not selected for physical inspection.7.1.13 InfrastructureAlso linked with administrative barriers the level of infrastructure development is another factorthat affects the level of foreign investment and itcan be hardly claimed thatSouth Asiancountries have reached alevel of infrastructure development that will satisfy foreign investors.Again this administrative and bureaucratic inefficiency failed to increase proper infrastructuresupport.7.1.14 Power supplyBangladesh has one of the lowest per capita consumption of power and coverage ofelectrification among developing countries. System losses in the powersector have oftenexceeded 40 per cent of gross generation. Involvement of the government in the power sector hascreated an overlapping andconfusing situation regarding responsibilities. In fact, inadequate andinefficient power supply continues to impose a high cost on the economy. The extensive load-shedding from time to time, particularly during peak hours, has disrupted industrial productionthus affecting the countrys external competitiveness.7.1.15 Expensive portThe cost of inefficient cargo handling atthe Port has been particularly high,thus affecting theexternal competitiveness of the economy. Thereare numerous workers unions at the port, all ofwhich are crucial for handling cargo.In case that one of these associations decides tocall astrike, the whole system comes to a standstill.There are, of course, thehidden unofficial costs for clearing cargo, be it forimport, be it forexports. In fact the port happens tobe one of themost expensive ports (container wise) in theworld, singularly due to these unofficial payments, to which the authorities concerned arecomfortably oblivious, evidently to their benefits.Another factor is the inefficiency and bureaucratic logjam,which increases the lead-time forshipments. Hence, even if a foreignclient is interested in ordering from Bangladesh, thecompany is compelled to procure the products from elsewhere if it is quite urgent.Not only dothe entrepreneurs lose, the government also loses its duetariffs and levies from the port.

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