Four months after protests against Bangladesh’s former prime minister Sheikh Hasina forced an interim government to take over, the country has declared that it is “open for business”.
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But the new regime – led by chief adviser Nobel laureate Muhammad Yunus – has been careful to stress that foreign investments and trade opportunities will need to promote greater social inclusivity, as it pushes through reforms to help the country “bounce forward” to a state of affairs where people can trust in fair play at every level of engagement.
Lutfey Siddiqi, who serves as the chief adviser’s special envoy on international affairs, said that transparency and discipline in decision-making is needed to ensure funding goes to “deserving projects” that are “actually generating the intended impact”.
“When it comes to investments, we need to widen both the sources of funds and the range of recipients of those funds,” he said, emphasing that all forms of financing such as equities, bonds, concessional loans and grants are welcome to build a rich capital structure, but they must “crowd in, not crowd out” each other.
Siddiqi, who is also an adjunct professor at the National University of Singapore and a visiting professor-in-practice at the London School of Economics, was speaking at the Orange Forum 2024 organised by capital platform Impact Investment Exchange (IIX) in Singapore on Tuesday.
Last month, the Bangladesh government, in collaboration with IIX and the United Nations Development Programme, announced a new initiative to raise up to US$1 billion through “orange bonds”, a nascent asset class aimed at improving gender equality in developing countries, to rebuild its economy.
According to the press release, proceeds from the bonds will target sectors vital for Bangladesh’s long-term stability and inclusive growth, such as the ready-made garments industry, which generates 85 per cent of the country’s export revenues and predominantly employs women, agriculture, and micro, small and medium enterprise (MSME) development.
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We would like to take this opportunity to bounce forward, and not bounce back, to a state of affairs where people trust in fair play, and in a level playing field at every level of engagement.
Lutfey Siddiqi, special envoy on international affairs to chief adviser, Bangladesh
The introduction of orange bonds in the country could help build “operating muscle” for policymakers and be a “practice ground” for the issuance of sovereign bonds and other types of bonds moving forward, said Siddiqi.
Describing Bangladesh as “a country that defies stereotypes”, he said the visibility of women who are active in the economy is high. “But at the same time, injustices and the lack of parity remain. The treatment of female workers, for example in the garment industry, is not up to par.”
Siddiqi shared that he has been trying to convince the International Labour Organization (ILO) to put forth a credible plan that could help improve the labour conditions in Bangladesh. The interim government has also commenced on free trade agreement negotiations last month with countries like Singapore, said Siddiqi, adding that he held a bilateral meeting with the city-state’s environment minister and minister-in-charge for trade relations Grace Fu on his visit.
To date, the interim government has mobilised over US$13 billion of financial support from international lenders, including the World Bank, Asian Development Bank, Islamic Development Bank and International Monetary Fund, to stabilise and reform the economy, after the previous administration left it in turmoil.
Of the total aid that has been pledged to Bangladesh, around US$2 billion from the World Bank will go into supporting its flood response and improving its air quality, which ranks among the world’s worst.
Meanwhile, Germany has pledged €600 million (US$630 million) to develop the country’s renewable energy sector – which currently only accounts for 4.5 per cent of its total installed power capacity – and improving the livelihoods of ethnic minorities, women and youths over the next decade.
The country, which has experienced three major destructive cyclones and catastrophic floods in this year alone, has been at the forefront of pushing for the operationalisation of the loss and damage fund and more adaptation finance at this year’s COP29 climate talks, which under-delivered on a new climate financing goal.
At the ongoing climate hearings before the International Court of Justice (ICJ), Bangladesh made a submission that called for the court to deliver a strong advisory opinion commensurate with the scale and gravity of the climate crisis. “It cannot be the case that international law has nothing to say in the face of this existential threat to affected states such as Bangladesh,” said Tareque Muhammad, ambassador of Bangladesh to the Netherlands.
Social and political reforms underway
In the wake of the mass uprising that overthrew the last administration, Bangladesh has owed some US$800 million to Indian energy firm Adani Power, which has been exporting power from its Jharkhand thermal coal plant to the nation since 2022.
Timeline of Bangladesh’s political turmoil
July 2024: Students launch protests against government job quotas that reserve one third of the posts for descendants of people who fought in the 1971 war for independence.
29 July 2024: Protests resume and calls grow for prime minister Sheikh Hasina’s resignation.
4 August 2024: Nearly 100 people are killed in widespread clashes in Bangladesh’s capital, Dhaka, and at least 21 districts, taking the death toll to almost 300.
5 August 2024: Thousands defy military curfew and storm the prime minister’s residence. Hasina resigns and flees to India.
8 August 2024: Nobel laureate Muhammad Yunus takes over as chief adviser of the interim government.
4 September 2024: The interim government appoints Lutfey Siddiqi as the chief adviser’s special envoy on international affairs.
11 September 2024: Yunus forms six reform commissions focused on the judiciary, electoral system, state administration, police, corruption and constitution.
1 October 2024: Reform commissions begin work. Four additional reform commissions on health, media, labour rights and women’s affairs are announced.
17 November 2024: Under Bangladesh’s constitution, fresh national elections should be held within three months after the dissolution of parliament. But 100 days in, Yunus has not given a fixed timeline.
21 November 2024: Bangladesh president appoints a new five-member election commission to hold the next elections, after the previous commissioners resigned before their term ended.
31 December 2024: Reform commissions to submit reports outlining roadmaps for reforms to the government.
Bangladesh is currently paying a nearly 27 per cent premium, compared to the rate charged by India’s other private producers, on the power supplied by Adani, which makes up about a tenth of its total energy consumption.
Last month, the interim government’s leader Yunus, who has vowed to green the country’s energy supply, set up a committee to scrutinise seven major power purchase agreements – including the Adani Power deal – that were believed to have been signed without a competitive bidding process under former prime minister Hasina.
Billionaire Gautam Adani, the chairman of Adani Power’s parent group, was recently charged in court in the United States for allegedly bribing government officials to win solar energy contracts. While he has denied the wrongdoing, the indictments have wiped out about US$27 billion in market value across his business empire, which spans from ports to manufacturing.
Since September, Yunus has set up 10 commissions to spearhead reforms in the judiciary, electoral system, state administration, police force, corruption, constitution, health, media, labour rights and women’s affairs.
Nevertheless, the commissions have not been immune to criticism, with some taking issue with its lack of inclusion of women and minorities as well as the opacity around the recruitment of commission members, who were handpicked by the interim government.
The commissions are expected to submit their conclusions to the government by end December. This will be followed by another round of consultations with all political parties and civil society members to execute some reforms, before organising what all parties consider to be a free and fair election, likely to be held in 2025.
Siddiqi said that the economic outlook has “defied expectations” and showed some early signs of recovery. “Foreign exchange reserves have stabilised over the past three months; remittances and exports are both up considerably by double digit percentages, compared to the same period last year.”
Appealing to the audience of international bankers, investors and regulators, Siddiqi said that the country currently has “a once in a lifetime opportunity” to take certain steps that could put the country on a very different trajectory, long after the interim government is gone.
“We are only here to put in place rules of the game that are a little bit more fair and inclusive. To the extent that you would like to see that succeed, jump in and help in any way you can.”
