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The Bangladesh elections ultimately turned out to be anti-climactic. The Bangladesh Nationalist Party (BNP) swept the polls with 209 seats (out of 300) and almost 50% of the vote share in what was widely anticipated to be a closely contested fight. Its closest rival, the Jamaat-e-Islami (Jamaat), an Islamist party, managed only 68 seats.
Widespread violence disrupting election day or its aftermath has also not occurred as feared. This bodes well for the legitimacy and stability of the BNP government led by Tarique Rahman, who now heads the first non-Awami League government since 2009. Nevertheless, several challenges remain and businesses should start preparing to navigate the new political and business landscape.
The tricky path ahead
The BNP needs to address three major fault lines. The first is the economic challenge. Despite the interim government’s efforts, the BNP inherits a fragile economy.
The government revenues continue to remain low, private and foreign investments have shrunk, the banking sector desperately needs reforms, inflation hovers around 8%-9%, power outages are chronic and the foreign exchange balance is precarious.
A difficult external geopolitical landscape that has adversely impacted the country’s exports, particularly the readymade garment (RMG) sector, further complicates matters.
Then there is the sensitive political environment. The BNP needs to address the status of the Awami League (AL), the party of former prime minister Sheikh Hasina, that was barred from contesting these polls. A prolonged exclusion will allow the Jamaat and other Islamist forces to become stronger, but political rehabilitation is not possible while Hasina continues to control the party. While the BNP can defer determining AL’s fate for now, ensuring justice for the Hasina government’s alleged excesses will be a more pressing concern.
Similarly, political reforms present another immediate challenge. A referendum, held simultaneously with the national elections, reflected strong support for the July National Charter, the document that outlines the reforms the next parliament is meant to implement. The BNP has been supportive of such reforms but has hinted at pursuing them on its own terms. A stronger opposition in turn has let the government know that it will not be given a free pass on this.
Finally, there is the law-and-order situation. Most pre-election surveys flagged this as one of the biggest concerns for voters. The interim government’s tenure was marked by nearly 600 incidents of political violence with regular street protests and strikes by various segments of society that posed operational and supply chain disruptions. With the military now committed to “return to the barracks”, the BNP government will assume full responsibility of this task.
The BNP’s economic vision
The election results give the BNP the mandate and the political stability needed to tackle these challenges in a decisive manner.
It has outlined an economic vision to make the country a trillion-dollar economy by 2034. Central to this vision is:
- Employment generation
- Addressing corruption
- Upskilling of the country’s labour force
- Streamlining the regulatory landscape
- Diversification of the economic base with a particular focus on the IT and advanced technology sectors, pharmaceuticals, renewable energy, leather, energy and food processing to reduce the country’s dependence on the RMG sector.
This creates potential new opportunities for international companies, especially given the BNP’s continued openness to foreign investments.
What businesses should expect
Businesses should not expect a significant overhaul of the country’s regulatory and operational landscape in the BNP’s first year. It has been two decades since the BNP was last in power and several of the party stalwarts with governance experience are no longer on the scene. Rahman, who himself has never held public office before, has brought in fresh, relatively inexperienced faces and will also seek to rejig the country’s key institutions that, until very recently, were firmly controlled by the AL. The BNP will need time to settle.
A new government also means a shift in political alignment for local businesses. The BNP has promised clean governance and an end to the politics of revenge. Economic compulsions may also prevent it from targeting local businesses previously favoured by the Hasina administration. But party members and business groups that remained loyal to the BNP during their years in the political wilderness will expect to be rewarded. Political connections that were once considered a liability may now be an asset and vice-versa.
Finally, the security landscape is likely to improve but triggers will remain. Fears of immediate post-election violence have abated with the acceptance of the result by the opposition parties. A stronger opposition, recent memories of Hasina’s overthrow in 2024, and a military keeping watch for any potential power abuse will also serve to keep the BNP in check. Nevertheless, differences over political reforms will persist and could trigger potential unrest in the months ahead - particularly if there is no political compromise on some of the provisions in the July Charter. The economic conditions will also remain a major trigger for unrest.
Navigating the transition
The elections will allow Bangladesh to reset after months of uncertainty. A new government offers new opportunities for companies operating in or with interests in Bangladesh, but it will not be business as usual.
It is critical to identify the new government’s policy priorities for specific sectors and the key movers and shakers in a BNP-dominated ecosystem. Understanding the level of political exposure of new or potential local partners is a must for any foreign company with interests in Bangladesh to fully evaluate its risk profile.
Given the existing triggers for further unrest, businesses should also prepare for contingency plans and mitigation measures for operational and supply chain disruptions, physical security risks and people safety.
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