Unrest threatens Bangladesh's hard-won progress

DHAKA (AFP) - An extended post-election political crisis could unravel much of the recent economic progress in Bangladesh which is still counting the cost of a series of disasters in its vital garment industry.

While still one of Asia's poorest nations, Bangladesh has posted annual growth figures of around six percent over the last five years and its poverty rate has fallen by some two percentage points.

Once branded a "basket case" by US secretary of state Henry Kissinger, it was more recently named one of Asia's "Emerging Tigers" by US investment house Goldman Sachs.

Sunday's election was meant to have been a chance for the young nation to demonstrate its democratic credentials to the international community.

But with the main opposition boycotting the contest amid a wave of deadly violence, analysts say foreign investors are more likely to be scared off.

"We are already seeing an adverse impact on the economy ... which could cause irreversible losses in the longer term," said Mustafizur Rahman, head of Dhaka's Centre for Policy Dialogue think tank.

"Shipment of exports, distribution of fertiliser to farmers, supply of goods and produces, purchasing power of consumers are hit hard. New export orders are slowing down, production costs are raising," Rahman added.

While opposition-ordered shutdowns have been a staple of Bangladeshi life since independence, the country has endured 71 days of general strikes and blockades since the start of 2013.

Frightened of violent repercussions if they break the blockades, many businesses and shops opt to shut for the day while the export of goods grinds to a halt.

One of the worst hit is the garment sector, the mainstay of the economy with Bangladesh now the world's second largest clothes manufacturer after China.

The Dhaka Chamber of Commerce and Industry has put the cost of the disruption since October at more than US$4 billion (S$5.1 billion), including a US$1 billion loss for the garment sector.

Farmers nationwide have been forced to dump milk and produce has been left rotting, with trucks unable to move them to towns and cities for sale.

Food prices have soared in cities due to disrupted supplies as opposition supporters, armed with crude bombs and weapons, blockade main roads in violent protests.

But analysts fear the political turmoil could linger well beyond the one-sided polls, with the opposition showing no sign of easing the pressure on Prime Minister Sheikh Hasina's Awami League government.

The turmoil caps a woeful period for the garment industry which was hit by a series of strikes in May following the collapse of a factory complex in which at least 1,135 workers were killed.

That industrial disaster, the worst in Bangladesh's history, again highlighted the appalling safety conditions in the sector after a fire in November 2012 which killed 111 people.

It also fuelled demands for substantial wage increases. Although basic salaries have been hiked by 76 percent, the average worker still earns just $68 a month.

"The political hostilities have made the industry vulnerable," said Shahidullah Azim, vice president of the Bangladesh Garment Manufacturers and Exporters Association.

"The minimum wages for the workers have been raised, but orders are shrinking. We fear many factories might not be able to pay their wages," added Azim whose US$22 billion industry accounts for 80 percent of Bangladesh's exports.

"Buyers are pulling out. If more and more orders are diverted, we will have less and less work."

In a final pre-election address on Thursday, Hasina vowed to turn Bangladesh into a middle-income economy by the end of the decade.

But the International Monetary Fund said in a report last month that growth would slow in 2014 to 5.5 percent - the slowest rate in a decade.

"The economy faces challenges rising mainly from the uncertainty in the political environment, social unrest and the transition in the garment industry," said the report.

Despite the impressive growth of recent years, around a third of Bangladesh's 154 million population still lives below the poverty line.

The relative stability of the last two decades has enabled Bangladesh to thrive at a time when Pakistan, its former overlord, has been in near constant crisis.

But the recent turmoil, which has been compounded by the violent reaction to controversial trials dating back to the 1971 war of independence, has evoked fears that Bangladesh could go the same way.

Zaid Bakht, director of the Bangladesh Institute of Development Studies, said the country's poorest were most at threat which could in turn undermine social stability.

The Centre for Policy Dialogue's Rahman said the situation was not beyond salvation.

"But if we further delay, something irreversible will happen," he added.

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