Domination of crony capitalism deprived genuine investors: White paper body

The final draft white paper on Bangladesh's economy has highlighted significant concerns over preferential treatment allegedly granted to politically connected businesses over the past decade.

The report titled 'White Paper on State of the Bangladesh Economy' claims such entities often enjoyed early access to government contracts and resources at heavily subsidised rates, alongside exemptions from regulations and concessions in the banking sector.

The draft, published today (1 December), further alleges that massive loans were extended to powerful conglomerates, often bypassing standard banking protocols. This, it argues, has stifled opportunities for smaller entrepreneurs and enterprises, creating an uneven playing field in the country's economic landscape.

"Despite a series of incentives announced by the government for businesses, most such measures remained ineffective or elusive to the majority. In addition, while foreign investors eyed Bangladesh's growing sectors with interest, several issues prevented them from committing themselves to long-term investments in these areas," says the white paper.

One of the most salient features of the prevailing crony capitalism in Bangladesh was that influential businesses could shape policymaking - a phenomenon often referred to as "state capture by the powerful." This was very much evident in sectors like telecommunications, RMG, banking, real estate, and energy, where major policy decisions were disproportionately in favour of a few dominant players, according to the findings of the white paper.

"These entities exerted a strong influence on policy frameworks, often at the expense of competition and innovation. Their influence undermined equitable development by diverting public policy away from national interests and toward narrow, politically motivated objectives."

The white paper committee led by Dr Debapriya Bhattacharya also found that the critically important institutions tasked with promoting investment and ensuring a level playing field were often co-opted by narrow interest groups. "This institutional capture eroded transparency and accountability, discouraging foreign and domestic investment alike."

This, therefore, meant that only a few amassed enormous benefits at the cost of better economic and social benefits for the majority. This, among other misalignments between public policy and interest, remained the impediment to inclusive economic growth, according to the white paper findings.