GOVERNMENT AND BUSINESS DISCUSS ANTI-CORRUPTION

C O N F I D E N T I A L SECTION 01 OF 02 DHAKA 001494

SIPDIS

SIPDIS

E.O. 12958: DECL: 09/10/2017
TAGS: PGOV ECON KCOR BG
SUBJECT: GOVERNMENT AND BUSINESS DISCUSS ANTI-CORRUPTION
DRIVE AND BANGLADESH ECONOMY

REF: DHAKA 1472

Classified By: CDA a.i. Geeta Pasi, reason 1.4 (b) and (d)


1. (C) SUMMARY: Chief Adviser Fakhruddin Ahmed and Chief of
Army Staff General Moeen U Ahmed met September 5 with members
of the nation's business community in an effort to strengthen
the commercial climate. Business confidence appears to be
weakening in the wake of floods, rising prices, the
government's anti-corruption campaign, and falling investment
levels, including orders for ready-made garments that
typically decline this time of year. Business
representatives voiced support for the Caretaker Government,
but expressed concern that Bangladesh's economy is faltering
and noted that investment will not thrive in a climate where
investors fear they may become a target of anti-corruption
authorities. Moeen and Fakhruddin Ahmed emphasized the
importance of attacking corruption in Bangladesh, but vowed
to finalize by the end of September the list of individuals
authorities plan to investigate. Moeen and the Chief Adviser
discussed progress the government has made on certain
economic priorities and unveiled a number of initiatives
aimed at improving government-business interaction. Their
comments were welcomed by the business representatives, but
some question whether the Caretaker Government has the
ability to achieve the large number of economic and
commercial goals highlighted at the meeting. END SUMMARY.


2. (C) Scores of businesspeople attended a September 5
gathering on "Bangladesh Economy and Future Perspective," at
which Chief of Army Staff General Moeen U Ahmed and Chief
Adviser Fakhruddin Ahmed were keynote speakers. The host of
the event was ostensibly the Ministry of Commerce. One
businessman told CDA a.i. that attendance at the conference
had been required of the business community by the
Directorate General of Forces Intelligence. Others indicated
they were pleased that such a dialogue was held, regardless
of who actually organized the event.

ANTI-CORRUPTION CAMPAIGN WILL CONTINUE, WITHIN LIMITS
============================================= ========


3. (U) In his speech to the gathering, General Moeen stated
in strong terms that the Caretaker Government's
anti-corruption campaign was needed to guarantee free and
fair elections in 2008. He called upon the business
representatives to act as "whistle-blowers" and report
corrupt "culprits." The business representatives, for their
part, criticized the Caretaker Government for creating a
climate of fear and for being overzealous in its efforts to
root out corruption. They asserted that the economy of
Bangladesh has suffered as a result of the anti-corruption
drive, which has discouraged investors from establishing and
expanding business ventures. In response to these comments,
Moeen reported that the government's list of people to be
investigated on corruption charges currently stands at 142
persons. He stated that the list would not exceed 220 and
that it would be finalized by the end of September. Moeen
said that anyone not on the list by that date would not be
subject to investigation for past corrupt activities. The
audience greeted Moeen's statements with applause. The Chief
Adviser reiterated this point in his address to the nation
September 9. (Reftel)

RISING PRICES AND RAMADAN
=========================


4. (C) There was much discussion of inflation in Bangladesh
at the gathering. Prices, which traditionally increase
during Ramadan, are already high, particularly for food and
fuel. Many registered concern about the consequences of
further price hikes -- as Ramadan starts this week -- on a
population already suffering the effects of flooding and loss
of some domestic food stocks. Business representatives urged
the government to ameliorate prices in the short term by
increasing the supply of food imports. Government
representatives said they were addressing the problem and
asked business to do its part in keeping food prices down by
limiting Ramadan markups. (COMMENT: Some of our contacts
indicated that it was concern about inflation in the run-up
to Ramadan that led the government to call this meeting.
Other actions that indicate the government's concern include
a Bangladesh Rifles (BDR) operation to acquire food at
wholesale prices and sell it to the populace with no markup.
END COMMENT.)

DHAKA 00001494 002 OF 002



AMBITIOUS PLANS TO BOLSTER THE ECONOMY
======================================


5. (U) Moeen and the Chief Adviser highlighted the Caretaker
Government's economic accomplishments and outlined some of
its initiatives to bolster the country's economy. The Chief
Adviser noted the government's progress in making Chittagong
Port more efficient and described plans to address
Bangladesh's severe power shortage. He reported the
government was working to initiate a range of power projects,
from smaller, private independent power projects (IPPs) to
larger government power projects. Until those projects are
up and running, the government is making plans to address
Bangladesh's power needs in the short term, according to
Fakhruddin Ahmed.


6. (U) Both Moeen and Ahmed discussed a range of ideas to
bolster the economy, including sweeping reform of the
government's regulatory system, better management of tax
policy, expediting the implementation of development programs
and promoting worker remittances through labor export. Both
leaders also emphasized the leading role the private sector
plays in Bangladesh's economy. The Chief Adviser announced
the creation of a Better Business Forum that he will chair
and that will include representatives of top businesses. He
said the forum will meet on a regular basis to make decisions
on issues of concern to the private sector.


7. (C) COMMENT: The meeting itself was an indication that
the government has realized it needs to better communicate
its priorities and actions to the public. While
businesspeople appreciated government reaching out to discuss
the economic situation, they are now waiting to see how the
government acts on the economic initiatives presented at the
gathering. Many expressed concern about the Caretaker
Government's capacity to implement all of the large-scale
economic reforms discussed at the meeting. Problems of
inflation, weak infrastructure, and declining investment do
not have quick fixes. In the short term, high prices --
particularly for food -- are likely to continue to plague
Bangladesh citizens and the government. High food prices are
mainly the result of factors external to Bangladesh,
including low food stockpiles globally. This reality paired
with cumbersome government procurement rules in Bangladesh is
likely to make it difficult for the Caretaker Government to
quickly augment food stocks with imports.
Pasi