Introduction

South Asia consists of Bangladesh, India, Pakistan, Sri Lanka, Bhutan, Nepal and Maldives. Of these countries Bangladesh, Bhutan and Nepal are the least developed countries（LDCs）, the rest being developing countries. All the South Asian countries except Sri Lanka were, at one point of time, amongst the least open among the world economies. South Asian countries in the post-independence period followed the policy of import-substituting industrialisation, extreme public sector planning and regulation which proved to be unsuccessful in stimulating the industrial sector and attracting foreign investment while simultaneously creating an inefficient and protected manufacturing sector, and a huge public sector. Accordingly the policies of the South Asian economies towards investment were restrictive. Initially foreign direct investment was allowed only in a restrictive manner and on mutually advantageous terms with the majority stake held by the domestic firms.

During 1990s, Bangladesh along with other South Asian countries reformed their economic policies leading to integration of their economies with the world economy. Such reforms were brought because of a number of reasons, growing fiscal imbalances, serious balance of payment problems, severe depletion of foreign reserves etc. Also the success of the East Asian countries under their open and export oriented regime, led to crystallisation of the belief that inward looking strategy was not yielding results and reforms were required. As a part of this reform process, recognising the need of foreign capital to induce growth, Bangladesh started aggressively negotiating bilateral investment treaties and free trade agreements when the country became a member of WTO as well.

Bangladesh, characterised by a high population density, a low resource base and recurrent natural disasters and persistent socio-political instability, has traversed a long way since its creation in 1971. Initially, after independence, Bangladesh was following a“state controlled”model of economy, which was abandoned and indeed reversed with the change in the political regime in 1975, followed by the policies of deregulation and liberalization to create an open and private sector led economy along with a liberal trade regime. However, these initial reform efforts did not have either a clear direction or a broad time frame for implementation. This phase of muddling through lasted for about a decade.

The period covering most of the 1980s, had several characteristics including slow and fluctuating economic growth, deteriorating macroeconomic stability with growing fiscal crisis, authoritarianism of governance including institutionalization of corruption and the rise of crony capitalism, etc. In 1980, the Government enacted the Foreign Private Investment（Promotion and Protection）Act which contains provision relating to protection and equitable treatment, indemnification, expropriation and nationalization, repatriation of investment, etc. And it was only in the 1980s that Bangladesh started signing IIAs and FTAs. After 1991 even more significant reforms were made which included progress on tariff reforms, reformation of import clearance procedure and movement towards a uniform tariff structure. Recognizing the role of foreign investment in its comprehensive Industrial Policy of 1999, the Government of Bangladesh recognised the importance of“promoting private sector to lead the growth of industrial production and investment”and“attracting foreign direct investment in both export and domestic market oriented industries to make up for the deficient domestic investment resources, and to acquire evolving technology and gain access to export markets. ”

Bangladesh, an original member of the WTO, grants at least MFN（most favored nation）treatment to all its trading partners and receives the special and differential treatment provided for in the WTO agreements. Since joining the WTO, the Government has undertaken a number of bold steps, which include liberalisation of the trade and foreign investment regime, strengthening the financial sectors and regulatory framework, closing and privatising some loss-making state-owned enterprises and taking steps to improve the governance. Bangladesh continued to participate actively in the work of the WTO, serving twice as the coordinator of the LDC Group in Geneva in 2007 and 2011, and advocating issues of interest to LDCs, including greater market access, increased flexibility in the development of multilateral trade rules as well as targeted assistance to trade infrastructure.

Since embracing a liberal trade policy during the 1990s, Bangladesh began reforming and enacting laws in different areas covering standards and accreditation, customs system, rules of origin, anti-dumping and countervailing measure, TBT（technical barriers to trade）, SPS（sanitary and phy to sanitary）, government procurement, intellectual property rights, economic zones, money laundering, insurance, tourism, telecommunications, competition, expropriation and compensation, labour management, environmental law. Moreover, to attract foreign investors and to facilitate international trade, Bangladesh has entered into many trade and investment agreements. The country provides investors or foreign traders friendly dispute settlement mechanism to resolve disputes arising out of international trade of foreign investment.

As the country embraced open and liberal trade policy to promote its economy, the Government felt it necessary to transform the temporary Law Commission into a permanent statutory body. Steps were taken and the Law Commission Act of 1996（Act No XIX of 1996）was promulgated on 9 September 1996. Under the auspices of the commission, the Government has adjusted and is continuing to adjust its laws,regulations, and rules governing such areas as international trade, foreign investment, intellectual property protection and customs inspection, as well as arbitration and dispute resolutions as per the directions of the law commission. Although there are no specific directives to meet the international standard while drafting laws, over the years it has been observed that most of the times the law commission has given due consideration to the country's compliance with international standards while drafting any law. Section 6（b）of the Law Commission Act may be utilised to justify reforming the law in line with international standards that promote a free market economy. Section 6（b）of the Act provides that the Commission will act

“（b）Keeping in mind the attraction of domestic and foreign investment and necessity of free market economy—

（1）to recommend amendment of relevant laws including company law or legislation of new law in appropriate cases in order to create competitive atmosphere in the field of trade and industry and to avoid monopoly;

（2）to recommend, after examination, measures with regard to relevant laws especially copyright, trademarks, patents, arbitration, contract, registration and similar other matters;

（3）to recommend necessary measures for the establishment of separate courts for disposal of cases arising out of commercial and bank loan matters. . . ”.

It is clear that Law Commission has a wide mandate to recommend amendment of laws to make the legal system ready to take maximum benefit of a free economy.

Against this backdrop, this report endeavours to explain the existing institutional and legal framework of Bangladesh that addresses above mentioned issues, supporting a comparative study under the Belt and Road Initiative. This report is divided into eight chapters:Chapter 1 seeks to demonstrate the laws of Bangladesh relating to customs system; Chapter 2 deals with laws of Bangladesh relating to foreign trade system; Chapter 3 highlights laws regulating foreign direct investment in Bangladesh;Chapter 4 underlines monetary and banking laws of Bangladesh; Chapter 5 provides a brief study of laws relating to construction and infrastructure in Bangladesh; Chapter 6 offers an explanation of labour management and treatment laws in Bangladesh;Chapter 7 deals with environmental laws of Bangladesh; the last chapter looks at laws of Bangladesh relating to dispute settlement mechanism involving foreign investors before drawing a conclusion.