Bangladesh - Politics, government, and taxation

Bangladesh is a parliamentary democracy largely influenced by the British

parliamentary system. Executive power is in the hands of the prime minister, who is the
head of the cabinet, and who must be a member of the 300-seat Jatiya Sangsad
( unicameral parliament). She/he recommends the council of ministers to the
president. The president is the constitutional head of state and is elected for a 5-year
term by the parliament, but plays a largely ceremonial role. The president can act only
on the advice of the prime minister, as the presidential power was significantly reduced
in accordance with constitutional changes in 1991.
All adult citizens (18 years old and over) are eligible to vote, including women and
ethnic minorities. One of the unique features of the political system in Bangladesh is
that 30 seats (10 percent) in the parliament are reserved for female members, and they
are elected by the members of the parliament.
Bangladesh experienced a number of military coups after achieving independence in
1971, and several military governments tried to restrict activities of political parties.
However, after the return to civil rule in 1990, all political parties may openly function
in the country. There are a number of political organizations in Bangladesh. Most
prominent of them are: the Awami League (a coalition of 8 parties); the Bangladesh
Nationalist Party; the Jatiya Party; and the Jamaat-e-Islami Party. The Awami League
(AL), which led the country to independence in 1971, generally
supports moregovernment interventionist policies and has a very cautious attitude
towards liberalization or opening of the national economy to international
competition; in fact, in the early 1970s the party had strong pro-socialist elements in its
economic policy. The Bangladesh Nationalist Party (BNP), which was the ruling party
from 1991 until its defeat in the parliamentary election of 1996, is more free-market
oriented. The BNP introduced the policy of economic liberalization and privatized some
state-owned enterprises. It opened the national economy to international competition in
an attempt to attract foreign investors.
Once Bangladesh had achieved independence, political stability, the creation of a viable
national economy, and the elimination of poverty became the major political issues
shaping political debate and conflict in the state. The political process in the country was
complicated by the hostility and often violent confrontations between the 2 leading
parties, AL and BNP. The Awami League won the first post-independence general
elections while promulgating ideas of nationalism, socialism, democracy and
secularism. In economic areas, this government took a strongly interventionist role in
the development and industrialization of the national economy. The party, however,
could not overcome the economic and political divisions within Bangladeshi society and
lost its power in a military coup in August 1975. The coup pushed the country towards
even greater political instability, which continued until 1990, when charismatic General
Hossain Ershad was forced to resign. Military rule failed to bring stability to the country
because it did not stop the rivalry between the 2 major parties, the AL and BNP. In fact,
the army was drawn into the groups' political confrontations.
In 1991, the first free and fair election was held in Bangladesh. Begum Khaleda Zia
(widow of General Ziaur Rahman, the president from 1978 until his assassination in
1981) and her party (BNP) won the election. The new government brought radical
changes to the economic policy, promoting private entrepreneurship, especially among
representatives of poor communities, and supporting small- and medium-size
businesses and privatization. This program was successful, and Bangladesh experienced
economic growth throughout the 1990s. According to the World Bank, between 1989
and 1999 the average annual GDP growth was around 4.8 percent, with industrial
production growing at an annual average of 7.3 percent and exports of goods and
services at an annual average of 14.2 percent, albeit from a very low base. For the first
time in decades the Bangladeshi government had brought a sense of stability to the
country.
The 1996 parliamentary election, however, was again accompanied by irregularities and
almost pushed the country into chaos again. The BNP won the February 1996
parliamentary election, which was boycotted by the AL-led opposition. The
confrontation escalated in violence, and the BNP handed power over to a caretaker
government. After 2 decades in opposition, the Awami League won the June 1996
parliamentary election, with support from the Jatiya Party. This time the Awami Party
significantly moderated its position, supporting a gradual liberalization of the national
economy, encouraging private entrepreneurship, and advocating the secular state; it had
largely abandoned socialist ideas. One of the most important achievements of the 1990s
was the diminishing role of the army in the political life of the state, although the army
threatened to take matters into its own hands during the period of political conflict in
1996.
According to the IMF Country Report, the major source of government revenue comes
from taxes, although the tax ratio of 7.6 percent of GDP remains one of the lowest in the
world. Total government revenue was Tk210 billion in the 1997/1998 FINANCIAL
year. Tk51 billion came from value-added tax (VAT), Tk43.5 billion from
customs duties , Tk20.0 billion from income and profit taxes, Tk21 billion from
supplementary duties, and the rest from other sources. According to the U.S.
Department of State, the maximum customs duty rate has been reduced from 350
percent in 1991 to around 37 percent in 2000.


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