URU, Alm.del - 2019-20 - Bilag 117: Landepolitikpapir for Bangladesh 2019-2021

Udenrigsudvalget 2019-20
URU Alm.del Bilag 117
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MINISTRY OF FOREIGN AFFAIRS

DENMARK

Denmark´s Country Policy Paper for Bangladesh

2019

–

2021

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Abbreviations

CSO

–

Civil Society Organisation

LDC

–

Least Developed Country

NGO

–

Non-Governmental Organisation

RMG - Ready Made Garment

SDG

–

Sustainable Development Goal

–

(Danish) Trade Council

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A. Introduction

Bangladesh has followed a remarkable trajectory in the last couple of decades

and is

expected to graduate from the United

Nation’s

classification as a Least Developed Country

(LDC) by 2024. The country has moreover achieved impressive progress in social development.

These achievements

–

and the fact that Bangladesh has opened its borders to nearly a million

Rohingya refugees fleeing from Myanmar and now hosts the

world’s

largest refugee camp

–

reflect the strong aspiration of Bangladesh and its people to be recognised by the world as an

equal partner and in its own right.

Thus in the years to come, Bangladesh will need to prepare itself for a smooth graduation from

LDC-status, which after a grace period of 3 years will take full effect in 2027. Meanwhile,

Bangladesh faces challenges in meeting the UN Sustainable Development Goals

(SDGs),

particularly in regards to addressing climate change, increased inequality, weak

institutions and corruption, as well as job-creation for large generations of young people. In

addition,

democracy, rule of law and human rights have come under increased pressure,

notably in connection with the parliamentary elections in December 2018. If not managed,

these factors may lead to increased irregular migration

–

including to Europe

–

and the risk of

instability.

Dating back to

Bangladesh’s

independence in 1972,

the development cooperation between

Denmark and Bangladesh has contributed to the country’s progress

in many areas such

as agriculture, climate resilience, governance, and

women’s

rights. To underpin the fast

development and increasing diversification of

trade and commercial relations,

Strategic

Sector Cooperation was established in 2015 in the area of

workers’

rights and safety. Well-

functioning cooperation on return and readmission has been established, and most recently,

Denmark has provided substantial humanitarian and development assistance in the context of

the massive influx of Rohingya refugees since 2017. The long-term and comprehensive

engagement has resulted in a solid and trusted partnership.

Denmark has a strong interest in continuing a broad-based partnership with

Bangladesh.

In addition to being one of

Asia’s

fastest growing economies with an emerging

consumer market, its strategic location, large and young population and economic dynamics

create significant opportunities for Danish investment and trade. Politically, Denmark has an

interest in contributing to ensure that Bangladesh remains a stable country that upholds rule of

law and human rights, is resilient to radicalism and extremism and prevents irregular migration.

A continued development partnership, in conjunction with engagements through the EU and

multilateral partners, will play an important role in this regard.

This country policy paper covers the period 2019 to 2021 in order to reconcile the country

policy cycle with the current development programme. During this period, focus of the

development cooperation will be on consolidating the results of ongoing engagements and test

new approaches and partnerships.

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Denmark’s

partnership with Bangladesh; overall vision and strategic direction

Denmark actively supports Bangladesh in its transition from Least Developed Country to

becoming a Developing Country. Given

Bangladesh’s

sustained high economic growth and

increased self-reliance, Danish business opportunities in Bangladesh will expand, and over the

mid- to long-term the focus of the Danish-Bangladeshi partnership will shift from aid to trade.

During the period covered by this country policy paper, focus will be on consolidating the

foundation for moving towards a strategic engagement focused on political and commercial

cooperation underpinned by development cooperation.

Denmark’s

overall vision for the partnership with Bangladesh is

to support

Bangladesh’s

graduation process and development towards sustainable and inclusive growth as a

basis for deepening and widening political and commercial ties; and to promote

freedom, security and prosperity, focusing on steps to widen the democratic space and

enhance the respect for human rights.

The vision will be realised through the following four strategic objectives of the partnership:

1. Contribute to inclusive and sustainable growth

2. Enhance resilience of selected vulnerable and marginalised groups, including

Rohingya refugees and affected host communities as well as groups prone to

irregular migration

3. Promote shared values in terms of democracy, good governance, human rights and

gender equality

4. Expand and diversify economic and commercial relations between Denmark and

Bangladesh.

These strategic objectives align with Denmark’s Strategy for development cooperation and

humanitarian action,

“The

World

2030”,

and will address all its four strategic concerns.

Furthermore, the strategic objectives align with

Bangladesh’s

seventh Five Year Plan,

“Accelerating

Growth - Empowering Citizens” (2016-2020),

which sets an ambitious agenda for the

journey towards middle-income country status. Finally, the SDGs will serve as a globally

recognized framework for the partnership.

Denmark will pursue the above strategic objectives through a comprehensive partnership and

rights based approach based on

six key instruments

(see box next page) with

considerable

opportunities for synergies

between them. Furthermore, Denmark will promote synergies

between actions that supplement and complement each other, including in the following ways:

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

Complement existing agricultural livelihood and resilience activities with funds from the

Climate Envelope;



Using Trade Council (TC) tools as

Key instruments:

well as Danida Business Finance,



Diplomacy and political dialogue, including through the

EU, with a broad range of Bangladesh actors, building

the Investment Fund for

also the foundation for an efficient economic diplomacy

Developing Countries (IFU) and



Development cooperation, incl. funds from the Climate

Denmark’s

Export Credit Agency

Envelope and support to Danish NGOs

(EKF) to promote Danish business



Humanitarian assistance through Danish and

opportunities.

international partners



Complementing development



Promotion of commercial cooperation, trade and

investment, including with Danida Business Finance and

engagements and partnerships with

other financial instruments

Danish civil society organisations in



Strategic Sector Cooperation with a focus on sustainable

support of decent work and labour

growth in the manufacturing sector

rights through the Strategic Sector



Funds from the Migration Envelope

Cooperation on

workers’

safety.

This will contribute to inclusive

economic development and the creation of decent jobs. In addition, the Strategic Sector

Cooperation will contribute to safer and more socially responsible production of products

in Bangladesh of interest for Danish importers.



Strengthening Hum-Dev Nexus by using development and humanitarian funds in response

to the Rohingya refugee crisis,

i.a.

in cooperation with Danish NGO partners and possibly

also with relevant UN-organisations and the World Bank. Closer coherence between the

initial humanitarian responses and more long-term development engagements will promote

sustainable and durable solutions to the crisis. Focus will be on fostering innovative

partnerships and approaches.



Exploring synergies between Danida and TC activities, including how Danish business

solutions and expertise can be applied to leverage the pro-poor Danida investments in line

with SDG 17

(“partnerships

for the goals”).

In its development partnership with Bangladesh, Denmark has engaged with

a wide variety of

partners

over the years

–

from line ministries and other government entities, over UN

agencies, to Danish and international NGO-partners as well as a host of national CSOs and

NGOs. Building on lessons learned, Denmark will continue the cooperation with its long-term

partners, but also seek out new entry points and drivers of change with a clear strategic look

towards the next phase of the country programme, including by supporting Bangladeshi civil

society, Danish strategic NGO-partners and the private sector. Furthermore, Denmark will

seek to establish broader alliances among the Nordic countries, within the EU and with other

international actors in Bangladesh in order to promote Danish policy priorities on democracy,

gender equality, youth, human rights, labour rights, as well as sexual and reproductive health

and rights. Denmark will promote transparency in all partnerships.

It is the expectation that Bangladesh will maintain a platform and a presence in Denmark. The

Bangladeshi embassy in Copenhagen provides a basis for a continued efficient dialogue and

strong bilateral cooperation.

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C. Analysis of the situation in Bangladesh; opportunities, challenges and risks

The Bangladeshi economy has grown rapidly in the past decade

with annual GDP growth

rates consistently above 6 pct.

and reaching 7.3 pct. in 2018, placing it among the fastest

growing economies in Asia. In many ways, the outlook is positive as big challenges related to

insufficient power supply and poor infrastructure are starting to be addressed and a new

consumer class emerges with a demand for more and better goods and services. Moreover,

while Bangladesh is located in one of the least integrated regions globally, there is significant

potential for

cross-border cooperation

in a wide range of areas, including development of

infrastructure such as roads, tunnels, bridges, power supply and for promoting trade. With a

strategic location along potential economic corridors, Bangladesh could act as a hub between

India, China and South East Asia. This represents a potential rise in trade, transport and

tourism, including in the context of the Chinese Belt and Road Initiative.

However, many issues remain to be addressed for Bangladesh to fully realize its social and

economic potential. Economic growth is still mainly driven by the export led Ready-made

Garment (RMG) industry, the service and construction industries and remittances. With more

than 2 million youths entering the labour market every year, job creation will be crucial

–

also

to address irregular migrant flows. Yet, the inflow of foreign direct investment remains low,

mainly due to the poor regulatory framework and business environment as well as widespread

corruption and red tape. Moreover, domestic investments suffer from limited and expensive

local financing. Despite this,

both larger and middle-sized Danish companies are showing

an increased interest in entering the local market.

The Ready-made Garment sector

accounts for more than 80 pct. of export earnings and

employs more than 4 million workers, 60 pct. of whom are women. The success has made

Bangladesh the

world’s

second largest exporter of RMG after China, but the

sector’s

role in

creating employment has started to decline with increased automation. The pharmaceutical

sector has grown significantly and is becoming one of the growth industries with exports to

more than 125 countries, including the US and EU markets. Also

the information and

communications technology (ICT) industry

has grown steadily over the last years, with

increased outsourcing of services and development solutions by European companies to

Bangladesh. As most imports to Bangladesh are sourced from China and India, the trade

balance between Bangladesh and the EU is in clear favour of Bangladesh.

The majority of people living in rural areas are still dependent on

agriculture

for livelihood

and income. Today, Bangladesh is self-sufficient in grains, but productivity increases have

stalled and the area of farmland is shrinking, following urbanization and climate change.

Bangladesh is among the most climate vulnerable countries,

victim to heavy rain, floods,

cyclones, salinization and spells of drought, intensifying the risk of food insecurity,

disappearance of income opportunities for farmers, and the spread of water-related diseases.

More than 25 million out of the

country’s

165 million people are still living in

poverty,

mainly

in rural areas. Economic projections indicate that the poverty rate will fall to 15-20 pct. by

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2030, which is still far from enough to eradicate extreme poverty by 2030. In addition,

inequality is increasing.

The high level of

remittances

is believed to have played a major role in the reduction of

poverty. With a contribution of around 8-10 pct. to GDP, remittances compose a major pillar

of the Bangladeshi economy, and Bangladesh ranks seventh on the list of the

world’s

top

remittance receiving countries. Every year, more than half a million Bangladeshis join the 9

million already working abroad

–

mainly in the Middle East and South East Asia. Bangladeshi

nationals represent a significant group of irregular migrants arriving in Europe.

In recent years,

Bangladesh’s

political development has been characterized by an

increasing

pressure on democracy, rule of law and human rights.

This has been most notable in

connection with the parliamentary elections in December 2018 and the campaign period

preceding it, which was marred with violence and significant obstacles to a level playing field.

The Government has enacted and amended laws, which violate freedom of expression and

curtail civil and political rights, such as the freedom of assembly. Civil society space is

significantly constrained with

i.a.

a very bureaucratic and cumbersome registration process.

Despite some progress, the

governance

system continues to be weak and insufficiently

resourced. Most public institutions are inefficient, highly centralized and politicized, making

provision of effective services challenging.

Corruption

continues to be a widespread and

systemic problem undermining democratic, social and economic development. As Bangladesh

graduates from the LDC status, compliance with the human and

workers’

rights covenants will

be of increasing importance to maintain the preferential access to EU markets through the

current Everything But Arms (EBA) or future Generalised Scheme of Preferences-Plus

(GSP+), that is key for the RMG sector and thus for the Bangladeshi economy.

While employment in the RMG-sector has created opportunities for women, mainly from rural

areas with little or no education,

gender inequality

remains a big challenge as social and

institutional barriers still prevent women from taking up jobs and from developing productive

skills. Bangladesh has the third highest rate of

child marriage

in the world. Gender based

violence, harassment in public transportation, lack of child-care facilities and lack of secured

benefits such as maternity leave are common problems.

Bangladesh has made remarkable achievements in access to education, especially at the primary

level and for girls. Despite this, the dropout rates are still significant, and only 50 percent of the

students who enrol in the first grade reach grade 10. Women continue to lag behind men in

higher secondary and tertiary education. Government spending on education as a share of

GDP is around 2 pct., the second lowest in South Asia.

The fragile situation in the Chittagong Hill Tracts where

indigenous peoples

are poorer and

have less access to social services than the national average represents a particular set of

problems. The Government is yet to fully implement a peace accord from 1997 and to address

tens of thousands of grievances on access to land.

Religious intolerance

and

violent extremism

are on the rise. In recent years, Bangladesh has

experienced killings of people who oppose a fundamentalist interpretation of Islam, such as

bloggers, and human rights activists as well as religious minorities and foreigners. Factors such

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as political polarisation, increasing inequality and adverse impacts of climate change contribute

to the creation of a breeding ground for radicalization, particularly among youth. This situation

is exploited by groups such as Daesh (ISIL), Al Qaeda in the Indian Subcontinent (AQIS), and

the Pakistani based Lashkar-e-Taiba, all believed to be active in Bangladesh. The authorities

regularly claim to disrupt planned terror attacks.

With the escalation of the

Rohingya crisis in 2017,

almost one million Rohingya refugees have

taken shelter in

Cox’s

Bazar in the South Eastern part of the densely populated country. The

Government of Bangladesh maintains that the only acceptable outcome is a political solution

and that the refugees must return to Myanmar. Yet, this is unlikely to happen in the short- to

medium term, and the situation is well under way to become a protracted crisis. While the

Bangladeshi people initially welcomed the Rohingya population, there are growing concerns

about the negative impacts of their longer-term stay. Decreasing water levels, environmental

degradation and deforestation, road congestion, price hikes, and potential outbreak of diseases

are among the consequences that create tensions with local communities. Moreover, there is a

risk of trafficking and radicalization in the extremely densely populated camps.

In its

international relations,

the Government of Bangladesh has placed high importance on

reaching out to its neighbours and building broad alliances in the region and beyond. The

country is a strong

advocate for achieving the SDGs,

in particular those related to climate

and water resources, aid effectiveness and education for girls. Bangladesh is an active partner in

international organisations and a major contributor of military staff to UN peacekeeping

operations. In addition, the country has a high international profile in the promotion of safe,

orderly and regular migration. Bangladesh is a member of the Human Rights Council for the

period 2019-2021. The country has also applied to

become a P4G partner.

D. Strategic objectives and key areas addressed in Danish-Bangladesh partnership

D.1 Inclusive and sustainable economic growth

Building on a long-standing partnership with Bangladesh to address poverty reduction and

sustainable economic growth and employment, this strategic objective will continue to be

guided by SDGs 1

(“ending poverty”),

(“gender equality”),

(“decent

work and economic

growth”),

(“reduction

inequality”)

and 13

(“climate action”).

Based on lessons learned from years of cooperation with the Bangladeshi Ministry of

Agriculture,

Denmark will consolidate results

achieved from its national focus on livelihood

improvements, rural economic development and climate resilience with a focus on women and

youth. In the medium term, it is envisaged that the previous emphasis on empowerment of

poor rural households through the Farmer Field School approach will gradually

shift towards

a more private sector-led value chain approach

to economic development and the creation

of decent jobs, including for women and youth. Lessons learned from the Strategic Sector

Cooperation will to the extent possible complement and be included in the development

engagements. It will also be explored how Danish business solutions and know-how can be

applied to leverage the pro-poor Danida investments

–

in line with SDG 17 (“partnerships for

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the goals”). Danish businesses can play an important role in creating growth and decent jobs in

Bangladesh, while there is also a significant potential for local demand for Danish solutions.

Consequently,

Denmark will increasingly center its support around the linkages between

agricultural supply and demand markets

–

more specifically between farmers that are poor

(but with some means of production) and their producer organisations on the one hand and

small and medium sized enterprises (SMEs) within the agribusiness sector on the other. The

aim is to enhance value addition throughout the value chain, thereby improving markets and

employment opportunities for the poor farmers while stimulating private sector growth

through agribusiness development. Climate smart solutions and strategies for adapting to

challenges in the supply market will increasingly serve as a guiding principle. In line with the

UN Guiding Principles on Business and Human Rights, the new private sector development

approach will emphasize issues such as climate and environment, gender equality, youth, social

protection, and human rights including the rights of workers. Realising that markets do not

automatically work in favour of the poor,

Denmark will strive to ensure that increased

profit and value addition benefit all value chain actors,

including smallholder farmers.

D.2 Enhanced resilience of selected vulnerable and marginalised groups, including

Rohingya refugees and host communities as well as groups prone to irregular migration

and climate affected displacement

In line with the principle of the SDGs to leave no one behind,

Denmark will maintain its

focus on marginalised and vulnerable groups.

It is assumed that skills and agribusiness

development will lead to better jobs and improved income for these groups. A lack of

economic opportunities being one of the root causes of irregular migration, it is further

assumed that the support will have a positive effect on vulnerable groups of potential irregular

migrants.

Denmark will cooperate with the Bangladeshi authorities on enhancing

migration management,

i.a.

through information campaigns about the risks of irregular

migration and responsible reintegration of returning Bangladeshi citizens as well as through

contributions to the reintegration of returnees.

Denmark will support efforts to improve the livelihood and climate resilience of

Rohingya

refugees and affected host communities

in South Eastern Bangladesh. The support will

build on lessons learned from the Farmer Field School approach, but will also focus on social

cohesion and peaceful coexistence between host communities and the refugee population. Such

a focus is key in providing for the protection space that is needed for a continued effective

humanitarian response to the refugee crisis.

It is

Denmark’s

ambition to strengthen the

Humanitarian-Development Nexus approach

in a Bangladeshi context and in doing so

ensuring that the Danish development engagements are applied in synergy with the

humanitarian interventions as part of a more durable and longer-term response to the refugee

crisis. Underpinning this,

Denmark will utilize knowledge of more durable solutions from

other contexts

to promote stronger coordination between development partners and

humanitarian actors and a long-term commitment in Bangladesh. In addition,

Denmark will

continue livelihood support to the indigenous and marginalised people

of the Chittagong

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Hill Tracts. Denmark will continue to stay engaged in the political dialogue to promote

sustainable solutions together with relevant international partners.

D.3 Democracy, good governance, human rights and gender equality

This strategic objective will be guided by SDGs 5

(“gender equality”)

and 16

(“peace,

justice

and strong institutions”).

In the areas of gender, human rights and anti-corruption, Denmark has long-term partnerships

with several public institutions and NGOs. These partnerships provide Denmark with a high

degree of credibility and trust

–

as well as responsibility

–

in these areas, vis-à-vis the

Bangladeshi actors. Denmark is highly regarded for its constructive advocacy on delicate issues,

including fighting corruption and upholding rule of law. Value-based dialogue will remain an

important element in Denmark’s partnership with Bangladesh in the years to come, and

Denmark will maintain a constructive dialogue with partners and interlocutors

on a

wide range of issues of interest to both countries.

Denmark will consolidate ongoing development activities

that promote human rights and

good governance, improved working conditions and workers safety, civic space, gender

equality, sexual and reproductive health and rights, while combating gender based violence,

radicalisation and violent extremism. In this context, Denmark will also look for new entry

points to provide support to local civil society.

Denmark will seek influence

in the areas with the best possibilities for creating positive

change.

Political dialogue

–

both bilateral and through the EU

–

will be a key instrument in

contributing to the development of democracy, human rights and fundamental freedoms,

including the freedom of speech, which is particularly relevant in the wake of the 2018

parliamentary election. In addition Denmark will seek broad partnerships with likeminded

partners and development actors, including relevant Danish strategic NGOs.

Both Bangladesh and Denmark are members of the

Human Rights Council (HRC) for the

period 2019-2021.

This creates an opportunity for re-enforcing cooperation in the area of

human rights and gives a platform for dialogue at a higher level. The locally-based process of

following up on recommendations from the

Universal Periodic Review (UPR)

is another

concrete opportunity where closer cooperation and dialogue can support improvements to the

human right situation in Bangladesh.

Denmark will work to strengthen local civil society

through the provision of long-term

support, including

–

where relevant

–

support for networks, dialogue activities etc. with the aim

of building local capacity and collective resilience to pressure. Danish and international NGO-

partners will be an important vehicle for such efforts.

D.4 Increased and diversified economic and commercial relations

The commercial opportunities in Bangladesh are generally seen as attractive by Danish

companies, which is reflected in growing engagement year by year. More than two million

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Bangladeshis join the ranks of the middle class every year and Bangladeshi consumers are eager

to spend on more sophisticated goods and services. Meanwhile, the Government of

Bangladesh as well as the private sector increasingly focus on

green growth and

sustainability.

There is a growing interest from several sectors, including the RMG sector, in

efficient and green solutions within energy and water as well as a drive towards higher-level

technological solutions

–

areas where Danish businesses hold a strong position and where

investments can contribute to achieving the SDGs. At the same time, Danish companies

sourcing in Bangladesh, particularly within the RMG sector, have an interest in ensuring that

their products comply with required standards and are produced under sustainable and socially

responsible conditions. However, protectionism of the local industry is very common and high

import duties on many products challenge the Danish export opportunities and the

competition in general. To tap into the large business opportunities in Bangladesh, Danish

companies will therefore need to ensure local content in the value chain of their products.

Large companies within the dairy and pharmaceutical sectors have a long history in the country

and a growing portfolio, and several Danish clothing brands have long sourced from

Bangladeshi textile factories. Investments in the local production of Danish brands contribute

to both development of the specific sectors by transfer of know-how and technology and

secure local employment and growth opportunities. These well-established Danish companies

serve as inspiration for new companies within a broad range of industries. Danish consulting

companies occasionally win contracts tendered by the development banks or the government,

but there is an additional potential to tap.

Denmark will continue and expand the

Strategic Sector Cooperation on

workers’

safety

between the relevant authorities

in Denmark and Bangladesh in support of Danish buyers.

At the same time, Denmark will continue to

enhance synergies between the development

cooperation and commercial activities

and promote Danida Business Finance instruments,

Denmark’s

Export Credit Facility (EKF), the Investment Fund for Developing Countries

(IFU) and other financing instruments, including the multilateral banks.

Denmark will continue to provide

high quality services to Danish companies.

The Danish

Embassy in Dhaka offers all the services from the Trade Council available to Danish

companies. Going forward, commercial relations will be promoted within a wider regional

Trade Council approach for South Asia and aligned to regional clusters in order to provide

better services and critical mass to companies and partners.

Meanwhile, to better support Danish businesses, Denmark will

strengthen its economic

diplomacy

in Bangladesh, both bilaterally and in cooperation with the EU. In context of the

latter, Denmark is engaged in the Bangladesh-EU business dialogue, that seeks to promote and

improve the business environment.

E. Monitoring of

Denmark’s

engagement

A mid-term review of the country programme has been carried out in 2019. An evaluation of

the Agricultural Growth and Employment Programme (AGEP) will be finalised in 2019. The

joint regional board for TC South Asia, which is headed by the ambassadors of the region, will

monitor and coordinate trade related activities.

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