In order to expand an existing company into an international market, there is a need to review the legal environment to ensure that the market penetration and general performance are sustainable. Global Logistics is a successful freight service company based in Europe. The company is interested in tapping the Asian market to offer freight logistics services and has selected Bangladesh as the regional host for its activities. This paper examines Bangladesh’s legal business environment in comparison with the European market.
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The rationale for Selecting Bangladesh
Bangladesh operates under the free market economy model, thus, all business variables are liberalized from internal and external forces. This means that EnGlobal will not face limitations as a result of extreme government interventions. Bangladesh is also centrally located and neighbors China, Nepal, India, Maynmar, and Bhutan. Thus, the freight logistics market penetration in South Asia will be easier through Bangladesh. In addition, the high population estimated at 163 million will provide a ready market for EnGlobal Logistics’ services. In addition, though the official language in Bangladesh is Bengali, a sizable population can speak in English, thus, minimal cultural or language barriers (Index of Economic Freedom, 2018). These factors guarantee EnGlobal Logistics’ profitability and sustainable market operations.
General Overview of the Legal Business Environment
Despite the relatively positive score in the market and economic variables that support business operations, Bangladesh is notorious for disrespect of the rule of law and weak legal regulations that govern business. For instance, most property laws are antiquated besides uneven enforcement. There are few legal structures to enforce the existing commercial laws. As a result, some entities rely on the jangle laws in protecting their business interests. Bangladesh’s judiciary can be described as lacking independence and vulnerable to political manipulation (Sakib, 2016). This means that the enforcement of business contracts and resolution of disputes is inefficient.
Bangladesh is one of the most corrupt business environments in the South Asian region. Moreover, commerce-related criminal acts such as extortion and bribery are common occurrences. The existing business laws are weak in terms of implementation and accurate justice in the local courts. This means that a third party can divert the course of justice as long as the interests of the law enforcers are taken care of. In addition, the limited bureaucratic transparency is challenged in meeting the government conditions to that comply with the commerce laws (Sakib, 2016). Lastly, the extremely polarized political system has undermined the ability of the government of the day to effectively accountable to the business community despite the double tax regime (US Department of State, 2018). For instance, anticorruption efforts are often neutralized by a politicized law enforcement process that makes it easy to subvert justice.
Stratified Legal Business Environment Analysis
Common and Civil Law Systems
Unlike the well-organized and effective commercial laws in the European market, EnGlobal has to deal with the relatively weaker, poorly enforced, and discriminative business laws in Bangladesh. For instance, unlike the clear tax compliance certification process in Europe, the situation is marred with irregularities and extortion cartels who demand bribes to issues a simple business permit (Sakib, 2016). Moreover, the period for permit approval is unpredictable in Bangladesh and might attract unreasonable costs due to the unending bureaucratic cycle (Sakib, 2016). In addition, some of the requirements are impractical and might be unfriendly to an internal business such as EnGlobal Logistics. For instance, the licensing board requires payment of business licensing upfront for at least three years even before approval. This is the opposite of the events in the European legal business environment where payments are made after approval.
Intellectual Property, Copyright Infringement, and Legal Ramifications
Although there are clear intellectual property laws through a patent regulatory board, its implementation has not been effective. Due to corruption and attitude of negligence, it is not uncommon for two businesses to own the same patent certificate. The process of lodging a complaint and pursuing legal redress in such a scenario is painstaking. In addition, the law enforcers might be bribed to subvert such a process as long as the other party is willing to play along. Unlike the US commercial regulations that are stricter and effectively enforced, EnGlobal Logistics must find a way around the intellectual property rights to safeguard itself from copyright infringement since the process of legal ramification might not result from injustice. The Bangladesh business laws indicate that a party guilty of copyright infringement should pay a fine of up to a million Bangladeshi taka and a maximum of 5 years imprisonment or both (Index of Economic Freedom, 2018). Although this law is clear on paper, its enforcement is a farce. Depending on the ability of the law breaker’s ability to bribe the judicial system, it is often difficult to pursue a satisfactory legal redress.
Violation of Human Rights of Employees/Child Labor Violations
Cases of abuse of employee basic human rights and use of child labor are common phenomena in Bangladesh. For instance, in the government report for the year 2017, cases of child labor abuse were reported in several sectors (ICAEW, 2018). Moreover, some companies have continued to pay employees salaries below the minimum wage. Although the Bangladesh constitution has criminalized such acts, they continue to happen under the protection of corrupt law enforcement elements. Thus, EnGlobal Logistics should consider respective employee rights by setting salaries above the minimum wage. Moreover, the company should consider recruiting employees above eighteen years as recognized by the government to be falling with the adult workforce. The laws of Bangladesh indicate that a party guilty of child labor and abuse of basic employee rights might be subject to a fine, imprisonment, or revoking business license (ORG Legal, 2018). The same verdict is applied under the EU commercial laws.
Public Perception on Companies Considered Corrupt
Due to prolonged polarized national debate on corruption with few genuine attempts to tackle this menace, the general public has developed an indifferent attitude towards companies engaged in illegal practices. Although there is an open hunger and public outcry whenever such cases arise, the Bangladesh population seems to have given up and only act through criticism and small-scale boycotts. This attitude could be related to the polarized enforcement system and prolonged judicial justice process. At present, the justice system has not finalized on any cases that are two decades old (Netherlands Bangladesh Business Platform, 2018). In order to avoid open criticism and product boycott, EnGlobal Logistics should consider using the same ethical guideline in the European market when expanding into Bangladesh.
Impact of European Union on Business Environment
The EU regulations have been standardized and can be applied to any business environment. Since EnGlobal has successfully operated under these regulations, it would be easy for the company to expand operations in Bangladesh. This means that EnGlobal Logistics will not strain to comply with the weak Bangladesh commercial laws (Sakib, 2016).
ICAEW. (2018). Doing business in Bangladesh. Web.
Index of Economic Freedom. (2018). Bangladesh. Web.
Netherlands Bangladesh Business Platform. (2018). Good business practices. Web.
OGR Legal. (2018). Legal system of Bangladesh. Web.
Sakib, N. (2016). Weak infrastructure, poor business climate discouraging investors. Web.
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US Department of State. (2018). Bangladesh. Web.