BANGLADESH Trends and Developments Contributed by: Mohammed Forrukh Rahman, Kamrunnaher Shimu and Salauddin Kader, Rahman’s Chambers
Beyond the Framework: Due Diligence, Dispute Risks, and Evolving Strategies for Investment in Bangladesh Bangladesh presents a compelling narrative of growth, driven by significant ambitions in infrastructure and energy development. This ambition attracts substan- tial foreign direct investment (FDI) and international contracting expertise. However, the landscape is complicated by significant macroeconomic pressures, intricate regulatory environments, and the practical challenges of project execution. Although the legal framework for investor protection is modern, the practical realities on the ground often dic- tate the success of investments and the trajectory of disputes. This article analyses the critical importance of rigorous due diligence, the shift in procurement strategies, the evolving definition of “investor”, and the key dispute risks shaping the investment climate in Bangladesh. The shift to competitive bidding and the need for rigorous legal oversight A significant transformation is underway in Bangla- desh’s procurement strategy for major projects. The government is decisively transitioning away from reliance on unsolicited proposals and fast-tracked approvals (such as those facilitated by the Quick Enhancement of Electricity and Energy Supply Act 2010) towards standardised, competitive bidding pro- cesses governed by the Public Procurement Act and associated regulations. This shift aims to enhance transparency and secure better value for money. However, it also introduces new challenges for investors and contractors. Com- petitive tender processes are characterised by com- plex procedures, strict timelines, and rigorous evalu- ation criteria. The scope for amending bid documents or negotiating terms post-submission is extremely limited. In this environment, the timing of decisions and the meticulous preparation of bid documents are critical. Errors or omissions during the bidding stage can lead to disqualification or the acceptance of unfavourable contractual terms that cannot be easily renegotiated later. Consequently, specialised legal assistance is
now indispensable throughout the entire tender pro- cess – from the initial review of the request for pro- posal (RFP) and the drafting of clarifications, to ensur- ing compliance with all mandatory requirements and finalising the bid submission. Rigorous legal oversight is necessary to navigate these complex procedures and ensure that decisions taken at different stages are properly documented and strategically sound. The imperative of rigorous due diligence A recurring theme in disputes involving major pro- jects in Bangladesh is the gap between contractual assumptions and operational realities. Although the government and state-owned enterprises (SOEs) typi- cally provide feasibility studies and foundational data, tender documents for major infrastructure and energy projects invariably place the burden of verification on the bidder. These documents often contain explicit disclaimers regarding the accuracy or completeness of the provided information and require bidders to conduct their own independent investigations. Con- sequently, the responsibility for due diligence is effec- tively mutualised; the state provides the data, but the investor assumes the risk of its reliability. Comprehensive, independent due diligence is essen- tial. It should be focused on three critical areas, as follows. Land acquisition and site verification Land acquisition remains the single most significant cause of delays and disputes in infrastructure and energy projects. Bangladesh’s high population den- sity and complex land tenure systems create inherent challenges. Delays in the handover of unencumbered land by the government authority to the project com- pany frequently precipitate claims for extensions of time (EoT) and additional costs. Due diligence must go beyond reviewing title docu- ments. Physical verification of the site is crucial to assess encumbrances, potential resettlement issues, and the actual ground conditions. A thorough under- standing of the Acquisition and Requisition of Immov- able Property Act 2017 and the social dynamics sur- rounding the project site is vital for realistic project scheduling and risk pricing.
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