Labor is inexpensive, but productivity is low. Infrastructure such as electric power, telecommunications, and water and rail transport is poor, even by regional standards. In particular, an old, congested, and corruption-ridden port at Chittagong exacts a heavy toll on the economy. The country's legal system is outdated and undermanned, leading to long delays in resolving cases. Many government officials view their role as more controlling commercial activity than stimulating it.
Corruption is pervasive at all levels of officialdom.
The law and order situation has deteriorated, with extortion and crime affecting all corners of society. The economy has now recovered fully from the shock it suffered in 1998 from Bangladesh s worst flood of the century, which inundated more than two-thirds of the country, wiped out winter crops, and displaced millions of people. Failure of the Government to address long-standing structural deficiencies in the economy and an uncertain business environment brought about by confrontational politics have seriously inhibited industrial activity in Bangladesh. The slow down in the industrial sector began in early 1998, and was exacerbated by the 1998 flood when manufacturing output contracted for three months. Bangladesh s sharp monetary expansion during FY2000, fueled by unprecedented government borrowing from the banking sector, has serious consequences for the Bangladeshi economy if it continues unchecked.