Culture of Mass Strikes Suffocates Bangladesh’s Economy; ‘Hartals’ occurring at a time when Bangladesh is already struggling to rebuild its reputation with apparel companies

August 2, 2013, 9:16 p.m. ET

Culture of Mass Strikes Suffocates Bangladesh’s Economy

‘Hartals’ occurring at a time when Bangladesh is already struggling to rebuild its reputation with apparel companies


DHAKA, Bangladesh—Amid the fallout of a deadly garment-factory collapse in April, Bangladesh faces a more immediate economic threat from the massive strikes known as “hartals,” which are bringing the country to its knees with disturbing, and rising, frequency. In one such strike last month, protesters attacked buses, blockaded roads and detonated homemade bombs, while at least five people died in clashes with police. Dhaka businesses saw revenue nosedive as shoppers stayed home. Even mango vendors suffered, as supplies from the countryside dwindled with roadways under threat of violence.At the Pan Pacific Sonargaon, a popular business hotel, staff slipped notes under visitors’ doors advising of the suspension of “all vehicular movement” during strikes and warning guests not to venture off the property. Guests needing to go to the airport were ferried in a shuttle bus with armed guards that took back roads through an army base to avoid dangerous mobs.

Bangladesh has long suffered from hartals, which have been common in South Asia since the days of Mahatma Gandhi, who used them to protest colonial rule in India. In the case of Bangladesh, the hartals are called by any of the country’s raucous political parties to score political points or embarrass whoever controls the government.

But this year is shaping up to be especially bad for strikes at a time when Bangladesh is already struggling to rebuild its reputation with apparel companies after the Rana Plaza factory disaster. In part that is because of tensions over a controversial war-crimes tribunal set up by Prime Minister Sheikh Hasinato investigate atrocities committed during Bangladesh’s war of independence from Pakistan in 1971. The tribunal has reopened old wounds and triggered strikes, including several called by the Islamist Jamaat-e-Islami party last month after some of its leaders were sentenced.

The hartals are also spreading because Bangladesh is preparing for a national election that must be held by January, which has further inflamed passions.

The country has endured 36 nationwide shutdowns this year, according to the Commerce Ministry, compared with 29 last year and 17 in 2009 to 2011. Typically, university classes are canceled, businesses operate at reduced staff, and many people stay home lest they get caught in stray violence. More than 80 people have died in hartal-related bloodshed since January, while protesters have torched hundreds of buses and cars.

The strikes have cost the country more than $7 billion this year, or more than $200 million a day, the Federation of Bangladesh Chambers of Commerce and Industry estimates. Many analysts believe hartals will become even more common as the election approaches.

“The hartal culture is destroying us,” says Kazi Akram Uddin Ahmed, president of the FBCCI.

Abul Kalam Azad, managing director of Ha-Meem Group, which says it has made garments for Gap Inc. GPS +0.35% and other global brands, says protesters set fire to one of his trucks en route to the country’s main port in Chittagong during the latest strikes, burning 2,500 garment pieces.

But that is a small expense compared with what can happen during really long protests, he says, when losses can run into the millions of dollars as factory owners redirect shipments to customers by airfreight instead of driving them to port.

“It’s enough to bankrupt a factory,” adds Rodney Reed, chairman of Reed Consulting, a local advisory firm.

The hartals also mean continuing uncertainty for foreign investorswho are undecided on how much to stake on Bangladesh, which has lots of cheap labor but substandard infrastructure and unpredictable politics.

“I haven’t left the hotel in three days,” said one Western businessman during the latest hartal who asked not to be identified because he wasn’t authorized to speak for his company. A group of data-analysis consultants from Toronto said they were delaying their next trip to the country until after elections to reduce the risk of facing protests.

Some desperate businessmen go to extremes to get work done during hartals—including hiring private ambulances for about $150 a day to move safely through the streets. At the end of one recent weekday a half-dozen such vehicles were seen dropping off businesspeople at the Pan Pacific hotel. One Spanish investor proudly displayed iPhone photos of the ambulance provided for him by local clients.

The FBCCI has joined with many everyday citizens in calling on the government to ban the hartals. But leaders haven’t heeded the calls. The ruling Awami League called more than 170 days of strikes when it was in opposition from 2001 to 2006. It is a practice it may return to if it is voted out of power, as some analysts expect to happen in the coming elections.

Government officials have condemned the hartals but have focused mainly on asking opposition leaders not to call them rather than banning them.

“The constitution guarantees freedom of expression and protest, so I’m not in favor of banning hartals,” said Home Minister Mohiuddin Khan Alamgir earlier this year after a spate of strikes. “But hartals should never be called without strong logical and moral reasons.”

Opposition leaders say a ban on hartals would be abused by the government. “Business leaders should think about the reasons behind the hartals and suggest ways to remove them instead of proposing a law banning hartals,” said Nazrul Islam Khan, a leader of the main opposition BNP.

Meanwhile, small shop owners who bear the biggest brunt of the hartals soldier on.

At the Bashundhara City mall, one of Dhaka’s most popular shopping centers, shops were largely empty during the latest strike, which hit during the Islamic holy month of Ramadan, normally one of the biggest shopping seasons.

“The owner expected to make good money this holiday season, but you can see that isn’t happening,” said Selim Ahmed, 38, as he and a half-dozen other employees watched over an otherwise vacant shop selling Indian saris. Bad sales mean staff might not get holiday bonuses, which normally run as high as $250, a big sum in Bangladesh. “The problem is that no one wants to compromise,” Mr. Ahmed said. “And we’re caught in the middle.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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