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Fresh Wave of Violence Revives Investor Fears in Bangladesh

Fresh Wave of Violence Revives Investor Fears in Bangladesh

(Bloomberg) -- Bangladesh is struggling to contain a new outbreak of violence linked to the Islamic State that threatens to stoke fears about investing in the fast-growing South Asian nation.

At least five attacks in March -- including two separate attacks claimed by IS in two days -- and an army raid on a single apartment building reveal the extent of Bangladesh’s internal security problem. The army shot dead four militants, including a woman, in the security operation, which is ongoing. Two militants were found with suicide vests strapped to their bodies, said Brigadier General Fakhrul Ahsan, a spokesman for Bangladesh army, at a media briefing on Monday night.

On Friday, a suicide attacker blew himself up at a police checkpoint near the airport in Dhaka, while security services began an anti-terrorism raid on an apartment building in Sylhet, a city about 200 kilometers northeast of the capital. A further six people, including two policemen, were killed in a bomb blast and a suicide attack on Saturday that injured 40 others near the building under siege. 

The fresh wave of violence is the first since an Islamic State-linked group killed 22 people including 17 foreigners last July at an upscale cafe in Dhaka’s diplomatic area, prompting concerns that the deteriorating security situation could hurt the nation’s garment industry and dent an economy forecast to expand 7.1 percent this year. The government’s denial of the existence of IS networks risks complicating the security response.

“The economic impact on Bangladesh could be substantial," said Amarnath Amarasingam, a senior research fellow at the London-based Institute for Strategic Dialogue. "For two attacks to happen in the same week and to have them claimed so quickly is a clear indication that there is an ISIS network in the country."

Foreign Investors

The attacks come after Prime Minister Sheikh Hasina’s long battle against the rise of Islamic militancy in the Muslim-majority nation. Rising fears about IS-linked attacks in Bangladesh threaten to derail Hasina’s effort to speed up economic growth and attract investments from abroad, including in the country’s garment sector.

"The worsening security situation in Bangladesh has worried current and potential foreign investors," said Reshmi Khurana, head of South Asia at Kroll Associates Inc., a global political risk firm. "They are investing significant resources in assessing and consolidating their security arrangements on the ground and while they have not scaled back their investments in Bangladesh, they are more closely evaluating their future commitment to the country."

‘Head In The Sand’

The militants holed up in the Sylhet building seemed "well-trained and equipped," and had planted improvised explosive devices around the building to block access inside, Ahsan told reporters on Sunday.

The blast near the airport on Friday was the second suicide attack in a week in the capital Dhaka. On March 17, a suicide bomber blew himself up after he was stopped by security forces on duty near the barracks of the Rapid Action Battalion, an elite anti-terrorism force. The following day, on March 18, a motorcyclist armed with explosives was shot dead as he tried to crash into a security checkpoint.

The Islamic State took credit for the attacks in Sylhet and Dhaka, according to counter-terrorism organization, the SITE Intelligence Group, citing the IS news agency Amaq. However, the government continues to downplay the presence of IS networks in the country, a stance that is likely to complicate the effectiveness of the response, said Amarasingam, the analyst.

"It doesn’t help to keep your head in the sand and ignore the international ties and networks these individuals have developed," he said. "If ignored, they are more likely to plant roots and cause future damage."

To contact the reporters on this story: Arun Devnath in Dhaka at adevnath@bloomberg.net, Iain Marlow in New Delhi at imarlow1@bloomberg.net.

To contact the editors responsible for this story: Ruth Pollard at rpollard2@bloomberg.net, Arijit Ghosh