Why Bangladesh ? ? ?
Bangladesh is a winning combination with its competitive market, business-friendly environment and cost structure that can give you the best returns.
Industrious low-cost workforce
Bangladesh offers a well-educated, highly adaptive and industrious workforce with the lowest wages and salaries in the region. 57.3% of the population is under 25, providing a youthful group for recruitment. The country has consistently developed a skilled workforce catering to investors needs. English is widely spoken, making communication easy.
Strategic location, regional connectivity and worldwide access
Bangladesh is strategically located next to India, China and ASEAN markets. As the South Asian Free Trade Area (SAFTA) comes into force, investors in Bangladesh will enjoy duty-free access to India and other member countries.
Strong local market and growth
Bangladesh has proved to be an attractive investment location with its 144 million population and consistent economic growth leading to strong and growing domestic demand.
Low cost of energy
Energy prices in Bangladesh are the most competitive in the region. Transportation on green compressed natural gas is less than 20% of the diesel price.
Proven export competitiveness
Bangladesh enjoys tariff-free access to the European Union, Canada, Australia and Japan. In Europe, Bangladesh enjoys 60% of the market share and is the top manufacturing exporter amongst 50 least developed countries.
Competitive incentives
Bangladesh offers the most liberal FDI regime in South Asia, allowing 100% foreign equity with unrestricted exit policy, easy remittance of royalty and repatriation of profits and incomes.
Export processing zones
Bangladesh offers export-oriented industrial enclaves with infrastructural facilities and logistical support for foreign investors. The country is also developing its core infrastructures, including roads, highways, surface transport and port facilities for a better business environment.
Positive climate
A largely homogeneous society with people living in harmony irrespective of race and religion, Bangladesh is a democratic country enjoying broad bi-partisan political support for private investment. The legal and policy framework for business is conducive to foreign investment.
In today’s age of globalisation and inter-regional collaboration, the world has become a global village. Trade liberalisation, flow of foreign direct investment (FDI) and development of capital markets — the widely acknowledged ??three pillars of globalisation?? — have brought economic prosperity to many nations.FDI inflow, which reached $1 billion for the first time in 2008, increasing market capitalisation in the bourses, and a respectable GDP growth helped Bangladesh rank among the top three South Asian countries.
Of late Bangladesh received Standard & Poor’s ??BB-?? long-term and ??B?? short-term sovereign credit ratings for both foreign and local currency. Bangladesh has come a long way from its earlier ??unknown risk?? phase to a ??stable outlook?? which, according to S&P, reflects ??expectations that a prudent macroeconomic policy-setting will prevail and microeconomic reforms to gradually address growth constraints will continue??. Moody’s also certified Bangladesh’s strong fundamentals.
Further, Bangladesh’s regulatory regime vehemently supports private sector investment with incentives of 100 percent foreign ownership, repatriation of dividend and the foreign investment protection act itself. Companies such as Marico, an Indian corporate, have demonstrated the success potential in Bangladesh and have enabled other such investors to envision their participation in this market, in several promising sectors.
Power
With demand for power at around 5,600 MW against an average supply of 3,800 MW, there remains a consistent gap of 1,800MW. Only 35 percent of the population have access to electricity. Consequently opportunities abound.
Increasing the country’s power generation to 8,000 MW by 2015 with requirements of around $10 billion is the starting point. Coal-based small power plants, which would need around $2 billion from joint-venture partners and debt financing, should also be considered. Particularly, to reduce dependence on gas-based power generation in the backdrop of potential depletion of gas reserves by 2015, the coal-based plants present strong possibilities. LNG (liquefied natural gas) terminals should also be explored.
On the policy front, the government is progressing on a draft public private partnership (PPP) policy, which will replace the existing Bangladesh Private Sector Infrastructure Guidelines (BPSIG). The ??Bangladesh Public-Private Partnership Policy and Guidelines?? is expected to incorporate provisions for special fiscal incentives and hence, be more investment-friendly.
Telecom
Telecom is one of the fastest growing sectors with around 54 million subscribers (30 percent of the population) and six operators (mostly foreign-owned). Due to large investments by NTT DoCoMo and Bharti Telecom, the FDI inflow has grown at 50 percent. As the government is unlikely to issue more mobile licences, future investment will be in proliferation of data-based and value added services. Implementation of 3G (third generation) licences will also require significant investment.
Further opportunities lie in manufacturing of handsets by utilising relatively cheap labour of the country. With some differentiation in quality, design or price, Bangladesh-India joint ventures can compete in the inexpensive phone set market.
Health care
?The demand for health care services is rising rapidly because of increasing purchasing power of the growing middle- and upper-middle classes, increasing life expectancy, declining mortality and rising incidence of chronic and treatable diseases.
In response to these factors, private, premium-priced hospitals with international standard facilities, such as Apollo, United, Square, Popular, are now very popular. The registration of 200,000 patients with Apollo Hospitals Dhaka since 2005 is a testament to this popularity.
Further, considering that the Bangladeshis spend nearly $200 million abroad for treatment, there is enough space to grow. Foreign investors can also play a bigger role in improving the health care standards by setting up world-class nurses/technicians training institutes.
Education
Increasingly we see a large number of undergraduates and graduates aspiring towards higher education abroad. Local private universities have also grown rapidly in response to demand, despite the high premiums charged. Consequently, opportunities to establish campuses of renowned business schools, affiliations with private universities, especially reasonably priced secondary and higher secondary institutions, also abound.
Business Process Outsourcing
Outsourcing of services is increasingly popular as it allows organisations to focus on core competencies and capitalise on specialist knowledge in respective functions. While Bangladesh is still at the nascent phase, it must start pitching for Business Processing Outsourcing (BPO), primarily offshore outsourcing, now. Statistics shows that the global “addressable” BPO market is worth $122-$154 billion, of which $10 billion+ is travel/hospitality, $10 billion telecoms, and $20 billion+ is finance, accounting and human resource. This is a huge market to tap as only 8 percent of that capacity was utilised as of 2006.
Though Bangladesh is comparatively new to this field, there is a huge potential in call centres, data entry facilities, and such sectors that can be served with low to medium level of skilled resources. The pie is big and growing — it is up to us to partner with neighboring countries and investors and capture a slice.
Pharmaceuticals
Pharmaceuticals have gradually evolved from an import-based industry to a self-manufacturing one exporting to 70 countries with a market size of over $750 million. Foreign investments — either in the form of joint ventures with Bangladeshi companies or other partnerships whereby research and development is run in laboratories in India with complementing manufacturing plants in Bangladesh — should be welcomed. These companies, such as Sun Pharmaceuticals of India, can utilise the competitively priced labour in Bangladesh and use cost advantages to capture the export market.
Since Bangladesh has received exemption from Trade Related Intellectual Property Rights till 2016, manufacturers’ ability to continue to produce pharmaceuticals products till the expiry of the exemption period increases the incentives greatly.
FMCG
?Some other areas of interest could be FMCG (fast moving consumer goods) segments given Bangladesh’s large population with progressive increase in purchasing capacity.
The present regime has identified PPP as one of the key focus areas and is committed to attracting foreign investors to thrust sectors. The government has resolved to ensure economic and political stability and foster transparency and availability of information. If we move forward to partner with the right organisation to invest in the right sector, only then it will result in mutual economic and commercial benefits. Most importantly, we have to move at the right time to tap the opportunities — I believe now is precisely the right time
