Bangladesh: The Best Place for Investment in the World

Why Bangladesh

Bangladesh is now one of the prominent developing nations in the world and foreign investors are finally starting to identify it as one of most economically viable country to invent in.  After gaining independence in 1971 the country has made some major achievement in economic and social sector. Located between strategically important South and Southeast Asia the country has a total area of 1,47,570 sq.km. and a coastline of 710 km. It is one of the densest populated countries in the world with a population of 167. 84 million according to UNFPA with a growth rate of 1.02%. The populations are largely ethnically homogeneous. Bangla is the state language but English is also widely spoken. Bangladesh is also the largest delta in the world. It has wide range of river and canal system which helps it achieve a good and cheaper water communication for all purposes.

Official NameThe People’s Republic of Bangladesh

Political System: Parliamentary Democracy

Capital Name: Dhaka

Major Cities: Dhaka, Chittagong, Khulna, Rajshahi, Sylhet, Barisal, Rangpur.

Principal IndustriesReady Made Garments, Garment Accessories, Pharmaceuticals, Cements, Fertilizers, Ship Building, Chemicals,  Newsprint, Leather and Leather Goods, Sugar, Paper and Jute.

Principal Exports: Ready Made Garments, Frozen Foods (like shrimps & vegetables), Leather, Leather Products, Chemical Product, Textile Fabrics, Home Textile, Jute, Jute Products, Tea, Light Engineering Products including Bi-cycle and Ceramic. 

Why Bangladesh is the Best Place to Invest in the Region

Bangladesh’s huge population and recent stable political system has contributed Its domestic consumption potential. Its strategic location puts makes it an ideal place to invest in. Bangladesh has important natural resources, huge economic potential and government’s willingness to promote private and foreign investment make the country an excellent place for investment. Government has taken huge steps to streamline rules and regulations, provide necessary investment-friendly facilities and infrastructure, ease-up import and export regulation and set-up energy sector to attract Foreign Direct Investment. The country has a steady flow of remittances (USD $32.94 Billion according to June 2018 estimation), GDP growth rate of 7.80 in the fiscal year 2018-2019 and a healthy currency rate for foreign investor (  USD 1 = BDT 84.73).

One of the Fastest Growing Economy in the World:

Bangladesh is on the path to become the third fastest growing economy in the world in 2019 in terms of GDP according to a United Nation report. The projected GDP is 7.4% in 2019 and it is estimated that by the year 2030 it will become the 26th economic power in the world. Investment in Bangladesh has never been better as the outlook of the country’s economy is destined for great success.

Well Connected to Other Regional Country and have Great Worldwide Access: 

Bangladesh is located in the geographical location which is considered an important place for geo-economic, geo-politics and geo-strategy. Situated on the border of South and Southeast Asia, Bangladesh has close location to other potential market like Seven sisters of India and China. Capital city Dhaka located at the heart of Bangladesh is considered the most significant economic center of Eastern South Asia as it not only has easy access to neighboring countries and states but also the commercial and financial hub of Bangladesh.

The cost of Bay of Bengal is ideal for business as it has connection to both south-east and middle-east. Bangladesh now has  three Seaports: Chittagong, Mongla and Patuakhali, all located at the coast of Bay of Bengal which can be used to boast the tread deal with other region. Being strategically located between India, China and ASEAN markets, investors can take advantage the full South Asian Free Trade Area (SAFTA) and duty-free access to other major economic and developed countries like EU, Japan and India.

Attractive Incentives for Foreign Investors: 

Bangladesh Government’s business-friendly policies and environment, very good local and international connectivity and overall cost competitive structure makes it a lucrative place for foreign investment.

Government’s willingness to keep the country’s economy booming pushed to towards policies that are very beneficial to foreign investors. Foreign Investments are now welcome in almost all sectors. They provide helpful advises, guidance and powerful incentives to provide advantageous condition for Foreign Investors.

Some of the incentives Bangladesh is offering to foreign investors are:

  • BIDAhas taken significant steps to make Bangladesh one of the top countries to invest in. As it can be seen in recent World Bank’s Ease of Doing Business Index Bangladesh is consistently improving in the index. BIDA is working hard to make sure that the country remains in the double-digit position and jump up in the higher position.
  • Bangladesh Government has created task forces in consultation with each ministry and taken time-bound action plan for smooth and efficient action.
  • Importation of raw materials and machinery has been vastly simplified.
  • Foreign Investors now enjoys Tax holidays and exceptions.
  • Bangladesh Government has taken a page out of Singapore’s Government book of how to ease doing business and nearly completed the software development for the One-Stop Service Act, 2018 to deliver 150 services.
  • The Government has plan to create 100 economic zones all over Bangladesh by 20130 and 88 of them are already under construction.

All of these steps are already seeing a positive outlook. In 2018 during the January November Period FDI has risen to a sharp 32.09% compared to 2017 period. A total of  $2.84 billion FDI is invested in Bangladesh. The outlook is also positive for 2019 as it is expected $3.7 billion FDI to be invested in even though the global FDI is expected to dwindle.

Industrious, Skilled and abounded of Young Work Forces:

Young workforce is one of the main driving forces of Bangladesh’s economic growth in recent years. Young population (15-24) now constitute 53% of total population. Government’s adequate and timely investments in childhood vaccination, sanitation, safe drinking water and primary health reduce child mortality contribute to the rise of young population. In fact, , the median age in Bangladesh is just 26.0 in 2019.

Bangladesh’s highly professional, well-educated and hardworking young forces like to take challenges head on and not to mention that their wages and salaries are the lowest in the entire region. English is widely spoken in the country and the country has developed agencies that continuously cater to create highly skilled employees that are suitable to investors need. The government are also creating a huge population that are also highly skilled in technical education. Bangladesh now ranked at the top of the world as a destination for outsourcing IT and software related work. Bangladesh has 38 public universities, 95 private universities, 60 teacher training colleges and 1,143 technical and vocational institutions. The European Commission also acknowledge Bangladesh achievement by listing it as an ideal destination for outsourcing. Each year 15,000 Bangladeshi graduates get in IT firms that also includes Google, IBM and Microsoft.

To further achieve competence in ICT sector Government of Bangladesh have already created Tech Parks in Dhaka and Jashore. Bangladesh has the highest rate of Internet penetration presentation in South Asia. The total number of Internet Subscriber is 92.061 million which constitutes more than 50% of total population. The telecommunication sectors are increasing their investment in latest technology such as 4G and there are talks about starting 5g by 2020. Vast population as a consumer, skilled, competent, cheap work force open up huge potential for both online and offline business opportunities.

Competitive Labor And Energy Costs: 

Energy and labor cost are well below the world market standard. For example, the average monthly wage for garment workers in Bangladesh is approximately US$100 whereas Chinese garment workers get on average US$347. It’s not just in garment industry, in all sectors labor costs are cheaper than most of the world. Electricity and other power production costs are also low for both consumers and industrial cases. According to BIDA- In 2016-17 the per capita generation (KWH) of electricity was 351.21 and per capita consumption (KWH) was 308. Bangladesh now produces electricity that are both plentiful and cheap. Combination of both cheap labor and energy is the reason lots of investors are now moving from china to Bangladesh.

Economic and Export Processing Zones:

Bangladesh Economic Zones Authority (BEZA) is planning to create 100 economic zones all across Bangladesh. For that reason it pursuing to acquire an additional  100,000 acres of land. BEZA already acquired 75,000 acres of land and distributed the land the private sector for six economic zones. The country is also upgrading its core infrastructures like port facilities, highways and roads,  surface and water transport  for a better business environment.

BEZA recently reformed and simplify existing legal frameworks to better suited Investors need. The result is BEZA has received investment commitment over $17 billion investment in the last couple of mouths. Bangladesh Government is improving their local infrastructure, communication, transportation and tax system to boast the confidence of the investors and easy up the development of Economic Zones. The Government is now working hard to synthesize the Public-Private Partnership Authority and BEZA to facilitate and promote private-public-foreign investment in Economic Zones.   

Bangladesh Export Processing Zones Authority (BEPZA) is the official entity of the government to indorse, entice and facilitate foreign investment in the Export Processing Zones. Export Processing Zones (EPZs) are export oriented industrial enclaves which provide the infrastructure, the facilities, administrative and support services for a wide variety of enterprises. The primary objective of an EPZ is to offer special areas where potential investors would find congenial investment climate free from unwieldly procedures.

Here are other objectives for creating EPZs in Bangladesh: 

  1. i) Attracting and motivating foreign investment in these zones for the purpose of economic development of the country.
  2. ii) Expand the export of Bangladeshi made product in order to diversify the source of foreign exchange earnings.

iii) By establishing the EPZs the government can generate overall economic growth by creating commercial and industrial enterprises in a zone that specializes in export.

  1. iv) Creating EPZs also opens up opportunities to acquire advance technology and it also create lots of jobs for local people.

In Bangladesh there are currently eight EPZs :

EPZ-DHAKA

EPZ-CHITTAGONG

EPZ-KARNAPHULI

EPZ-ADAMJEE

EPZ-UTTARA

EPZ-COMILLA

EPZ-ISHWARDI

EPZ-MONGLA

Investment in EPZs are seeing Year by Year Growth: 

Year                               Cumulative Investment (Million US$)

2009-10                        1804.46

2010-11                         2117.71

2011-12                         2456.96

2012-13                         2785.49

2013-14                         3188.05

2014-15                         3594.43

2015-16                         3998.78

2016-17                         4341.26

EPZs are highly successful projects for both Bangladesh and also for foreign investors. Investors are putting their money in these sectors because it’s been a successful investment for them. 

Trade Agreements with other Nations and International Organization: 

Bangladesh has numbers of trade agreements with other nations and international organization which makes the country a safe and reliable place for investment. Bangladesh is a long time member of World Trade Organization. Bangladesh has long standing relationship with European Union. In 2001, EU and Bangladesh signed the EU-Bangladesh cooperation Agreement under which Bangladeshi made products gets preferential duty-free export. In 2019, Bangladesh is to get Duty-Free and Quota-Free (DFQF) from China. Under DFQF, almost 99% of exportable Bangladeshi products will enjoy the zero-duty benefit.

Bangladeshi Government already signed several trade deals, including SAARC Preferential Trading Arrangement, Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Co-operation and Trade Preferential System among the member states of OIC (Organization of Islamic Co-operation), South Asian Free Trade Area, Asia-Pacific Trade Agreement, Preferential Tariff Arrangement-Group of Eight Developing Countries etc. The Government is also in talk with Russia and Turkey to get preferential treatment for products made in Bangladesh.

Recent trade war between America and China made Bangladesh a safe haven for investors. Even Chinese companies are now moving some of their industry in Bangladesh in order to avoid the cross of the trade war.

Investment Protection: 

Bangladesh Government has taken multiple steps to order to ensure and protect Investment coming from foreign countries. To save foreign investors fear of losing their investment to nationalization and expropriation the country has The Foreign Private Investment (Promotion and Protection) Act, 1980. Under the law it guarantees foreign investors the protection and security it needs. The law also make sure the foreign investment enjoy equitable treatment, profit and capital repatriation as well.

Board of Investment (BOI) was established in 1989 in pursuit of the acceleration of private sector and foreign investment in the economy. The board is directly under the Prime Minister’s Office and the board has essential powers to implement policies that are indispensable for investment protection. BOI functions are broadly categorized into three groups:

Here  are some of the services BOI provides:

  • Pre and post investment information, counseling and guidance for specific investor sectors.
  • Fast track immigration policy for foreign visitors.
  • Quick and hassle-free approval of work permit for the foreign nationals
  • Facilitation of procuring utility connections and industrial plots
  • Giving guidance to import of capital machinery and raw materials etc