Bangladesh: South Asia’s investment hub
Friday, 24 June 2011 Author / Source : Srimal Fernando
Bangladesh boasts a rich history dating back to two thousand five hundred years or more. Historically, Bangladesh has earned its reputation by being at the crossroads of many cultures. It is one of the most vibrant and dynamic countries in all of South Asia. The country has received a great deal of attention lately. The nation has transformed from a traditional agricultural society to a progressive and industrialized state. The country’s main endowments include its vast human resource base, rich agricultural land and its relatively abundant water. The economy of the country is named amongst the ‘Next 11′ club after the G20 countries. The economy of the country is expected to grow between 6 and 7 per cent in the next few years and benefits from the most favored nation status from the United States. Bangladesh has a population of 156 millions (2010) of which 18.6 percent are engaged in agriculture, 28.6 in industry and the balance 52.8 in the service sector. According to the Bangladesh Bureau of Statistics (BBS), the per capita income rose to $818 in the fiscal year 2010-2011. The country is close to graduating from least developing country status to a developing one. During the last 20 years, there was a marked improvement in the lives of the masses of Bangladesh. Bangladesh enjoys historic ties with neighboring South Asian countries and is a member of SAARC (South Asian Association for Regional Cooperation) and BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical & Economic Cooperation). The country pursues a moderate foreign policy that places heavy reliance on multilateral diplomacy. Investors will find that the cost of salaries and wages in Bangladesh is very much lower than in the neighboring countries.
The skilled, semi and unskilled labour force in the country is considered to be the country’s main asset. There are large numbers of Bangladesh expatriates working and living abroad and contribute to the economic development of the country. The remittance from Bangladeshis working overseas, mainly in the Middle East, is a major source of foreign exchange earnings. The country has the basic attributes for successful agro-based industries, namely rich alluvial soil, an adequate water supply and abundance of cheap labour. Mechanization of agriculture has played an important role in increasing the farm production. Present and previous governments from time to time have introduced a range of incentives to enable farmers to boost their production and increase output.The land is devoted mainly to rice and jute cultivation as well as fruits and vegetables products. The country has an exclusive economic zone of 41,000 square miles (110,000 km2). More than 80 percent of the animal protein in the Bangladeshi diet comes from fish. The fishery policy of Bangladesh is steered towards increasing fish production with modern cold storage facilities. It enabled improvements in the fish processing sector in the country.
The traditional fishing industry or “artisan fishing” is a term used to describe small scale fishing practices, particularly using traditional techniques. Exports of garments and textiles are one of the main sources of foreign exchange income for Bangladesh. In 2009, the value of apparel exports stood at 2.66 billion dollars. The industry employs nearly 3.5 million workers. Cement is another rapidly expanding $1.2 billion industry. Despite having more than thirty active players inclusive of local and multinationals, the market is dominated by few companies. Pharmaceuticals are another important industry in Bangladesh having approximately 200 companies in the country. The value of the market is $825 million. In Bangladesh, the pharmaceutical industry has a growth rate of 18.41 percent. The unique feature of this sector is that it takes care of about 97 percent of the country’s pharmaceutical needs. Also, ship building has become a major force for the rapid growth of the GDP. The country has an estimated natural gas reserve of 195.4 billion cu m (2010 estimates). The other major industries in the country are cotton textiles, jute, tea processing, leather, paper and newsprint, chemical fertilizer, light engineering and sugar cane. The burgeoning high end industries based at the eight Export Processing Zones of the country including Dhaka and Chittagong yield many opportunities for investment. At present, around 300,000 are employed in all EPZs of Bangladesh. As of September 2010, the Bangladesh Telecom Regulatory Commission has reported that there are 65.14 million mobile phone subscribers in the country. It is further estimated that there are 4 to 4.5 million internet users. The government’s vision is to provide electricity for all citizens by 2021. New power plants having capacity to generate 12,000MW of electric power will be built in the next five years and it will be raised to 20,000MW by 2021 to provide electricity to all citizens. The tourism sector in Bangladesh which had an astounding success story is entering a new track with fresh dimensions. The geographic diversity of Bangladesh gives the country a rich diversity to its wild life and to rich archaeological heritage sites.
Bangladesh is indeed a shopper’s paradise with a rich tradition of handicrafts, often available at affordable prices. The country is famous for its natural pink pearls, silk fabrics, leather goods, cotton, silk and jute. Brassware also receives deep appreciation from the buyers. A study called ‘Bangladesh Tourism Vision 2020′ forecast that tourist arrivals to Bangladesh are likely to exceed 1.30 million. Considering its geographic location in South and South East Asia and having a large domestic market with a growing middle class, competitive labour market and flexible labour laws with stable inflow of remittances with a comfortable balance of payment situation the country should be your next place of investment.
The contributor recently visited Bangladesh at the invitation of the Ministry of Foreign Affairs. He is a journalist and a senior representative of the non-governmental sector in Sri Lanka.
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