Investment Investment Bangladesh
Bangladesh offers an unparalleled investment climate compared to the other South Asian economies. Here are eight key pointers to Bangladesh’s investment climate today.
- Bangladesh is a largely homogeneous society with no major internal or external tensions and a population with great resilience in the face of adversity (e.g. natural calamities).
- Bangladesh is a liberal democracy. The population of this country irrespective of race or religion have been living in harmony and understanding for thousands of years.
- Broad non-partisan political support for market oriented reform and the most investor-friendly regulatory regime in South Asia.
- Trainable, enthusiastic, hardworking and low-cost (even by regional standards) labor force suitable for any labor-intensive industry.
- The geographic location of the country is ideal for global trade, with very convenient access to international sea and air routes.
- Bangladesh is endowed with abundant supply of natural gas, water and its soil is very fertile.
- Although Bengali (Bangla) is the official language, English is generally used as a second language. The majority of the educated population can read, write and speak in English.
- As a result of low per capita GDP, present domestic consumption is not significant. However, it should always be considered that there exists a middle class with over 10% of the population. As economic growth picks up, the purchasing power will also grow substantially.
Bangladeshi products enjoy duty free and quota free access to almost all the developed countries. This access to the global market is further helped by the fact that the policy regime of Bangladesh for foreign direct investment is by far the best in South Asia. Most Bangladeshi products enjoy complete duty and quota free access to EU, Canada, Australia and Norway. Though in limited scale, Bangladesh products already found their access with lower duty in the markets of Thailand, India and Pakistan. However, talks are underway with China, Russia, Malaysia and other neighbouring countries in this regard.
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Bangladesh Export Competitiveness
Bangladesh, despite being a least developed economy, has a proven record in export competitiveness. Here is a summary of the facts. From 2003 to 2007 Bangladesh achieved annual export value growth of 19.6%, a testimony to its export competitiveness. Whilst not wishing to be complacent, and being mindful of difficult global trade conditions in 2008-2010, these positive trade differentials are likely to be with Bangladesh well into the future.
Competitive Cost Base
In January 2010, JETRO conducted a comparative survey of investment related costs in 29 major cities and regions in Asia. The following comparison is based on that survey with some selected cities. Bangladesh offers a truely low competitive cost base.
Wages and salaries are still lowest in the region, a strong business advantage. Yet this is an increasingly well-educated, adaptive and peaceful population with many skilled workers.
- Dhaka’s skilled labor cost base is still less than the other major cities.
- Dhaka’s management grades are 2-3 times less than in Singapore, Shanghai, Bangkok.
- Industrial estate rent in Dhaka is cost effective than Shanghai, Jakarta, Bangkok.
- Office rents are also very competitive with other international cities.
- Dhaka’s housing rent for foreigners are less expensive than Singapore, Mumbai, Karachi, Hanoi.
- Cost of diesel in Dhaka is found to be more competitively priced than most other large cities.
- Vehicles increasingly use LPG as Dhaka gasoline costs are competitive with most other cities.
BOI notes that the figures are not absolutes, but serve as a guide. Whilst the actual costs vary each month the general trends remain similar. No precise figures are shown with the graphs because they are only a ‘snapshot’ of costs on the day of survey.
Bangladesh offers some of the world’s most competitive fiscal non-fiscal incentives. BOI can advise further on this matter. In summary and in most cases, these amount to the following: Remittance of royalty, technical know-how and technical assistance fees. Repatriation facilities of dividend and capital at exit. Permanent resident permits on investing US$ 75,000 and citizenship on investing US$ 500,000.