Bangladesh

Economic Overview

The country’s economic growth, which has been stable for several years, is driven by wire transfers from emigrant workers and by revenue obtained from the exports clothes. Even though the country was little affected by the crisis, the IMF and the World Bank’s predictions on the economic growth for the coming five years (around 6%), indicate that this is insufficient performance to get the country out of extreme poverty.

In December 2010, the government has signed an accord with the IMF, which should lead to a three-year program under the IMF’s Extended Credit Facility. The general aim of the program is to accelerate growth in order to reduce poverty and attain the level of a medium-income country within the next decade. Fiscal reform, promotion of public-private partnerships and a reinforcement of the financial system are its main priorities.

Bangladesh’s economy is based on its extensive human resources, its rich agricultural land, and its abundant water resources. The country has substantial reserves of natural gas, which constitute the bulk of the revenue. Factors that fuel domestic demand are agriculture and industrial investments in the private sector. Rapid population growth, general political strikes, poor infrastructures, weak financial system and inefficient public sector, as well as a resistance to exploiting the country’s rich natural resources and a limited availability of capital, are all factors restricting economic growth.

FDI in Figures

Foreign direct investment has been rising since 2001 but remains structurally weak (1% of the GDP).

Foreign investors often find that ministries demand unnecessary licenses and authorizations. Added to these difficulties are problems caused by the uncertainties linked to criminality, poor infrastructures, inadequate commercial laws and courts, not honouring contracts and policy instability (decisions taken by previous governments are overturned when a new government comes into power). The difficulties in attracting foreign investment also result from Bangladesh’s image as an impoverished and undeveloped country, subject to frequent and devastating natural disasters.

The country’s main strengths are its strategic geographical position between South and South-East Asia, the potential of its consumption market and its natural resources.

FDIs are generally oriented towards the sectors of telecommunications and textile and energy industry. By far the main investor is Egypt, followed by the United Kingdom, U.A.E. and Malaysia.

Foreign Trade Overview

Bangladesh is open to foreign trade, which represents around 50% of the GDP.  Customs duties in Bangladesh are relatively high, however, the country is implementing a series of measures including concessional tariffs, a customs duty recovery system and export processing zones, in order to reduce these barriers.  Besides high import duties, the other hindrances to the country’s development are the low quality of transport and communication infrastructures, an unreliable energy supply, and a lack of skilled manpower. Corruption remains a serious obstacle to efficient business operations. Financed by international aid and wire transfers from emigrants, traditionally, the country has shown a significant trade deficit. This trend should continue in the coming years.

The country’s main trade export partners are the European Union, the United States and China. The main export products are clothes, unprocessed hessian and its derivative products, leather, fish and frozen seafood. Bangladesh mainly imports machinery and equipment products, medication, iron, steel, textile, petroleum products, food and cement, from china, India, Kuwait, Singapore and Japan.