Ferdausur Rahman, Barrister (Lincoln’s Inn) and Partner, A.S & Associates highlights the business opportunities in the fast growing economy of Bangladesh.
Bangladesh is a booming economy, recently making the list of low-middle income countries as per the World Bank. According to the IMF, the Bangladeshi economy is projected to grow from $180 billion to $322 billion by 2021. The rate of GDP in 2015 was $195.1 Billion and the gradually escalating growth rate was 6.6%. High-growth domestic markets, government support, lower valuations of takeover targets and ready access to capital have provided unprecedented opportunities for investors all across the world to explore new market in Bangladesh. Bangladesh is already one of the leading FDI targets in the Asia Pacific.
In the last six years, net FDI inflows into Bangladesh have grown enormously, hitting $2.2 billion in 2015. China alone, as per the Chinese ambassador to Bangladesh, is planning to increase the Chinese FDI in Bangladesh by 50% in the coming years. The Government has taken initiatives for developing the infrastructure of the country through Public Private Partnership (PPP) to sustain the growth in the economy.
Bangladesh has the third largest capital market of South Asia with two full-fledged automated stock exchanges, hosted on computer based trading system. Consequently, the country is seeing more and more of direct foreign and local investments in different corporate sectors and in the capital market.
The increased need of investment is facilitated by various legislations, development of infrastructure through Public Private Partnership and supported by multiple commercial banks, financing corporations and NBFIs (As per Bangladesh Bank’s report, there are 56 scheduled banks, 4 non-scheduled banks and 31 Financial Institutions and 9 Foreign Commercial Banks are operating in Bangladesh). Furthermore, tax holiday for new businesses has been given and special Economic Zones (EZs) have been established to facilitate the business growth.
Bangladesh has 1, 66,000 sq. km area of sea, abundance with living and non-living resources and has more than 200 rivers all around the country, with a total length of about 22,155 km, which occupy about 11% of total area of the country. Major export and import of Bangladesh (about 85%) depends on the ports. To facilitate the process, the Government has installed a new Deep Sea Port on the Bay of Bengal, in addition to the two previous Ports.
The Government has given highest priority to the power sector development in Bangladesh and is committed to make electricity available to all citizens by 2021. The Government has initiated implementing reform measures in the power sector, including significant development programs. As of April 2016, total installed generation capacity was 12,339 Megawatt (MW) including 6,440 MW in the public sector and 5899 Megawatt in the private sector. According to the Power Sector Master Plan, installed capacity will rise to 30,000 MW by the year 2021. To reach this goal, the Government is facilitating establishment of multiple LNG, Coal, Solar and Wind based power plants on BOT or BOO basis.
In the Real Estate Sector, the number of registered members of Real Estate & Housing Association of Bangladesh (REHAB), an association for the real estate developers, have increased from 11 in 1991 to 1151 in 2016. Each year approximately 9,000 to 10,000 units of apartments and approximately 5,000 to 6,000 units of plot are being delivered by these Real Estate ventures. Hand in hand, the Tourism and Hospitality sector is growing as well. International brands are opening their hotels and resorts in Bangladesh.
Telecom sector has seen mobile penetration growth that has exceeded all expectations and gradually brining the Government’s vision of DIGITAL BANGLADESH into reality. In recent years, the Telecommunication Sector of Bangladesh has seen some bold moves from the operators and the regulators, including merger of two of the leading providers and takeover of one operator by a foreign operator. Telecom sector is having transformative impact on the economy in terms of aggregate investment, Foreign Direct Investment and productivity levels. The Government of Bangladesh has revisited its taxation policy for mobile telecommunication industry for creating opportunity for them to reach out to poor population of rural Bangladesh. Such decision will surely attract more investment by the telecommunications operators. The government is planning to accelerate the process of introducing new telecommunication technologies (e.g., 4G, LTE) in the telecom sector through transparent licensing system within shortest possible time.
Within the Health Sector, Bangladesh’s pharmaceutical industry was valued at about $1.5 billion in 2013, expected to grow at more than 3 times the rate of GDP growth. Based on IMF World Economic Outlook GDP projections and a GDP/Pharmaceutical ratio of 3.3 percent the pharmaceutical industry growth rate is expected to be 23% for the next 10 years, with revenues reaching $4 billion in 2016 and $9 billion by 2020. In 2015, to expand the horizon of this sector, the Government issued permission for establishing the first ever Clinical Research Organization in Bangladesh.
Truly Bangladesh has become the new destination for the investors. The country should be an excellent place for the potential investors to explore and the development of the country should be an exciting thing to watch.
