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Investment Opportunities In Bangladesh

Investment Opportunities In Bangladesh

Business

Investment Opportunities In Bangladesh

There are number of investment opportunities In Bangladesh for investment given its relaxed Industrial policies and sharp focus on export oriented strategy lead by the private sector. The government works as the facilitator to create an easy environment for expanding private investments both locally and internationally. The Board of Investment founded by the government was intended to attract private investments, providing institutional support and services to the investors who are willing to invest in Bangladesh. In this article we have listed down the most prospective industries of Bangladesh. 

SEE ALSO: The Key Benefits Of Investing In Bangladesh

Agriculture & Agro Products: Bangladesh is called the land of rivers and its fertile land is the ideal place to grow corps. It produces a wide range of agricultural products such as rice, wheat, corn, legumes, fruits and vegetables. Rice is the main source of food in Bangladesh. The industry already employs 47% of countries total labor force and contributes 16% to the national GDP. Exporting of certain agricultural products can also earn additional government subsidies as much as 20%. These percentage of subsidies changes every year with country’s financial budget. During 2015-2016 government paid approximately 9,000 corer in subsidies for agricultural industry alone.

Exporting Human Resources: Bangladesh is estimated to have a labor force of 7.2 corer people according to World Bank. There are many skill development institution both funded by government and private organizations to enhance skills of this massive work force. Bangladesh has been a member of International Labor Organization and maintains a close collaboration. The country already heavily depend on the remittance sent by the labor force in overseas countries and these remittance played a vital role in the country’s economic growth. Almost 5 lacs people are being exported as labor force every year.   

Ship Building: It is hard to imagine that a business as complex as building ships would be an attractive business opportunity in Bangladesh. But lately ship building industry has taken off and there are approximately 100 shipyards building massive ships and vessels. The country has already exported ships to owners from Denmark, Germany, Netherlands and Finland. Germanischer Lloyd declared Bangladesh as a shipbuilding nation of the international standards. The country has 1 lac skilled and 1.5 lac semi skilled labor forces to support this growing industry and most importantly, 70% of the materials that goes into building a ship can be sourced locally. Up to 20% government subsidies were available for ship exporters in 2013.

Renewable Energy: Bangladesh has been working with renewable energy methods for quite a while now and has been successful in generating power from bio gas, hydro power, solar and wind so far. 40% of countries population lives in rural and urban areas who do not have access to the national grid and will eventually need to rely on alternative power sources. Solar has great potential as the isolation in Bangladesh averages 5 kwh/m2/day. Tidal power is also a lucrative method of generating renewable energy especially in the coastal areas. Government recently announced that a private company, producing 100 kilowatts to 5 megawatts of renewable energy can sell directly to the national grid and they will be ensured guaranteed profit.    

Tourism Industry: Tourism in Bangladesh is a rapidly growing industry, contributing 5.4 Billion USD and forecast to rise by 6.2% in 2017 according to WTC. Bangladesh has the world longest sandy sea beach stretching over 150 km located in Cox’s bazaar and the largest mangrove forest called Sundarban. 1.8% of the countries labor forced are directly involved in the tourism industry and the number is growing exponentially. Investment in this sector can enjoy duty free imported equipment to establish hotels and resorts.  

Information and Technology: In recent years Bangladesh has experienced a tremendous growth in the ICT industry. Since the launch of 3G network the Internet penetration grew by 22% with almost 30 Million active Internet users. The country has set a goal to build a digital Bangladesh by the year 2021. The association for software industry known as BASIS actively initiate policy framework to grow this industry to help achieve this 2021 vision. Government has built massive infrastructure to support this growth. Investor in this industry can enjoy 7 years of tax holidays and no V.A.T is applicable.   

Semi Conductor Manufacturing: Bangladesh has almost 130 Million mobile phone subscribers according to BTRC. Given the market size, it is a heaven for large phone manufacturers. Some companies are already manufacturing phones and other electronic appliances in Bangladesh where semi conductor is a vital part. World bank has funded engineering universities to develop engineers to support this industry.

SEE ALSO: How To Start A Business Entity In Bangladesh

RMG/Textile Industry: Bangladesh is the second largest RMG exporting nation in the world, exporting around US$28.1 Billion worth of products. The country has numerous international trade deals to support this industry. Government has implemented many policies and built infrastructure for the RMG sector. 5% cash subsidies are available on the export of textile products. Bangladesh garments manufacturers and exporters association is one of the most influential associations of the country. BGME also established it’s own institution to develop skilled labor to support its growing demand. Recently an agreement, Bangladesh Accord 2018 was signed by the major international brands and trade unions to regulate this industry to ensure maximum safety for the garment workers.   

Pharmaceuticals Industry:  The pharmaceutical industry is slowly becoming a powerful business sector in Bangladesh. The industry is currently contributing one percent to the total GDP but has huge potential for future expansion. Domestic health care expenses are currently three percent of total GDP, offering substantial opportunity for domestic pharmaceutical sales in addition to exports. Increased education levels, enhanced awareness of health care, growing per capital incomes, the emergence of private health care services and the government’s expanding public expenditures in this sector continue to stimulate a rise in demand. Bangladesh’s pharmaceutical industry is protected from external competition, as imports are restricted for similar type of drugs to those that are manufactured locally. The World Trade Organization’s trade-related aspects of intellectual property rights agreement allows Bangladesh to reverse-engineer patented generic pharmaceutical products to sell locally and export to markets around the world. This is essentially turning Bangladesh into an affordable and high-quality generic medicines producer with exports to potentially more than 85 countries across the world.  

Plastic Industry: Currently the per capital consumption of plastics in Bangladesh is 5 kg per year as compared to the world average of 20 kg. There is a huge potential market and growth of Plastic industry in the country. Plastic-based products currently represent a size able industrial sector in Bangladesh. The current market size of plastic and plastic products is around 1 Billion USD with majority 714 million USD in the domestic market. The availability of cheap labor and the rapidly developing plastic wastes recycling industry due to rising cost of petroleum provide Bangladesh a potential advantage of competitiveness in the global market. 

Jute Fiber and Jute Products: Bangladesh used to be one of the leading jute producers of the world enjoying the monopoly of jute and jute goods in the global market during seventeenth century. At present the country produces approximately 6 million bales of raw jute annually out of which 50% are exported and the rest are consumed by the local jute mills. The future prospect of this eco-friendly natural fiber is expected to grow with effective support from the governments of the producing countries adopting new policies like banning synthetic packaging materials and enactment of regulations favorable towards its cultivation, diversification and marketing. Jute products are once again gaining global demand and the industries are producing shopping bags, shoes, composite materials, geo textiles, home textiles, handicrafts, gift items, pulp and papers etc. 

Leather Hide and Leather Products: Leather industry in Bangladesh is the second largest industry contributing 4% to the countries total earning from export. Total global market size for leather and leather products are worth 215 billion USD and Bangladesh only accounts for 0.5%. Bangladesh produces 300 million square feet of leather each year and the industry has been growing 25% each year for over the last 5 years. The country also enjoys tariff and quota free access to European, Canadian, Japanese and Australian market. Government has recently reallocated the largest tannery of the country to a new location in Savar, in order to enhance quality, compliance and competitiveness. Investment in this sector can ensure high return of investment as most of the raw materials for leather goods can be sourced locally.     

Light Engineering and Electronics: The prospect of significant cost reductions for companies sourcing electronic components for global market make Bangladesh a compelling choice for foreign investors.  The light engineering industry in Bangladesh continues to grow each year. This labor intense industry produces a diverse range of items, such as machinery parts, plant machinery, small tools, toys, consumer items and paper products for the domestic market. Entrepreneurs from China, Japan and South Korea have already taken advantage of Bangladesh’s cheap and easily trainable work force to manufacture products for the export market. The relative skill and low-cost of Bangladeshi labor in this sector offers companies great returns on investment. The government of Bangladesh is also paying increasing attention to workers’ rights and safety, measures which, implemented correctly, will help to boost international demand for items manufactured in Bangladesh.

Furniture Manufacturing Plant: The furniture industry has been experiencing a steady growth over the last 6 years and the domestic market is exhibiting an upward trend. Furniture industry in  Bangladesh initially developed as a cottage based industry later transformed in to mechanized mass production oriented industries in the last decade. The industry now produces international standard furniture from wood, processed wood, melamine board, Medium Density Fibre Board (MDF), particleboard, steel etc. Availability of good quality timber from Chittagong Hill Tracts and Sundarbans and access to cheap labor force makes it a lucrative industry to invest in. 

Frozen Fish Industry: Bangladesh is the land of rivers and exporting fish has played a vital role in earning foreign currencies and created employments for the national economy. The country has been exporting shrimp for decades and It is being called the white gold of Bangladesh. Bangladesh is currently the fourth largest producer and exporter of shrimp in the global market. In recent years, there has been growing demand for other frozen fish such as Pangasius and Tilapia and also been exported from Bangladesh as frozen fish fillet. Food and Agricultural organization work closely with local fisheries ministry in order to enhance this industry in Bangladesh in order to meet the world food demand. Government also encourages investment in this sector through different cash subsidies for export.

Tea Industry: Tea is the most consumed beverage in the world right after water and Bangladesh has been producing premium quality tea since 1800 century. The countries hilly areas and required rain fall for tree plantation makes Bangladesh an ideal place for tea production. The country currently produces around 80 million kg per year which is sold in auction to retailers. The domestic tea consumption has grown so much that the country had to import tea to cater for the domestic needs. There is a huge opportunity in this sector as domestic consumption is rising by the minute and the government is investments and expertise to produce more tea to meet domestic demand.    

Ceramics: The ceramics industry is a sector in Bangladesh. The industry currently produces tableware, sanitary ware and tiles. Bangladesh currently exports around US$40 million worth of ceramic goods after meeting the domestic demand. The main export destinations are the Europe, USA and the Middle-East. White clay deposits which is the main raw material for ceramic have been discovered in the regions of Mymensingh, Sylhet and Netrokona. The largest deposit was found at Bijoypur of Mymensingh which was discovered in 1957. The ceramics industry sector has attracted many foreign investments mainly from China and the Middle East. There are major competitors like China and Thailand in the international market for Bangladeshi ceramic manufacturers. However, the cheap labor costs of the local manufacturers has put Bangladesh in a strong position.

Tissue Grafting and Bio-Technology: Bangladesh being an agricultural based country, it has huge potential to use bio technology to enhance its agricultural production. The country has not yet to explored this industry to its full potential. Genetic transformation has been implied on rice and jute to increase resistance to fungus but there are many other sectors that can rip the benefit of this new emerging technology. The potential sectors where bio technology can be applied are animal biotechnology, aquaculture, insects, food, medical, pharmaceutical and for the environment. 

Cosmetic and Toiletries: Bangladesh cosmetics and toiletries market size is around 4000 corers BDT. Locally produced toiletries started to play a significant role in a sector that has been largely dominated by imports in the past. Most of the products in this sector are consumer goods which have a large demand in the domestic market. Imports of cosmetics and toiletries are targeted mostly to the middle and high-end segments of the market. Most of the local customers are quite happy with the domestic products as long as product quality is satisfactory and the price is reasonable. Most of the manufacturers focus primarily on meeting the demands of the local market and some companies have started exporting cosmetics and toiletries products from Bangladesh. All most all the toiletries manufacturers have experienced steady growth for last 10 years and slowly making it to the global markets.  

Kepler Staff of Publishers and Correspondents. Kepler is the leading online information and entertainment site in Bangladesh. We focus into the most important stories that are shaping our country. We add critical perspectives to these stories through rigorous reporting, detailed analysis and expert commentary by our in house correspondents.

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