Posted on 16th Sep 2024 08:38:21 PM Marketing
Introduction
Bangladesh is a developing country where about 80 percent people of total population deal with poverty life. Mainly agro based this country fight with several natural disasters. But, its people has the determination to develop their life through heavy labour. They try to make up the loss of various countries in a short time though there are a little opportunity and possibility of getting desired elements such as fertilizers, bio-fuels, pesticide or ever modern technology. In this situation, they need a support by getting more investment to change and develop their life, in all sectors basically in agriculture. They have the possibility to reach in development cultivation with a little help.
Research Design
The private sector is dominated by export-oriented garment and knitwear manufacturing, accounting for 70 percent of exports. This market has become extremely competitive since the dismantling of quotas in 2005, but exports continue to grow. The power and energy sectors (natural gas and coal) are also important potential areas of private investment; major . international energy and mining companies have largely withdrawn from exploration and development due to the limited size of the local market and the government's policy of not allowing gas exports. There has been renewed interest in coal and power development recently, with sponsors seeking IFC support, in view of the major social and environmental issues involved.
Poor governance, inadequate infrastructure, and social and political instability have raised the costs of doing business to very high levels. Corruption has hampered investment in power generation capacity, leading to increasing shortfalls in power supply.
Bangladesh's economy is extremely resilient to adverse shocks such as the expiry of the Agreement on Textile and Clothing at end-2004, flooding, and the problems created by poor governance and corruption. The new caretaker government, backed by the military, appears to have restored a degree of confidence. The government's and central bank's growth forecast of 7.0% appears optimistic however, a more conservative forecast for growth in FY06/07 is 6.0%. Prices have risen in recent months, with inflation at 7% pa.
The practice of subsidizing fuel is a threat to the public finances and price stability. Other risks that could cloud the outlook are the possibility of renewed flooding; a slowdown in the US and the EU, Bangladesh's main export markets for clothing; and failure to solve the power crisis and secure foreign direct investment.
Sample Design
Bangladesh achieved its independence in 1971. Since that time, the country has gone through several major policy changes regarding the ownership and control of industries with a view to promoting economic growth. One of the strategies the Government of Bangladesh (GOB) followed to accelerate economic growth was to attract foreign direct investment (FDI) into the country. Immediately after the independence, the Government obtained control of a large number of industries abandoned by non-Bangladeshi owners. Through the Nationalization Order of 1972, all key industries including jute, cotton textiles and sugar were vested upon the public sector. The wholesale nationalization of industries resulted in a low growth of the economy. The Gross National Product (GNP) per capita of the country grew at an average annual rate of 0.4 per cent until 1985 compared to 3.8 per cent for the group of "low income countries" (The World Development Report, 1989). The low growth performance of the economy put pressures on GOB to privatise major industries and to undertake economic reforms. As Karim (1996) mentions, external pressure from donors had a significant impact on the Government's investment policy. As a result, the GOB has taken a number of measures to attract FDI including the establishment of the Board of Investment (BOI) and wide publicity in foreign countries. Many believe that GOB has maintained an over-valued exchange rate in order to attract FDI. These policy changes, along with other traditional factors (such as financial, political, regulatory and tax risks) have significant impact on foreign direct investment (FDI) in Bangladesh.
Investment Area
Investments in areas of manufacturing and services are welcome. Investors are free to choose fields of investment. However, from the point of view of comparative advantage, the following are potential areas for investment.
Textile Export market of US$ 2 billion from the garments sector and large domestic market. Infrastructure Energy, telecommunication, oil & gas, ports, highways and bridges.
Agro based Industry Dairy & poultry, processing of fruits & vegetables, shrimp, fish culture and processing, shrimp feed plants etc.
Leather & leather products Wet blue leather, crust and finished leather, footwear and other leather products.
Labour-intensive Industries Electronics, data processing & software development, electrical goods & accessories, light engineering goods, toys, jewelry and others.
Communication Facilities Adequate sea, rail, road and air services facilitate both domestic and international transportation.
Telecommunication Internet, telex, fax, international direct dialing services and e-mail facilities.
Traditional Export Items Raw jute, jute manufacturers, (hessain sacking, carpet backing, carpets), jute products, tea, leather, leather products, etc.
Non-traditional Export Items Ready-made garments, frozen shrimps / prawn and fish, newsprint, urea fertilizer, furnace oil, naphtha newsprint, paper etc.
Principal Import Items Wheat, oil seeds, crude petroleum, raw cotton, edible oil, petroleum products, fertilizer, cement, staple fibers, yarn, iron and steel, capital goods and machinery etc.
Banking and Financing Bangladesh offers adequate banking facilities to the investors for establishment of industries and to facilitate their business transactions. 14 private and 13 foreign commercial banks, 10 financing institutions and 3 nationalized commercial banks having network of correspondents and branches operating all over the country and abroad. Export Processing Zones: Export Processing Zones in the port city Chittagong and capital city Dhaka with necessary fiscal and infrastructure for export oriented enterprises. Another Export Processing Zone, near the capital city (at Gazipur) is under implementation.
Courtesy Service Board of Investment extends courtesy service such as airport reception, hotel & transport booking and fixing appointments with the Government and Chamber officials in accordance with the needs of foreign entrepreneurs visiting Bangladesh. For availing courtesy service, entrepreneurs need to contact BOI in advance.
Conclusion
The report focuses on the investment climate environment in Bangladesh, as it has evolved in time, across locations, and in international comparisons, and outlines policy options for further progress.
Bangladesh has recorded impressive economic and social gains since the 1990s. Recent growth has been at levels close to six percent. The country has doubled per capita growth and taken large strides toward reaching many Millennium Development Goals (MDGs), ahead of many comparable countries. Attainment of the MDGs calls for accelerating economic growth of 6-7 percent a year.
Improving investment climate is core to accelerating the economic growth - to aid diversification into areas of comparative advantage and to finance infrastructure - and higher productivity. Substantial improvements in the investment climate is achieved by improving trade policies, enhancing the legal and regulatory environment for the private sector, developing an effective competition policy, establishing policies friendly to foreign direct investment, and deepening financial sector reforms. Addressing labor skills with due regard to education and social issues is critical to improving productivity. Improvements in the policy environment for energy development are central to this effort, by strengthening the institutional framework, addressing distorted pricing, and encouraging accountable and transparent processes for investment decisions. Equitable growth and empowerment of the poor further call for strengthening of high-growth rural and peri-urban areas with natural potential, via services and infrastructure provision to such promising growth poles.
The structure of the Bangladesh economy had been moving away from agriculture, into industry and services. Rising incomes in Bangladesh are spurring consumerism, which is further fuelled by urbanization and remittances. The services sector is growing fast, represents 52% of GDP and is the largest source of employment for women; yet it faces a more adverse investment climate environment, as compared to manufacturing, and has not been a focus for policy measures.
Business in urban and rural areas displays vastly different characteristics, strengths, and issues. This divergence is equally reflected in investment climate conditions. Growth in peri-urban areas, small towns, and villages would benefit from better connectivity with metropolitan areas, not only in terms of transport and telecommunications, but also deeper market, financial, and information linkages.
The external sector has been strengthened by continued robust performance of exports and remittances, and further growth would rely on successful improvements in quality and safety standards, labor and management skills. Private sector investment has been maintained at 16.4%, though higher levels are needed to reach growth rates of 7-8%. Increased investment
domestically would depend on the ability of the financial system to fulfill its term transformation role. FDI net flows are below potential at 1.3%; higher foreign capital flows will be attracted via further improvements in infrastructure, governance, and the regulatory environment.
The current global financial crisis has dried up global liquidity, curtailing growth and international trade, and drying up international capital flows, including from emerging stock markets. Developing countries have not only seen considerable short term capital outflows, but are expected to see decreasing exports to the developed countries, and lower remittances from abroad. Bangladesh is in more robust shape than most, to handle the financial crisis aftermath, though it will nevertheless see some export and remittance effects. With turmoil abroad, it becomes even more important to focus on investment and development at home, improving the domestic investment climate so as to enable rapid private sector growth to exert its stabilizing effect. We at the World Bank are monitoring the evolving situation as well as the effect on the developing countries very closely, and stand ready to assist Bangladesh when needed.
Productivity growth during the period 2003-2007 was below its potential, as scarce resources - land, skilled labor, capital, and energy - did not find their way to their most productive uses. For example, whereas most resources are channeled to larger and older firms, analysis shows smaller and younger firms to be more productive in spite of more adverse investment climate conditions. Greater dynamism and competition within industrial sectors would spur innovation and technology and ICT investment, and create pressures for improved labor skills, as the private sector strives for productivity improvements.
With sustained growth, the scarcity of certain resources (energy, finance, land, labor skills) has started to strain the economy's growth and productivity gains. It is important to address and unblock those bottlenecks in basic resource markets, allowing for the economy and development of Bangladesh to forge ahead in a rapid, robust, and socially equitable manner.
Let me conclude by saying that there are many lessons that can be learned from this important study. I am looking forward to today's interesting and productive discussion and exchange of experiences, which will ultimately enable the policy makers, and eventually the investors to benefit from this undertaking in contributing to the promotion of stronger investment climate and, in the process, help the nation to grow steadily.
Investment, Climate, Manufacturing, Infrastructure, Energy, Telecommunication, Oil, Gas, Ports, Highways, Bridges, Dairy, Fruits, Vegetables, Jute, Tea, Leather, Poultry, Ready-Made, Garments, Textile, Export, Market, Bangladesh, Research, Proposal, Foreign, Direct, Investment, FDI, Gross, National, Product, GNP
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