Bangladesh, traditionally known for jute and tea exports,
has recently attracted world- wide attention for readymade
garments and leather exports. Bangladesh foresees an
expansion of her agricultural sector, as well as increased
diversity in non traditional industries and business.
Below is a short account of a few potential investment
*130 million population
*50 million civilian labour force *trained and educated
workforce at low wage rate *sizeable domestic market
*political stability *steady growth of GDP * stable
rate of exchange *low interest rate *low rate of inflation
*comfortable foreign exchange reserve.
Bangladesh is a land of nearly 112 million people with
annual per capita income of US$ 386. Clothing being
the second basic need there exists a vast market for
textile products in this country.
The readymade garments (RMG.) is the manufacturing success
story in Bangladesh from US$ 7.00 million in 1981-82
to US$ 1949 million in 1995-96 and from 11% to 50% of
total export earning during the period. Only knit fabric
for the knitted garments and hosiery are domestically
produced. But the predominant raw materials for readymade
garments are woven fabrics, most of which are now imported.
Due to lack of quality woven fabrics required by buyers,
the readymade garments sector in Bangladesh had to import
a total of 2.5 billion linear yards of fabrics in 1995.
The projected fabrics demand for the RMG. industry for
1996 is around 2.85 billion yards light woven, heavy
woven and mixed woven 2.38 billion yards, and knit 0.47
billion yards) Currently 240 readymade garments units
spend approximately 65% of their export earnings on
import of fabrics.
It is estimated that in order to meet the demand gap
by the year 2000 additional investment in 156 spinning
mills (each having 25000 spindles), 371 weaving mills
(each having 300 shuttles or 120 shuttles looms) and
371 dyeing, printing and finishing units (each having
production capacity of 10 million meters annually) will
be required to setup.
There is already a substantial domestic leather industry,
mostly export-oriented. The leather includes some readymade
garments, although that, aspect is confined mainly to
a small export-trade in 'Italian made' garments for
the US market. Footwear is more important in terms of
value added, accounting for just over US$ 4 million
exports in FY 1992-93. The figure raised at US$ 22.77
million in FY 1996-97. This is the fast growing sector
for leather products. Bangladesh produces between 2
and 3 percent of the world's leather market. Most of
the livestock base for this production is domestic which
is estimated as comprising 1.8 percent of the world's
cattle stock and 3.7 percent of the goat stock. The
hides and skins (average annual output is 150 million
sq.ft.) have a good international reputation. Foreign
direct investment in this sector along with the production
of tanning chemicals appears to be highly rewarding.
Having the basic raw materials for leather goods as
well as for the production of leather shoe, a large
pool of cheap but trainable labour force together with
tariff concession facility to major importing countries
under GSP coverage Bangladesh can be a potential off
shore location for leather and leather products manufacturing
with low cost but high quality.
The frozen fish export sector is the second largest
export sector of the country with annual turnover of
US$ 321 milion (17.05 M.Lbs) in 1996-97. The average
annual growth rate is 28%. This 100% export oriented
industry includes the following sub-sectors which need
proper attention for augmentation of production and
Hatcheries-sustainable aqua-culture technology-feed
meals plants-processing unit for value added products.
Foreign investment with technology in this potential
sector has been recognised as most viable areas in Bangladesh.
This sector has various incentive for foreign investment/jointventure
in one of the above mentioned areas or may be under
a composite project with potential high return.
Bangladesh is one of the leading producers of jute in
the world. At present the annual production is 890,000
MT. In 1996-97 Bangladesh exported raw jute worth US$
116.32 million and jute goods worth US$ 317.86 million
in the form of sacking hessian. carpet & carpet
backing cloth, jute yarn/twine etc. This is one of the
very prospective areas for investment with higher technology.
Oil and Gas
Bangladesh has an estimated gas reserve of about 23
TCF. Out of this about 14 TCF is considered recoverable.
So far 57 wells have been drilled in 19 discovered gas
fields and present production is about 280 BCF per annum.
The government of Bangladesh has decided that future
exploration for oil and gas will be done through the
private sector to the maximum extent possible. With
this end in view the first round of bidding took place
in 1993 and 4 companies eventually signed Production
Sharing Contracts (PSCS) with Rexwood Okland, United
Meridiam and Occidental.
The second round of bidding was held in July 1997 and
the bidding process is still continuing. During this
bidding for the remaining 15 blocks bids have been received
for 12 blocks. The competition in some of the blocks
with good gas prospects has been intensive and all the
biggest names in the oil and gas business in the world
have shown active interest in Bangladesh. This bidding
round will close in December 1997 and exploration activities
are expected to begin immediately.
So far the private sector oil and gas exploration companies
have invested US$ 100 million. With the amount of the
contracts in the second round bidding there will be
manifold augmentation of investment. Besides exploration
which is an upstream activity in the down stream activities
also the international investors have shown keen interest
to set up joint ventures on their own as well as with
public sector enterprises.
Besides Oil and gas a contract has been signed to extract
coal from Barapukuria coal mine in Dinajpur district
with a Chineses consortium designed to extract 1.0 million
MT coal a year. Another contract has been signed with
a North Korean company for the extraction of 1.6 million
MT hard rock per year at Madhyapara in the same district.
Bangladesh is still at a low level of electrification
with only 16% of it population having access to electricity
and per capita generation is only 96 KW per annum. Hence,
there is a great need and urgency to expand the electrification
programs. The government of Bangladesh has attached
priority for the development of the power sector.
The present installed generation capacity is 2908 MW.
But the available generation capacity is about 2200
MW due to old age of few power plants. The route length
of transmission line is 3500 Km, the total length of
distribution network is 1,28,000 KM and the number of
consumers is 35,00,000 at present.
The present demand of electricity is about 22,00 MW.
It is estimated that the peak demand in FY 2000 will
be about 3150 MW and this will increase to about 4600
MW in FY 2005. A total of 2700 MW generation capacity
is planned to be added to the system during the Fifth
Five Year Plan period FY 1998-FY 2002.
Bangladesh has amended its Industrial Policy and the
power sector is open to private investment. The government
has approved the Private Sector Power Generation. Policy
of Bangladesh to attract private investment in power
generation. Under the policy, the private power companies
shall be exempted from corporate income tax for a period
of 15 years and the companies will be allowed to import
plant and equipment without payment of custom duties
Because of the favorable conditions for private investment
a large number of Independent power producers (IPPs)
have shown interests for setting up power plants in
Bangladesh. A Rural Power Plant is being implemented
by RPC at Mymensingh. A Rural Power Company (RPC) has
been created A 60 MW Gas Turbine Power Plant is being
implemented by RPC at Mymensingh.Contracts with four
IPPs selected through competitive bidding have already
been negotiated and are expected to be signed shortly.
Bids received for setting up a 360 MW combined cycle
power plant at Haripur and 450 MW combined cycle power
plant at Meghna Ghat in the private sector are being
evaluated. There is need for more private investment
in power generation to meet the increasing demand in
The government of Bangadesh has undertaken some reform
measures with a view to achieving operational and management
efficiency and commercial characteristics in the power
sector. Power Grid Company of Bangladesh (PGCB) has
been created. Initially PGCB will own the transmision
lines associated with Meghna Ghat Power Project. Ultimately
it will take over the entire transmission system of
the country. Dhaka Electric Supply Comapny (DESCO) has
been created to manage the distribution area of Mirpur.
DESCO will eventually take over the entire distribution
responsibilities of Dhaka metropolitan city area.
The recent revolution in information technology has
opened up a new area for private investment in the telecommunication
sector. Previously in the public sector. this has now
been opened up for private investment.
Bangladesh Telegraph and Telephone Board (BTTB) is developing
communication facilities with modern technology, Communications
with the outside world are also being developed. Private
sector operations in the rural telecommunications, paging,
cellular telephones and reverine radio trucking have
already been allowed. BTTB has already started providing
VSAT (Very Small Aperture Terminals) facilities to the
private sector. In the meantime two private companies
have been given license for providing telecommunication
in 390 thanks, till now they have covered 221 upa-zillas.
So far licenses have been issued to four private operators
for cellular or mobile telephone services in the country.
In air transport, the government has given provisional
domestic air transport operating licenses to six private
companies for STOL Services. Seven airports have been
refurnished to cater to their needs. International air
& cargo transport in the private sector is now allowed
for operation in Bangladesh.
Bangladesh's experience in basic electronics spans over
two decades. In recent years, European and Asian electronic
firms have established technical collaboration with
their Bangladeshi counterparts to produce some electronic
goods at competitive prices. This has tremendous potentiality
Light engineering industries
Light industries in Bangladesh produce a multitude of
labour intensive goods including toys, consumer items,
small tools and paper products for the domestic market.
Further development of these industries offers various
Export oriented production in light industries has gained
momentum in the past few years. Entrepreneurs from Hong
Kong, Japan and Korea have taken advantage of Bangladesh's
cheap and easily trainable labour and its infrastructure
facilities to manufacture products for the export market.
With growing international interest in travelling through
Asia tourism is taking roots in Bangladesh. Bangladesh
offers a variety of historically significant and culturally
unique sites for tourists. Sylhet's tea gardens, Cox's
Bazar sea-beach, the Royal Bengal Tiger, Deer and the
Sundarbans, the largest mangrove forest in the world
with unique bio-diversity offer tourist attractions.
Ancient mosques, Buddhist monasteries, Hindu temples,
monuments and other landmarks dot the countryside. Additional
hotel and resort facilities could be created for attracting
tourists from home and abroad. Dhaka and Chittagong
also have an unmet demand for additional hotel rooms,
restaurants, entertainment and recreational facilities.
Raw jute, tea, tobacco, vegetables, spices and tropical
fruits are the key potential products. Agiculture is
the biggest private sector operation contributing 35%
of GDP. The government has gradually removed the contsraints
imposed by state intervention deregulated and liberalised
the markets to allow further private participation particularly
in the supply of imputs and distribution of outpus.
The govenment has drastically rediced duties and taxes
on a rage of agriculture imputs. Fertizer is exempted
from customs duties and VAT.
Bangladesh continues to grow about 2 percent of the
world's tea in some 150 plantations on the North-East
region of Sylhet. Tropical fruits and vegetables are
grown seasonlly and have recently begun to be exported
in various forms. Tobacco farming is also well established.
Agro based industries
Bangladesh has the basic attributes for successful agro
based industries, namely, rich alluvial soil, a year-round
frost free environment, an adequate water supply and
an abundance of cheap labour. Increased cultivation
of vegetables, spices and tropical fruits now grown
in Bangladesh could supply raw materials to local agro
processing industries for both domestic and export markets.
Progressive agricultural practices, improved marketing
techniques and modern processing facilities would enable
the agro processing industry to improve its quality
and expand production levels significantly. Computer
software development, data entry & data processing.
Availability of substantial number of unemployed qualified
young people in various branches of engineering, science
and technologies have opened up the scope of profitable
investment in these sectors. Comparatively short training
period and low investment have made such ventures highly