Doing business in Bangladesh

Many multi-national businesses are already using the south Asian country as a manufacturing base, considered by Goldman Sachs as one of the “Next 11” countries to be large growth markets after the BRICs.

Here are some of the factors to consider when making a direct investment into Bangladesh

  1. Bangladesh’s working-age population is significantly more female than male. In the 15-24 and 25-54 cohorts, which together represent 56.8% of the country’s population, there are 6% more women than men. That makes for a total of nearly 5.5million fewer men in those age groups, even though the male and female populations in the dependent age groups (0-14 and 55+) are approximately even. This effect can likely be attributed to many men of working age emigrating to take higher-paying jobs abroad.
  2. Bangladesh population statistics

    Data source: CIA World Factbook

  3. According to the Financial Times, Bangladesh is the eighth largest recipient of remittances in the world. These remittances, driven primarily by the Bangladeshi men working abroad, totaled US$14.94bn in the 12 months to February 2015 and are a huge driver of domestic consumer spending. In the same FT article referenced above, based on a report by credit rating agency Moody’s, it is suggested that these remittances fuel close to 80% of Bangladesh’s GDP.
  4. Bangladesh’s service industry dominates, with a 58.3% share of the economy. However, the momentum is in the country’s industrial sector, which the Asian Development Bank claims grew by 8.4% last year against a 5.8% growth in services.
  5. Dhaka has Bangladesh’s largest population, with the distribution of population between different regions following a similar curve to that observed in other countries.
  6. Bangladesh population by places

    Data source: Bangladesh 2011 Census

  7. The currency of Bangladesh is the Taka, denoted with the symbol ‘৳’. The currency has consistently been devalued against the dollar since the nation’s independence in 1971. The Taka now holds less than a tenth of its relative value, having declined from around 7.5 Taka to the dollar to today’s exchange rate of around 82:1. However, the weak currency helps to drive exports and increases the value of foreign Bangladeshi workers’ remittances.
  8. Unusually, Bangladesh has a corporate tax regime that expressly favours publicly-traded companies, who pay 27.5% tax on their earnings instead of Bangladesh’s main 35% rate. The Dhaka Stock Exchange has more than 300 listed companies at the time of writing.
  9. There are 39 privately-owned commercial banks operating in Bangladesh, which compete against five state-owned banks. 9 foreign-registered banks also have branch operations in the country, including HSBC, Citibank and Standard Chartered. 8 of the 39 private commercial banks provide Islamic finance services, catering to the country’s primarily Muslim population with Sharia-compliant products.
  10. The textile industry provides the overwhelming majority of Bangladesh’s exports, with the largest single export being men’s suits, followed by t-shirts. Most of the country’s imports are the raw materials used by the country’s industry, with three of the top five imports being cotton (the other two are palm oil and petroleum).
  11. Although most of Bangladesh’s imports are sourced from elsewhere in Asia, 83% of the finished products go to Europe and North America.

Contact us

For more information on investing in Bangladesh, talk to our business experts at +65 6735 0120 or email at email[at]healyconsultants[dot]com

Photo Credit: “Garments Factory in Bangladesh” by Fahad FaisalOwn work. Licensed under CC BY-SA 3.0 via Wikimedia Commons.