The Safe Destination of Your Investment

Bangladesh – the Safe Destination of Your Investment

Bangladesh is on the way towards achieving its government’s “Vision 2021” – to achieve people’s socioeconomic emancipation and to build a poverty and hunger-free prosperous country by transforming the country into a middle income country by 2021 – coinciding with the 50th anniversary of the independence of Bangladesh.

Bangladesh has demonstrated strong economic fundamentals with a consistent GDP growth rate of over 6 percent over the last 7 years. The projected GDP growth rate is 7% in 2015-16 and this will continue to grow in the years ahead. Bangladesh has already graduated to a lower middle income nation from a low income one in the World Bank Index. It’s per capita income now stands at $1,314. And the government aims to treble it to over $4,000 by 2021. Over the last seven years, Bangladesh has set an example to the world by showing them how development and high inclusive growth is possible even in the face of natural and manmade heavy odds.

As the country needs foreign investment for the desired economic development, creation of hassle-free environment for the investors in setting up industries and running their business is a pre-requisite. In order to provide a favourable investment environment, Bangladesh Government established Bangladesh Economic Zones Authority (BEZA) in 2010 and Bangladesh Export Processing Zones Authority (BEPZA) much earlier. BEPZA currently oversees the operations of eight export processing zones (EPZ). Government has announced its plan to develop 100 Economic Zones in next 15 years and create employment opportunities for 10 million People.

BEZA and BEPZA provide serviced land/factory buildings to the investors with all infrastructural and utility facilities. At this moment BEZA is working with 59 economic zones out of which 8 are private economic zones. The land area covered by the 59 economic zones is 42000 acres. Works are on to establish 2 economic zones for the Japanese investors, 1 economic zone for the Chinese investors and 2 economic zones for the Indian investors on G to G basis.

BEPZA is currently having an area of only 2,307.27 acres of land; BEPZA contributes around one-fifth to national exports & investment (particularly in manufacturing sectors). BEPZA’s success can only be illustrated by its spectacular achievement – 453 industries operating in eight EPZs, an incredible employment of nearly half a million workers, an investment portfolio of nearly US$ 4 billion and export reach at US$ 49.88 billion. A low cost of production, availability of trained workforce and a safety net of policies and procedures are what entrepreneurs from 38 countries find upon deciding to invest in EPZs. The investors are manufacturing traditional and diversified products which are mostly world famous brand.

Bangladesh is now lauded as ‘Bonanza for the Investors’ from all corners of the globe. BEPZA achieved remarkable growth in last 7 years, it has attained US$ 2238.51 million in investment which shows growth of 147.76%, export earned US$ 31724.72 with growth 187.47%, generation of employment 2,33,117 that’s growth 123.29% and new operating industries were 160 with growth 44.14% during 2009-15 compared to the 2002-08 period.

Why Bangladesh is an optimal destination of investment

1. Consistent Economic Growth: Despite ups-and-downs in the global economy and the subsequent slump in growth, Bangldesh’s economy has been maintaining an impressive growth rate of more than 6% on average over the last 10-years.

2. Industrious low-cost work force: Bangladesh offers a well-educated, highly adaptive and industrious workforce with economic wage level, proven by its remarkable success in RMG manufacturing and export. About 57.3% of the population is under 25, providing a youthful group for recruitment. In each year around 2 million youth is entering in the job market.

3. Low Cost Energy : Energy prices in Bangladesh are much cheaper compared to neighboring countries.

4. Strategic location of Economic Zones/Export Processing Zones: The Locations of economic/export processing zones of the country have been chosen, based on regional connectivity, proximity to highways, access to ports, abundance of labor force, and backward linkage opportunities.

5. Competitive Incentives to the Economic Zone developers and Units established in the Economic Zones : The government provided similar fiscal and financial incentives and benefits to industrial units as provided to the industrial units covered under Bangladesh Export Processing Zones Authority Act, 1980 and Bangladesh Private Export Processing Zone Act, 1996. Bangladesh offers the most liberal FDI regime in South Asia, allowing 100% foreign equity with unrestricted exit policy, remittance of royalty, facilities, equity and dividend.

6. Polices and reforms ·

  • Continued reforms taking place embracing global best practices ·
  • A positive attitude among policy makers towards undertaking reforms for business growth. ·
  • A special high-level committee works for policy and regulatory improvement.

7. Market Access: 

  • Bangladesh has a large domestic market of nearby 160 million. ·
  • Middle class (with purchasing power) is growing fast. ·
  • Access to regional market of about 3.0 billion people through regional and bilateral integration in South Asia ·
  • Bangladesh has preferred market access (global reach) to large developed markets ·
  • ASEAN/East Asian investors can utilize Bangladesh as an export springboard to the world.

8. According to doing business report 1014 Bangladesh stands in the south Asian region in the following positions:

  • The 2nd easiest place for Doing Business in the SA region ·
  • 2nd easiest place in the region to do business ·
  • 2nd in region on ‘starting a business’ ·
  • 1st in region on ‘protecting investors’ ·
  • 1st in region on ‘ease of paying tax’

Japan External Trade Organization (JETRO) in its 2014-15 survey mentioned that Bangladesh has continued to be an attractive destination for Japanese companies to do business due to its lower production cost and labor wage compared to those of 19 countries in Asia and Oceania. In comparison to Japan, the cost of production in Bangladesh is less than half, (49.5 percent), while it is 81.9 percent in China, 73 percent in Vietnam and 80.6 percent in India.

 

Category of Economic Zones at a glance

1. PPP Economic Zones– Established through public and private partnership (PPP) by local or foreign individuals, body or organizations;

2. Private Economic Zones- Established individually or jointly by local, non-resident Bangladeshis of foreign investors, body, business organizations or groups;

3. Government Economic Zones– Established and owned by the Government;

4. Special Economic Zones- Established privately or by public private partnership or by the government initiative, for establishing any kind of specialized industry or commercial organization;

5. G2G Economic Zones- Established upon initiative by the government of a foreign country of the Government of Bangladesh and/or in partnership between Government of Bangladesh and Government of a foreign country; and

6. Economic Zones- Established in collaboration with and/or partnership between Government