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Your complete guide on how to start and do business with Bangladsh. Information such as import/export regulations, customs information, tax , currency, copyrights, etc.

4. ECONOMIC OUTLOOK

With an estimated 126 million people in an area of less than 150,000 sq.kms, Bangladesh is still considered one of the world’s poorest countries. In its 27-year history, the country has received annually the equivalent of close to 6% of GDP in foreign assistance, although this figure has declined to around 4% in recent years.

Although there has been moderate economic growth, more dramatic growth levels are necessary to accelerate the country to a more economically stable position. The government has yet to address major structural weaknesses of the economy such as reforms in land administration and improving the weak financial sector and an unproductive public sector. Bangladesh’s industrial development has been hampered by a history of government intervention in trade & industry. Although over the past couple of years the Bangladesh government has enacted policies to diminish bureaucratic requirements and open the economy to private sector development, these efforts at
market-based reforms have not been completely successful. Trade has been liberalized and previously government monopolies opened up to private sector development. However, many other reforms, such as privatization and financial sector reforms encounter stiff opposition from vested interest groups such as public sector labor unions, bureaucrats, opposition political parties or influential businessmen.

Bangladesh is a predominantly import dependent country with the majority of imports coming from India, China, Japan, Hongkong & Singapore. By all accounts, unofficial imports, basically border trade with India, have continued to increase. Bangladesh exports on the other hand are heavily dependent on garments and knitwear followed by shrimps, leather goods and jute. To encourage export-oriented industries the government has given additional incentives like concessionary duty on capital machinery, special bonded warehouse facilities and duty drawbacks. At present, the Bangladesh Central Bank follows a semi-flexible exchange rate policy, periodically revaluing the currency by small steps on the basis of the real effective exchange rate, taking account of the nominal exchange rates of major trading partners. A level of reserves equal to approx. 3 months of
imports and a black market rate close to the official rate suggest the central bank has fixed the exchange rate close to the equilibrium level at least in the short term.

Bangladesh has two major seaports – Chittagong and Mongla. The Chittagong port, by far the larger port handles the majority of the cargo. Both ports suffer from insufficient space management and a shortage of handling equipment and strikes and work shutdown by port workers are common. The country’s 36,000 km primary road network is in moderately good condition giving rise to substantial private trucking industry. A 4.5-km road & rail bridge across the Jamuna now links the east and west Bangladesh. Inland
waterways are extensive and account for about 60% of domestic cargo transportation and about 35% of inter-district passenger traffic. Bangladesh’s 4,364-km railway system is in poor condition – inefficient management combined with widespread ticketless travel and aged equipment being the major causes behind this. Canada with other donors has supported Bangladesh Railway and is working for its reform.
The country’s three international airports – Dhaka, Chittagong and Sylhet are slowly being modernized and private sector participation has been allowed in the domestic routes.
Bangladesh’s pubic power sector is inadequate and rife with corruption. System loss is over 30% and overloading and lack of maintenance of aged machinery cause frequent outages. Although power generation has been opened up to private sector participation, government bureaucracy, lack of negotiation knowledge and corruption at all levels have hampered / delayed implementation of private sector projects.
The country’s telecommunication services are also inadequate. The government run telephone service has approximately 450,000 lines to serve 126 million people and a call connection rate of 30%. Efforts are slowly underway to upgrade the telephone system including expanding domestic and international capacity and installing digital exchanges. The sector has been partially opened up for private sector participation and several cellular operators and Internet service providers are presently operating in the market.



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