Bangladesh

In-depth country-focused analysis on Bangladesh's economic, political and operational risk environment, complemented by detailed sector insight

Bangladesh

Bangladesh is slowly emerging on the investment radar as a frontier market. It is expected to benefit from rising foreign investment, especially from India. In addition, the nascent domestic shipbuilding industry could emerge as a new growth driver. Bangladesh’s large youthful population and competitive labour cost structure make it a prime investment destination for businesses with labour-intensive operations, such as agriculture and manufacturing.

We keep our clients informed of the latest market moves and political developments in Bangladesh, as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on five of Bangladesh’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert research teams. We aim to keep you one step ahead, so you can do business with confidence in Bangladesh.

Country Risk

Bangladesh Country Risk

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Core Views

  • The opposition Bangladesh Nationalist Party (BNP)'s sudden boycott of mayoral elections in North and South Dhaka and Chittagong will worsen the country's political crisis, further disrupting the economy. A military coup is unlikely, unless the state nears collapse.

  • Bangladesh's ready-made garment industry will be hard-hit as the business environment in the country continues to worsen amid escalating political turmoil and rising operational risks. While Bangladesh retains some long-term advantages over its regional rivals, short-term economic and export growth will continue to face significant headwinds.

  • Bangladesh Bank (BB) will look to balance growth and inflation by employing more direct measures such as influencing lending and deposit rates, rather than cutting the repurchase (repo) rate. As such, we...

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Bangladesh Operational Risk Coverage (9)

Bangladesh Operational Risk

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BMI View: Bangladesh's large youthful population and competitive labour cost structure are two key factors that make it a prime investment destination for businesses with labour-intensive operations such as agriculture and manufacturing. However, the country's overall attractiveness is weighed down by an underdeveloped transport sector as well as severe barriers to trade and investment, notably a complicated fiscal regime, high levels of corruption and excessive red tape, which often lead to delays and unplanned expenses. Taking these factors into consideration, Bangladesh receives a score of 39.4 out of 100 in BMI's Operational Risk Index, ranking...

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Bangladesh Crime & Security

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BMI View: Investors in Bangladesh face considerable risks across each of the three crime and security pillars, resulting in Crime and Security Risk measures reflecting the country's worst performance across the BMI Operational Risk Index. While interstate relationships between Bangladesh and its neighbours are improving, the country remains vulnerable to regional tensions relating to contested border areas and the activities of international terrorist groups. The threat of political unrest escalating to violent protest remains high and domestic terrorism is an ongoing concern. At the same time Bangladesh experiences a high rate of crime and businesses face significant additional costs to ensure the security of...

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Bangladesh Labour Market

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BMI View: Low levels of education and literacy are the key contributors to the country's relatively poor performance in Labour Market Risk Pillar of the BMI Labour Market Risk Index. Furthermore low tertiary education enrolment; and heavy unionisation, particularly in the ready-made garment industry further add to costs and limit investment to those requiring low skilled workers. Bangladesh's Labour Market presents a moderate risks for investors in regional terms, with a score of 45.3, placing it 17th out of 29 countries in the Asia region, and positioning it between Philippines and Samoa, and behind India in 12 thplace regionally.

Availability of Labour poses the greatest risk to investors in Bangladesh, with low urbanisation, high underemployment and low levels of education. Despite massive investment in the country's educational infrastructure in the form of...

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Bangladesh Logistics

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BMI View: The logistics network in Bangladesh presents investors with some substantial risks. The road and rail network is underdeveloped and air transport options are limited. These risks are exacerbated by excessive trade procedures which further increase the time and cost of trading goods to and from Bangladesh. Businesses also face interruptions to supplies of key utilities, particularly electricity and potable water. With pressure on the country's infrastructure growing, these risks will likely become more pronounced creating additional risks. As a result, Bangladesh has a score of just 41.5 out of 100 for Logistics Risk which places the country 21st out of 38 Asia region states and 131st out of 201 states on a global basis.

As Bangladesh's large economy is poised for stronger growth, its utilities market will be placed under...

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Bangladesh Trade & Investment

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BMI View: Despite stable economic growth over two decades, Bangladesh has seen a rise in political instability as a result of a number of factors, including inter-party and ethno-religious tensions, which has negatively affected investment. Furthermore, the country suffers from high levels of corruption and weak enforcement of legislation, which combine to create an inhospitable investment environment. On the other hand, the financial market is relatively well-developed, and with international donor assistance Bangladesh has made great strides in poverty reduction in recent years. Bangladesh presents a high risk for Trade and Investment, sitting fourth place from the bottom of 29 Asian countries with a score of 25.8. It is positioned between Nepal and Laos, and seven places behind India.

The area with the lowest risk to...

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Bangladesh Industry Coverage (6)

Agribusiness

Bangladesh Agribusiness

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BMI View: We hold a cautious outlook towards the Bangladesh agriculture sector over the short term. The latest finding of high levels of toxic substances in poultry feed provides much cause for concern as it reflects on the low food safety standards employed by the country, even in its largest agriculture sector. Indeed, structural problems still plague the industry. In the medium term, for example, the frequent occurrences of strikes, or hartals and road blockages, will keep our optimism for the industry at bay as these often aggravate the logistical challenges of food transportation within the country, causing the biggest h...

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Autos

Bangladesh Autos

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Over the first five months of 2015 (most recent data available as this report was being compiled), a total of 21,438 vehicles were sold in Bangladesh. Breaking down the headline figure, passenger car sales (jeeps, private passenger cars + taxicabs) stood at 8,883 units over the 5M15 period, with commercial vehicle sales (vans, buses, pick-ups, special purpose vehicles and trucks) standing at 12,555 units.

This strong sales performance comes despite a still-clouded political backdrop. Significant political tensions remain between the ruling Awami League party (AL) and the main opposition Bangladesh Nationalist Party (BNP), and especially their respective leaders, Prime Minister Sheikh Hasina and Begum Khaledia Zia. In April 2015, the BNP decided to boycott the mayoral elections in North Dhaka, South Dhaka, and Chittagong. BMI's Country Risk team believes that this boycott will exacerbate the country's...

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Commercial Banking

Bangladesh Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

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Medical Devices

Bangladesh Medical Devices

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BMI Industry View: Bangladesh represents a small medical device market of just under USD163mn, similar in size to Latvia or Serbia. Market size is where the similarity ends, however, as Bangladeshi per capita spending is one of the world's worst, at just USD1 per capita. The market is almost exclusively supplied by imports.

Headline Industry Forecasts

  • In 2013, the Bangladeshi medical device market was estimated at USD162.7mn, equal to just USD1.0 per capita. The market is projected to expand at...

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Pharmaceuticals & Healthcare

Bangladesh Pharmaceuticals & Healthcare

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BMI View: Bangladesh's pharmaceutical and healthcare sector growth will continue to stand on robust long-term fundamentals, including population growth, rising incomes, urbanisation and economic expansion. Moreover, the country's efforts to increase drug manufacturing capacity both for domestic supply and drug exports will be sustained in the years ahead. This favourable outlook is reflected in UK-drugmaker GlaxoSmithKline expected strategies to strengthen its presence in the country. However, current political tensions in Bangladesh are set to weigh on the country's full potential, increasing economic...

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Telecommunications

Bangladesh Telecommunications

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BMI View : The launch of 3G services has significantly boosted consumption of non-voice advanced services in the mobile market. Top-line subscription growth figures support the notion that there is untapped demand for such services, although we are aware that price-driven promotional campaigns are just as responsible for this uptick. Nevertheless, in absolute terms, non-voice still accounts for a small proportion of total mobile revenues. This is of scant solace to operators that have invested heavily in spectrum and infrastructure, particularly those smaller players already impacted by high taxation on service income and sales of SIM taxes. Selling passive infrastructure such as towers offers short-term respite at best. We continue to believe that there are too many operators in the market, but there are few willing to risk investment in this volatile market.

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