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.
Bangladesh Country Risk
Bangladesh's real GDP growth will likely remain stable at 6.5% in FY2015/16 (July-June) before picking up slightly to 6.7% in FY2016/17, aided by an accommodative monetary policy, expansionary fiscal policy, and the return of a stable political climate. In particular, the government's ongoing focus on public investment into supporting infrastructures should help to attract more investment and boost productivity in the manufacturing sector, thus allowing Bangladesh to retain its dominant position in the global garment industry.
Bangladesh's small budget surplus of 0.1% of GDP between July and October 2015 will likely flip into a deficit over the coming months as the government accelerates its capital and development expenditure to support growth in the economy. As such, we maintain our forecast for Bangladesh's budget balance as a...
Bangladesh Operational Risk Coverage (9)
Bangladesh Operational Risk
Bangladesh Operational Risk
BMI View: Bangladesh's large youth 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 and insecure operating environment, 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 39.3 out of 100 in BMI's Operational Risk Index, ranking 26th out of 35 countries in the Asia region, between Tuvalu and the Solomon Islands.
|Substantial Risks Present Despite Some Labour Market Advantages|
Bangladesh Crime & Security
Bangladesh Crime & Security
BMI View: Investors in Bangladesh face considerable security risks from a range of sources. The threat of political unrest escalating to violent protest remains high and domestic terrorism is an ongoing concern, particularly with recent attacks against foreigners. 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. At the same time Bangladesh experiences a high rate of crime and businesses face significant additional costs to ensure the security of staff and property, as well as to combat the growing rate of cybercrime and financial crime. Due to these considerations, Bangladesh has an overall score of 30.2 out of 100 for Crime and Security Risk, placing the country an uncompetitive 30th out of 35 states in...
Bangladesh Labour Market
Bangladesh Labour Market
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...
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...
Bangladesh Trade & Investment
Bangladesh Trade & Investment
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...
Bangladesh Industry Coverage (8)
BMI View: We hold a cautious outlook towards the Bangladesh agriculture sector over the short term. The limited amount of arable land available for acreage expansion, as well as poor safety standards, will constrain growth over our forecast period. Structural problems still plague the industry, in particular the logistical challenges of food transportation within the country. Over the long term, we believe there is much more room for growth and improvement in sub-sectors such as grains and livestock. That said, as the agricultural sector in Bangladesh employs close to 70% of the working population but...
BMI View: We continue to believe that the combination of an improving macroeconomic backdrop and positive news on infrastructure development will enable further growth for the Bangladeshi new vehicle sales market in 2016. We expect 11.5% sales growth for the sector as a whole, with passenger car sales set to outperform those of commercial vehicle sales.
|Passenger Car and Light Commercial Vehicle Sales|
|f = BMI...|
Bangladesh Commercial Banking
|Date||Total assets||Client loans||Bond portfolio||Other||Liabilities and capital||Capital||Client deposits...|
BMI View: Our forecast for sustained real growth for Bangladesh's construction sector over the coming decade is underpinned by significant greenfield infrastructure projects, economic growth and strong foreign investor interest. However, the sector's expansion will be tempered by a still-challenging business environment, a lack of implementation capacity as well as potential political and social instability.
Latest Updates And Structural Trends
The construction industry in Bangladesh registered real growth of 8.7% in 2015, reaching a total value of USD15.1bn. We forecast the growth rate to accelerate to 9.5% in 2016 on account of strong economic growth and rising investor interest. We anticipate the industry to sustain a similar pace of expansion over the coming decade, averaging 8.4% real growth per annum.
Bangladesh Medical Devices
BMI Industry View: We expect the Bangladeshi medical device market to achieve one of the fastest growth rates in the world, at 14.5% annually, to 2019. With little domestic production, the demand for imported goods continues to drive growth, and positive trade indicators confirm this view. This under-developed market has huge potential, but prospects will hinge upon maintaining political stability and economic growth.
|Total (USDmn)||Per Capita (USD)||Total (Local Currency mn)||...|
Pharmaceuticals & Healthcare
Bangladesh Pharmaceuticals & Healthcare
BMI View: While Bangladesh's ambitious goals for pharmaceutical exports are unlikely to be realised, the sector will see modest growth ahead. Emerging markets such as Myanmar will be stable sources of demand even as opportunities to export to the lucrative developed markets such as the US and the EU grow due to cost containment. A key risk to this stems from the commoditisation of the generic drug sector, which will place pressure on profit margins, and the competition from the more established Indian pharmaceutical sector.
Headline Expenditure Projections
Pharmaceuticals: BDT171.6bn (USD2.2bn) in 2015 to BDT190.8bn (USD2.4bn) in 2016; +11.2% in local currency terms and +9.1% in US dollar terms.
Healthcare: BDT494.0bn (USD6.3bn) in 2015 to BDT554....
BMI View: Gas will remain the dominant source of energy for electricity generation in Bangladesh for much of the foreseeable future. However, if Bangladesh is to stop the acute gas shortages from crimping economic growth, the country will have to cut its over-reliance on gas-fired capacity and diversify the energy mix. The government has outlined plans to ensure coal accounts for 50% of the energy mix by 2030 , but we remain unconvinced that such plans will come to fruition local opposition to the exploitation of Bangladesh's huge coal reserves has so far stymied the development of a domestic industry.
BMI View : Two mobile operators have announced network upgrades that will boost 3G and 4G take-up. Robi Axiata, which is set to displace Banglalink in terms of mobile subscriber market share through its merger with Airtel Bangladesh, has contracted Ericsson as its supplier for hardware, software and integration services, 3G expansion and 4G network readiness. According to the operator, smartphone penetration reached 20% at end-2015, up from just 6% two years earlier, and is projected to reach 40% by 2018. Grameenphone's parent company Telenor has also signed a five-year network enhancement agreement with Ericsson, which encompasses not only 2G/3G network transformation but also the deployment of 4G. The operator aims to upgrade all...