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 40.1 out of 100 in BMI's Operational Risk Index, ranking 31st out of...

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Bangladesh Crime & Security

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BMI View: Bangladesh poses fairly high security risks for foreign business travellers, expatriates and tourists. While many short-term visitors may be unaffected, petty crime is common, including robbery, pick pocketing and scams. Moreover, business operations and employees face risks from domestic terrorist and extremist organisations that have been responsible for a number of attacks throughout the country's 43-year history. While the risk of interstate violence has dissipated in recent years and the country is not presently engaged in any territorial dispute, the small size of its army renders it weak compared to neighbouring states. Bangladesh is therefore awarded a low...

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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: Investors in Bangladesh, attracted by the country's solid growth prospects, face underdeveloped supply chains with business operations hampered by an inefficient and poor-quality transport network, as well as unreliable utilities availability. Investors are also impeded by excessive trade procedures, which increase trade delays and drive up costs. As a result, Bangladesh receives an overall BMI Logistics Risk Index score of 41.6 out of 100. This places the country in 21st position out of 38 Asian states on a regional comparison, between Samoa and the Solomon Islands and five places behind its neighbour India.

As Bangladesh's large economy is poised for stronger growth, its utilities...

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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. The latest finding of high levels of toxic substances in poultry feed brings 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 hurt to the farmers.

Over the long term, we believe that there is much more room for growth and improvement in sub...

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Autos

Bangladesh Autos

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Looking at early sales trends for 2015, a total of 10,877 vehicles were sold in Bangladesh over the first quarter. Breaking down the headline figure, passenger car sales stood at 4,272 units for Q115. CV sales stood at 6,605 units. On current sales trends, there may therefore be some slight downside risks to BMI's forecast of 47,752 units for the full-year. However, we choose to wait for further monthly data to be released by the authorities before making any changes to our current forecasts.

BMI has become more cautious on the political and macroeconomic outlook for Bangladesh over the past quarter. In February 2015, BMI's Country Risk team downgraded Bangladesh's real GDP growth forecast for FY2014/15 (July-June) to 5.6% (versus 6.0% previously) as the political and social unrest, which began in early January, continues to...

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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 : Significant growth in mobile data and value-added services revenue in 2014 resulted from widespread deployment of 3G networks and the greater availability of smartphones. However, intense price competition means that, in absolute value, data revenues continue to represent only a small proportion of total income. It will still be many years before operators will see a meaningful return on their investment, a problem compounded by the government's reluctance to relax taxes on a sector it views as a useful cash cow. Selling towers would provide a modest respite, but consolidation would be more beneficial, ridding the market of ine...

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