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 trade balance is likely to worsen slightly in FY2015/16 (July-June) as imports will continue to surge on the back of a strong taka. However, a modest recovery in the export sector and strong remittance growth will lend support to the current account balance, which should in turn help to maintain external stability. As such, we forecast Bangladesh's current account deficit as a share of GDP to come in at -0.5% of GDP, versus -0.2% in FY2014/15. This reflects a relatively well-balanced economy which should be positive for medium-term growth.
Bangladesh's economy will likely grow by 6.5% in FY2015/16 (July-June), similar to the rate in FY2014/15, on the back of robust expansions in the industrial and services sectors. However, the global economic slowdown and domestic security threats pose downside risks to our optimistic view....
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...
|Passenger Car And Light Commercial Vehicle Sales|
|f = BMI forecast. Source: Bangladesh Road Transport Authority, BMI|
BMI View: We believe that a combination of an improving macroeconomic backdrop and constructive news on infrastructure development should lead to another positive year for the Bangladeshi new vehicle sales market in 2016. We are forecasting 15.3% sales growth for the sector as a whole, with commercial vehicles set to outperform passenger cars....
Bangladesh Commercial Banking
|Date||Total assets||Client loans||Bond portfolio||Other||Liabilities and capital||Capital||Client deposits...|
BMI View: Bangladesh's construction sector will see a slight pickup in growth, underpinned by significant greenfield infrastructure opportunities, economic growth and strong foreign investor interest. Such growth will be tempered by a still-challenging business environment, a lack of implementation capacity and relatively high capital costs.
Latest Updates And Structural Trends
We forecast Bangladesh's construction sector to expand by an annual average of 8.3% between FY2015/16 and 2019/20.
Growth will be underpinned by significant greenfield opportunities, given the country's infrastructure deficit, as well as positive economic growth. A positive outlook on the country's economy and the ready-made garments industry will also help to support the residential and non-residential...
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: Sustained growth in Bangladesh's pharmaceutical and healthcare market will continue to translate into commercial opportunities for drugmakers over the forecast period. A large generic medicine segment will continue to account for the lion's share of the market, although patented products will continue to gain market share as affordability levels improve and healthcare development gradually materialises. In the medium term, the one-off doubling of government wages and an increase in budget allocation for the annual development program in FY2015/16 pose upside risks to market headlines driven by higher consumption. Over the long term, low-cost manufacturing will increase the market attractiveness and contribute to...
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 : 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, non-voice still accounts for a small proportion of total mobile revenues.
|Slow Growth For 3G|
|Mobile & 3G Subscriptions|
|e/f = BMI estimate/forecast. Source: BMI, operators, BTRC ...|