International Business: Bangladesh's Opportunities and Challenges

This report provides a comprehensive overview of the business environment in Bangladesh. It begins with a profile of the country, including its geography, climate, mineral resources, and major landmarks. The report then delves into Bangladesh's major exports and imports, highlighting key sectors such as garments, machinery, and mineral fuels. It also examines the political situation, including the electoral system, major political parties, and government policies. Furthermore, the report analyzes the legal system for business development, including investor rights, incentives, and restrictions. The report concludes with a discussion of the opportunities and challenges facing businesses in Bangladesh, making it a valuable resource for anyone interested in international business in this South Asian nation.

Course title: International business
Course code: MGT314
Assignment on “Briefly discussion on Bangladesh and its business
opportunities and challenges”

Profile of the country: Bangladesh
Official name: People’s Republic of Bangladesh
Location: South Asia
Capital city: Dhaka
Nationality: Bangladeshi
Currency: Taka
Area: 148,460 sq.km
State language: Bangla
Date of Independence: March 26, 1971
Bangladesh Anthem: Amar Shonar Bangla
National Animal: Royal Bengal Tiger
National Bird: Oriental Magpie Robin
National Fish: Hilsa
National Flower: White Water Lily
National Fruit: Jackfruit
National Tree: Mango Tree

Geography of Bangladesh
Location
Bangladesh is a South-Asian small country. Its total Area is about 148,460 square km. It is
situated from 20º34″ north latitude to 26˚38˝ north latitude and from 88˚01˝ east longitude to
92˚41˝ east longitude.
International Boundary: 5138 km
Border with India: 4156 km
Border with Myanmar: 271 km
Coastline: 711 km

Border:
West Bengal (India) on the west; West Bengal, Assam and Meghalaya (all the Indian states) on
the north; Indian states of Assam, Tripura and Mizoram together with Myanmar on the east; and
Bay of Bengal on the south.
Maritime boundary:
The political Sea line of Bangladesh is about 12 nautical miles and the exclusive economic zone
of the country is 200 nautical miles. Bangladesh reclaimed 19,467square kilometers out of
25,602 sq km disputed area in the Bay of Bengal. (March 2012)
Topography
Topography is a configuration of a land surface. There are three typical natural features in
Bangladesh.
 A broad deltaic plain subject to frequent flooding.

 A slightly elevated relatively older plain.
 A small hill region especially in Chittagong hills in southeast and low hills in northeast.
Bangladesh is also the largest delta of the world. The delta plain of the Ganges (Padma),
Brahmaputra (Jamuna), and Meghna Rivers and their tributaries occupy 79 percent of the
country.
Rivers of Bangladesh
Bangladesh is a riverine country. About 700 rivers flow through the country. Most of the
country's land is formed through mud brought by the rivers. These rivers play a significant role
in the economic growth of the country.
The system of rivers can be divided into five major networks as follows:
 Brahmaputra-Jamuna river system
 Ganges-Padma river system
 Surma-Meghna river system
 Tista river System
 Karnafuli river system
MINERAL RESOURCES
Natural gas: It is found in several small fields in the northeastern part. There are 24
discovered gas fields in Bangladesh.
Coal: There are five coalfields in Bangladesh.
Limestone, pottery clays, hard rock, construction sand, glass sand are also found in Bangladesh.
Climate
Bangladesh is subject to devastating cyclones, originating over the Bay of Bengal, in the periods
of April to May and September to November. Floods also occur in rainy season and many other
natural calamities.
Straddling the Tropic of Cancer, Bangladesh has a tropical monsoon climate characterized by
heavy seasonal rainfall, high temperatures, and high humidity. It is the area of Subtropical
monsoon. Mild winter (October to March); hot, humid & summer (March to June); humid, warm
rainy monsoon (June to October).
In general, highest summer temperatures range between 30° to 40°C and April is the warmest
month. January is the coldest month, when average temperature is about 10°C. There are six

seasons: summer, rainy, autumn, late autumn, winter and spring. For practical purposes, three
seasons are distinguishable: summer, rainy, and winter.
Some major landmarks or places of interest of Bangladesh
There are many historical places in Bangladesh. Also there are many attractive tourist spots in
Bangladesh where many of tourist visits from whole world which also contribute much in
Bangladesh economy.
Some of those places are:
Mosque:
 Seven domed Mosque (17th century)
 Baitul Mukarram National Mosque
 Star Mosque or tara masjid (18th century).
Hindu Temples:
 Dhakeshwari Temple
 Ramakrishna Mission
National Memorial: Located at Savar, 35, km. from Dhaka city. The memorial designed by
architect Moinul Hossein, is dedicated to the sacred memory of people who fought for
independence in 1971.
Lalbagh Fort: It was built in 1678 by Prince Mohammad Azam, son of Mughal emperor
Aurangzeb. Outstanding among the monuments of the Lelbagh are the tomb of Pari Bibi (Fairy
lady), and also shahid minar, sonargon, picnic spots, clubs, institute of arts and crafts are place to
visit.
Mainimati Ruins: Famous as an important centre of Buddhist culture from the 7th to 12th
centuries, the buildings excavated here were made wholly of baked bricks.
Kaptai: A pleasant and picturesque drive of 64 km. from Chittagong brings you to a huge
expanse of emerald and blue water ringed with tropical forest. It is the famous manmade Kaptai
lake (680 sq. km) formed by damming the Karnaphuli river.
Cox’s Bazaar: The world’s longest unbroken natural sea beach lies on Cox’s Bazaar. Other
beaches in Bangladesh include Kuakata, which is famous for its sight of both sunrise and sunset.
And the beautiful coral island of Saint Martin’s is a very popular tourist destination here in
Bangladesh.

Sundarban: The largest mangrove forest in the world, the Sundarban , is situated in the
southwestern part of the country.
Puthia, Mohastanghar and Paharpur fill up the amazing collection of archaelogical sites in the northern
side of the Bangladesh.
Bangladesh major exports and imports:
Almost every country is related to imports and exports. This is very important because this is
how every country fulfills their demands and maintains a healthy economy. Bangladesh is also
highly involved in imports and exports and day by day it is increasing.
Major Exports of Bangladesh
he country’s merchandise export earnings grew by 10.55 percent year-on-year to $40.53 billion
in the immediate past fiscal year riding on a high volume of garment shipment in a favourable
external business environment.
The earnings were 3.94 percent higher than the annual target of $39 billion in 2018-19. In 2017-
18, Bangladesh exported goods worth $36.66 billion.

However, June recorded one of the lowest export receipts at $2.78 billion, which is also 5.27
percent less than that of the corresponding month in the previous fiscal year, according to Export
Promotion Bureau (EPB) data released yesterday.
In June of 2017-18, Bangladesh’s export earnings were $2.93 billion.
June’s receipts were also 22.65 percent lower than the monthly target of $3.60 billion set by the
government. In Bangladesh, the fiscal year is counted between July of a year and June of the
next year.
Garment export earnings, which accounted for over 84 percent of the national exports, amounted
to $34.13 billion, registering an 11.49 percent year-on-year growth.
Of the amount, $16.88 billion came from knitwear and $17.24 billion from woven garment
products.
Earnings from apparel shipment were 4.57 percent higher than the target of $32.68 billion. Some
$30.61 billion was earned in fiscal 2017-18.
Bangladesh Major Imports
The following product groups represent the highest dollar value in Bangladesh’s import
purchases during 2019. Also shown is the percentage share each product category represents in
terms of overall imports into Bangladesh.
 Machinery including computers: US$5.8 billion (11.5% of total imports)
 Cotton: $5.4 billion (10.8%)
 Mineral fuels including oil: $4.4 billion (8.7%)
 Electrical machinery, equipment: $3.2 billion (6.4%)
 Iron, steel: $2.9 billion (5.8%)
 Plastics, plastic articles: $2.2 billion (4.4%)
 Vehicles: $1.7 billion (3.5%)
 Manmade staple fibers: $1.6 billion (3.2%)
 Manmade filaments: $1.42 billion (2.8%)
Bangladesh’s top 10 imports represent about three-fifths (59.7%) of the overall value of its
product purchases from other countries.
Iron and steel posted the fastest growth in cost among Bangladesh’s top 10 import categories, up
by 4.8% from 2018 to 2019. The other top product category to appreciate year over year was
manmade filaments, due to its 1.8% increase.
Leading the decreases among the top 10 Bangladeshi imports was cotton via its -21.3% drop year
over year, ahead of the 21% decline for imported electrical machinery and equipment.

Political situation of Bangladesh
Electoral system and form of government: Bangladesh practices multi-party democracy
influenced by the British parliamentary system. Executive power is in the hands of the prime
minister, who is the head of the cabinet. The president is the constitutional head of state and is
elected for a 5- year term by the parliament. All adult citizens (18 years old and over) are
eligible to vote, including women and ethnic minorities. In Bangladesh, parliament is called
Jatiya Sangsad. Parliamentary elections take place every five years. It is a unicameral legislature
consisting of 350 members of which 300 Members from 300 territorial constituencies on the
basis of adult Franchise. The remaining 50 seats are reserved for women who are elected by the
parliamentarians.
Major political parties:
 Bangladesh Jamaat-e-Islami
 Bangladesh Nationalist Party (BNP)
 Jatiya Party
 Bangladesh Awami League (BAL)
Politics of alliance: The politics of Bangladesh is dominated by mainstream two large parties,
Bangladesh Awami League and Bangladesh Nationalist Party (BNP). However, though the
center-left Awami League and center-right BNP dominated Bangladesh politics for a long time,
currently both are heading coalitions of like-minded parties with the AL leading the secular and
liberal elements while BNP is rallying the right-of-centre parties.
Policy & steps of current government
The ruling Government’s “Vision 2021” aims to eliminate extreme poverty completely and
achieve Middle Income Country status by the start of the next decade. Currently different
infrastructural development works are going on to ensure smooth connectivity all over the
Bangladesh and with neighboring countries. The government declared few Special Economic
Zones to attract more foreign investment. They allotted a large part of that special zone for
Chinese investment.
All political parties are united in their views towards the foreign investment. There is no barrier
to invest in Bangladesh. So Bangladesh is open and safe zone to invest for international
companies. Now Bangladesh is one of most preferable country to the foreign investors because
of low wage.

Bangladesh Legal System for Business
Legal system for business development: Following the political turmoil in 2013, law and order
is restored, helping to facilitate business and economic growth. The Rana Plaza tragedy forced
the government to introduce certain compliance requirements in the garments sector by enacting
the Labor (Amendment) Act 2013. A new Companies Act is being finalized to replace the
Companies Act 1994. The draft proposes certain treatments in line with the Organization for
Economic Co-operation and Development (OECD) compliance framework.
Private sector investment is prohibited for certain sectors including:
 Arms and ammunition
 Defense equipment
 Forest plantation
 Extraction of reserved forests
 Nuclear energy
 Security printing
 Minting
There is no restriction on foreign investment except in sectors controlled by administrative
licensing processes. These include:
 Banking
 Finance
 Insurance
 Merchant banking and brokerage
 Telecommunication
 Aviation
 Broadcasting
To acquire a stake in local companies, foreign investors require prior approval from the
Bangladesh Bank, if control of the business is transferred from local to foreign shareholders.
Open for all: There is no general restriction on doing business with certain countries or
jurisdictions. However, the Chief Controller of Import and Export (CCIE) amends the import and
export policies, addendums and Statutory Regulatory Orders (SROs) regularly, to prohibit or
impose limits on import and export of certain commodities from or to certain countries for
certain periods of time.
Investor rights protected: Foreign investor rights are protected under the Foreign Private
Investment (Promotion and Protection) Act 1980.The Bangladesh Bank has outlined relevant
procedures and formalities for all inward and outward remittance in its Guidelines for Foreign
Exchange Transactions (GFET). Any transaction that has not been outlined in the GFET must
obtain approval from the Bangladesh Bank.

Incentives available for investors: In Bangladesh different types of incentives for foreign investors are
available. In some cases local export oriented industries also get incentive opportunities. These include-
 Duty free import of capital machinery and spares bonded warehousing for businesses exporting
80% or more of goods or services.
 90% loans against letters of credit and funds for export promotion
 Cash incentives and export subsidies are granted on the free on board value (this includes
inland freight, export duty and other expenses, but not ocean freight, insurance and consular
fees) in the form of drawbacks and rebates on import and excise duties paid on direct inputs
and so on;
 For 100% export oriented industries, no import duty is charged on raw materials
Incentives to foreign investors-These include:
 100% foreign ownership and repatriation of invested capital, profit, and dividends;
 Double taxation can be avoided;
 Private sector power generation companies are tax exempted for 15 years;
 New investors are granted six month multiple entry visas.
Economy System of Bangladesh:
Formal Sector - The formal sector includes all regulated institutions like Banks, Non-Bank
financial institutions (FIs), Insurance companies, Capital Market Intermediaries like Brokerage
houses, bourgeois Banks etc.; micro Finance institutions (MFIs)
Semi-Formal Sector - The Semi formal sector includes those institutions which are regulated
otherwise but don't fall into the jurisdiction of financial organization, Insurance Authority,
Securities and Exchange Commission or any other enacted financial regulator. This sector is
principally pictured by specialised financial institutions like House Building Finance Corporation
(HBFC), Palli destiny Sahayak Foundation (PKSF), Samabay Bank, Grameen Bank etc., Non
Governmental Organizations (NGOs and separate government programs.
Informal Sector - The informal sector comprises of the institutions which are free and fully
unregulated. The sectors are categorized with their regulations.
Free Market Economy in Bangladesh: The economic system of Bangladesh after liberation
was neither capitalist nor socialist. Recently dramatic changes were made in the economic
system of the country. Policies were made to liberalize the economy where 100% foreign direct
investment and same treatment for both local and foreign investors were granted.