6 Reasons Why NOW is The Time to Invest in Bangladesh
Despite going through a period of impressive economic growth, Bangladesh remains underrated as a country to invest in. Foreign investment reached $2.4 billion in 2017 but there is still far more potential.
Why is now the time to invest in Bangladesh?
Economic Growth
Bangladesh’s GDP has grown significantly over the past few years.
It increased by 7.3% in 2017 and is expected to grow by 7% in 2019, as it continues the trend of the past few years.
The average GDP growth for developing countries is 4.9%, meaning that Bangladesh is well ahead of the pack.
Pro-Investment Policies
This growth has been driven by a raft of government policies designed to encourage investment in Bangladesh.
The government is keen to promote the private sector and in particular foreign investment as a driver for growth.
It offers incentives such as tax holidays and simplified imports for materials and machinery.
There’s also help getting connected to utilities.
The central bank respects the transferability of foreign currency, making such currency abundant.
There are very few restrictions on foreign ownership of Bangladeshi companies, with only four specific and security sensitive sectors having limitations.
The One-Stop Service Act, a law passed last year, will make foreign investment even easier.
Its aim is to create a single point of contact through which investors can deal with the bureaucracy of setting up in Bangladesh.
This vastly simplifies the process.
Together with the 100 economic zones being created across the country by 2030, this means that opportunities to invest in Bangladesh are at a critical point of increased opportunity.
Bangladesh is currently very reliant on the textile industry.
The government has concerns about being over-reliant on one sector, so is likely to be particularly helpful to other sorts of businesses.
Trade Agreements
Bangladesh has a growing range of trade agreements. These offer investors in the country access to wider markets and the profits of international trade.
The agreements vary in scale from a free trade agreement with Pakistan to membership of large organisations for trade in the Bay of Bengal, the Asia-Pacific region, and a network of Islamic states.
These agreements aren’t just local to Bangladesh.
One of the country’s most important trading partners is the European Union. The EU- Bangladesh Cooperation Agreement, which has been in place since 2001, offers duty-free exports to improve trade.
Location
All of these recent developments are encouraging for investors.
And there are some fundamental factors that put Bangladesh in a strong position from which to grow its economy. One of these is location.
Placed at the eastern edge of the Indian subcontinent, Bangladesh has good access to both Asian and Middle Eastern markets. The Bay of Bengal provides immediate access to global shipping routes.
Critically, Bangladesh is physically close to both India and China.
This provides trade opportunities with these growing global powerhouses. It has already led to significant investment from China, as wage disparities lead Chinese companies to outsource textile production to Bangladesh.
Natural Resources
Bangladesh has a number of natural resources which, due to its previously under- developed economy, have potential for greater profit than they currently provide.
Bangladesh is the seventh largest producer of natural gas in Asia, producing around 2,700 million cubic feet of natural gas each day.
A lack of skilled personnel means that it is currently reliant on importing these skills from other countries.
Anyone who can reduce the wastage and improve production could earn more from an already profitable industry.
Climatic conditions have made Bangladesh home to a prospering fishing industry, with both inland and ocean fisheries.
The country produces 2.8 million tons of fish each year.
Environmental concerns and land limits are turning more people around the globe away from eating red meat. So fishing industries are currently facing an opportunity for growth.
Roughly 20% of mainland Bangladesh is covered with forests. The government is making moves to preserve the forests.
But there are still opportunities for the managed forestry of rare trees as well as finding new biomedical ingredients among the genetic diversity forests provide.
An Overlooked Economy
Perhaps the strongest reason to invest in Bangladesh right now is that it is under-rated.
Its image as a nation vulnerable to social instability and environmental disaster has put off investors and it ranked 177thout of 190 economies in the World Bank’s Doing Business ranking for 2018.
With the government continuing its sustained effort to grow the economy and attract investment, this situation looks likely to change.
Now is the time to invest, before more people recognise Bangladesh’s potential.
Paul Connolly
Paul Connolly has been a journalist for more than 20 years, as a reporter and editor for Argus Media, Reuters, The Times, Associated Newspapers and The Guardian. He has covered Islamic Finance for Reuters in the 1990s. Paul has since helped launch three newspapers, as well as reported from Tokyo, Los Angeles and Stockholm.
