3 03. Vision 2021: In Quest of a Happy, Prosperous and Inclusive BangladeshMedium Term Economic Targets (2013)Raising economic growth rate to 8%Reducing poverty rate to 25% from 45%Enhancing electricity supply to 7,000 MWLong Term Economic Targets (2021)Boosting economic growth rate to 10% in 2017 and sustaining it till 2021Reducing poverty rate to 15%Enhancing electricity supply to 20,000 MWRaising the economy to the level of a middle-income country33
4 04. Road to Middle Income Country by 2021 To achieve the status of a middle income country by 2021:Required growth rate : 7.5%- 8% every yearPer Capita Income : US$ 1,300 (World Bank Report): US$ 1,100 (current)[Bangladesh Bureau of Statistics (BBS)]Share of Investment : 30% instead of 26.84%(FY 2013)44
5 05. Present status of the country: Bangladesh maintains a very promising economy with stable growth rate 6%+Per Capita Income US$ 1044BD reduced MDG targeted poverty rate to 25% in 2012, before the targeted yr. (2013)Generated electricity 10,000 MW in December, 2013BD is one of the top exporters of RMG to US & European countriesHas never posted negative economic growth rate during the past 30 yrs.Maintains a open, market based economyLeasing & buying a private land by foreign investors in BD is easier than India, Pakistan and Srilanka (World Bank Report)Bangladesh is an emerging country for FDI and (World Bank Report)‘‘… a peaceful society and stable ’’55
6 Sectoral Contribution to GDP since 1947: DurationSector wise GDP change (%)AgricultureIndustryServiceTotalBefore Liberation in70~554~1026~35100After Liberation in 197144~1811~3045~52At present in FY 2013193249SAARC Country (India)18.126.355.6Year Wise Electricity GenerationYearGeneration Capacity (MW)Actual Production (MW)5166416252714606663948908100606685256350Planning for Electricity Generation ( )YearMW201513,300202022,500202530,000203039,0006
7 07. What is told about Bangladesh Citi Investment Research & Analysis termed Bangladesh, China, Egypt, India, Indonesia, Iraq, Mongolia, Nigeria, Philippines, Sri Lanka and Vietnam have the most promising (per capita) growth prospects .Goldman Sachs branded as Bangladesh is in ‘Next 11’ list after the BRICS nationsThe International Monetary Fund (IMF) commented on the economy of Bangladesh as Resilient export and remittance flows have bolstered growth and external stabilityThe Wall Street Journal (WSJ) dismissed the previous branding of Bangladesh as commented Bangladesh, 'Basket Case' No More - with a higher growth rate, a lower birth rate, and a more internationally competitive economy,JPMorganChase commented Bangladesh The country ranks fourth in growth in economically active population.Morgan Stanley has commented Bangladesh is at the very early stages of an investment boom…New York Times has termed Bangladesh as “an unlikely corner of Asia, strong promise of growth”…COFACE (Economic & Insurance Institution of France) termed among the 10 countries including Bangladesh have promising growth prospects, business friendly environment- after Goldman Sachs ‘Next 11’ list like the BRICS nationsCOFACE countries: 1st 5: Peru, Philippine, Indonesia, Colambia & Srilanka , 2nd 5: Kenya, Tanzania, Zambia, Bangladesh & Ethiopia
8 08. World Bank Assessment World Bank on Bangladesh as an FDI destination: Bangladesh has scored higher than the average rating of around 100 developing countries in the CPIA of the World Bank that assesses four broad areas including economic & public sector managementThe areas are a) economic management, b) structural policies, c) policies for social inclusion and d) public sector management and institutionsBangladesh scores 3.5 out of a maximum 6 pointsDeveloping countries average point is 3.3 (BD score 0.2% higher)Basic requirements for sound investment are a) good macroeconomic statistics, b) accurate financial statements, c) stable regulatory framework and d) clear understanding of corporate governance structureBangladesh possesses all of the above at the present time and the quality of macroeconomic statistics is improving gradually.Bangladesh is the most convenient destinations for FDI for its investment friendly facilities & regulationsLeasing & buying a private land in BD by foreign investors is much easier than India, Pakistan and Srilanka”World Bank’s latest report on Investing Across Boarder 2010 covering 87 countries lists BD as one of the most convenient destinations for FDI”..
9 09. World Bank Assessment World Bank on Bangladesh as an FDI destination:(contd..) According to the World Bank’s New Business report- 2013:Bangladesh is ranked 74 for ease in doing a new business instead of previous yrs rank 132Bangladesh has undertaken significant & continuous reforms in business registration, process simplification and automation in service deliverySource: World Bank’s New Business Report- 2013
10 10. FDI Policy FrameworkThe National Industrial Policy of Bangladesh is one of the best and liberal policies in South Asia. The main features of the policy are:a) Private sector is treated as the engine of growthb) 100% foreign equity is allowed along with unrestricted exit.c) All industrial sectors are open for foreign investors for investment except 4 *reserve sectors for the government.c) No upper ceiling for foreign investorsd) Equal treatment for both local and foreign investmente) Export oriented industries are given top priorityf) J/V with local partner either private or public is allowed but not mandatory.g) Foreign private investment in Bangladesh is secured by law.Reserve Sectors: 1. Defense and defense production, 2. nuclear energy, 3. extraction from reserved forests, 4. security printing and mint and air transportation (some domestic routes and international air cargo already opened for private investment.) and railways.10
11 11. FDI Policy Framework (contd…) The broader FDI policy & regulatory framework include, among others, the following:Business StagePolicy & RegulationGeneralBangladesh Industrial Policy (as undertaken from time to time)Business start-upThe Companies Act, 1994Securities and Exchange Commission Act, 1993ProtectionThe Foreign Private Investment (Promotion & Protection) Act, 1980Export ZonesBangladesh Export Processing Zones Authority Act, 1980Bangladesh Private Export Processing Zones Authority Act, 1996FacilitationThe Investment Board Act, 1989Corporate / Personal Taxation and incentivesIncome Tax Ordinance 1984 and related rules and SROsNational BudgetThe Finance Act/BillInternational Trade (Export & Import)Bangladesh Export Policy (as undertaken from time to time)Bangladesh Import Order (as undertaken from time to time)SectoralBangladesh Energy Regulatory Commission Act, 2003 (BERC)Bangladesh Telecommunication Regulatory Commission Act, 2001 (BTRC)The National Drug Policy, 2005Foreign ExchangeBangladesh Foreign Exchange Guidelines (issued from time to time)
12 12. Investment Opportunities Industrious low cost workforceStrategic location, regional connectivity and worldwide accessStrong local market and growthLow cost of energyProven export competitivenessCompetitive incentives, Tax holidayExport & economic zonesBangladesh is the bridge between ASIAN & SAARC nationsBangladesh ensures adequate protection of intellectual property rights such as patents, designs & trademarks and copy right.
13 Bangladesh in global context 13. Investment Environment - tax and policiesBangladesh in global contextDuty and quota free accessDuty and quota free access to EU plus Japan, US, Canada, Australia and most other developed countriesTariff-free access to selected SAFTA marketsBilateral Investment treaties (BITs)32 countries and in process with another 08Double taxation treaties (DTTs) and other guarantees and bilateral agreements with 28 countries plus 21 in process“…Bangladesh foreign trade policy provides duty and quota free access to many of the world’s major markets, for most products…”1313131313
14 Financial incentives 14. Investment Opportunities - incentives Tax holidays (Industries set up within 2015 for 17 industrial sectors):In Dhaka & Chittagong Divisions (excluding city and adjacent ): 5 years % first 2 years : 50% next 2 years: last 1 year 25%.In Rajshahi, Khulna, Sylhet, Barisal, Rangpur Divisions and 3 Chittagong Hilly Districts : 7 years 100% for 1st 3 years: 50% for next 3 years: 25% for last 1 year .For Infrastructural Sectors: 10 yrs. (all over the Country)Depreciation allowances:Accelerated depreciation allowed for new industries: 50%, 30% and 20% for 1st, 2nd, 3rd years on cost of plant & machinery(“…very competitive range of financial incentives makes the cost ofdoing business in Bangladesh even more attractive.…”)141414
15 15. Investment Opportunities - incentives Financial incentivesBusinesses exporting 80% or more of goods or servicesReduced import duty on machinery & spares(1% for export oriented industries and 3% for other industries)Export credit guarantee schemeDomestic market sales up to 20% allowed to export-oriented companies outside EPZ (relevant duties apply)Cash incentives and export subsidies granted on the FOB value:5% for local textiles , 10% for jute products, light engineering products, 12.5% frozen fish, potato, 15% for leather products, and 17.5% for bicycles.Remittances facilities:Up to 75% of of the salaries of the foreigner employed in BangladeshSaving and retirement benefits at the time of returnRemittance of royally, technical-know how and technical assistance fees are allowed:a. For new industry such fees should not exceed an aggregate limit of 6% of C& F value of imported machineryb. For other projects, such fees should not exceed an aggregate limit of 6% of previous years sale.151515
16 16. Promotion and Protection of Investment in Bangladesh Foreign investment in Bangladesh is secured by law against nationalization and expropriation.Foreign Private Investment (Promotion and Protection) Law, 1980Bangladesh is a signatory to ICSID, UNCITRAL, OPIC, MIGA, WAIPA, WIPO and WTO.Intellectual Property right is protected by Law.Bilateral investment treaty with India signed in 6 May, 2009The avoidance of double taxation treaty with India was signedActive presence of Bangladesh India Bangladesh Chamber of Commerce and Industry.
17 Bangladesh at a Glance 17. A sustained economic growth “…constant unbroken GDP growth…”Source: Ministry of Finance, others171717
18 “…export driven growth in manufacturing…” 18. Economic Performance - growthExports US$bnManufacturing growth % of GDP“…export driven growth in manufacturing…”Source: Bangladesh Bureau of Statistics Bangladesh Economic Review 20131818181818
19 . 19. FDI inflow… FDI by major sectors Sector wise FDI Inflows from 2009 to June 2013*(US$ Million)Sector20092010201120122013*Agriculture & fishing11.7913.635.5960.8514.86Power, Gas &Petroleum51.1592.06238.21126.6555.12Manufacturing211.29238.78425.50515.21384.76Construction0.740.210.452.904.79Trade & Commerce161.59186.63263.39163.72248.8Transport, Storage & Communication250.14360.31182.78375.64186.66Services13.4521.720.4547.6937.97Others0.491.790.030.13Total700.16913.32933.0919
20 20. FDI Inflow: Distribution by Sources/Countries (US$ Mill) Source Country2010201120122013*Egypt3.01152.30126.640.37USA56.95117.7443.8052.83Netherlands64.92116.7579.8238.52UK105.68116.32136.94104.84South Korea40.00113.0697.5973.69Hong Kong63.8454.1248.93Australia13.9572.8039.81Pakistan18.8870.549.17Japan21.7946.5530.0877.12SingaporeMalaysia97.73India43.1925.7428.4326UAE36.41Others481.11199.74646.2Total FDI913.32933.09In CY2013*Jan.-June FDI inflow has increased by 88% from 2012 (Jan. June)Malaysia, British Virgin Islands, and Thailand has shown their interest* Data till June 2013Source: Enterprise Survey, Bangladesh Bank20
21 21. Investment Opportunities Sectoral OpportunitiesortunitiesInfrastructure projects (Power Generation, Gas and Oil Exploration, High-tech Parks, etc.)Composite Textiles and Ready Made Garments with backward linkagesSteel and EngineeringInfocomm Services (IT and IT enabled services);Textile and other Industrial Machinery and Parts thereofFrozen Shrimp, Frozen Fish for exportFinished Leather and Leather goodsHome AppliancesTelecommunication equipment Semi- ConductorFresh Fruits & Vegetables, Cooked/Semi Cooked Food items, Canned Juice, Dairy and Poultry, Livestock and FisheriesAutomobileCentral Effluent Treatment Plants in Industrial AreasPaper from green jute and Allied ProductsHotel & MotelManufacturing of bicycle and two wheeler for exportJute productsTourismShipbuildingNew forms of social capital with mass transit networks, urban sewerage system, river reclamation, forestry and clean energy projects.
22 22. Prospective areas for Investment (as per the National Industrial Policy- 2010) 1. Agro-based & agro-processing industry2. Jute & jute-mixed goods3. Flower cultivation5. Commercial plantation6. Horticulture7. Silkworm & silk industry8. Furniture9.Handicrafts10. Home Textiles11. Textiles industry12. Readymade garments industry13. High value added RMG14. Computer software & ICT goods15. Electronics16. Light engineering incl. automobiles18. Pharmaceutical goods19. Leather and leather products.20. Herbal medicines21. Ceramics22. Frozen Food23. Integrated shrimp cultivation24. Infrastructure25. Jewellery and diamond cutting polishing26. Oil and gas27. Tourism industry28. Basic chemicals/raw materials used in industries.29. Dye and chemicals used in textiles industry.30. Cosmetics and toiletries.31. Information & Communication Technology32. Health care22
23 23. BOI Role / FunctionsBOI Functions are broadly categorized into three areas:Investment promotion;Investment facilitation (Registration, permission, recommendations etc. including investment aftercare) andPolicy advocacy4. Investment after careFor easy entry of investment in Bangladesh from BOI end-All process & procedures are simplified for investment registrationOnline Registration & Service Tracking system are introduced in BOIInvestor can register his project within a day.
24 24. BOI services BOI Service Category Investment Counseling Visa on ArrivalForeign/JV / Local Investment Facilitationa. Registration of New Industriesb. Visa Recommendationc. Work Permit Issued. Recommendation for IP, Machinery Clearance Certificatee. Recommendation for IRC, Bonded Warehousef. Approval of Royalty and Technical Assistance Feesg. Processing and approval of Foreign Borrowingh. Liaison/Branch Office PermissionIP = Import Permit; IRC= Import Registration Certificate
25 25. Private Public Partnership (PPP) Policy Promulgated by Govt 25. Private Public Partnership (PPP) Policy Promulgated by Govt. in 2010The objectives of this Policy and Strategy are to:Spell out the principles of partnership with private sector for undertaking various projects related to infrastructure as well as public service delivery;Define an institutional framework, which is conducive and efficient in handling the PPP projects as well as effective to protect public interest; andEnsure balance between risk and reward for both the government and private partners while aiming to keep the undertaking attractive for the private sector.
26 26. Economic Zones: Economic Zones under implementation… Govt has promulgated Economic Zones Act in 2010 to build EZ in the countryKey Features:Comprehensive industrial InfrastructureDevelopment under PPP (Private Public Partnership) modelOwned and regulated by the government, but managed by the private sectorEncompasses multiple business sectors within each zoneCombines both bonded and non-bonded areaEZ includes non processing & domestic areaEconomic Zones under implementation…Mongla, Sirajganj, Anowara, MirershoraiMaulvibazar26
27 Bangladesh-India Business Relations Key Features:Bilateral investment treaty with India signed in 6 May, 2009The avoidance of double taxation treaty with India was signedActive presence of Bangladesh India Bangladesh Chamber of Commerce and Industry.BOI arranged road show in major cities of India such as Mumbai, Chennai, Kolkata last year with active support from CII and IBCCIIndian corporate houses like CEAT, TATA, BAJAJ, MARICO, AsianPaints, ACI Godrej, Emami, Sun Pharma, Mundi Pharma, Jyothi kallol, TVS Auto etc are actively present in Bangladesh.27
28 Bangladesh- india Business Relations Indian Investment Projects registered with BOIProjectTypeNo. of ProjectsProposedInvestment(USD Million)PotentialEmployment(Person)100% Foreign Investment8617, 538Joint Venture Investment19840,231Total2842,57,769[Source: June , 2013Board of Investment]
29 Bangladesh-India Business Relations Actual FDI from India (Fiscal year basis)The trend of actual inflow from India to Bangladesh is increasing…[Source: Enterprise Survey, Bangladesh Bank, World Investment Report , UNCTAD]
30 Thank youPrime Minister’s Office, Government of the People's Republic of Bangladesh, Jiban Bima Tower (19th Floor), 10 Dilkusha C/A, Dhaka 1000, BangladeshPhone: (880-2) Fax: (880-2)Web:303030