Bangladesh Economy

Introduction:
Bangladesh is one of the world's poorest nations, with overpopulation adding to its economic woes, and it is heavily reliant on foreign aid. The country's economy is based on agriculture. Rice, jute, tea, sugarcane, tobacco, and wheat are the chief crops. Bangladesh is the world's largest producer of jute. Fishing is also an important economic activity, and beef, dairy products, and poultry are also produced. Except for natural gas (found along its eastern border), limited quantities of oil (in the Bay of Bengal), coal, and some uranium, Bangladesh possesses few minerals. The economy of Bangladesh is a rapidly developing market-based economy. Its per capita income in 2010 was est. US$1,700 (adjusted by purchasing power parity). According to the International Monetary Fund, Bangladesh ranked as the 43rd largest economy in the world in 2010 in PPP terms and 57th largest in nominal terms, among the Next Eleven or N-11 of Goldman Sachs and D-8 economies, with a gross domestic product of US$269.3 billion in PPP terms and US$104.9 billion in nominal terms. The economy has grown at the rate of 6-7% p.a. over the past few years. More than half of the GDP belongs to the service sector, a major number of nearly half of Bangladeshis are employed in the agriculture sector, with RMG, textiles, leather, jute, fish, vegetables, leather and leather goods, ceramics, fruits as other important produce. The land is devoted mainly to rice and jute cultivation as well as fruits and produce, although wheat production has increased in recent years; the country is largely self-sufficient in rice production. Bangladesh's growth of its agro industries is due to its rich deltaic fertile land that depend on its six seasons and multiple harvests. Improving at a very fast rate, infrastructure to support transportation, communications, power supply and water distribution are rapidly developing. Bangladesh is limited in its reserves of oil, but recently there was huge development in gas and coal mining. The service sector has expanded rapidly during last two decades, the country's industrial base remains very positive. The country's main endowments include its vast human resource base, rich agricultural land, relatively abundant water, and substantial reserves of natural gas, with the blessing of possessing the worlds only natural sea ports in Mongla and Chittagong, in addition to being the only central port linking two large burgeoning economic hub groups SAARC and ASEAN.

Economy History:
Bangladesh historically has run a large trade deficit, financed largely through aid receipts and remittances from workers overseas. Foreign reserves dropped markedly in 2001 but stabilized in the USD3 to USD4 billion range (or about 3 months' import cover). In January 2007, reserves stood at $3.74 billion, and then increased to $5.8 billion by January 2008, in November 2009 it surpassed $10.0 billion, and as of April 2011 it surpassed the US $12 billion according to the Bank of Bangladesh, the central bank. In addition imports and aid-dependence of the country has systematically been reduced since the beginning of 1990s.

Macro-economic trend:
This is a chart of trend of gross domestic product of Bangladesh at market prices estimated by the International Monetary Fund with figures in millions of Bangladeshi Taka. However, this reflects only the formal sector of the economy. Gross Domestic Year Product 1980 1985 1990 1995 2000 2005 2008 250,300 597,318 1,054,234 1,594,210 2,453,160 3,913,334 5,003,438 US Dollar Exchange 16.10 Taka 31.00 Taka 35.79 Taka 40.27 Taka 52.14 Taka 63.92 Taka 68.65 Taka Inflation Index (2000=100) 20 36 58 78 100 126 147 Per Capita Income (as % of USA) 1.79 1.19 1.16 1.12 0.97 0.95

Mean wages were $0.58 per manhour in 2009.

Economic outlook:
Efforts to achieve Bangladesh's macroeconomic goals have been problematic mostly due to various factors including the country's large population, corruption within the government, power shortages etc. The privatization of public sector industries has proceeded at a slow pacedue in part to worker unrest in affected industriesalthough on June 30, 2010, the government took a bold step as it closed down the Adamjee Jute Mill, the country's largest and most costly state-owned enterprise. The government also has proven unable to resist demands for wage hikes in government-owned industries. Access to capital is impeded. State-owned banks, which control about three-fourths of deposits and loans, carry classified loan burdens of about 50%.

The IMF and World Bank predict GDP growth over the next 5 years will be about 6.5%, well short of the 9-10% needed to lift Bangladesh to Mid Income Nation level, within that time period. The initial impact of the end of quotas under the Multi-Fiber Arrangement has been positive for Bangladesh, with continuing investment in the ready-made garment sector, which has experienced annual export growth in excess of around 20%.Downward price pressure means Bangladesh must continue to cut final delivered costs if it is to remain competitive in the world market. Foreign investors in a broad range of sectors are increasingly frustrated with the politics of confrontation, the level of corruption, the slow pace of reform and privatization and deregulation of the public sector and the lack of basic infrastructure e.g. roads. While investors view favorably recent steps by the interim government to address corruption, governance, and infrastructure issues, most believe it is too early to assess the long-term impact of these developments.

Bangladesh Economy : Quick look

Bangladesh is an agricultural country. With some three-fifths of the population engaged in farming. Jute and tea are principal sources of foreign exchange. Major impediments to growth include frequent cyclones and floods, inefficient stateowned enterprises, inadequate port facilities, a rapidly growing labor force that cannot be absorbed by agriculture, delays in exploiting energy resources (natural gas), insufficient power supplies, and slow implementation of economic reforms. Economic reform is stalled in many instances by political infighting and corruption at all levels of government. Progress also has been blocked by opposition from the bureaucracy, public sector unions, and other vested interest groups. The newly-elected BNP government, led by Prime Minister Khaleda ZIA, has the parliamentary strength to push through needed reforms, but the party's level of political will to do so remains undetermined. For higher GDP growth, investments in both public and private sectors will need to be accelerated. The prevailing political and economic stability has greatly encouraged investment in the private sector. The trend of foreign direct investment is very encouraging. The government is committed to market economy and has been pursuing policies for supporting and encouraging private investment and eliminating unproductive expenditures in the public sector. A number of measures have been taken to strengthen the planning system and intensify reforms in the financial sector. The present government believe that wastage of resources is a far greater obstacle to development than inadequacy of resources. It is common knowledge that many development efforts in the past years turned into exercises in futility because of inefficiency and corruption in high places. Terrorism was allowed to paralyse law and order. Administration was over

centralized at the cost of local government institutions. The government has, therefore, decided to decentralize administration in the quickest possible time. GDP: purchasing power parity - $230 billion (2001 est.) GDP-real growth rate: 5.6% (2001 est.) GDP-per capita: purchasing power parity - $1,750 (2001 est.) GDP-composition by sector: agriculture: 30%. industry: 18%. services: 52% (2000). Population below poverty line: 35.6% (1995-96 est.) Household income or consumption by percentage share: lowest 10%: 3.9%. highest 10%: 28.6% (1996). Inflation rate (consumer prices): 5.8% (2000) Labor force: 64.1 million (1998). note: extensive export of labor to Saudi Arabia, Kuwait, UAE, Oman, Qatar, and Malaysia; workers' remittances estimated at $1.71 billion in 1998-99. Labor force-by occupation: agriculture 65%, services 25%, industry and mining 10% (1996) Unemployment rate: 35.2% (1996). Budget: revenues: $4.9 billion expenditures: $6.8 billion, including capital expenditures of $NA (2000). Industries: jute manufacturing, cotton textiles, garments, tea processing, paper newsprint, cement, chemical, light engineering, sugar, food processing, steel, fertilizer. Industrial production growth rate: 6.2% (2001) Electricity-production: 13.493 billion kWh (2000). Electricity-production by source: fossil fuel: 92.45% hydro: 7.55% nuclear: 0%. other: 0% (2000). Electricity-consumption: 12.548 billion kWh (2000) Electricity-exports: 0 kWh (2000).

Electricity-imports: 0 kWh (2000). Agriculture-products: rice, jute, tea, wheat, sugarcane, potatoes, tobacco, pulses, oilseeds, spices, fruit; beef, milk, poultry. Exports: $6.6 billion (2001) Exports-commodities: garments, jute and jute goods, leather, frozen fish and seafood. Exports-partners: US 31.8%, Germany 10.9%, UK 7.9%, France 5.2%, Netherlands 5.2%, Italy 4.42% (2000). Imports: $8.7 billion (2001) Imports-commodities: machinery and equipment, chemicals, iron and steel, textiles, raw cotton, food, crude oil and petroleum products, cement. Imports-partners: India 10.5%, EU 9.5%, Japan 9.5%, Singapore 8.5%, China 7.4% (2000) Economic aid-recipient: $1.575 billion (2000 est.) Currency: 1 taka (Tk) = 100 poisha. Exchange rates: Taka per US dollar - 57.756 (January 2002), 55.807 (2001), 52.142 (2000), 49.085 (1999), 46.906 (1998), 43.892 (1997) Fiscal year: 1 July-30 June.

Agriculture of Bangladesh:

Bangladesh is primarily an agrarian economy. Agriculture is the single largest producing sector of economy since it comprises about 30% of the country's GDP and employing around 60% of the total labour force. The performance of this sector has an overwhelming impact on major macroeconomic objectives like employment generation, poverty alleviation, human resources development and food security. Meeting the nation's food requirements remain the key-objective of the government and in recent years there has been substantial increase in grain production. However, due to calamities like flood, loss of food and cash crops is a recurring phenomenon which disrupts the continuing progress of the entire economy. Agricultural holdings in Bangladesh are generally small. Through Cooperatives the use of modern machinery is gradually gaining popularity. Rice, Jute, Sugarcane, Potato, Pulses, Wheat, Tea and Tobacco are the principal crops. The crop sub-sector dominates the agriculture sector contributing about 72% of total production. Fisheries, livestock and forestry sub-sectors are 10.33%, 10.11% and 7.33% respectively. Bangladesh is the largest producer of World's best Jute, which also known as natural jute or raw jute. Rice being the staple food, its production is of major importance. Rice production stood at 20.3 million tons in 1996-97 fiscal year. Crop diversification program, credit, extension and research, and input distribution policies pursued by the government are yielding positive results. The country is now on the threshold of attaining self-sufficiency in food grain production.

Commerce & Industry:

Commerce Information :
In 1972-73, the export earnings of the country totaled US$348.33 million, of which 90% came from the jute export sector. The other major export producing items were tea and leather. Since then, the country has been widening its export base. The situation has now vastly improved with addition of non-traditional items like readymade garments, shrimps, fish, finished, leather, newsprint chemical fertilizer, handicrafts, naphtha, ceramic products, fresh fruits, flowers and vegetables, etc. As a result, the export earnings increased, estimated to be US $ 5020 million during 1997-98. The major importable items include raw cotton, textile fabrics and accessories cotton yarn, petroleum products, capital machinery, automobiles including spares and accessories, industrial chemicals and dyes, pharmaceutical raw materials, milk food, edible-oil, coal, ferrous and non-ferrous metals, cement, etc. The value of imports during 1997-98 has been estimated to be US$ 7525 million. In line with the global trend, the government has steadily liberalized its trade barriers and significant progress has been achieved in recent years in reducing or eliminating non-tariff restrictions, rationalizing tariff rates and raising export incentives.

Information on Industry :
The county was one of the major exporters of textiles, silk and sugar till the eighteenth century but the industrialization process was subsequently halted during the 200 years of colonial exploitation. As a result, Bangladesh inherited a narrow industrial base when it became independent in 1971. It has a good number of large, medium and small-sized industries in both public and private sectors based on both indigenous and imported raw materials. Among them are jute, cotton, textile, fertilizer, engineering, shipbuilding, steel, oil-refinery, paper, newsprint, sugar, chemicals, cement and leather. Raw Jute and Jute Industry has traditionally played an important role in the national economy. But in recent years, Ready Made Garments Industry has replaced Jute Industry as the principal export-earner for the country. Considerable progress has been attained in the past few years in industries such as leather, ceramic, shrimp, fish, pharmaceuticals and frozen food. With the development of infrastructures, supportive policies for trade and investment and comparative advantage in labour-intensive Industries, excellent prospects for investment exist in Bangladesh today. Industrial growth was recorded at 81% during 1997-98. Foreign investors are pouring into the country in greater numbers everday, especially in the export processing zones special

facilties existing at Dhaka and Chittagong.

Energy Sector of Bangladesh:

An essential precondition for industrial development is uninterrupted supply of energy. Although the installed capacity for generation of electricity in the country is 2908 megawatt, the actual production does not exceed 2160 megawatt as against the peak demand of 2200 megawatt. The average level of system loss is still as high as 33.3%. The demand for power will increase by 300 MW annually and an investment of about Tk 110 billion up to the turn of the century will be needed to meet it. The private power generation policy offers attractive incentives including tax holidays for 15 years and one-win-dow service. The reserve of recoverable natural gas has been estimated at 12.4 trillion cubic feet. After years of commercial exploitation, a reserve of 9.8 trillion cubic feet is still available. Productionsharing contracts have been signed with local and foreign firms for oil and gas exploration in 8 blocs out of a total 23 in the country. Currently about 88 percent of power generation is based on natural gas. About 55% of the country's energy supply is based on traditional fuels (crop residues, animal dung and fuel wood), 24% on natural gas, 19% on imported oil and coal and the remaining 2% is hydroelectricity. Natural gas has also contributed to the rapid growth of the chemical fertilizer industry. The recent discovery of sizable coal deposits in the northwestern part of the country is of significance. Agreements have been signed with some Chinese companies for their extraction. A coal-based power plant is also proposed to be set up in the area. Abundant supply of coal at home will greatly reduce pressure on imported oil.

Fisheries & livestock of Bangladesh:

In recent years. the fisheries and livestock sector has been playing an increasingly important role in the economy uplift efforts of Bangladesh. It is a labourintensive and quick-yielding sector which augments growth and alleviates poverty. Around 1.3 million people are directly employed in the fisheries sector alone. The country has immense natural potential for developing the fisheries subsector. The sector contributes 3.3% of the GDP and 10.33% of the agriculture sector. The sector includes open water bodies such as rivers, canals,lakes, etc. And closed water bodies such as ponds and flood-control polders totalling 4 million hecteres. Almost 80% of the country's protein requirement, around 70%

of exports in the primary commodity category and almost 9% of toral exports come from this sub-sector. The sub-sector marked a continuous annual growth of 8.6% since 1996. This increase is due to both Government and private initiatives. Fish production increased to over 1 .4 million during 1997-98. With an annual growth rate of over 8% since 1993, the contribution of the livestock sub-sector to GDP and the agriculture sector as a whole is currently 3.2% and 10.11% respectively. Showing much potential to develop as a commercial sector with employment and income generating opportunities both in the rural and urban areas. A large number of enterprises-cattle, poultry and dairy farms have grown in the private sector in recent years.

External trade:
The Bangladesh Garments Manufacturers and Exporters Association (BGMEA) has predicted textile exports will rise from US$7.90 billion earned in 2005-06 to US$15 billion by 2011. In part this optimism stems from how well the sector has fared since the end of textile and clothing quotas, under the Multifibre Agreement, in early 2005. According to a United Nations Development Programme report "Sewing Thoughts: How to Realize Human Development Gains in the Post-Quota World" Bangladesh has been able to offset a decline in European sales by cultivating new markets in the United States. "[In 2005] we had tremendous growth. The quota-free textile regime has proved to be a big boost for our factories," said BGMEA president S.M. Fazlul Hoque told reporters, after the sector's 24 per cent growth rate was revealed. Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) president Md Fazlul Hoque has also struck an optimistic tone. In an interview with United News Bangladesh he lauded the blistering growth rate, saying "The quality of our products and its competitiveness in terms of prices helped the sector achieve such... tremendous success." Knitwear posted the strongest growth of all textile products in 2005-06, surging 35.38 per cent to US$2.82 billion. On the downside however, the sector's strong growth came amid sharp falls in prices for textile products on the world market, with growth subsequently dependent upon large increases in volume. Bangladesh's quest to boost the quantity of textile trade was also helped by US and EU caps on Chinese textiles. The US cap restricts growth in imports of Chinese textiles to 12.5 per cent next year and between 15 and 16 per cent in 2008. The EU deal similarly manages import growth until 2008.

Bangladesh may continue to benefit from these restrictions over the next two years, however a climate of falling global textile prices forces wage rates the centre of the nation's efforts to increase market share. Prior to the Wage Board's announcement of its recommended minimum wage of $24, Tk1,604, in 2006, the rate had remained unchanged at Tk950, about $15, for more than 12 years. Although the government may allow up to three years for the new wage to be implemented, and inevitably there will be compliance issues as manufacturers drag their feet, it seemed politically untenable for wages to remain at those levels given the unprecedented industrial unrest. The formation of labour unions within the EPZs is prohibited as are strikes. Bangladesh's exports to the U.S. surpassed $1.9 billion in 1999. Bangladesh also exports significant amounts of garments and knitwear to the EU market. Bangladesh also has significant jute, leather, shrimp, pharmaceutical, and ceramics industries. Bangladesh has been a world leader in its efforts to end the use of child labor in garment factories. On July 4, 1995, the Bangladesh Garment Manufacturers Export Association, International Labour Organization, and UNICEF signed a memorandum of understanding on the elimination of child labor in the garment sector. Implementation of this pioneering agreement began in fall 1995, and by the end of 1999, child labor in the garment trade virtually had been eliminated. The labor-intensive process of ship breaking for scrap has developed to the point where it now meets most of Bangladesh's domestic steel needs. Other industries include sugar, tea, leather goods, newsprint, pharmaceutical, and fertilizer production.

Foreign Aid:
The government is aware of the fact that because of the existing international economic environment the amount of foreign aid so essential for developing countries like Bangladesh is fast dwindling. The conditionalities of aid are also becoming stringent. The government has, therefore, taken appropriate initiatives for proper utilization of foreign aid. The country's development partners at the same time, ought to acknowledge that Bangladesh not only needs more aid but also better aid. The government has given the highest priority to implementing with utmost efficiency the annual development programme (ADP) which allocates domestic and foreign resources to different sectors of the economy. From the economic and social points of view, agriculture is the country's most important sector as it contributes 32.4 percent of GDP and about 75 percent of its 120 million people are directly or indirectly dependent on it for their livelihood. But because of

declining growth in agriculture in the past the standard of life of the small and marginal farmers had been going down forcing the nation to become increasingly dependent on food imports. The government has, therefore, decided to increase allocation for agriculture substantially and offer a wide range of incentives to the farmers including liberal credit to raise production and generate on-farm and off-farm employment for the rural poor. An Agriculture Commission has also been set up to recommend longterm policy reforms to boost the sector. Fiscal Year 20072008 20082009 2009-2010 2010-2011 Total Export Total Import Foreign Remittance Earnings $14.11b $25.205b $8.9b $15.56b $22.00b+ $9.68b $16.7b ~$24b $10.87b $22.93b $32b $11.65b

Textile sector:
Bangladesh's textile industry, which includes knitwear and ready-made garments along with specialized textile products, is the nation's number one export earner, accounting for 80% of Bangladesh's exports of $15.56 billion in 2009. Bangladesh is 3rd in world textile exports behind Turkey, another low volume exporter, and China which exported $120.1 billion worth of textiles in 2009. The industry employs nearly 3.5 million workers. Current exports have doubled since 2004. Wages in Bangladesh's textile industry were the lowest in the world as of 2010. The country was considered the most formidable rival to China where wages were rapidly rising and currency was appreciating. After massive labor unrest in 2006 the government formed a Minimum Wage Board including business and worker representatives which in 2006 set a minimum wage equivalent to 1,662.50 taka, $24 a month, up from Tk950. In 2010, following widespread labor protests involving 100,000 workers in June, 2010, a controversial proposal was being considered by the Board which would raise the monthly minimum to the equivalent of $50 a month, still far below worker demands of 5,000 taka, $72, for entry level wages, but unacceptably high according to textile manufacturers who are asking for a wage below $30. On July 28, 2010 it was announced that the minimum entry level wage would be increased to 3,000 taka, about $43. The government also seems to believe some change is necessary. On September 21, 2006 then ex-Prime Minister Khaleda Zia called on textile firms to ensure the safety of workers by complying with international labor law at a speech inaugurating the Bangladesh Apparel & Textile Exposition (BATEXPO).

Investment:
The stock market capitalization of the Dhaka Stock Exchange in Bangladesh crossed $10 billion in November 2007 and the $30 billion dollar mark in 2009, and USD 50 billion in August 2010. Bangladesh had one of the best performing stock markets in the world during the recent global recession, due to relatively low correlations with developed country stock markets. Major investment in real estate by domestic and foreign-resident Bangladeshis has led to a massive building boom in Dhaka and Chittagong. Recent (2011) trends for investing in Bangladesh as Saudi Arabia trying to secure public and private investment in oil and gas, power and transportation projects, United Arab Emirates (UAE) is keen to invest in growing shipbuilding industry in Bangladesh encouraged by comparative cost advantage, Tata, an India-based leading industrial multinational to invest Taka 1500 crore to set up an automobile industry in Bangladesh, World Bank to invest in rural roads improving quality of live, the Rwandan entrepreneurs are keen to invest in Bangladesh's pharmaceuticals sector considering its potentiality in international market, Samsung sought to lease 500 industrial plots from the export zones authority to set up an electronics hub in Bangladesh with an investment of US$1.25 billion, National Board of Revenue (NBR) is set to withdraw tax rebate facilities on investment in the capital market by individual taxpayers from the fiscal 2011-12.

2010-11 market crash:

The bullish capital market turned bearish during 2010, with the exchange losing 1,800 points between December 2010 and January 2011. Millions of investors have been rendered bankrupt as a result of the market crash. The crash is believed to be caused artificially to benefit a handful of players at the expense of the big players.

A New Horizon For Investment:

Bangladesh is now trying to establish itself as the next rising star in South Asia for foreign investment. The government has implemented a number of policy reforms designed to create a more open and competitive climate for private investment, both foreign and local. The country has a genuinely democratic system of government and enjoys political stability seen as a sine qua non for ensuring a favorable climate for investment and sustained development. Bangladesh has been quick to undertake major restructuring for establishing a

market economy, with the major thrust coming from the private sector. The country enjoys modest but steady economic growth. Its current development strategy is based on the premise that the creation and distribution of wealth occurs through the acceleration of growth driven by competitive market forces, with the government facilitating growth and making a clean break from the practices of a controlled economy where private investment is constrained. With this end in view. The government has been gradually withdrawing its involvement in this industrial and infrastructure sectors and promoting private sector participation. The government has moved speedily to translate its policy pronouncements into specific reforms. It has been consistently pursuing an open-door investment policy and playing a catalytic rather than a regulatory role. Regulatory controls and constrains have been reduced to a minimum. The government has steadily liberalized its trade regime. Significant progress has been achieved in reducing non-tariff restrictions on trade, rationalizing tariff rates and improving export incentives. The introduction of VAT has helped rationalization of the import tariff and domestic tax structures. The tariff structure and the import policy are kept under constant review to identify areas where further improvements are called for. On the legal and administrative front, the government has initiated measures to give greater autonomy and independence to the judiciary - a pre-requisite as viewed by investors, for the restoration of confidence in the judicial system. A permanent Law Reform Commission has already been set up to ensure greater transparency and predictability in the way rules and regulations are made and implemented. An Administrative Reform Commission to rationalize existing rules, regulations and procedures has also been set up. The Company Law has been updated and modernized. The Securities and Exchange Commission has been established to oversee and regulate the operations of the stock market. The financial services have been strengthened through enactment of the Banking Companies Act, 1991 and the Financial Institution Act, 1993. The Industrial Relations Act has been amended to enhance labour market efficiency. Motivated by the simple realization that state-owned enterprises are a drain on its scarce resources and that these are generally inefficient, very costly and slow in responding to changing markets and consumer desires, the country has embarked on a privatization programme, offering substantial opportunities for international investors.

In order to entice investors, the government has put in place an extensive programe of incentives, which include :
no ceiling on investment. tax-holidays. tax-exemption and duty-free importation of capital machinery and spare parts for 100% export-oriented industries. residency permits for foreign nationals. capital, profit and dividend repatriation facilities. hundred percent foreign equity allowed. exemption of income tax upto three years for expatriate employees. term loans and working capital loans from local banks allowed. reinvestment of repatriable dividends treated as new investment. double-taxation avoidance, as per bilateral agreements already concluded. tax exemption on the interest payable on foreign loans and on royalties and technical know-how fees. open exchange controls. multiple-entry visas for foreign investors. investors can take advantage of the generalized system of preference, which allows duty-free access to American, European and Japanese markets. Taka is convertible for current account transactions.

The Country also offers :

extremely competitive labour costs, perhaps the lowest in Asia. easily trainable workforce of 56 million. a large domestic market, with disposable income growing especially among the middle class. strategic location as the bridge between South and East Asian high-growth regions as well as links with other markets e.g. India, Pakistan, Malaysia, Singapore etc. low land and energy costs. good road/bridge/rail infrastructure, which are being improved; two sea-ports being further developed. enjoys Most Favoured Nations status. legal protection to foreign investment against nationalization and expropriation. equitable treatment with local investors regarding indemnification, compensation etc.

All sectors of industry (except five) are open for private investment. The five sectors reserved for public investment only are defense and defense production, nuclear energy, extraction from reserved forests, security printing and mint and air transportation (some domestic routes and international air cargo already opened for private investment.) and railways.

Some of the foreign private investment opportunities are:

direct (100%) foreign investment or joint venture investment in the Export Processing Zones (EPZs) or outside EPZs (with the exception of the five industries mentioned earlier). portfolio investment by purchasing shares in publicly listed companies through the stock exchange. investment in infrastructure projects such as power generation (private power generation policy announced); oil, gas and mineral exploration, telecommunication, ports, roads and highways. outright purchase or purchase of shares of state-owned enterprises, which are under process of privatization. investment in private EPZ (Private EPZ Act recently passed). Foreign investment is particularly welcome in the export-oriented industries such as textiles, leather goods, electronic products and components, chemicals and petrochemicals, agro-based industries, green jute pulp, paper, rayon products, frozen foods (dominated by shrimp farming), tourism, agriculture, light industries, software and data processing. Foreign investment is also desired in high technology products that will help import substitution or industries that will be labour as well as technology intensive. The country's drive for foreign investment is being spearheaded by the Board of Investment, which was created to facilitate the setting up of manufacturing and other industries in the private sector, both local and foreign. It is a promotional organization dedicated towards providing investment assistance to all investors. The Board is headed by the country's Prime Minister and it includes Ministers and Secretaries from the concerned ministries as well as representatives from the private sector. The Board has launched an investment promotion drive at home and abroad to attract investors. The BOI has been assisting in the implementation of new projects as well as providing services. Bangladesh is on the verge of a significant breakthrough in terms both of international investor confidence and significant inflow of new investment funds.

Labor Force:
Occupationally, 75 percent of the civilian labour force, which is currently estimated at 56 million, is directly or indirectly engaged in agriculture. Only 12 percent is engaged in industry. Unemployment is estimated at around 18.5 percent. In terms of age structure, it is more youthful than in the western countries. Heavy pressure of population on scarce land has no doubt created an extremely unfavourable land-man ratio. Coupled with this is the problem of unequal distribution and heavy fragmentation of land in the rural areas. This is expected to improve with more vigorous efforts at poverty alleviation and raising of educational and social consciousness. Sluggishness of the agricultural sector has resulted in its increasing dependence on the whims of nature and the per capita daily availability of food grains coming down to low level of 432 gram. Nearly 45% of the people live below the poverty line. As the country steps to the 21st century, it aims at accelerated economic growth, human resource development and self-reliance. Central to all the efforts to reach those targets will be poverty alleviation, rural development, involving women in all national activities and creating a well-educated healthy nation to be able to face up to the challenges of a fast moving technologically advanced global society.

Trend & Planning:

Trend:
Bangladesh has an agrarian economy with 32% of GDP coming from the Agriculture Sector. Major agricultural products are rice, jute, wheat, potato, pulses, tobacco, tea, sugarcane, etc. The country is the largest exporter of jute and jute goods in the world. Readymade garments are among the most exportable items. Tea, frozen shrimps, fish, leather goods and handicrafts are also major exportable commodities. The country has under gone a major shift in its economic philosophy and

management in recent years. On its birth, it embraced socialism as the economic ideology with a dominant role for the public sector. But since the mid-seventies, it undertook a major restructuring towards establishing a market economy with emphasis on private sector-led economic growth. During the nineties, the country has completed a major stabilization program which has reduced inflation as well as fiscal and current account deficits and established a healthy foreign exchange reserve position with low and sustainable debt-service liabilities. With a modest economic growth, the basic indicators related to health, education and poverty have all shown sustained improvement According to a World Bank estimate, Bangladesh has the 36th largest economy in the world in terms of GNP based on purchasing power parity method of valuation, and 55th largest in terms of nominal GNP in U.S. Dollars. However, because of the population size, per capita income was US$ 280 in 1998(1 US$=Taka 48.50).

Planning:
Bangladesh has pursued the path of planned development since independence. Short term Annual Development Programs. Medium term Five-year Plans and Long term perspective plans have been used for the purpose. The First-Five year plan (1973-78) was launched in 1973, while the Fourth-Five year plan concluded in June. 1995. The Fifth Five Year Plan has been launched by the previous government covering the period 1997-002 in order to enable the country to face the challenges of the 21st century. Export-led economic growth through a liberal free market approach, alleviation of poverty and empowerment of the poor, industrialization, agricultural growth and human resource development have been attached topmost priority in recent Development Plans. During the l990s, the government policy has focused on strengthening the government's role in social and infrastructure development, with the private sector playing the leading role in directly productive activities. The roles of the government are mainly confined to regulatory and promotional ones. Participation of target people at the grassroots level in the planning process has been emphasized by the present government. Grass-roots institutions and individuals are expected to get a prominent role in future in plan formulation and implementation.

Economy Review 2011:

The economy has grown 5-6% per year since 1996 despite political instability, poor infrastructure, corruption, insufficient power supplies, and slow implementation of economic reforms. Bangladesh remains a poor, overpopulated, and inefficiently-governed nation. Although more than half of GDP is generated through the service sector, 45% of Bangladeshis are employed in the agriculture sector, with rice as the single-most-important product. Bangladesh's growth was resilient during the 2008-09 global financial crisis and recession. Garment exports, totaling $12.3 billion in FY09 and remittances from overseas Bangladeshis, totaling $11 billion in FY10, accounted for almost 25% of GDP.

GDP (purchasing power parity)

$258.6 billion (2010 est.) $243.9 billion (2009 est.) $230.6 billion (2008 est.) note: data are in 2010 US dollars

GDP (official exchange rate)

$104.9 billion (2010 est.)

GDP - real growth rate

6% (2010 est.) 5.8% (2009 est.) 6% (2008 est.)

GDP - per capita (PPP)

$1,700 (2010 est.) $1,600 (2009 est.) $1,500 (2008 est.) note: data are in 2010 US dollars

GDP - composition by sector

agriculture: 18.8% industry: 28.5% services: 52.6% (2010 est.)

Population below poverty line

40% (2010 est.)

Labor force
73.86 million note: extensive export of labor to Saudi Arabia, Kuwait, UAE, Oman, Qatar, and Malaysia; workers' remittances were $10.9 billion in FY09/10 (2010 est.)

Labor force - by occupation

agriculture: 45% industry: 30% services: 25% (2008)

Unemployment rate
5.1% (2010 est.) 5.1% (2009 est.) note: about 40% of the population is underemployed; many participants in the labor force work only a few hours a week, at low wages

Unemployment, youth ages 15-24

total: 9.27% male: 8% female: 13.6% (2006)

Household income or consumption by percentage share

lowest 10%: NA highest 10%: 26.6% (2008 est.)

Distribution of family income - Gini index

33.2 (2005) 33.6 (1996)

Investment (gross fixed)

23.8% of GDP (2010 est.)

Budget
revenues: $11.41 billion expenditures: $15.87 billion (2010 est.)

Taxes and other revenues

10.9% of GDP (2010 est.)

Budget surplus (+) or deficit (-)

-4.2% of GDP (2010 est.)

Public debt
35.2% of GDP (2010 est.) 35.4% of GDP (2009 est.)

Inflation rate (consumer prices)

8.1% (2010 est.) 5.4% (2009 est.)

Central bank discount rate

5% (31 October 2010) 5% (31 December 2008)

Commercial bank prime lending rate

13% (31 December 2010 est.) 14.6% (31 December 2009 est.)

Stock of money
$10.35 billion (30 September 2009) $8.444 billion (31 December 2007)

Stock of narrow money

$13.98 billion (31 December 2010 est.) $10.92 billion (31 December 2009 est.)

Stock of broad money

$57.21 billion (31 December 2010 est.) $63.03 billion (31 December 2009)

Stock of quasi money

$45.23 billion (30 September 2009) $37.98 billion (31 December 2008)

Stock of domestic credit

$64.71 billion (31 December 2010 est.) $53.59 billion (31 December 2009 est.)

Market value of publicly traded shares

$47 billion (31 December 2010) $7.068 billion (31 December 2009) $6.671 billion (31 December 2008)

Agriculture - products
rice, jute, tea, wheat, sugarcane, potatoes, tobacco, pulses, oilseeds, spices, fruit; beef, milk, poultry

Industries
cotton textiles, jute, garments, tea processing, paper newsprint, cement, chemical fertilizer, light engineering, sugar

Industrial production growth rate

7% (2010 est.)

Electricity - production
25.62 billion kWh (2009 est.)

Electricity - production by source

fossil fuel: 93.7% hydro: 6.3% nuclear: 0% other: 0% (2001)

Electricity - consumption
23.94 billion kWh (2009 est.)

Electricity - exports
0 kWh (2009 est.)

Electricity - imports

0 kWh (2009 est.)

Oil - production
5,724 bbl/day (2010 est.)

Oil - consumption
98,000 bbl/day (2010 est.)

Oil - exports
2,770 bbl/day (2009 est.)

Oil - imports
77,340 bbl/day (2010 est.)

Oil - proved reserves

28 million bbl (1 January 2011 est.)

Natural gas - production

19.75 billion cu m (2009 est.)

Natural gas - consumption

20.1 billion cu m (2010 est.)

Natural gas - exports

0 cu m (2009 est.)

Natural gas - imports

0 cu m (2009 est.)

Natural gas - proved reserves

195.4 billion cu m (1 January 2011 est.)

Current Account Balance

$3.734 billion (2010 est.) $2.416 billion (2009 est.)

Exports
$15.97 billion (2010 est.) $15.07 billion (2009 est.)

Exports - commodities
garments, frozen fish and seafood, jute and jute goods, leather

Exports - partners
US 22.1%, Germany 14.1%, UK 8.5%, France 6.8%, Netherlands 6.1% (2010)

Imports
$21.34 billion (2010 est.) $19.76 billion (2009 est.)

Imports - commodities
machinery and equipment, chemicals, iron and steel, textiles, foodstuffs, petroleum products, cement

Imports - partners
China 18.9%, India 12.7%, Singapore 6%, Malaysia 4.7%, Japan 4% (2010)

Reserves of foreign exchange and gold

$11.18 billion (31 December 2010 est.) $10.34 billion (31 December 2009 est.)

Debt - external
$24.41 billion (31 December 2010 est.) $23.82 billion (31 December 2009 est.)

Stock of direct foreign investment - at home

$5.939 billion (31 December 2010 est.) $5.139 billion (31 December 2009 est.)

Stock of direct foreign investment - abroad

$92 million (31 December 2010 est.) $91 million (31 December 2009 est.)

Exchange rates
taka (BDT) per US dollar 70.59 (2010) 69.04 (2009) 68.554 (2008) 69.893 (2007) 69.031 (2006)

Conclusion:
The data and information presented in the review will help analyse the overall economic situation of the country. Other than reviewing the important sectors of the economy several critical issues like poverty reduction, human resource development and private sector development have also been discussed in this document. I firmly believe that the policy planners, researchers, academics, students and concerned agencies will find the document useful.

References:
1. ^ "Doing Business in Bangladesh 2012". World Bank. http://www.doingbusiness.org/data/exploreeconomies/bangladesh/. Retrieved 2011-11-21. 2. ^ "Sovereigns rating list". Standard & Poor's. http://www.standardandpoors.com/ratings/sovereigns/ratingslist/en/eu/?subSectorCode=39. Retrieved 26 May 2011. 3. ^ "Reproductive Health and Rights is Fundamental for Sound Economic Development and Poverty Alleviation," United Nations Population Fund. Retrieved June 9, 2009. 4. ^ a b c d e f g h i j k l m n o p q r s t u v w x y z aa ab ac ad ae af ag ah ai aj ak al am an ao ap aq ar as "Background Note: Bangladesh". Bureau of South and Central

Asian Affairs (March 2008). Accessed June 11, 2008. This article incorporates text from this source, which is in the public domain. 5. ^ a b c d e f g h i j k l m n o p q r s Lawrence B. Lesser. "Historical Perspective". A Country Study: Bangladesh (James Heitzman and Robert Worden, editors). Library of Congress Federal Research Division (September 1988). This article incorporates text from this source, which is in the public domain.About the Country Studies / Area Handbooks Program: Country Studies - Federal Research Division, Library of Congress 6. ^ a b c d e f g h i j k l Lawrence B. Lesser. "Economic Reconstruction after Independence". A Country Study: Bangladesh (James Heitzman and Robert Worden, editors). Library of Congress Federal Research Division (September 1988). This article incorporates text from this source, which is in the public domain.About the Country Studies / Area Handbooks Program: Country Studies - Federal Research Division, Library of Congress 7. ^ a b Rebecca Holmes, John Farrington, Taifur Rahman and Rachel Slater (2008) Extreme poverty in Bangladesh: Protecting and promoting rural livelihoods London: Overseas Development Institute Archived 22 July 2007 at WebCite 8. ^ "Bangladesh overtakes India in apparel exports: Indian companies grabbing Bangladeshi quota in Europe". Associated Press of Pakistan. http://www.app.com.pk/en_/index.php? option=com_content&task=view&id=92847&Itemid=2. Retrieved 30 December 2009. 9. ^ a b "Full blown RMG violence at Ashulia" The Financial Express VOL 18 NO 168 REGD NO DA 1589 Dhaka, Tuesday June 22, 2010. Retrieved July 17, 2010. 10. ^ "'China textile cos may go bankrupt'" The Financial Express Tuesday, Jul 13, 2010 at 1210 hrs IST. Retrieved July 17, 2010. 11. ^ a b "Bangladesh, With Low Pay, Moves In on China" article by Vikas Bajaj in The New York Times July 16, 2010. Retrieved July 17, 2010. 12. ^ "One dead after Bangladesh protest" BBC May 23, 2006 13. ^ "Apparel Workers Resume Production In Bangladesh" All Headline News June 23, 2010. Retrieved July 17, 2010. 14. ^ "Bangladesh garment industry edging closer to wage deal?" juststyle.com 9 July 2010. Retrieved July 17, 2010. 15. ^ "Bangladesh Garment Workers Awarded Higher Pay" article by Vikas Bajaj in The New York Times July 28, 2010. Retrieved July 29, 2010. 16. ^ a b "Probe panel finds massive manipulation at Bangla stock market". India Times. 7 April 2011. http://articles.economictimes.indiatimes.com/2011-0407/news/29392594_1_debacle-manipulation-probe-committee. Retrieved 18 October 2011.

17. ^ "Sewing Thoughts: How to Realise Human Development Gains in the Post-Quota World", United Nation Development Programme. April 2006. 18. ^ "BD eyes $15bn textile exports by 2011". The Dawn. 3 September 2006. 19. ^ a b "Bangladesh Export Promotion Bureau". Bangladesh Export Promotion Bureau. 20. ^ Bangladesh Sangbad Sangstha (BSS).[dead link] Bangladesh Sangbad Sangstha (National News Agency of Bangladesh). 21. ^ Gillan, Audrey. From Bangladesh to Brick Lane. The Guardian. 21 June 2002.

Bangladesh Growth in Remittance Income Slows Down during 2011

Posted by CEIC China Database Team September 16, 2011 Macro Watch: Growth in Bangladeshs remittance income has shown signs of decelerating during the fiscal year ended June 2011. Remittances grew by only 6.03%, compared to the 13.40% observed in 2009-2010. Remittance income growth has been slowing down since the peak of 32.39% in 2007-2008. Remittance income is one of Bangladeshs key economic indicators, given its significant contribution to Bangladeshs overall gross domestic product (GDP). Decline in remittance income growth saw remittances amounting to 10.53% of nominal GDP in fiscal year 2010-2011 compared to 10.95% in 2009-2010. Lower labour migration has been one of the reasons for the overall deceleration of remittance income growth. Labour migration declined as cost of hire increased relative to incremental wages obtainable abroad. Bangladesh saw the number of overseas workers abroad decline by 33.74% and 34.29% in fiscal years 2008-2009 and 2009-2010, respectively.

Remittances in Bangladesh

Chart provided by: CEIC Data

Remittance income grew by a five-year compound annualized growth rate of 19.4% from 2006-2007 to 2010-2011. With the exception of 2010-2011, remittances as a proportion of nominal GDP grew from 6.36% in 2004-2005 to 10.53% in 2010-2011, reinforcing its importance to Bangladeshs economy. Remittances constitute Bangladeshs second largest source of foreign exchange, next to exports. Growth in remittance income continues to be sustained through increased remittances from its major labour importers, namely Saudi Arabia, the United Arab Emirates, the United States, Kuwait, and the United Kingdom, which altogether contributed 78.2% of remittance income in 2011. Discuss this post and many other topics in our LinkedIn Group (you must be a LinkedIn member to participate). Request a Free Trial Subscription. By Oh Ming Siong in Malaysia CEIC Analyst