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U.S. Department of State
Bangladesh 1996 Country Commercial Guide
Office of the Coordinator for Business Affairs
BANGLADESH
COUNTRY COMMERCIAL GUIDE
This Country Commercial Guide (CCG) presents a comprehensive look
at Bangladesh's commercial environment through economic,
political and market analyses.
The CCGs were established by recommendation of the Trade
Promotion Coordinating Committee (TPCC), a multi-agency task
force, to consolidate various reporting documents prepared for
the U.S. business community. Country Commercial Guides are
prepared annualy at U.S. Embassies through the combined efforts
of several U.S. governement agencies.
Table of Contents
I. EXECUTIVE SUMMARY
II. ECONOMIC TRENDS AND OUTLOOK
Major Trends and Outlook
Principal Growth Sectors
Government Role in the Economy
Balance of Payments Situation
Infrastructure Situation
III. POLITICAL ENVIRONMENT
Nature of Political Relationship with the United States
Major Political Issues Affecting Business Climate
Synopsis of Political System
IV. MARKETING U.S. PRODUCTS AND SERVICES
Distribution and Sales Channels
Use of Agents/Distributors; Finding a Partner
Franchising
Direct Marketing
Joint Ventures/Licensing
Steps to Establishing an Office
Selling Factors/Techniques
Advertising and Trade Promotion
Pricing Product
Sales Service/Customer Support
Selling to the Government
Protecting your Product from IPR Infringement
Need for Local Attorney
V. LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT
Best Prospects for Non-Agricultural Goods and Services
Best Prospects for Agricultural Products
VI. TRADE REGULATIONS AND STANDARDS
Trade Barriers, Including Tariffs, Non-Tariff Barriers
and Import Taxes
Customs Valuation
Import Licenses
Export Controls
Import/Export Documentation
Temporary Entry
Labeling, Marking Requirements
Prohibited Imports
Standards
Free Trade Zones/Warehouses
Special Import Provisions
Membership in Free Trade Arrangements
VII. INVESTMENT CLIMATE
Openness to Foreign Investment
Conversion and Transfer Policies
Expropriation and Compensation
Dispute Settlement
Political Violence
Performance Requirements/Incentives
Right to Private Ownership and Establishment
Regulatory System: Laws and Procedures
Efficient Capital Markets and Portfolio Investment
Bilateral Investment Agreements
OPIC and other Insurance Programs
Labor
Foreign Trade Zones
Capital Outflow Policy
Major Foreign Investors
VIII. TRADE AND PROJECT FINANCING
Brief Description of Banking System
Foreign Exchange Controls Affecting Trading
General Financing Availability
How to Finance Exports/Methods of Payment
Types of Available Export Financing and Insurance
Project Financing Available
List of Banks with Correspondent U.S. Banking Arrangements
IX. BUSINESS TRAVEL
Business Customs
Travel Advisory and Visas
Holidays
Business Infrastructure
X. APPENDICES
Appendix A - Country Data
Population
Population Growth Rate
Religion(s)
Government System
Languages(s)
Work Week
Appendix B - Domestic Economy
GDP
GDP Growth Rate
GDP Per Capita
Government Spending as a Percent of GDP
Inflation
Unemployment
Foreign Exchange Reserves
Average Exchange Rate for USD 1.00
Debt Service Ratio
U.S. Economic Assistance
Appendix C - Trade
Total Country Exports
Total Country Imports
U.S. Exports
U.S. Imports
Appendix D - Investment Statistics
Appendix E - U.S. and Country Contacts
U.S. Embassy Trade Related Contacts
American Chamber and/or Bilateral Business Councils
Country Trade or Industry Associations in Key Sectors
Country Government Offices Relating to Key Sectors and/or
Significant Trade Related Activities
Country Market Research Firms
Country Commercial Banks
Appendix F - Market Research
Appendix G - Trade Event Schedule
I. EXECUTIVE SUMMARY
Bangladesh's macroeconomy remains stable and healthy, with 4.6 percent
GDP growth, a balance of payments surplus, and inflation under five
percent. The microeconomy, however, remains stagnant. About 45 percent
of the country's 120 million people continue to live below the poverty
line. GDP growth over the current period is expected to be 4.6 to 5
percent. Increased industrial growth over the period partially
compensated for the impact of a large drop in rice production and
consequent rise in inflation. Economic reforms, necessary to the
revival of the microeconomy, will continue to move slowly as Bangladesh
gears up for national elections to be held by early 1996.
Despite Bangladesh's difficult commercial environment, foreign firms
successfully market their goods and services to the country, and a few
have made major investments. Labor is inexpensive, but suffers from low
productivity. Politically motivated strikes are frequent. Power,
telecommunications and rail transport are poor by regional standards.
The country's legal system is outdated and inefficient. A large and
recalcitrant bureaucracy often views its role more as controlling
commercial activity than as stimulating it. Corruption is endemic. Yet
the economy has been registering positive rates of growth in per capita
GDP. The increasing private sector orientation of government policy is
beginning to show results, particularly in the oil and gas sector.
Relations between Bangladesh and the United States are excellent. The
Bangladesh business community is well disposed towards American
products. Business opportunities for U.S. firms are expanding.
Commercial imports now make up approximately 65 percent of Bangladesh's
import bill, with aid-financed imports accounting for the remainder.
Recent U.S. sales to Bangladesh's private sector include textile
machinery, power generation equipment, computer equipment, grain, and
cotton. U.S. sales to the public sector in recent years include grain,
oil drilling equipment, aircraft, telecommunications equipment, and
power generation/transmission equipment. U.S. consultants have provided
advice on rural finance, banking and capital markets, natural resource
management, rural electrification, fertilizer distribution, and
government policy in industry and agriculture.
Best prospects for American firms include fossil fuel exploration and
production, telecommunications, and power generation. U.S. wheat and
cotton exports soared over the past year, and are expected to increase
in the coming year. Many of the larger Bangladeshi firms express
interest in joint ventures with U.S. companies. A key to success in
doing business in Bangladesh rests on having strong, effective local
representation.
Country Commercial Guides are available on the National trade Data Bank
on CD-ROM or through the Internet. Please contact STAT-USA at 1-800-
STAT-USA for more information. To locate Country Commercial Guides via
the Internet, please use the following worldwide WEB address: WWW.STAT-
USA.GOV. CCGs can also be ordered in hard copy or on diskette from the
National Technical Information Service (NTIS) at 1-800-553-NTIS.
II. ECONOMIC TRENDS AND OUTLOOK
Major Trends and Outlook
Lying between the eastern arm of India and the Bay of Bengal, Bangladesh
is a semitropical riverine nation with fertile soil and high
vulnerability to floods. Most Bangladeshis make their living from
agriculture. With 120 million people crowded into an area the size of
Wisconsin, Bangladesh has the highest population density of any country,
excepting city-states like Singapore.
Present-day Bangladesh became part of Pakistan when the British withdrew
from the sub-continent in 1947. Disputes with the West Pakistanis led
to a bloody war of independence in 1971, resulting in the creation of
the new nation of Bangladesh. Since 1971, Bangladesh has remained one
of the world's poorest countries, although agricultural output has
increased steadily over the nation's 23-year history. During that time,
Bangladesh's difficult circumstances have drawn significant assistance
from developed nations. Bangladesh receives annually the equivalent of
6-8 percent of GDP in foreign assistance, and would get even more were
it not for local bottlenecks that cause projects to back up in the aid
"pipeline."
Economic performance in 1994 was in large part a continuation of the
trends of the past several years. The macroeconomy remained healthy.
Changes in Bangladesh's tax and tariff regimes and the liberalization of
the foreign exchange regime have helped open markets. Stagnant imports
as well as the continued growth of non-traditional manufactured exports
resulted in a drop in the current account deficit. The overall balance
of payments was positive. By mid-1995, foreign exchange reserves topped
$3.4 billion, about 10 months of import cover.
The overall microeconomic picture is less encouraging. Rice production
dropped by an estimated 9 percent in 1994/95 due to a severe drought and
a fertilizer shortage. As a result, Bangladesh is importing 600,000
metric tons of rice. Inflation, while below two percent in FY94, has
recently edged upward to over four percent with a 24 percent surge in
rice prices. The government made little progress in privatizing
inefficient state-owned industries or reducing the public payroll.
Bureaucratic bottlenecks, labor strife and a deteriorating law and order
situation continue to discourage domestic and foreign investors, keeping
Bangladesh from reaching the 6-7 percent sustained annual economic
growth rate necessary to lift it out of poverty. The Bangladesh
Government (BDG) hopes to boost GDP growth from its current estimated
five percent to an ambitious six percent in the coming year. This will
require a better rice crop, a rise in foreign aid utilization, and
significant progress in expanding the role of the private sector. At
the current growth rate, the country's population is expected to double
in the next 35 years. Without accelerated industrialization and greater
private sector involvement, population growth threatens to undermine
future economic stability.
Import Trade: (Note: Bangladesh's fiscal year (FY) runs from July 1 to
June 30. All trade figures are calculated in nominal dollar terms.)
Imports appear to be picking up in 1995, with a surge of imports in
machinery, industrial raw materials and intermediate goods, and crude
petroleum, implying more robust industrial activity. Official imports
were more or less stagnant in FY94 compared to FY93. This appears to
have been due to lower petroleum prices, lower food imports, and a
significant drop in imported milk products and edible oil. In FY94,
stagnant industrial growth and slower growth in the garment industry
dampened imports of raw materials and intermediate goods. Many buyers
deferred imports, anticipating lower duties in FY95. By all accounts,
unofficial imports, basically border trade with India, has continued to
increase.
Export Trade: Export figures for the first seven months of FY95 point
to a 30 percent increase over FY94. While exports of frozen food, jute
goods, and leather are continuing to grow moderately, garment exports
appear to be up significantly, as are exports of other manufactured
items. Export growth increased by 9.7 percent in FY94, down from 12.5
percent growth in FY93. The growth in garment exports in FY94 dropped
dramatically, from about 35 percent annually in FY90-92 to 18.3 percent
growth in FY93 and 16 percent growth in FY94. At over $1.4 billion in
FY94, garments account for 61 percent of Bangladesh's total exports.
However, because most of the trade consists of assembling imported cloth
for re-export, the total value added to garments in Bangladesh is only
about one fourth of the exported value.
Bangladesh began exporting garments only in the early 1980s, but growth
in the industry since that time has been phenomenal, partly due to the
imposition under the Multi-Fiber Arrangement (MFA) of U.S. textile
import quotas on Bangladesh's Asian competitors. Sharing credit for the
success of garment exports is the Bangladesh Government, which permitted
garment manufacturers to skip customs formalities by providing access to
bonded warehouses and to back-to-back letters of credit (which enabled
foreign banks to finance operations) and otherwise leaving the
manufacturers alone. However, this laissez faire approach has given way
to a 30 percent domestic value added requirement for quota items (25
percent for non-quota items), intended to force garment exporters to
source some of their cloth from local textile mills. The FY94 slump in
export growth may be attributable to declining garment prices as a
result of heightened international competition as well as an increase in
the price of imported fabric and raw cotton. Some observers also blame
the diversion of demand to other countries because of frustrations with
Bangladesh's power outages, congested port, and frequent strikes.
Garment exports rebounded in the first half of FY95, but have recently
begun to taper, apparently because of a slump in the U.S. market. It is
an open question whether Bangladesh's garment industry will continue to
grow as the phase out of the Multi-Fiber Arrangement forces the sector
to compete on the world stage without the benefit of quotas.
Bangladesh's non-garment exports continued to grow slowly in FY94.
Frozen food exports (mostly shrimp) rose by 23 percent in FY94 to $249
million. Leather exports increased by only 4 percent. FY94 was a bad
year for jute. The export of jute goods fell by 11 percent, while raw
jute exports dropped by 14 percent, to the lowest level in seven years.
A World Bank-financed jute restructuring program has so far fallen flat,
with the government's failure to close even one jute mill. For the
short term, jute exports seem likely to continue to suffer from stagnant
world demand, excessive regulation, and over-staffing in the state-run
jute mills. The two percent depreciation of the taka in FY94 over the
average exchange rate prevailing in FY93 may have helped exports.
Given Bangladesh's low domestic demand, hopes for accelerated economic
growth must rest with exporters. To promote exports, the Bangladesh
Government will need to follow the pattern it established with the
garment industry in granting relatively easy letter of credit facilities
and bonded warehousing. Further arbitrary interventions such as the ban
on wet-blue leather exports, or the 30 percent domestic value added
requirement for garments, will short circuit export promotion efforts.
Reforms in export policy have been slow, with continued export bans on a
wide range of commodities and manufactured products, ostensibly to
"protect" consumers. Bonded warehouse facilities and duty drawback
schemes are inadequate. Exporters still face limits in foreign exchange
retention.
U.S.-Bangladesh Trade: With the steady growth of Bangladesh's garment
exports to the U.S. and a slump in overall imports from the United
States, the U.S. trade deficit with Bangladesh increased from $641
million in calendar year 1993 to $846 million in calendar year 1994.
The U.S. imported $1.08 billion worth of goods from Bangladesh in
calendar year 1994, mostly ready-made garments. U.S. exports to
Bangladesh totaled $233 million in 1994, down five percent over 1993.
Half of the 1993 performance is accounted for by a $111 million lease of
McDonnell Douglas DC-10 aircraft and $7 million in parts and spares. If
these items are deducted from the 1993 export figures, U.S. exports to
Bangladesh increased by 90 percent in 1994, almost all due to a tripling
of exports in wheat, cotton, and fertilizer. Tobacco exports also
tripled and soybean oil exports surged, although from a small base.
Total agricultural exports increased by 47 percent, while non-
agricultural exports were up 16 percent.
Bangladesh is shifting a larger share of its garment exports towards the
United States. U.S. garment imports from Bangladesh rose from $668
million in calendar year 1993 to $910 million in 1994. U.S. and
Bangladeshi negotiators met in 1994 to extend the bilateral textile
agreement, retaining a 7 percent annual growth rate for garment quotas,
adding new flexibility in some categories and inserting anti-
circumvention language. It also changed the end of the quota year from
January to December. Recent years have seen some challenges to
Bangladeshi garment exporters from U.S. labor groups and buyers
protesting child labor practices. The garment exporters association has
been working with UNICEF and the ILO to draft an agreement to phase out
child labor from the garment industry. U.S. imports of jute and jute
products increased by over 50 percent, while frozen food imports
tripled.
1995 should be even brighter than 1994 for U.S. agricultural exports.
1995 may also bring the sale of U.S. commercial aircraft, which would
significantly boost U.S. trade. Unless this happens, however, garment
imports will likely push the U.S.-Bangladesh trade deficit to around $1
billion in calendar year 1994.
Principal Growth Sectors
Agriculture: Rice production fell by nine percent, down from 18.04 mmt
in FY94 to 16.5 mmt in FY95--the second biggest drop since independence
in 1971. A dramatic drop in monsoon rainfall resulted in a significant
decline in "aman" (fall/winter) rice production. A shortage in urea
fertilizer, resulting from exporting too much of local production and
increased government controls over distribution, contributed to a large
decline in the "boro" (winter) crop. Bangladesh responded to the
shortfall by importing an estimated 600,000 mt of rice, raising
questions whether Bangladesh will be able to maintain market self-
sufficiency in rice. Rice prices in FY95 jumped 17 percent over FY94.
Given high prices and a predicted normal monsoon, rice production in
FY96 should rebound significantly.
The FY95 drought proved a boon for dry season crops, since farmers could
plant these crops earlier than normal. With a 10 percent increase in
area planted, this year's wheat crop is expected to reach record levels
of 1.2 mmt (up five percent from 1.14 mmt in FY94). In addition,
farmers recorded a bumper potato crop, with area planted up by around 20
percent, production up 37 percent, and prices on a downward trend.
Production has also increased for mustard, sweet potatoes, maize, and
other dry-season minor crops.
Wheat: Wheat imports declined in FY94 to 880,000 mt, from 1.14 mmt in
the previous year. Because Bangladesh had reached market self-
sufficiency in rice production in FY93, wheat donations dropped. The
total amount of wheat provided through various food-aid programs in FY94
was 654,000 mt, down from 716,000 mt in FY93. U.S. contributions to
Bangladesh, under Title II and Title II PL-480 programs, remained nearly
the same at 247,000 mt. Bangladesh also imported 230,000 mt of wheat on
commercial terms. Commercial rice and wheat imports as well as
donations of food grains to Bangladesh are expected to increase this
year, in response to the shortfall in rice production and the lowering
import duty on rice (from 7.5 percent to zero) and wheat (15 to 7.5
percent).
Jute: Jute, the traditional "golden fiber" of Bengal, is Bangladesh's
main cash crop, cultivated in rotation with rice on the country's wet,
fertile fields. Although Bangladesh is still the world's leading jute
exporter, the fiber's prominence has slipped in recent years as world
demand for such jute products as carpet-backing and burlap bags has
stagnated or fallen. Heavy government involvement in procurement and
processing has also contributed to jute's decline. Production of raw
jute has decreased by 10 percent, partly in response to lower prices in
FY93. The value of jute and jute goods exports continues to decline
from $342 million in FY93 to $303 million in FY94.
Cotton: Bangladesh's raw cotton trade is expanding. Total cotton
imports in FY 94/95 are forecast at 100,000 mt, up 43 percent from the
depressed previous year's import level. FY 95/96 imports are forecast
to reach a record of 110,000 mt. Growth in the cotton import level
shall continue to meet growing consumption by local textile industries.
U.S. cotton exports to Bangladesh in FY 94/95 are forecast at 65,000 mt
(estimated value: $115 million). This represents a phenomenal growth
over past years. U.S. sales are in medium staple cotton, which has
traditionally been imported from Pakistan. Pakistani cotton is
currently under import embargo by Bangladesh's textile mills
association. Central Asian cotton poses some competition, but a growing
number of buyers are coming to rely on the dependability and quality of
U.S. shipments. Cotton production in FY94 rose by seven percent to
78,000 bales.
Industry: Industrial production continues to grow at about a moderate
10 percent a year. Industry's contribution to real GDP, if the figure
includes manufacturing, construction, power, and utilities, was around
19 percent in FY94. The state owns 40 percent of industrial capacity,
primarily in jute and textile milling and in the production of steel and
chemicals. However, employment in government industries represents
less than 10 percent of total industrial employment. In 1994, the World
Bank negotiated a jute restructuring package to privatize or close a
large number of public sector jute mills. This and other privatization
efforts have moved slowly. Further privatization of any industry is not
expected until after elections, expected before February 1996.
Reforms in the oil and gas sectors have begun to yield results.
International oil firms have negotiated production contracts with the
BDG. Reform plans for the power and telecommunications industries have
stalled. The private sector still struggles with over-regulation,
inadequate commercial laws, frequent strikes, power outages, and other
factors which dampen investment. Real GDP growth in FY94 was 4.6
percent. Growth in FY95 will most likely be around 5 percent, with
increased industrial growth balanced by dampened production this year's
poor rice crop and the lack of significant economic reforms.
Government Role in the Economy
Bangladesh's industrial development has been hampered by a strong
government commitment, common in South Asia, to intervention in trade
and industry. Efforts at market reform often run afoul of vested
interest groups, such as public sector labor unions or domestic
producers in import-competing industries. The public sector accounts
for only about one fourth of Bangladesh's industrial output (although
less than ten percent in manufacturing). However, it exercises a
dominant influence in many prominent industries (for example, jute,
textiles, steel and chemical production, and sugar). Most public sector
industries, including textiles, jute processing, and sugar processing,
are perennial money losers, draining the treasury and setting high wages
that their private sector counterparts often feel compelled to meet out
of fear of union action. Even worse, the fact that crucial non-
manufacturing industries--power, telecommunications, railroads, and the
national airline--are in the public sector tends to limit private sector
productivity.
Balance of Payments Situation
The current account deficit, having increased marginally to $618 million
in FY93 from $578 million in FY92, narrowed to $420 million (or 1.6
percent of GDP) in FY94. This reflected stagnant imports, offset by a
slight drop in the net investment income deficit, slow-growing exports,
and growth in overseas remittances. Despite a slight drop in aid
disbursements, Bangladesh ran a substantial balance of payments surplus
of about $625 million. This surplus in turn generated continued growth
in the Bangladesh Bank's (central bank's) foreign exchange reserves,
from $2.1 billion (end-FY93) to $2.8 billion (end-FY94), equivalent to
eight months of imports. As of March, 1995, reserves stood at $3.4
billion, about 10 months of import cover. While the increase in
reserves is itself intrinsically desirable, it also reflects the low
demand for imported investment goods and the moderate rate of economic
growth.
Hard currency remittances from Bangladeshi workers abroad, principally
in the Middle East, continue to increase, promising to offset further
the current account deficit in FY95. The share of remittances passing
through the formal banking sector has increased as currency
liberalization makes this channel more attractive.
The exchange rate depreciated by two percent during FY94 to 40.01 taka
to the dollar at end-FY94. The Bangladesh Bank follows a semi-flexible
exchange rate policy of revaluing the currency on the basis of a
weighted basket of economic indicators. Standard indicators--the high
level of reserves and a black market rate close to the official rate--
suggest the Bank has done a good job fixing the exchange rate close to
its equilibrium level. The taka's market value, however, is bolstered
by the large sums of foreign exchange Bangladesh receives every year
through aid transfers. Noting that the real exchange rate for the taka
has risen vis-à-vis exchange rates for the currencies of export
competitors like India and China, some economists and exporters now
argue for further devaluation. The government recently declared the
taka fully convertible on the current account. Capital account
convertibility was promised in the June 1995 budget speech.
Assessed on the basis of outstanding principal, Bangladesh's national
debt was $13 billion in FY93, up seven percent from the June 1992 debt
of $12.2 billion, and six percent less than the projected FY94 debt of
$13.9 billion. Because virtually all of the country's outstanding
external debt has been granted on highly concessional terms (e.g., one
or two percent interest, 30-year maturity, and a 20-year grace period)
by donor nations and multilateral lending institutions, the net present
value of the debt is far lower than the face value. In addition to the
national debt, Bangladesh owes about $1.24 billion to the United States
as an obligation incurred through PL-480 Title I and $21.2 million in
Title III food disbursements as of June, 1995.
Infrastructure Situation
Most observers give the transport sector mixed marks. The 36,000-
kilometer primary road network is in relatively good shape, giving rise
to a substantial private trucking industry. Inland waterways are
extensive. Inland water transportation accounts for about 65 percent of
domestic cargo transportation and about 38 percent of inter-district
passenger traffic, despite some siltation and inadequate port
facilities. Bangladesh's two major seaports, Chittagong and Mongla,
handled 9.8 million metric tons of cargo in 1993/94. Chittagong (by far
the largest port, with two container terminals) suffers from inefficient
space management and a shortage of handling equipment which causes
serious delays and traffic congestion. Bangladesh's 2,800-kilometer
railway system is in poor shape, hobbled by a mix of gauges, widespread
ticketless travel, and old equipment. Bangladesh is modernizing Dhaka
airport and plans to expand Chittagong and Sylhet airports. The
government-operated Bangladesh Biman Airlines runs a fleet of nine
aircraft, and some 15 airlines connect Dhaka with Europe, the Persian
Gulf, and South, Southeast, and East Asia.
Bangladesh's power sector is inadequate and rife with corruption.
Overloading and a lack of maintenance cause frequent outages. Damaged
equipment, investments in standby generators, and wasted production time
caused by power failures have cost some firms up to 30 percent of their
value of production. The country's telecommunications services are also
inadequate. The government-controlled telephone service provides about
2.5 telephones per 1,000 people and a call connection rate of 30
percent. Most lines are analog, and the quality of service is poor,
undermined, as in the case of power, by widespread petty corruption.
Efforts are under way to upgrade the telephone system, including
expanding domestic and international capacity and installing digital
exchanges. Private telecommunications firms provide cellular telephone
and internet electronic mail services in Dhaka.
III. POLITICAL ENVIRONMENT
Nature of Political Relationship with the United States
U.S.-Bangladesh relations are excellent. U.S. policies have focused
primarily on efforts to promote Bangladesh's economic development and
political progress in the context of a democratic system. The United
States committed $62.7 million in economic aid to Bangladesh in 1995.
Since Bangladesh's independence in 1971, the United States has provided
over $3 billion in economic assistance.
Major Political Issues Affecting Business Climate
There are no major bilateral or international political issues which
affect the business climate. However, domestic politics has had a
negative effect. Political demonstrations and general strikes, called
hartals, regularly disrupt business operations. Hartals were
particularly frequent and disruptive in 1994. The local business
community has voiced its concerns about the economic impact of such
political agitation and has appealed to all parties to restrict their
disagreements to the Parliament. As of July 1995, hartals are somewhat
less frequent than a few months ago.
Synopsis of Political System
Bangladesh is a parliamentary democracy headed by Prime Minister Khaleda
Zia of the Bangladesh Nationalist Party (BNP) which won the most seats
in elections in 1991. The BNP holds a slim but secure majority in the
Parliament. Members of Parliament are elected at least once every five
years. The Parliament has 300 elected members, with 30 additional seats
reserved for women who are chosen after the election by the seated
Parliament. Candidates may contest a maximum of five seats in any one
election but may only hold one. Parliament elects Bangladesh's
president to a five-year term. The President's duties are largely
ceremonial. The parliamentary opposition is led by Sheikh Hasina Wajed,
head of the largest opposition party, the Awami League.
Following its war of independence in 1971 and the establishment of a new
Constitution in 1972, Bangladesh held its first parliamentary election
in March 1973, which solidified the Awami League's ruling majority. In
August 1975, the elected government of Sheikh Mujibur Rahman, long the
most prominent leader in the nationalist movement, was overthrown in the
first of a series of military coups and military rule which plagued the
country for the next fifteen years. During this military coup, Sheikh
Mujibur Rahman was murdered. (His daughter, Sheikh Hasina, was out of
the country and survived. She now leads the Awami League.) In 1981,
President Ziaur Rahman, an army general who came to power in the turmoil
following the death of Sheikh Mujib, was himself assassinated. (His
wife, Begum Khaleda Zia, is the current Prime Minister.) In 1982, then
Army Chief of Staff, General H.M. Ershad, seized power and declared
himself President in December 1982. Despite efforts to legitimize his
rule through coercion and political manipulation, Ershad was forced to
resign in December 1990, following months of popular demonstrations.
In February 1991, former President Zia's Bangladesh Nationalist Party
(BNP) won a parliamentary plurality and formed the government. The
Awami League won 90 seats; Ershad's Jatiyo Party, 35; and the Jamaat-e-
Islami, 18. Domestic and foreign observers described the election as
free and fair, perhaps the most honest since Bangladesh won
independence.
The Awami League won municipal elections in 1994 in Bangladesh's two
largest cities, Dhaka and Chittagong. The opposition charged that a
March 1994 by-election won by the BNP was rigged. In protest of this
election and other government actions, the opposition boycotted
Parliament and called for new elections under a neutral caretaker
government. In December 1994, 147 deputies from the three major
opposition parties resigned from Parliament in protest of government
refusal to meet their demands.
There are few if any policy differences among three of the major
contenders for power--the BNP, the Awami League, and Jatiyo Party. The
Jamaat-e-Islami calls for establishment of an Islamic state in
Bangladesh, but Jamaat leaders also profess a commitment to tolerance,
democracy and economic freedom. Despite a remarkable degree of policy
consensus among major parties, the inability of government and
opposition to resolve the ongoing political stalemate and continued
uncertainty whether the opposition will participate in the next
elections persists as of early July 1995.
IV. MARKETING U.S. PRODUCTS AND SERVICES
Distribution and Sales Channels
The primary channel for selling U.S. merchandise in Bangladesh is
through a resident agent or representative (importer, wholesaler, or
distributor). An agent may be appointed on an exclusive or non-
exclusive basis. Approximately half of Bangladesh's imports are made
through tender or direct purchase by public sector corporations,
autonomous bodies, and government-controlled corporations. These
agencies prefer to deal with local firms acting as exclusive agents or
distributors of foreign manufacturers and suppliers. An exclusive
agency or distributorship arrangement ensures that foreign suppliers
submit only one bid. In the private sector, deals with exclusive agents
generally are preferred to ensure after-sales service, continuous supply
of spare parts, and to solve possible future technical problems. It is
also helpful for a foreign firm to have an exclusive distributor in
order to monitor the progress of major projects, provide information on
upcoming sales opportunities, and work out strategies to win tenders.
Non-exclusive arrangements are common for commodities such as cotton,
wheat, edible oil, chemicals, and metals, where brand names are not
important.
Urban retailers usually purchase or obtain on credit supplies sufficient
to last them for a week. Rural retailers generally travel to large
cities like Dhaka or Chittagong to inspect goods and to place orders
sufficient to last a month or more. While many retail stores carry
general merchandise, only a few carry a wide enough range to be
considered small department stores. The typical retail shop sells a
single commodity, such as, tires, cooking utensils, or jewelry. It is
frequently located in a crowded bazaar area near other shops carrying
similar goods and is likely to be small.
Use of Agents/Distributors; Finding a Partner
The primary channel for selling U.S. products or services in Bangladesh
is through a local agent. U.S. firms may appoint a Bangladesh firm or
individual as an exclusive or non-exclusive agent. The local agent
should be imaginative, active, politically astute, and technically
competent. A local agent may be authorized to service industrial
consumers, to bid on government tenders, or to place orders or book
indent orders for his own account. The Embassy's experience suggests
that a local organization which represents many foreign companies may
not be as effective as a smaller one which can be more aggressive in
pursuing a product or product line. An American firm seeking an agent
in Bangladesh may wish to contact its district Department of Commerce
office and request and pay for an Agent/Distributor Service (ADS) before
deciding on a local representative. U.S. firms should carefully check a
potential agent's financial soundness, sales capabilities, and contacts
with public and private sector organizations. Personal interviews are
useful in discussing a business proposal with a potential agent or
distributor.
Franchising
Franchising is not practiced in Bangladesh, although there are no
regulations barring franchise operation. Because of market limitations,
franchising is not considered viable for U.S. firms in Bangladesh.
Direct Marketing
Direct marketing in Bangladesh is difficult because of widespread
illiteracy and inadequate media services. Most imports, especially
government procurements, are made through local agents.
Joint Ventures/Licensing
Bangladesh business people are eager to collaborate with foreign
partners, and the Bangladesh Government (BDG) has amended conditions for
joint ventures to be more attractive in recent years. Joint ventures in
which the foreign partner provides the foreign exchange capital,
equipment, technology, and expertise are particularly welcome. One
hundred percent foreign ownership is permitted for export-oriented
investments.
The Industrial Policy of 1991/1992 ensures equal treatment for local
investment, joint venture, and 100 percent foreign investment.
According to the policy, no permission of the government is required to
set up a joint venture project. However, for obtaining facilities such
as import entitlement for raw materials and spare parts, land, and
utility connections all industries are required to be registered with
the Board of Investment (BOI). Aside from completing its two-page
registration application, the BOI does not require any additional
documentation. Joint ventures with public sector corporations are also
allowed.
Steps to Establishing an Office
A business in Bangladesh may be organized as a sole proprietorship, a
partnership, or as an incorporated or unincorporated association.
Foreign investors establishing enterprises in Bangladesh normally form
corporations. Two broad categories of corporations exist in Bangladesh:
public and private. Companies of either type may be limited or
unlimited. The liability of the shareholders of a limited company is
restricted to the amount of share capital subscribed by them or held in
their name. The liability of the shareholders of an unlimited company
is not as restricted. A minimum of seven shareholders is required to
establish a public limited company; there is no limit on the number of
shareholders it may have. A private company requires a minimum of two
shareholders, and its total number of shareholders may not exceed 50.
Any foreign firm incorporated outside of Bangladesh must be registered
in Bangladesh in order to carry out business. Business firms are
incorporated and registered under the provisions of the Companies Act of
1994. The incorporation/registration is done by the Registrar of Joint
Stock Companies, 24-25, Dilkusha C/A, Dhaka 1000, telephone: 236398.
Any foreign firm with its corporate head office outside Bangladesh
wishing to open a branch or liaison office must apply in a prescribed
form to the Ministry of Industries, Shilpa Bhaban, Motijheel C/A,
telephone: 230590. Copies of original or attested (by the Bangladesh
Mission in the United States) copies of the certificate of incorporation
should be submitted with the application.
Selling Factors/Techniques
One of the most important selling factors in marketing U.S. products is
selecting an efficient and effective local agent. U.S. firms should be
careful in terms of considering potential agents' financial soundness,
sales capabilities, and, most importantly, close contact with public and
private sector organizations. The local agents should be instructed to
provide advance information regarding potential government purchases.
Since the government's tender procedures are complicated and require a
lot of paper work, advanced notice is essential to be competitive in
bidding. Local companies should be given adequate product information
and training in order to promote U.S. firms products/services in the
local market. Promotional materials such as product brochures,
catalogs, posters for display and specific media advertisement strategy
greatly assists local agents to sell their principal's
products/services. U.S. firms should also consider promoting their
products/services through the annual U.S. trade show held in Dhaka.
Details on the trade show are available from the Executive Secretary,
American Bangladesh Economic Forum (ABEF), Room 319, Dhaka Sheraton
Hotel, 1 Minto Road, GPO Box 504, Dhaka 1000; telephone: 880-2-863391,
fax: 880-2-832915.
Advertising and Trade Promotion
Bangladesh has a small but growing advertising market research sector.
Product and trade advertisements are popular in Bangladesh and are
carried primarily through newspapers, magazines, radio and television,
billboards, posters, film shorts, and local exhibitions. Newspapers are
published in English and Bangla. Over 200 newspapers and magazines,
including over 100 dailies, circulate throughout the country. The
principal English-language dailies published in Dhaka are "Daily Star",
"Independent", "Morning Sun", "New Nation", "Bangladesh Observer",
"Financial Express", and "Bangladesh Times." The primary Bengali
dailies are "Ittefaq", "Inquilab", "Banglar Bani", "Dainik Bangla",
"Jana Khanta", and "Sangbad." Television and radio operate under the
government and broadcast nationwide. Radio Bangladesh offers commercial
advertisements generally in Bangla, but Bangladesh Television (BTV) also
carries advertisements in English. Radio Bangladesh broadcasts over 20
hours per day; BTV broadcasts primarily in the evening. U.S. Cable News
Network (CNN) and British Broadcasting Corporation (BBC) are transmitted
six hours a day via BTV. Satellite television is increasingly popular
among city dwellers, who watch mostly programs beamed from Hong Kong
(Star TV) and India (Door Darshan). Local cable companies have started
operations in Dhaka.
Pricing Product
Since most government purchases are through open public tenders,
contracts are usually awarded to the lowest bidder. The private sector
is also price sensitive. Other than a few essential pharmaceutical
products, the government does not have price controls over most
consumable items. Bulk commodities like imported fertilizer, edible
oil, milk powder, and petroleum products are subject to price controls.
Current inflation is slightly over four percent.
Sales Service/Customer Support
Sales service and customer support is critical particularly for private
sector customers. Marketing products, such as electric generators,
capital machinery, and large air conditioning plants requires sound
technical support for installation as well as maintenance needs. Agents
of U.S. firms dealing with these products should maintain sufficient
spare parts stock to support their customers.
Selling to the Government
The Bangladesh Government is the largest importer. Most government
agencies, autonomous organizations, and public sector corporations
import directly through public tenders, which are publicly announced or
issued to registered suppliers. Major BDG direct importers are the
Bangladesh Chemical Industries Corporation (BCIC); Bangladesh Steel &
Engineering Corporation (BSEC); Bangladesh Oil, Gas and Mineral
Corporation (BOGMC); Bangladesh Sugar & Food Industries Corporation
(BSFC); Trading Corporation of Bangladesh (TCB); Bangladesh Power
Development Board (PDB); Bangladesh Telephone & Telegraph Board (BTTB);
Directorate General of Defense Purchase (DGDP).
Major and bulk purchases to be made by public tender are published in
the local media. The Economic/Commercial Section of the Embassy
monitors all bid announcements and reports them promptly to the Office
of International Projects (OIMP), Room 2015-B, International Trade
Administration, U.S. Department of Commerce, Washington D.C. 20230,
telephone (202) 377-2373. This office also tracks all multilateral
development bank projects valued at over $5 million. Information on
tenders under $5 million is received by the Office of South Asia's
Bangladesh Desk Officer (202) 377-2954.
Protecting your Product from IPR Infringement
The BDG has not given intellectual property rights a high priority.
Enforcement is lax. Intellectual property infringement is common, but
is of limited significance for U.S. firms, with the possible exception
of pharmaceutical products and audio and video cassettes. Bangladesh
intellectual property law dates from the pre-independence era. The
Patent and Design Act of 1911, as amended by the Patent and Design Rule
of 1933, the Trade Mark Act of 1940, and the Copyright Ordinance of 1962
govern patents, trademarks, and copyrights in Bangladesh. An effort to
update trademark and patent law has been underway since 1990. The
latest draft of this law is currently under review to ensure compliance
with treaty obligations under the trade-related aspects of intellectual
property provisions of the World Trade Organization agreement.
Bangladesh has been a member of the World Intellectual Property
Organization (WIPO) in Geneva since 1985.
Need for Local Attorney
Legal assistance may be required to settle business disputes. A
representative list of Bangladesh attorneys handling commercial law
cases follows below. No responsibility for professional ability or
integrity of those listed is implied, but the firms have been chosen
with care. Names are listed alphabetically.
-- Chamber of Law
B-167, Malibagh C/P
Dhaka 1015
Tel: 402935
-- H & H Company
Shareef Mansion (2nd floor), 56-57 Motijheel C/A
Dhaka 1000
Tel: 232447, Fax: 832915
-- Huq & Company
47/1, Purana Paltan
Dhaka 1000
Tel: 232196, Fax: 235953
-- Dr. Kamal Hossain & Associates
Chamber Building (2nd floor), 122-124 Motijheel C/A
Dhaka 1000
Tel: 864966, Fax: 863409
-- The Law Center
Isphani Building (1st floor), 14-15, Motijheel C/A
Dhaka 1000
Tel: 239335, Fax: 863803
-- Syed Ishtiaq Ahmed
69/1 New Circular Road
Dhaka 1000
Tel: 230479
V. LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT
Best Prospects for Non-Agricultural Products
1. - Oil, Gas, Mineral Production/Exploration Services (OGS): The
official estimate of Bangladesh's proven natural gas reserves is 10.7
trillion standard cubic feet (SCF). Subsidiaries of the national
petroleum company, Petrobangla, produce an average of 670 million SCF
per day, supplying 70 percent of Bangladesh's commercial energy
consumption. The outlook for significant additions to gas reserves is
promising. However, a serious gas supply bottleneck has developed due
to insufficient investment in developing known fields and in
constructing adequate distribution pipelines to carry gas from fields in
the Northeast to the industrial users in the center and south of the
country. Gas-fired power plants and urea fertilizer plants have placed
increased demands on the gas supply. The total shortfall is estimated
at 100 million SCF per day.
In order to meet this need for increased investment and expertise in
developing known fields and adding to proven reserves, Petrobangla has
signed exploration and development contracts with two international oil
firms, including the U.S. firm Occidental Petroleum. Several other
international firms are in advanced stages of negotiating production
sharing contracts with Petrobangla. The distribution bottleneck is
being addressed through projects financed by the World Bank and the
Asian Development Bank. Under the Third Gas Infrastructure Development
Plan, the World Bank contributed $120 million as the major component of
a $170 million project to construct a major northeast to center pipeline
(Ashuganj-Bakhrabad pipeline) and provide gas dehydration facilities, as
well as other components. This project requires considerable contract
technical assistance, including consulting services for project
engineering and construction supervision and institutional development
support in gas network management and environmental and safety
management. Petrobangla and its subsidiaries regularly publish bid
notices for piping and facilities construction. During 1995 Petrobangla
plans to install at least four gas surface processing plants.
2. - Telecommunications equipment (TEL): The Bangladesh Telegraph and
Telephone Board (BTTB), under the Ministry of Post & Telecommunications,
held an absolute monopoly over Bangladesh's telecommunications sector
until 1992. In 1992, the Bangladesh Government (BDG) allowed two
private sector telephone companies to operate public service telephone
networks in rural Bangladesh. At present BTTB has approximately 290,000
telephone lines to serve 120 million people. About 75 percent of these
lines use analog switches, mostly from Siemens. The remaining 25
percent of the lines use digital switches from NEC. Through a French
government financing project, the French company Alcatel is installing
150,000 digital lines in Dhaka and 30,000 lines in Chittagong. BTTB
plans to install an additional 140,000 digital lines which includes
replacement of 40,000 Siemens analog switches. The total cost of this
project is approximately $150 million. To upgrade the existing
transmission network to support digital exchanges and private rural
operators, BTTB has proposed four transmission link upgrading projects
costing approximately $152 million. These projects includes
installation of fiber optic and microwave links. There is a projected
need for another 650,000 lines by the year 2000.
U.S. companies have done well in the private sector, which holds the
dominant role in the more technically advanced telecommunications
services. A U.S. company is the main equipment supplier to what until
recently was the only cellular phone licensee. BTTB plans to invite
bids from potential cellular telephone service providers to establish a
competing urban cellular service which will also provide radio trunk and
marine telephone service. Several U.S. companies are supplying
telecommunications services and equipment to the two private rural
telecommunications providers.
3. - Electrical Power Systems (ELP): Bangladesh currently possesses an
installed capacity of 2,563 MW, all government owned and operated, with
an annual generation of 10,000 MKWH. With a population of 120 million,
Bangladesh's per capita power generation is only 80 KWH per person. BDG
officials have announced their goal of a 2,619 MW increase in installed
capacity, which they say can only be met by opening the power generation
sector to private investment. However, before Bangladesh can join the
South Asia-wide shift in favor of private power generation, the BDG must
resolve some major problems affecting the government's ability to
purchase power, attract concessionary project financing, and implement a
supportive regulatory framework for private power development. The
government must also decide if private power is to be pursued using
solicitation procedures or case by case negotiations. While not yet
making a decision on this point, the BDG has signed memoranda of
understanding with eight international power development firms,
including six U.S. firms. Preparations are underway for the next phase
of negotiations covering fuel supply and power purchase agreements. The
Asian Development Bank and the World Bank are both involved in promoting
the necessary policy reforms and, if policy goals are met, in financing
plant construction.
The average electricity tariff is $0.058 per kilowatt hour. With the
public utility's average delivery cost at $0.065 per kilowatt hour, the
cost includes a subsidy of just over 10 percent. The dominant primary
energy source is natural gas, which, at least in the near term, will be
in short supply. There is also scope for coal-fired power plants.
Short-term U.S. export prospects are for transformers, treated wood
poles, insulators, surge protectors, line tools, commercial diesel and
gas generator sets, and spare parts for U.S. and U.S.-licensed turbines
for government-run power plants. If the government is prepared to move
forward with private power plants, and additional gas reserves are
discovered and developed, U.S. firms should be well-positioned to win
power project contracts.
4. - Aircraft/Parts (AIR) and Airport/Ground Support Equipment (APG):
The primary customers in the aviation sector are government-owned Biman
Bangladesh Airlines and the Civil Aviation Authority of Bangladesh
(CAAB), also a government entity. Biman recently took over maintenance
of its five DC-10s (four of which are owned by Biman), enhancing
opportunities for sales of spares, including engines. Biman has
recently signed a contract to purchase two Airbus A-310 mid-haul
aircraft (with U.S. engines) for its Middle East routes. Biman plans to
buy four long-haul aircraft in the near future. The CAAB is expanding
its airports in Dhaka and Chittagong and anticipates procuring radar,
navigational aids, HF and VHF radios, runway lighting, ground support
and emergency vehicles, and additional boarding bridges.
5. - Computers/Peripherals (CPT) and Computer Software (CSF):
Bangladesh's approximate market size for computer hardware, peripherals,
and software is $13 million (based on 1993-94 imports). The U.S. share
of this market is about 40 percent. The remaining market share belongs
to cheap clone makers from the Far East. However, due to strong
customer preference for U.S.-made computers, the prospects for
increasing personal computer and software sales are good. There will be
significant opportunities should either the central bank or the
government-owned commercial banks computerize their operations.
6. - Textile Machinery/Equipment(TXM): Bangladesh has a thriving ready-
made garment industry which exported $1.3 billion worth of garments in
FY94. Bangladesh is only able to produce five percent of the export-
quality fabric it needs and consequently imports nearly all of its
requirements. Many large Bangladeshi business houses are building
composite textile mills. The Bangladeshi textile industry prefers new
machinery from Japan, Korea, Britain, Switzerland and Germany. However,
there have been recent signs of increased interest in used and
reconditioned equipment from the United States, from which some of the
leading textile manufacturers have obtained their machinery. U.S.
equipment is often cheaper than that of competitors of similar quality
and better than that of lower-priced competitors. However, Bangladeshi
businessmen have complained about a lack of information and
responsiveness from U.S. firms selling used and reconditioned textile
equipment.
7. - Architect/Construction/Engineering Services (ACE): U.S.
architectural/ construction/engineering services, mainly in the form of
design and supervision consultancy, are competitive in Bangladesh. Most
donor-funded infrastructure projects require consultancy services. The
estimated total market for engineering consultancy is over $20 million
each year. The U.S. market share hovers around 40 percent. While Asian
construction firms usually are competitive in construction work, the BDG
seems to prefer U.S. or European consultants to do project design and
supervision. With new road and bridge construction projects in the
works, the need for engineering consultancy will increase.
8. - Agricultural Chemicals (Fertilizer) (AGC): The market for U.S.
fertilizer in Bangladesh is at a historic low, but is expected to
rebound in the future. Fertilizer imports were formerly a government
monopoly, with a large quantity funded by donor aid. The government set
prices below world levels. Fertilizer imports dropped after the BDG
privatized fertilizer imports and distribution in December 1992. In
1993-94, imports started picking up, reaching $33 million. Bangladesh
mostly imports TSP phosphate, SSP phosphate and DAP phosphate. The U.S.
fertilizer market share started to decline in 1991 mainly because of
extremely low prices for potash from the Commonwealth of Independent
States and China. Tunisia, which enjoys shipping cost advantages over
the United States, is the main U.S. competitor for TSP phosphates.
Bangladesh imports an estimated 70-75 percent of its potash and 100
percent of its phosphate requirements. 1993-94 imports from the U.S.
totaled $2.5 million, with $4.3 million imported from Tunisia.
Best Prospects for Agricultural Products
Wheat: In spite of the growth in production during the late 1980s and
early 1990s, Bangladesh will probably import large amounts of food
grain. In response to a sharp reduction in rice production, the
Government and private traders are expected to import 600,000 mt of rice
and 850,000 mt of wheat in FY 94/95. The United States has managed to
retain a 90 percent share of Bangladesh's commercial wheat imports
through the Export Enhancement Program of the U.S. Department of
Agriculture. Total wheat imports (commercial plus concessional) are
expected to reach 1.84 million mt in FY 94/95, with the U.S. share
accounting for 1.13 million mt (worth about $192 million). U.S. wheat
imports are forecast to be about the same in FY95/96, with more
commercial and less concessional wheat due to the sharp reduction in the
PL 480 (III) allocation for Bangladesh in FY95.
Although the government claims continued support for private sector
wheat (and rice) imports, it is clearly concerned about the inflationary
(and demand driven) impact on rice and wheat prices. The Government
apparently plans to maintain larger food grain stocks in order to
promote price stability, decreasing reliance on the private sector to
determine the price and availability of food grains.
Cotton: Total cotton imports in FY 94/95 are forecast at 100,000 mt, up
43 percent from the depressed previous year's import level. FY 95/96
imports are expected to reach a record of 110,000 mt. Cotton imports
will likely continue to grow with increasing consumption from the
textile industry. U.S. cotton exports to Bangladesh tripled in FY 94/95
and are expected to total around 65,000 mt (worth $115 million). This
is a major break-through for the United States, since medium staple
cotton was traditionally imported from Pakistan (currently under an
import embargo sanctioned by the association of private sector textile
mills in Bangladesh). Central Asian cotton poses some competition, but
a growing number of buyers favor U.S. sources because of the commitment
of U.S. shippers to maintain quality and timely delivery.
Apples: While India remains a dominant supplier, over the past six
years U.S. exports of apples to Bangladesh have increased from nothing
to 400 mt (worth $400,000) in FY 94/95 (5 percent of the market).
Importers typically import U.S. apples between April and July, when the
supply dwindles in India and other nearby countries. While the quality
and flavor of U.S. apples (only Washington red apples are imported) make
them the apple of choice among consumers, their high price hinders their
growth in the Bangladesh market. Because consumption is growing at a
rate of about 10 percent a year, U.S. apple exports to Bangladesh will
continue to rise.
VI. TRADE REGULATIONS AND STANDARDS
Trade Barriers
Bangladesh has made significant progress in liberalizing one of the most
restrictive trade regimes in Asia. The Bangladesh Government (BDG)
announced further trade liberalization in the June 1995 budget. Customs
duty rates will be compressed to a range of 7.5-50 percent over the next
year. The 2.5 percent import permit fee is the only other protective
instrument for most imports (a trade neutral value-added tax is also
applied). The import permit system is now automatic. The cumbersome
procedure for opening letters of credit has been simplified.
Customs duties are levied on all imports except raw cotton, textile
machinery, certain machinery used in irrigation and agriculture, animal
feeds used by the poultry and dairy industries, and certain drugs and
medical equipment. Duty rates are determined along the following lines:
-few items, mostly inputs 7.5-15 percent
-basic raw materials 15-22.5 percent
-intermediate products 22.5-30 percent
-finished products 30-50 percent
A supplementary duty is levied on luxury items like cars with engine
capacity greater than 1,000 cc and "undesirable" items like cigarettes.
Excise duties have been abolished on all items except on manually
prepared cigarettes, bank accounts, and textiles. Certain agricultural
products are exempt from the value-added tax (e.g., feed and medicines
for poultry, dairy machinery, aircraft & spares, textile machinery, raw
cotton, certain types of medical equipment and items from small and
cottage industries). Manufacturers who are 100 percent export-oriented
can import duty free through bonded warehouses.
Customs Valuation
The customs valuation of imported goods for the purpose of assessment
and realization of customs duty is based on the normal value concept.
Ad valorem duties are generally assessed on the basis of the CIF (cost,
insurance, freight and other charges) cost of goods. Duties are
collected in Bangladesh currency by Customs authorities under the
Bangladesh Customs and Excise Departments of the Ministry of Finance's
National Board of Revenue.
Import Licenses
Import licenses are not required for any imported items not listed in
the restricted list. Importers, mainly manufacturers, need an
importer's passbook to import items specified in the restricted list.
Prior permission from the Ministry of Commerce is required to import
such items. Commercial importers do not require a passbook. To
simplify the import of restricted items, the government is considering
waiving the passbook system for manufacturers.
Export Controls
The following items are banned for export:
-all imported goods in their original or unprocessed form
-ferrous and non-ferrous metals and scraps thereof
-petroleum and petroleum products except naphtha and furnace oil
-oil seeds and edible oils except kapok seeds
-jute seeds and sunn-hemp seeds
-food grains including rice products and flour products
-milk and milk products
-gur and khandseri sugar
-animals, animal skins and wildlife covered by the Bangladesh Wildlife
(Preservation) Order, 1973
-arms and ammunition, explosives and, ingredients thereof
-fissionable materials
-maps and charts, except unclassified maps of scale smaller than 1/4
inch or 1/250,000 scale, as well as educational/scientific charts and
guide/relief maps
-beef, mutton, and animal fats
-green coconuts, coconuts, and copra
-rare items of archaeological interest
-human skeletons
-pulses
-eggs and poultry
-prawns and shrimp, except frozen and processed
-feature films not certified by the Bangladesh Film Censorship Board as
fit for export
-onions
-rice bran (except de-oiled rice bran)
-shrimp of count 71/90 and sizes below for sea water and 61/70 and sizes
below for fresh water, excluding two varieties (Harina and Chaka)
-oil cake
-bamboo and cane in whole form and wood log
-frogs of all species (live or dead) and frog legs
In addition, the following items are restricted for export, requiring
Ministry of Commerce permission on a case-by-case basis:
-molasses
-de-oiled rice bran
-wheat bran
-stainless steel scrap
Quality control licenses issued by the Bangladesh Standards and Testing
Institute are required to export the following items: cane molasses,
shrimps and prawns (except frozen deveined or cooked), oil cake, wet
batteries and dry battery cells, electric fans and other select electric
appliances, biscuits, and PVC electric cables. An inspection
certificate is required for exports of raw jute. All plants and plant
materials for export must be inspected and certified that they are free
of insects or disease.
Import/Export Documentation
Unless otherwise specified, all imports transacted through a bank
require a Letter of Credit Authorization (LCA) Form. Obtaining an LCA
is not onerous, and many of the documents required for submission by
importers can be kept on file with their banks. There is no problem in
availability of foreign currency for import. However, as a safety
cushion against currency fluctuation, banks prefer to source foreign
currency for L/Cs more than $500,000 from the central bank. Typically,
1-2 days is required to obtain registration from the central bank.
Unless otherwise specified, all imports must be made by opening an
irrevocable letter of credit. Import against an LCA may be made without
opening an L/C in the following areas:
-import of books, journals, magazines, and periodicals on sight draft of
issuance bill basis;
-import of any permissible item for an amount not exceeding $3,000 only
during each local fiscal year against remittances made from Bangladesh;
-imports under commodity aid, grant or such other loan for which there
are specified procurement procedures for import of goods without opening
any L/C;
-imports of "International Chemical References" through bank drafts by
recognized pharmaceutical (allopathic) industry on the approval of the
Director, Drug Administration, for the purpose of quality control of
their products.
Importers must submit to their nominated banks the following documents
along with the LCA:
-L/C application form duly signed by the importer;
-indents for goods issued by indentor or a proforma invoice obtained
from the foreign supplier;
-insurance cover note.
Public sector importers also need to provide the following
documentation:
-attested photocopy of allocation letter issued by the allocating
authority in favor of the concerned public sector agency specifying the
source, amount, purpose, validity, and the terms and conditions;
-attested photocopy of sub-allocation letter, if any, issued in favor of
the importing agency or unit;
-attested photocopy of sanction letter from the administrative ministry
or authority where applicable;
-a declaration by the authorized officer of the importing agency
indicating the amount of utilized/unutilized government funds and that
imported raw materials will not be sold.
Private sector importers need to furnish the following additional
documents:
-valid membership certificate from the registered local chamber of
commerce and industry or any trade association, established on an all-
Bangladesh basis, representing any special trade or business;
-proof of payment of renewal fees for the Import Registration
Certificate (IRC) for the concerned fiscal year;
-a declaration, in triplicate, that the importer has paid income tax or
submitted an income tax return for the preceding year;
-any such documents as may be required by import policy order or public
notice, or instruction issued by the Chief Controller of Imports and
Exports.
In the following case, neither an LCA nor the opening of an L/C will be
necessary, but an import permit (IP) or clearance permit (CP) will have
to be obtained by the importer:
-import of books, magazines, journals, periodicals and scientific and
laboratory equipment against surrender of UNESCO coupons;
-imports under pay-as-you-earn scheme for a limited number of cars,
fishing vessels, cargo or passenger vessels, and new machinery on the
basis of clearance from the Bangladesh Bank;
-import of items by passengers coming from abroad in excess of the
permissible limits as per permitted allowance;
-import of free samples, advertising materials, and gift items above
prescribed ceilings.
Temporary Entry
Agents and representatives of foreign manufacturers are allowed to
import machinery and equipment from their principals for purposes of
demonstration or exhibition, subject to the following conditions:
-the goods brought into Bangladesh will be re-exported within a period
of one year
-the importer shall execute a bond and furnish a bank guarantee or
understanding or a legal instrument to the satisfaction of Customs at
the time of clearance indicating that the goods will be re-exported in a
timely manner
-if the goods include any banned or restricted items, prior permission
is required from the Chief Controller of Imports and Exports.
Equipment or machinery imported on a temporary basis is exempt from duty
if the importer obtains an import cum export permit.
Labeling, Marking Requirements
Imported goods (including their containers) must not bear any words or
inscriptions of a religious connotation, the use or disposal of which
may injure the religious feelings and beliefs of any class of the
citizens of Bangladesh. In addition, imported goods should not bear any
obscene picture, writing, inscription, or visible representation.
Milk food can be imported in cans and in bulk. The container must
indicate the ingredients in Bangla as well as the manufacturing and
expiration dates (in Bangla or English). A measuring spoon must be
supplied in all containers of baby food. Non-fat dried milk is
importable only in airtight containers, with the date of manufacture and
expiration noted in Bangla or English. Pesticide containers must be
able to withstand "handling by sea," indicate the chemical contents, and
meet other specifications.
Prohibited Imports
Bangladesh's Import Policy Order 1993-95 places controls on some
imports. Items banned from import include:
-maps, charts and geographical globes which indicate the territory of
Bangladesh but do not do so in accordance with the maps published by the
Bangladesh Government's Department of Survey;
-horror comics, obscene and subversive literature;
-printed material, posters, video tapes, etc. containing matters likely
to outrage the religious feelings and beliefs of any class of the
citizens of Bangladesh;
-unless otherwise specified, old, second-hand and reconditioned goods;
-unless otherwise specified, all kinds of waste;
-goods bearing pictures or writing which is obscene or of a religious
connotation which may injure the religious feelings of any class of
Bangladesh citizens.
Other items completely banned are: live pigs, pig and poultry fat, poppy
seeds and dried posto dana, grass and vung, opium, tendu leaves, lard,
lard and tallow oil, solid or semi-solid palm oil, raw sugar, un-
denatured ethyl alcohol (80 percent or higher) and other spirits
denatured of any strength, wine, artificial mustard oil, woven fabrics
of silk or silk waste, pig hair, some kinds of cloth, nylon and
polyethylene ropes, fishing nets, used or new rags, padlocks up to three
inches, vessels more than 15 years old, and single phase electricity
meters.
In addition, goods from, originating in, or imported in flag vessels
from Israel are prohibited.
Standards
Quality standards are set and monitored by the Bangladesh Standards and
Testing Institute. Bangladesh also recognizes and accepts goods bearing
certification from standard institutions of other countries. Standards
for pharmaceuticals are controlled by the Department of Drugs
Administration under the Ministry of Health and Family Welfare. The
Bangladesh Atomic Energy Commission tests all imported food items to
ensure that the prescribed standard for radioactivity is maintained.
Free Trade Zones/Warehouses
Bangladesh has two Export Processing Zones (EPZs), one in Chittagong and
one in Savar (near Dhaka). The EPZs offer tax breaks, union-free labor,
a relatively secure power source, the duty-free import of capital
machinery, warehouse facilities, and other benefits to 100 percent
export-oriented industries. Chittagong port has 116,375 square meters
of covered warehouse space, with a capacity to hold 50,000 metric tons.
The port also has a warehouse for hazardous cargoes (102 metric tons)
and for cold storage (500 tons). Mongla port in Khulna (southwest
Bangladesh) also has warehouse facilities. For industries outside the
EPZs, the National Board of Revenue provides bonded warehouse facilities
to 100 percent export oriented industries or to industries whose raw
materials/components are mainly imported. Production within bonded
areas is free of import duties, with a minimum of customs formalities.
Special Import Provisions
Bangladesh has encouraged counter-trade for many years as a means to
promote exports while conserving foreign exchange. Barter trade in
commodities is carried out with countries in Eastern Europe, the CIS,
China, and North Korea. Bangladesh also allows special trading
arrangements through the Trading Corporation of Bangladesh.
Membership in Free Trade Arrangements
Bangladesh is a member of the South Asia Preferential Trade Agreement
(SAPTA) under the umbrella of the South Asia Association for Regional
Cooperation (SAARC).
VII. INVESTMENT CLIMATE
Openness to Foreign Investment
The policy of the Bangladesh Government (BDG) is to pursue foreign
investment actively. It has placed advertisements in international
print media promoting Bangladesh for foreign investment and regularly
arranges official and private trade delegations to Asian, European and
North American cities. In January 1995 the Bangladesh Board of
Investment and Euromoney Publications co-hosted an investment conference
that was well attended by international fund managers and the top ranks
of the Bangladesh Government. The Prime Minister and cabinet ministers
addressed the conference.
Although it welcomes foreign investment, Bangladesh has not yet
attracted a significant amount of it. To date, the Embassy estimates
just over 100 foreign firms have invested in Bangladesh, of which 26
operated prior to independence in 1971. Since 1986, overall private
investment in Bangladesh has amounted to only six percent of GDP or
less, the lowest in Asia. Foreign investment is expected to rise
significantly during the coming year as an Australian/U.S. firm
continues exploration of a coal source and two foreign oil and gas
exploration and development firms (one U.K., one U.S.) begin work on
their respective tracts.
Some of the difficulty in attracting foreign investment has been with
overcoming a dated and inaccurate image of dire poverty, devastating
disasters, and near-total lack of development. However, there are major
weaknesses in the investment climate. Domestic businesses generally
cite such problems as government red tape and corruption, an uncertain
law and order situation, poor infrastructure, inadequate commercial laws
and courts, and policy instability. In early 1995, a U.S. investor in a
medical products manufacturing plant was imprisoned briefly over a
dispute with his state-owned bank creditor. His treatment appeared to
be arbitrary, disproportionate, and possibly arising from extra-judicial
motives. It is generally recognized that domestic investment will not
rise before these problems are addressed. Foreign investment will
follow, not anticipate, domestic investment, except in specialized
sectors such as mineral extraction.
Many of the small number of foreign investors in Bangladesh, including
U.S. firms, have had favorable experiences and are earning profits in
Bangladesh. However, when existing foreign investors encounter problems
with policies and regulations, the BDG often does not pay adequate
attention. Three prominent foreign firms, the U.S. company Pfizer
Laboratories, the Dutch firm Philips, and the Swedish firm Swedish
Match, divested in 1993. Pfizer was the last of three U.S.
pharmaceutical firms to leave Bangladesh. The investment climate is
only now recovering from the BDG's holding up for a year in 1991,
following a change of government, the $520 million KAFCO fertilizer
plant project, financed with loans and equity from foreign governments,
private corporations and the BDG. The plant was finally commissioned in
January 1995, greatly relieving its foreign investors and creditors.
Major laws affecting foreign investment are the Foreign Private
Investment Act of 1980, the Industrial Policy of 1991, the Bangladesh
Export Processing Zones Authority Act of 1980, and the Companies Act,
1994. In addition, foreign investors are also affected by regulations
of the Bangladesh Bank (central bank), the National Board of Revenue
(for taxation and customs matters), and others. Although discrimination
against foreign investors is not widespread, some discriminatory
policies and regulations exist. For example, manufacturing and import
controls imposed by the national drug policy and the Drugs (Control)
Ordinance of 1982 discriminate against foreign drug companies.
BDG authority for dealing with foreign investment proposals is
fragmented, and no BDG office has the clout to be a "one-stop shop."
The Board of Investment (BOI), touted as a one-stop shop for all
investors, is only set up to register investors in industrial projects
outside the export processing zones (EPZs) and assist them with tax
treatment, land acquisition, utility hook-ups, and incorporation. The
corresponding EPZ authority is the Bangladesh Export Processing Zones
Authority. Registration with BOI is necessary to obtain benefits such
as importing machinery at concessionary duty rates or importing items on
the "restricted list." In 1994 BOI began using a greatly shortened form
and providing registration automatically. The BOI also administers the
approval of foreign loans and technology remittances on behalf of the
Bangladesh Bank. Investments in power, mineral resources, and
telecommunications must be approved by the corresponding BDG utilities
and ministries, while garment makers must seek production allocations
for quota exports to North America from the Export Promotion Bureau.
Although privatization is a critical part of the BDG's stated economic
reform policy, privatization has not seen sufficient progress to attract
foreign investors. Work permits for other than expatriate chief
executives are frequently restricted, directly contrary to the 1991
Industrial Policy, with re-entry visas limited to two-to-three entries.
There are no distinctions between foreign and domestic private investors
regarding investment incentives or export and import policies.
Incentives for investors, which the BDG hails as the most liberal in
Asia, include 100 percent ownership in most sectors; tax holidays;
reduced import duties on capital machinery and spares; duty-free imports
for 100 percent exporters; and tax exemptions on technology remittance
fees, on interest on foreign loans, and on capital gains by portfolio
investors. There are few performance requirements, and these do not
generally present a problem for foreign investors.
Conversion and Transfer Policies
The taka was recently made freely convertible for current account
transactions, and the BDG's 1995/1996 budget includes plans to make the
taka convertible on the capital account as well. At mid-1995, the BDG's
foreign exchange reserves stand at over $3.4 billion, representing ten
months of import cover. Foreign exchange is generally available for
permissible private sector transactions. The taka has been stable
against the dollar over the past year. Over the period 1991 to 1994,
the taka depreciated less than ten percent against the dollar.
The Foreign Investment Act guarantees the right of repatriation of
invested capital, profits, capital gains, post-tax dividends, and
approved royalties and fees. Bangladesh Bank exchange control
regulations and the United States-Bangladesh Bilateral Investment Treaty
(entered into force July 23, 1989) provide similar investment transfer
guarantees. In practice, most foreign firms are able to repatriate
these items without too much difficulty, provided the appropriate
documentation is in order. Foreign firms in joint ventures, which are
only able to remit profits in the form of dividends, also report no
difficulties in the process. However, in some cases, foreign firms'
profit remittances have been delayed for over one year pending tax
clearance from the National Board of Revenue. Where tax disputes are
causing the delay, firms may have to choose between timely profit
remittance and sacrificing legitimate positions on tax issues.
Although the law provides in general for capital transfers, there are
still some significant restrictions in practice. For example,
repatriating capital gains, other than from the sale of publicly listed
shares, is limited to ten percent of the capital gain, and is difficult
to accomplish. BOI also issues passbooks limiting repatriation of
royalties and other technology transfer fees. However, no permission is
required for remitting fees amounting to less than six percent of sales.
Expropriation and Compensation
In the years immediately following independence in 1971, widespread
nationalization resulted in government ownership of over 90 percent of
fixed assets in the modern manufacturing sector, as well as all banking
and insurance interests, except those in foreign (but non-Pakistani)
hands. All domestically owned cotton textiles, jute, and sugar
manufacturing units, none of which was owned by foreigners, were placed
under government control. Since then, the Foreign Investment Act of
1980 has forbidden nationalization or expropriation without adequate
compensation. There have been no instances of expropriation of foreign
property since the Foreign Investment Act was passed.
Dispute Settlement
Underlying other impediments to investment in Bangladesh is a weak legal
system in which the enforceability of contracts is in doubt. Over ten
years can pass between bringing a court case and executing a judgment.
With no interest charged on judgments, there is no penalty for delaying
proceedings. It is generally believed that in the lower courts where
cases are first brought, private sector parties with the means to make
"good connections" with the judge have an advantage, even in cases where
the government is the opposing party. Articles 115 and 116 of the
Constitution allow the head of state to control and discipline judges,
including Supreme Court justices. Legislation to make the judiciary
independent is pending. Nevertheless, the Supreme Court has retained a
reputation for fairness and competence. This has meant that at least at
the appellate level the outcome of commercial cases is determined by
merit.
There have not been any investment disputes over the past few years
involving U.S. or other foreign investors or contractors in the
Bangladeshi courts. In the event of arbitration, although Bangladesh is
a signatory of the International Convention for the Settlement of
Disputes, it has not yet acceded to the U.N. Convention for the
Enforcement of Foreign Arbitral Awards. A provision in the United
States-Bangladesh Bilateral Investment Treaty gives procedures for
referring unresolvable investment disputes to ICSID for third-party
settlement. In any case, the ability of the Bangladeshi judicial system
to enforce its own awards is weak, and there is no reason to think
enforcement of foreign judgments would be any stronger.
Most laws affecting investment in Bangladesh badly need overhauling.
Among others, Bangladesh has a 1909 and a 1920 Insolvency Law, an 1861
Admiralty Law, a 1911 Patents Law, a 1933 Patent and Design Rule, a 1940
Trademark Act, and a 1962 Copyright Ordinance. Some drafts of new
legislation produced by ad hoc government committees are more than ten
years old, but final reviews have not been conducted. Resource
constraints in the Law Ministry are a major problem. The insolvency
laws, which apply mainly to individual insolvency, are not being used
because of a web of falsified assets and uncollectible cross-
indebtedness supporting insolvent banks and companies. Although land,
whether for purchase or lease, is often critical for investment and as
security for loans, antiquated real property laws guarantee chaos. Land
registration records are untrustworthy and unreliable. Parties avoid
registering mortgages, liens and encumbrances because certain stamp
duties and charges have been set at high levels. Instruments take
effect from the date of execution, not the date of registration, so a
bona fide purchaser can never be certain of title.
Dispute settlement is also hampered by shortcomings in accounting
practices and the registration of real property. With the possible
exception of those conducted by a few internationally affiliated
accounting firms, audits of balance sheets and profit and loss
statements often follow clients' instructions and fail to conform to
international standards. Documents affecting title to real property are
often not registered, complicating transfer of ownership and
collateralization.
Political Violence
There have not been any incidents over the past few years involving
politically motivated damage to projects or installations. Although the
environment in Bangladesh is growing increasingly politicized as
national elections approach, which must take place not later than April
1996, and civil disturbances may become more common, violence targeted
against business concerns is unlikely. "Hartals," or general strikes,
which are occasionally called by opposition political parties and
political movements, mostly affect businesses by keeping workers away
with the threat of violence, resulting in significant productivity
losses. A general deterioration in law and order, due largely to
corruption and politically sponsored thuggery, is a widespread matter of
concern among Bangladeshis. This concern has dampened domestic
investment. The law and order situation has not yet resulted in the
cancellation of any foreign investments.
Performance Requirements/Incentives
The BDG prefers manufacturing which uses local inputs and has shifted
its preference for high technology products to more labor-intensive
industries. Ready-made garment manufacturers are encouraged, but not
required, to use a minimum of 15 percent locally produced fabric.
However, nearly all manufacturers are unable to source local fabric of
sufficient quality to do so. Similarly, garment manufacturers are
encouraged to achieve a total local value added content of their
garments of 30 percent or higher. The 1991 Industrial Policy states it
is "mandatory to pack food materials, sugar, cement, fertilizer, etc. in
jute bags." However, this is also not being followed in practice
because of inadequate supplies.
In order to qualify for incentives available only to exporters, such as
no duties or reduced duties on imported machinery and spare parts, a
company must establish that it exports 60 percent or more of its output.
Other incentives available to firms establishing themselves as exporters
are bonded warehouse facilities and tax holidays of ten years or more.
Right to Private Ownership and Establishment
Officially, six sectors are reserved for government investment only.
These are:
A) Arms, ammunition, defense equipment, and machinery;
B) Production of nuclear energy;
C) Security printing and minting;
D) Forestry in the reserved forest areas;
E) Airways (except short take-off and landing services)
and railways; and
F) Transmission and distribution of electricity.
Industrial activity is still dominated by inefficient public sector
enterprises, which stifles the potential for greater economic
performance. The BDG's privatization efforts have been watched closely
as a barometer of the official attitude towards the private sector.
Although on paper the BDG has sold off a significant number of companies
and shares, including about 38 percent of the country's jute milling
capacity, 70 percent in textiles, 12 percent in sugar and food, 10
percent in chemicals, and 4 percent in steel and engineering, it has
retained control of many. Privatized firms in these sectors continue to
behave as parastatals and to be heavily regulated; e.g., management has
not been able to reduce employment rolls. In at least three cases of
foreign firms whose joint venture partners were nationalized at
independence, the foreign firms have been unable to persuade the
government to sell them its shares at fair market value. Privatization
has slowed to a virtual standstill. In 1992, the BDG expressed a
commitment to privatize 42 industrial units. The Privatization Board
has handed over 11 state-owned enterprises, with seven others at various
stages in the process.
Unofficially, many sectors are reserved at least in part for the
government. Although occasionally the BDG has given way to the private
sector, such as for wheat and fertilizer imports and fertilizer
distribution, parastatals have often stifled private sector initiatives
and undermined legal and policy reforms. Licenses required for
businesses in which parastatals compete, such as banking and insurance,
are not readily granted. Following a BDG decision in mid-1993 to allow
the private sector to import petroleum products, a private firm imported
a shipment of diesel fuel. A court injunction won by the monopolist
Bangladesh Petroleum Corporation tied up the cargo in port for months.
Although the private company eventually prevailed, the BDG simply
reversed policy and reinstated its monopoly.
Regulatory System: Laws and Procedures
Starting from a position of extreme over-regulation, the trend roughly
since 1989 has been for governmental obstruction of private business
gradually to decrease. Many regulatory changes have not yet been
politically possible to implement. Although some civil servants and
ministers display genuine commitment, reforms face broad-based
resistance from nearly all groups of actors in the economy including
influential members of the business community. The official chambers of
commerce include manufacturers with protected industries and well-
connected commission agents pursuing government contracts. They call
for a greater voice for the private sector in government decisions and
for privatization, but they are also protectionist, subsidy-minded, and
tamed by their official roles.
Policy and regulations in Bangladesh are often not clear, consistent, or
publicized. Generally, the civil service, businesses, professionals,
trade unions and political parties have vested interests in a system in
which confidentiality is used as an excuse for lack of transparency and
in which patron-client relationships are the norm. Businesses must
always return to civil servants to get action, and may not get it, even
after receiving assurances at higher political levels. Traditionally,
the BDG's poorly paid civil servants regard businesspeople as
exploitative and regard themselves as having a near monopoly on economic
acumen and patriotism. They also strongly recognize that, whether they
are motivated by rent-seeking or rectitude, there is greater scrutiny of
their acts and risk to their careers under a democratically elected,
civilian government. Even so, accounts from domestic and some foreign
investors of solicitation of bribes continue to be too numerous to
dismiss. Donors have come to regard public administration reforms as
central to overall economic reform.
In practice, BDG laws and regulations and their enforcement do not
reduce distortions or impediments to investment, but create them.
Continued unhelpful treatment of businesses by BDG officials, coupled
with other negatives in the investment climate, raise start-up and
operational costs, add to risk, and counteract the BDG's investment
incentives. In this regard, business people agree that Customs and
Excise deserves special mention. Businesses spend a great deal of time
and money dealing with Customs. One common tangle concerns tariff
schedules, which Customs uses to determine the value of goods unless
pre-inspected, regardless of the invoiced amounts, to which it then
applies published rates of duty. The schedule is changed every three or
so months, without advance notice. Changes apply while goods are in
transit.
Efficient Capital Markets and Portfolio Investment
Foreign investors have access to local credit markets, but most seek
financing offshore. If they finance locally, it is with a foreign bank
branch. The private sector can also receive financing from two leasing
companies and by issuing shares or debentures on the Dhaka Stock
Exchange (DSE). A second stock exchange is due to open its doors during
the Summer of 1995 in Chittagong, Bangladesh's major port city.
One of the world's smallest share markets, the privately owned DSE lists
183 companies. On an average day shares of around 90 companies are
traded. Trading was dormant until 1993, when a boom began, believed by
insiders to have been helped by local businesses bringing in offshore
funds as foreign investment and a drop in the interest rate on bank
savings accounts. Between June 1993 and June 1995 as much as $200
million in foreign funds may have followed and market capitalization of
listed companies surpassed $1 billion. Average daily trading jumped
from $10,000 to over $450,000. However, overall DSE growth is severely
limited by the small number of available shares of the active issues.
The BDG's Securities and Exchange Commission (SEC) was formed in 1993 to
regulate the DSE and protect investors. In February, 1995, the SEC
imposed new restrictions on the involvement of foreign investors in the
Bangladesh capital market. The new guidelines stipulate that:
-- foreign investors are limited to no more than one-third of the shares
made available during an initial public offering, or the value of the
foreign exchange requirement of the project under implementation,
whichever is less;
-- foreign investors cannot sell shares purchased during an initial
public offering for one year from the date of purchase;
-- foreign investors can apply for that part of share offerings reserved
to local investors in the event reserved shares are not fully subscribed
by local investors;
-- foreign investors may underwrite up to one-third of the value of an
initial public offering.
Major foreign investors, such as United Bank of Switzerland, have
protested these measures, especially the one year enforced holding of
securities. Foreign investors point out that this measure exacerbates
the Bangladesh market's greatest drawback: the difficulty of buying or
selling in volume over a reasonably short period.
The SEC has not yet taken up the long overdue task of rigorously
enforcing reporting and audit requirements and bringing those
requirements up to international standards. DSE's politically
influential members have successfully resisted such enforcement in the
past. The DSE's articles limit it to 200 members. With the family
"sponsors" of most listed companies retaining majority ownership, there
is no issue of hostile takeovers. There are also no restrictions on
foreign investment in private firms or practices which limit it.
Bilateral Investment Agreements
The Foreign Investment Act includes a guarantee of national treatment.
National treatment is also provided in bilateral investment treaties for
the promotion and protection of foreign investment which have been
concluded with 11 countries: the United States, the United Kingdom,
Germany, France, Belgium, the Netherlands, South Korea, Romania, Italy,
Thailand, and Turkey. The United States Bilateral Investment Treaty,
signed on March 12, 1986, entered into force on July 23, 1989.
Bangladesh has concluded tax treaties, assuring investors of fair
treatment and the reduction or elimination of double taxation, with some
countries, and generally adheres to the principal of national treatment
with respect to tax policies. Separate bilateral agreements for the
avoidance of double taxation have been signed with 12 countries:
Britain, Canada, Sweden, Singapore, South Korea, Sri Lanka, Pakistan,
France, Malaysia, Japan, Germany, and Italy. A bilateral tax treaty
with the United States is under negotiation.
OPIC And Other Insurance Programs
The United States Overseas Private Investment Corporation provides
insurance coverage for some U.S. firms currently doing business in
Bangladesh. In recent years, BDG authorities have been cooperative in
approving requests for OPIC insurance. Bangladesh is a member of the
Multilateral Investment Guarantee Agency.
Labor
Bangladesh has a population of 120 million people. The formal sector in
Bangladesh has an estimated 4.8 million workers, with 1.4 million (30
percent) employed in public enterprises. Total underemployment and
unemployment in Bangladesh is loosely estimated at 30 percent.
Bangladesh's comparative advantage in cheap labor for manufacturing is
partially offset by low productivity, due to low skills, poor
management, and inefficient infrastructure and machinery. Technically
trained personnel often seek and find employment in the Middle East at
substantially higher wages than they would receive in Bangladesh. Over
the past 17 years, more than 1.2 million Bangladeshis have worked
overseas, officially bringing in over six billion dollars in foreign
exchange.
Foreign investors and managers report that Bangladeshi workers generally
respond well to training. All employers are expected to comply with the
government's labor laws, which specify employment conditions, working
hours, wage levels, leave policies, health and sanitary conditions, and
compensation for injured workers. Freedom of association and the right
to join unions is guaranteed in the Bangladesh Constitution. The right
to form a union, subject to government approval, is also guaranteed.
However, unions are not permitted to form yet in the export processing
zones. Approximately three and a half percent of Bangladesh's work
force is unionized. Labor unions remain strongest in the jute, textile,
and transportation sectors.
Bangladesh's labor unions, most of which are associated with the
political parties, have a reputation for militancy. In early 1995
clashes between jute mill labor groups and the police resulted in
numerous injuries and a few deaths. Violence and the threat of violence
by trade unions have produced wage increases in excess of productivity
increases, raising unit labor costs. Worker layoffs, or the mere threat
of reductions-in-force, can be expected to cause some of the most
serious and confrontational labor disputes. Labor in private sector
enterprises is mostly not unionized and comparatively more productive.
Productivity in Bangladesh is affected by hartals (general strikes)
called by political parties and movements, which take their toll in
down-time by intimidating people from leaving their homes.
On July 4, 1995, Bangladesh's garment exporters association signed a
memorandum of understanding (MOU) with the United Nations Children's
Fund and the International Labor Organization under which child labor in
the ready-made garment industry is to be eliminated while providing for
the education and welfare of the children removed from the factories.
This initiative was strongly encouraged by the Bangladesh Government,
the U.S. Embassy, and some U.S. consumer groups and garment buyers.
Foreign Trade Zones
Under the Bangladesh Export Processing Zones Authority Act of 1980, the
BDG established an export processing zone (EPZ) in Chittagong in 1983.
Another EPZ has been set up near Dhaka. One hundred percent foreign-
owned investments, joint ventures and one hundred percent Bangladeshi-
owned companies are all permitted to operate in the EPZ and enjoy equal
treatment.
Sixty companies operated in the Chittagong EPZ as of June 1995,
representing an investment of about $160 million and directly employing
over 27,000 people. Their combined exports in fiscal year 1994 were
$160 million. As of June 1995, 12 companies with a total investment of
$15 million were operating in the Dhaka EPZ, employing over 7,000
people. The Dhaka EPZ contributed $36 million to Bangladesh's exports
in fiscal year 1994. Investors in the Dhaka and Chittagong EPZs are
generally satisfied with their investments. Five U.S. firms are
currently operating in the Chittagong EPZ, including one garment factory
and four specialized textile manufacturers. Other foreign countries
with investment in the EPZs include Japan, South Korea, Hong Kong,
Singapore, the United Kingdom, Sweden, the Netherlands, Thailand, and
Pakistan. Industries represented in the EPZ include garments, textiles,
terry towel manufacturers, electronics, sporting goods, steel chain, and
services (including equipment leasing and container repairs and
handling).
Capital Outflow Policy
Beginning in fiscal year 1992, the Bangladesh Bank introduced measures
to relax existing controls on the use of foreign exchange, especially on
the current account. In his 1995/96 budget speech, the Finance Minister
avowed that currency liberalization would be extended to capital account
transactions over the course of the following fiscal year. However, as
of June 1995, the BDG continues to discourage capital outflow.
Bangladeshi investments abroad require case-by-case approval by various
government agencies and the Bangladesh Bank. Cases are more likely to
be favorably considered if it can be shown that the investment will
contribute directly to the export of goods, services or labor from
Bangladesh--areas with potential for generating additional foreign
exchange earnings.
Major Foreign Investors
The following is a list of major foreign direct investments in
Bangladesh:
U.S. Companies:
- American Express Bank, banking
- American Life Insurance Company (American International Group),
life insurance
- American President Lines, shipping
- Booz Allen & Hamilton, Inc. consultant to Finance Ministry
- BHP Minerals, coal, (Australian/U.S.)
- Citibank, N.A., banking
- IBM World Trade Corporation, computer hardware and
software
- Louis Berger International, Inc., engineering and
construction consultant
- Occidental Petroleum, oil & gas exploration and development
- Nathan Associates, consultant to Finance Ministry
- Rhone-Poulenc (Bangladesh) Ltd., pharmaceuticals (France/U.S.)
Other Nations' Companies
- Karnaphuli Fertilizer Company Limited, manufacture of urea and
ammonia, 54 percent held collectively by Chiyoda, Marubeni and IPM
(Japan), Haldor Topsoe A/S (Denmark), Stamicarbon (Netherlands),
and Commonwealth Development Corporation (U.K.)
- Olympic-MI Bangladesh Ltd., manufacture of electric tools,
fishing, and golf equipment (Japan)
- Bangladesh Tobacco Ltd., manufacture of cigarettes and smoking
tobacco, BAT Ltd. (U.K.)
- Azmat Bangladesh Ltd., manufacture of bed sheets (Netherlands)
- Lever Brothers Bangladesh, manufacture of soaps, detergents,
toiletries, and glycerin, Unilever Group (U.K.)
- Bata Shoe Co. Ltd., manufacture of footwear, Bata (Canada)
- Youngones Co. Ltd., manufacture of sportswear and garment accessories
(South Korea)
- Bangladesh Oxygen Ltd., manufacture of dry ice, welding electrodes,
industrial and medical gases, British Oxygen Ltd. (U.K.)
- James Finlay & Co., tea estates, P & O Containers (U.K.)
- Duncan Brothers (Bangladesh) Ltd., tea estates, Lawrie Group (U.K.)
- Glaxo Bangladesh, manufacture of pharmaceuticals and related products,
Glaxo Group Ltd. (U.K.)
- Reckitt & Colman, manufacture of pharmaceuticals and related products,
Reckitt & Colman (U.K.)
- Berger Paints Bangladesh Ltd., manufacture of paint products, Berger
Group (U.K.)
- Ciba-Geigy (Bangladesh) Ltd., manufacture of pharmaceuticals
and related products (Switzerland)
- Siemens Bangladesh Ltd., manufacture of telecommunications equipment
(Germany)
- AKZO-Nobel, chemicals (Netherlands)
- Nestle Bangladesh Ltd., manufacture of food products (60 percent
Switzerland)
- Standard Chartered Bank, commercial banking (U.K.)
- ANZ Grindlays Bank, commercial banking (Australia/U.K.)
- Banque Indosuez, commercial banking (France)
- Islami Bank, Islamic banking (75 percent Saudi Arabia)
- Al-Baraka Bangladesh Bank, Islamic banking (80 percent Saudi Arabia)
- State Bank of India, commercial banking (India)
- Habib Bank, commercial banking (Pakistan)
- Industrial Promotion and Development Company of Bangladesh, holding
company (U.K. joint venture)
- International Development Leasing Company of Bangladesh, leasing
(Korea/U.K. joint venture)
- Singer Bangladesh Limited, manufacture of sewing machines, consumer
electronics, lighting products and appliances (Canada)
- Saudi-Bangladesh Industrial Investment & Agriculture Investment
Company Ltd., holding company (Saudi Arabia joint venture)
- Kader Synthetic Fibers Ltd., manufacture of synthetic yarn
(Saudi Arabia, Netherlands joint venture)
- Tamijuddin Textile Mills Ltd., manufacture of textiles (Netherlands
joint venture)
- The General Electric Company of Bangladesh, manufacture of fans,
GEC Ltd. (U.K.)
- Advanced Chemical Industries Ltd., manufacture of chemicals, ICI Ltd.
(U.K.)
- Burroughs Wellcome & Company (Bangladesh) Ltd., manufacture of
pharmaceuticals, Burroughs & Wellcome Ltd. (U.K.)
- Hoechst Pharmaceutical, manufacture of pharmaceuticals, Hoechst
(Germany)
- Bangal Fisheries Ltd., deep-sea fishing and processing, (Japan joint
venture)
- Ahmed and Hakodate, deep-sea fishing (Japan joint venture)
- Cosmo Food Ltd., seafood processing (Japan joint venture)
- Cairns, oil exploration (U.K.)
VIII. TRADE AND PROJECT FINANCING
Brief Description of Banking System
The Bangladesh banking sector is made up of nine government-owned banks,
14 domestic private banks (with four more authorized, but not yet
operating), and seven foreign banks. The government banks and many
local private banks have a high percentage of classified or non-
performing loans. At the government banks, this resulted from directed
lending, mostly to money-losing parastatals, diverting credit from the
private sector. The banking system is impaired by a web of weak balance
sheets, high liquidity, high real interest rates on loans, weak demand
from creditworthy borrowers, and heavy reliance on liquid asset-based
lending. Despite market reforms, such as the liberalization of interest
rates, the BDG continues to encourage its own banks to lend to "sick"
industries, both parastatal and privatized, and all banks to increase
term lending. Donor institutions are assisting with financial sector
reforms. Part of the reform effort is to upgrade regulations and
accounting standards to international standards as far as possible.
The Bangladesh Bank regulates all banking institutions, including the
nationalized commercial banks (NCBs), other government banks
(development finance institutions and agricultural banks), domestic
private banks and foreign banks. Collectively, these banks make up the
"scheduled" banking system. As in many countries, the central bank is
controlled by the Ministry of Finance; it is not independent. The
Bangladesh Bank is headed by a Governor, who reports to the Secretary,
Finance Division of the Ministry of Finance. Overall banking activity
is dominated by the four NCBs--Sonali Bank, Janata Bank, Agrani Bank,
and Rupali Bank. Total scheduled bank deposits stand at about $9.0
billion.
Local private banks are noted for having to offer higher rates than
private foreign banks and the NCBs in order to attract depositors, and
for insider lending. A major insider lending scandal involving some
local private banks was uncovered by the Bangladesh Bank in 1994.
Efforts by the central bank to encourage the involved bank directors to
effect voluntary restitution--in lieu of criminal prosecution--had been
only partially successful as of mid-1995.
Local private banks include Pubali Bank, Uttara Bank, Arab Bangladesh
Bank, Islami Bank, National Bank, The City Bank, IFIC Bank, United
Commercial Bank,
and Al-Baraka Bangladesh Bank. The seven private foreign bank branches
are American Express Bank, Citibank, ANZ Grindlays Bank, Banque
Indosuez, Standard Chartered Bank, State Bank of India, and Habib Bank.
Foreign Exchange Controls Affecting Trading
Provided a local importer can obtain trade financing, which is widely
available and competitive, from a local bank, foreign exchange
availability is not an issue. The taka is almost without exception
freely convertible for current account transactions. Currently, foreign
exchange availability is also not an issue in terms of government
reserves, which stand at $3.4 billion, the equivalent of 10 months of
import cover.
General Financing Availability
Trade finance, working capital, and term loans are generally available
from local banks, particularly to multinational companies. Foreign
companies involved in manufacturing commonly obtain trade financing and
working capital loans from the foreign bank branches. The foreign bank
branches are also generally interested in project lending for foreign
investments in Bangladesh and can arrange offshore syndicated loans.
How to Finance Exports/Methods of Payment
Unless the importer is either a multinational company operating in
Bangladesh or a reliable, long-standing Bangladeshi customer, the
Embassy strongly recommends all U.S. exporters to require irrevocable,
confirmed letters of credit to secure payment, preferably from one of
the U.S. banks listed below. This is true whether the importer is
private or part of the Bangladesh Government (BDG), and whether or not
the importer is being financed by a multilateral institution or
bilateral donor agency or government. U.S. exporters should also be
aware that it is a normal business practice for Bangladesh Government
procurement agencies to require exporters to post performance bonds.
Performance bonds can be arranged with any of the local banks, including
the two U.S. banks, American Express Bank (fax 880-2-863808, tel. 880-2-
866705/6 or 866618/9) and Citibank (fax 880-2-833661, tel. 880-2-242355
or 242359).
Types of Available Export Financing and Insurance
As indicated, trade financing for private sector importers is widely
available. There are no multilateral or local sources for directly
financing U.S. exporters for sales to Bangladesh. There are
significant export sales opportunities in the government procurement
market. These opportunities can either be in the context of
straightforward procurement of goods by BDG agencies and parastatals,
increasingly financed by the BDG itself, or in the context of projects,
which are usually donor financed. Although BDG ministries and agencies
from time to time encourage companies interested in promoting projects
and making sales to approach donors directly, until the BDG has gone
through its internal process of approving and making a request for
assistance, such approaches are of minimal value. Exim Bank facilities
are available for U.S. exporters; initial inquiries should be made
directly to Exim Bank.
Project Financing Available
As indicated, the BDG procurement market is large, and a great deal of
procurement is in the context of a wide range of projects, which are
usually financed by donors, although from time to time the BDG may
finance its own projects or ask bidders to propose financing. In the
latter cases, donor financing is usually not available or not preferred
for whatever reason. The market for government procurement for which
U.S. firms are eligible to compete is approximately $1.0 billion per
year. In FY95, the U.S. Government committed $62.7 million in
development assistance to Bangladesh, of which $42.7 million was grant
aid and $20 million was food aid. The Japanese government's development
aid program, the World Bank, and the Asian Development Bank are other
important sources of development project financing in Bangladesh.
List of Banks with Correspondent U.S. Banking Arrangements
Of the government banks and local private banks, the following have
correspondent U.S. banking arrangements:
- Sonali Bank
- Agrani Bank
- Janata Bank
- Rupali Bank Ltd.
- Arab Bangladesh Bank
- IFIC Bank Ltd.
- National Bank Ltd.
- City Bank Ltd.
- Uttara Bank Ltd.
- Islami Bank
- Pubali Bank
- United Commercial Bank
The U.S. banks which maintain correspondent relationships in Bangladesh
include:
- American Express Bank (full service branches in Dhaka and Chittagong)
- Citibank (full service branch in Dhaka)
- Chase Manhattan Bank
- Bank of America
- Chemical Bank
IX. BUSINESS TRAVEL
Business Customs
Bangladeshi businessmen are usually very courteous. Foreign visitors
often find that hosting small meals for their Bangladeshi agents,
representatives, or business contacts helps to smooth business
negotiations. Visitors may also be invited to share meals as guests of
their Bangladeshi hosts.
Travel Advisory and Visas
All United States citizens are required to have visas for entry into
Bangladesh. Should a business traveler be unable to arrange for a visa,
immigration officials at Zia International Airport in Dhaka are
authorized to issue limited 15-day visas for a $21 fee.
For further information concerning entry requirements for Bangladesh,
travelers can contact the Embassy of the People's Republic of
Bangladesh, 2201 Wisconsin Ave., N.W., Washington, DC 20007, TEL: (202)
342-8372, or the Consulate General of People's Republic of Bangladesh,
821 United Nations Plaza, 8th Fl., New York, NY 10017, TEL: (212) 867-
3434.
The International Certificate of Vaccination is no longer required for
travel to Bangladesh, but typhoid immunization and malaria suppressants
are recommended, particularly for those traveling outside Dhaka.
Travel Fees
Business travelers departing on domestic and international flights must
pay an Embarkation Fee/Departure Tax, currently TK 50 ($1.25) for
domestic flights and TK 300 ($7.50) for international flights.
Foreigners are not required to pay other local travel taxes.
Currency and Exchange Regulations
There is no limit on the amount of foreign or U.S. dollar instruments
(travelers checks, money orders, etc.) that may be brought into
Bangladesh, but all foreign exchange exceeding $5,000 must be declared
upon entry, and visitors should be prepared to account for it upon
departure. Visitors should only make financial transactions through
authorized channels. Commercial exchange facilities are available
through both domestic and foreign commercial banks or through local
hotel cashiers. The banking sector can carry out most international
transactions, but efficient service varies greatly among banks and
individual branches.
Holidays
The Bangladesh Government (BDG) announces holidays for 1996 in late
December 1995. Muslim religious holidays vary with appearance of the
moon.
A list of Bangladesh's national holidays for 1995 follows (religious
holidays may move one or two days in either direction): January 17
(Shab-E-Barat); February 21 (Martyrs' Day); February 28 (Shab-E-Quadar);
March 2-4 (Eid-ul-Fitr); March 26 (Independence Day); April 14 (Bangla
New Year's Day); May 1 (May Day); May 10-12 (Eid-ul-Azha); June 20
(Muharram (Ashura)); August 10 (Eid-E-Miadunnabi); August 29
(Janmaausthami); October 3 (Durgapuja); November 7 (Solidarity Day);
December 16 (Victory Day).
Business Infrastructure
Transportation: Zia International airport is located at Kurmitola,
about 12 Kilometer from Dhaka city. The national air carrier, Biman
Bangladesh Airlines, currently enjoys a monopoly on major domestic air
destinations.
Language: Although Bangla (Bengali) is the official language of
Bangladesh, English is widely spoken and used in official and business
circles. U.S. business people may greet their Bangladeshi counterparts
with normal English salutations. The usual greeting among Bangladeshis
is the Arabic phrase "a-salaam-walaikum" (meaning "peace be with you").
The cordial response is "walaikum-as-salaam" ("and also with you"). A
polite parting phrase is "Khoda haafez" ("God bless").
Communications: Telex, telephone, and airmail postal services are
available for business correspondence. Most international telephone
calls must be booked through an operator, usually after some delay.
Collect telephone calls or toll free calls cannot be made from
Bangladesh. International direct dialing telephones and fax machines
are increasingly available in major cities and hotels in Bangladesh.
Cellular phone service is available in Dhaka. Bangladesh is six hours
ahead of Greenwich Mean Time (GMT) (11 hours ahead of Eastern standard
time or 10 hours during daylight time). Airmail correspondence takes
two weeks to arrive from the United States. Registration of all letters
sent by international mail is recommended. Express Mail Service (EMS)
is available to the major cities. International courier services,
including DHL, Federal Express, Airborne, and TNT Skypack, operate to
and from Bangladesh. United Parcel Service also operates to Bangladesh.
Lodging: Two high standard international hotels are located in Dhaka,
the Dhaka Sheraton and the Sonargaon Pan Pacific Hotel. A more
moderately priced but older hotel, the Hotel Purbani, is also used by
some business visitors to Dhaka. In Chittagong, visitors usually stay
at the Hotel Agrabad. For longer and dual purpose, office-cum-residence
stays, adequate rest/guest-house accommodations are available in
exclusive neighborhoods in Dhaka and Chittagong.
Health: Medical facilities are inadequate in Bangladesh. There is only
one registered physician for every 5,700 persons. Most of the diseases
are water-borne. Water must be boiled. Appropriate vaccinations are
essential for any visit to Bangladesh.
Food: Restaurants in Dhaka and Chittagong serve mainly local (Bengali)
and Asian cuisine. Continental food is available at Dhaka's
internationally operated hotels. Local food is spicy. The main
components of local food are boiled rice and fish or mutton, beef, or
chicken curry. Vegetables and dal (lentils) are also popular. There is
no effective system of health inspection of restaurants.
Appendix A - Country Data
- Population: 120.5 million
- Population Growth Rate: 1.9%
- Religions: Muslim (87%); Hindu (12%); Buddhist, Christian &
Other (1%)
- Government System: Parliamentary
- Languages: Bangla (Bengali), English
- Work Week: Saturday-Thursday
Appendix B - Domestic Economy (Millions USD)
FY 1993 1994 1995 (est.)
- Current GDP 24212 25884 28071
- Real GDP Growth Rate (%) 4.48 4.61 5.00
- GDP Per Capita 208.5 218.3 232.0
- Govt. Spending (%GDP) 17.6 18.00 20.40
- Inflation (%) 1.3 1.8 4.1
- Unemployment (%)b/ 26 27 N/A
- Foreign Reserves c/ 2125 2771 3469
- Avg Exchange Rate(TK/1US) 39.15 40.00 40.20
- Foreign Debt 13048 13859 14516
- Debt Service Ratio 12.1 11.5 N/A
- U.S. Economic Aid c/ 73.5 105.9 62.7
Notes:
a) Bangladesh fiscal year (July 1 to June 30)
b) Figure is a measure of unemployment and underemployment
c) As at end of fiscal year, 1995 figure is as at end of April 1995.
Appendix C - Trade (Millions USD)
FY 1993 1994 1995 (est.)
- Total Bangladesh Exports a/ 2138 2346 3050
- Total Bangladesh Imports a/ 3983 4072 5251
- U.S. Exports b/ 245 234
- U.S. Imports b/ 886 1080
Notes:
a) Bangladesh fiscal year (July 1 to June 30)
b/ Calendar year (January-December)
Appendix D - Investment Statistics
The Embassy estimates current foreign direct investment (FDI) to be
about $540 million. This means that current FDI stock as a percentage
of GDP is about 3.5 percent. This figure is expected to increase
significantly as foreign firms recently authorized to explore and
develop coal, and oil and gas deposits begin their work. This figure
will also rise when and if the BDG concludes agreements with
international power generation companies for private investment in power
plant construction.
At present, the Embassy estimates the largest three foreign investors in
Bangladesh by place of origin to be Hong Kong (including possible
Chinese investment through Hong Kong), the United Kingdom, and Japan.
The next tier of investors is the Netherlands, Canada, South Korea,
Singapore, China, Italy, the United States, Saudi Arabia, and
Switzerland. The Embassy estimates U.S. investment in Bangladesh at $20
million in book value, including five manufacturers in the Chittagong
EPZ, the assets of one life insurance company, the banking operations of
two U.S. commercial banks, and about 10 other U.S. service and marketing
firms.
Appendix E - U.S. and Bangladesh Contacts
Bangladesh Government Agencies
Country Code: (880)
Area Codes: Dhaka (2)
Chittagong (31)
Organization Contact Name/Title Address Phone/Fax
Ministry of Commerce Mohammad Asafuddowlah Bhaban No. 3 TEL 834886
Secretary Bangladesh FAX 865741
Secretariat
Dhaka 1000
Ministry of Finance Nasimuddin Ahmed Bhaban No. 7 TEL 404363
Finance Secretary Bangladesh FAX 865581
Secretariat
Dhaka 1000
Min. of Industries Dr. A.M.M. Shawkat Ali 91 Motijheel TEL 832143
Secretary Dhaka 1000 FAX 232019
Ministry of Energy M. Faizur Razzaque Bhaban No. 6, TEL 832045
& Mineral Resources Secretary 1st Floor FAX 414060
Bangladesh Secretariat
Dhaka 1000
Ministry of Syed Rezaul Hayat Bhaban No. 7, TEL 832230
Communications Secretary, 8th Floor FAX 866636
Road Transport Bangladesh Secretariat
Dhaka 1000
Dr.AKM Mashiur Rahman Railway Bhaban TEL 832223
Secretary, Railways Abdul Gani Rd FAX 813496
Dhaka 1000
Ministry of Posts Dr. M. Hafizuddin Khan Bhaban No. 7, TEL 832160
&Telecommunications Secretary 6th Floor FAX 862800
Bangladesh Secretariat
Dhaka 1000
Min. of Textiles Dr. Md. Abdur Rashid Bhaban No. 6, TEL 832091
Secretary 11th Floor FAX 249268
Bangladesh Secretariat
Dhaka 1000
Min. of Shipping Waliul Islam Bhaban No. 6, TEL 832245
Secretary 8th Floor FAX 832355
Bangladesh Secretariat
Dhaka 1000
Min. of Planning Dr. Shah Md. Farid Block No. 7, TEL 815142
Secretary Room 7 FAX 817581
Sher-e-Bangla Nagar
Dhaka
Ministry of Civil Nooruddin A. Almasood Bhaban No. 6, TEL 832089
Aviation & Tourism Secretary 19th Floor FAX 869206
Bangladesh Secretariat
Dhaka 1000
Privatization Board Amin Ullah Jiban Bima Tower TEL 866707
Chairman 10 Dilkusha C.A. FAX 860683
Dhaka 1000
Board of Investment Dr. Syed Yusuf Farooq Shilpa Bhaban TEL 868740
Executive Chairman Motijheel C.A. FAX 833626
Dhaka 1000
PetroBangla S. K. M. Abdullah Petrocentre TEL 814972
Chairman 3 Kawran Bazar FAX 811613
Dhaka
Telephone and M.H. Choudhury Telejogajog TEL 831500
Telegraph Board Chairman Bhaban, FAX 832577
36/1 Mymensingh
Road, Dhaka
Power Devlpmnt Mr. Golam Rahman WAPDA Building TEL 864633
Chairman 48 Motijheel FAX 866956
Dhaka 1000
Bangladesh Trade Associations/Chambers of Commerce
Organization Contact Name/Title Address Phone/Fax
American Bangladesh A. Gafur Dhaka Sheraton TEL:863391
Economic Forum Executive Secretary Room 319 FAX:832915
1 Minto Road
Dhaka 1000
Federation of Salman F. Rahman 60 Motijheel TEL 864680
Chambers of Commerce President Dhaka 1000 FAX 863213
Industry of Bangladesh
Dhaka Chamber of Rashed Maksud Khan 65-66 Motijheel TEL 234383
Commerce&Industry President Dhaka 1000 FAX 863608
Metropolitan Chamber Anis Ud Dowla 122-124 Motijheel TEL 231426
of Commerce&Industry President Dhaka 1000 FAX 863975
Chittagong Chamber of S. J. Nizam Chamber House TEL 711356
Commerce&Industry President Agrabad C.A. FAX 710183
Chittagong 4000
Bangladesh Employers Laila Rahman Kabir Chamber Building TEL 861487
Association President 122-124 Motijheel FAX 863975
Dhaka 1000
Bangladesh Commercial Banks
Organization Contact Name/Title Address Phone/Fax
American Express Bank David T. Kaveny 18-20 Motijheel TEL 863210
Sr. Director & Dhaka 1000 FAX 863808
General Manager
Citibank S. Sridhar Chamber Building TEL 833084
Vice President & 122-124 Motijheel FAX 833661
Corporate Officer Dhaka 1000
ANZ Grindlay's Bank Frank J. Gamble 2 Dilkusha TEL 833958
General Manager Dhaka 1000 FAX 833347
Standard Chartered Geoffrey I. Williams Alico Building TEL 863254
Chief Executive 18-20 Motijheel FAX 866392
Dhaka 1000
Banque Indosuez J. P. Raynaud 47 Motijheel TEL 867115
Country Manager Dhaka 1000 FAX 863137
Sonali Bank M. Ahsanul Haque Head Office TEL 864588
Managing Director Motijheel FAX 863061
Dhaka 1000
Agrani Bank Mostafa Aminur Rashid 9/D Motijheel TEL 862121
Managing Director Dhaka 1000 FAX 833587
Janata Bank Jalilur Rahman Chowdhury 110 Motijheel TEL 863974
Managing Director Dhaka 1000 FAX 863097
Rupali Bank Ltd. Rafiqul Karim Chowdhury 34 Dilkusha TEL 869319
Managing Director Dhaka 1000 FAX 867536
Arab Bangladesh Bank A. Rahim Chowdhury BCIC Bhaban, TEL 868137
President & Managing 8-9th Floor FAX 861977
Director 30-31 Dilkusha
Dhaka 1000
IFIC Bank Ltd. Shawkat Ali Chowdhury BSB Building TEL 867186
Managing Director 17-19th Fl. FAX 833198
8 Rajuk Avenue
Dhaka 1000
Uttara Bank Ltd. A. M. Anisuzzaman 90 Motijheel TEL 230229
Chairman Dhaka 1000 FAX 863529
Pubali Bank Ltd. E.A. Choudhury 26 Dilkusha TEL 863881
Chairman Dhaka 1000 FAX 863246
National Bank Ltd. Kazi Abdul Majid 18 Dilkusha TEL 241201
Managing Director Dhaka 1000 FAX 863277
City Bank Ltd. Quazi Baharul Islam 10 Dilkusha TEL 862518
Managing Director Dhaka 1000 FAX 833934
Islami Bank M. Kamaluddin Choudhury 75 Motijheel TEL 864131
Executive President Dhaka 1000 FAX 863632
U.S. Embassy Trade Personnel
Contact Name Address Phone/Fax
Title
David N. Merrill Madani Avenue TEL 884700
Ambassador Baridhara, Dhaka 1212 FAX 883744
Nancy J. Powell Madani Avenue TEL 884700
Deputy Chief of Mission Baridhara, Dhaka 1212
FAX 883744
Cornelia Weierbach Madani Avenue TEL 884700
Econ/Commercial Baridhara, Dhaka 1212 FAX 883744
Counselor
Larry Andre Madani Avenue TEL 884700
Econ/Commercial Officer Baridhara, Dhaka 1212 FAX 883744
e-mail: larry.e.andre@dos.us-state.gov
Christian De Angelis Madani Avenue TEL 884700
Econ/Commercial Officer Baridhara, Dhaka 1212 FAX 883744
Kamal Bhuiyan Jiban Bima Bhaban, 5th Fl TEL 862550
Economic Specialist 10 Dilkusha C.A., FAX 833987
Dhaka 1000
Tasnimul Haque Jiban Bima Bhaban, 5th Fl TEL 862550
Commercial Librarian 10 Dilkusha C.A. FAX 833987
Dhaka 1000
Washington-Based USG Bangladesh Contacts
Organization Contact Name/Title Address Phone/Fax
USDOC Gary Bouch ITA/ANE/OA Rm. 2308 TEL(202)482-2954
Desk Officer Herbert Hoover Bldg FAX(202)482-5330
14th & Constitution, N.W.
Washington, DC 20230
John Crown ITA/AP/OSAO Rm. 2308 TEL(202)482-2954
Desk Officer Herbert Hoover Bldg FAX(202)482-5330
14th & Constitution, N.W.
Washington, DC 20230
STATE Patricia Mahoney SA/PAB, Rm 5247 TEL(202)647-7593
Desk Officer State Department FAX(202)647-3001
Washington, DC 20520
OPIC Maurice A. Johnson OPIC, 1615 M. St. NW TEL(202)336-8799
Regional Manager Washington, DC 20527 FAX(202)408-5145
(Insurance)
OPIC Peter H. Ballinger OPIC, 1615 M. Street TEL(202)336-8799
Director, Investor Washington, DC 20527 FAX(202)408-5145
Services
EXIM BANK Terence J. Hulihan EXIM Bank, TEL(202)565-3946
Vice President 811 Vermont Ave.,NW FAX(202)565-3210
Asia, International Washington, DC 20571 565-3380
Lending
TRADE AND Daniel D. Stein TDA TEL(703)875-4357
DEVELOPMENT Regional Director Room 309, SA-16 FAX(703)875-4009
AGENCY (TDA) Washington, DC 20523-1602
Appendix F - Market Research
List of Available and Upcoming DOC/ISAs and IMIs
1. Telecommunication Projects in Bangladesh
2. Private Power in Bangladesh
3. Oil & Gas Survey
4. Transportation Sector
List of USDA/FAS Commodity Reports and Market Briefs
1. Grain Monthly Report
2. Grain and Feed Annual Report - January 1995
3. Oilseeds and Products Annual Report - April 1995
4. Cotton Annual Report - June 1995
5. Agricultural Situation Annual Report - September 1994
6. Basic Country Program - January 1995
7. Annual Work Plan - January 1995
A complete list is available on the National Trade Data Bank (NTDB).
The NTDB, on CD-ROM, is the U.S. Government's most comprehensive source
of World trade data. For more information on the NTDB, call 202-4821968
or National Technical Information Service (NTIS) at 800-553-NTIS.
Appendix G - Trade Event Schedule
U.S. Trade Show '96, an established premier annual trade event, will be
held at Dhaka Sheraton Hotel, January 11-13, 1996. The show is
organized by the American Bangladesh Economic Forum.
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