17 Feb 2017
Major Economic Indicators
- Bangladesh is the third most-populated country in South Asia (after India and Pakistan). It shares borders with India to the north, west and east, and overlooks the Bay of Bengal to the south. Since gaining independence in 1971, the country has faced a number of challenges, including poverty reduction, confrontational politics and an inefficient public sector, while also setting out to undertake ambitious economic and social reforms. Bangladesh has maintained macroeconomic stability in recent years despite dysfunctional politics. It has also witnessed a rise in foreign direct investment, particularly in the energy, telecoms and export processing sectors.
- An abundant supply of labour has made Bangladesh the world’s second largest exporter of ready-made garments (RMG) after China. Garment exports and hefty remittances (mainly from the Middle East) are the key drivers of its economy. Another significant contributor to the economy has been its expanding microfinance sector, which covers millions of borrowers and stimulates its rural economy, supporting entrepreneurship in agriculture, a number of cottage industries and small businesses.
- Bangladesh’s textiles and garments sector is vital to its economy, providing almost four million jobs and accounting for about 85% of its exports. Garment products are shipped mostly to the US and EU. Bangladesh mainly imports machinery and petroleum products from China and India. Since the Rana Plaza factory collapse in 2013, Bangladesh has adopted measures to improve workplace safety and has raised the minimum wage. However, the garment sector, once seemingly immune from political fallout, has experienced increased industrial disruptions aligned with an opposition alliance. This has affected exports amid faltering demand from the developed markets.
- Under the Belt and Road Initiative, China intends to set up economic corridors in alliance with other countries – with one covering Bangladesh, India and Myanmar (i.e. the BCIM Economic Corridor). The Corridor will link India’s Kolkata with China’s Kunming, with Myanmar’s Mandalay and Bangladesh’s Dhaka among the key points. To this end, the Chinese government has agreed to finance billions of dollars worth of infrastructure projects in Bangladesh. Chinese enterprises are also keen to invest in number of sectors in the country, including telecoms, power, agriculture and energy For instance, the two countries formed the joint venture Bangladesh-China Power Company Limited to invest US$1.56 billion to build a coal-fired electricity plant near a proposed sea port south of Dhaka.
- Bangladesh joined the WTO in 1995 and is a founding member of the South Asian Free Trade Area (SAFTA) and the Bay of Bengal Initiative for Multi-sectoral Technical and Economic Corporation.
- Bangladesh’s Board of Investment (BOI) is the principal investment promotion agency, which aims to accelerate economic development with FDI. While the textile and garment sector is a major FDI recipient, electronics in Bangladesh, telecommunications and light engineering are also sectors encouraged by the BOI. For more information on investment regulations and incentives in Bangladesh, please visit the BOI website.
- Bangladesh’s cumulative FDI was US$9.36 billion as at end-2014 compared with US$8.6 billion in the previous year. Based on statistics from China’s Ministry of Commerce, China’s cumulative FDI in Bangladesh was US$160.2 million as at end-2014.
- Hong Kong concluded an air services agreement with Bangladesh in 2000, with the negotiation on a double taxation agreement in progress.
More information on the Belt and Road countries’ economic and investment environment, tax and other subjects that are important in considering investment and doing business are available in The Belt and Road Initiative: Country Business Guides.