1. Bangladesh export overview
Bangladesh aims to become a middle income country by 2021.
Contact a Department for International Trade (DIT) Bangladesh export adviser for a free consultation if you are interested in exporting to Bangladesh.
The government’s strategic vision for 2021 is a plan for growth through massive investment in infrastructure, skills development and trade. Co-operation with the private sector and international donor agencies is expected.
Almost 100 UK businesses operate in Bangladesh, including well known companies like HSBC, Unilever and GSK.
Benefits for UK businesses exporting to Bangladesh include:
- English widely spoken in business
- British made goods regarded as reliable among end users
- strong consumer demand for products, equipment and services
- concessionary duty on imported capital machinery
Strengths of the Bangladesh market include:
- annual growth rate of at least 5.3% over the last 16 years
- stable credit rating
- close to issuing first Sovereign Bond
- poverty levels cut by half in the last decade
- competitive labour force
- Ready Made Garment (RMG) export levels quadrupled in 5 years
2. Challenges doing business in Bangladesh
Bangladesh is 173rd in the World Bank’s ease of doing business ranking.
Procurement practices in Bangladesh:
- often lack transparency
- have significant bureaucratic burden
Bangladesh is ranked 145th in Transparency International’s Corruption Perceptions Index.
The Bangladesh market is extremely price sensitive with low price goods from India and China dominating many sectors. UK companies should sell into the market on the basis of:
- life cycle cost
- after sales service
Corruption affects many aspects of daily life in Bangladesh and is often cited as a barrier to private sector development.
One of the biggest challenges facing UK companies in Bangladesh is how to avoid paying ‘speed money’. ‘Speed money’ is unofficial, under the counter payments to minor officials to expedite business. Politicians, bureaucrats and law enforcement officials often wield significant discretionary power and there have been some abuses.
You should have in place regular due diligence procedures and up-to-date risk strategies when doing business in Bangladesh.
You should ensure you take the necessary steps to comply with the requirements of the UK Bribery Act.
3. Growth potential
3.1 Economic growth
Gross Domestic Product (GDP) grew by 6% in fiscal year (FY) 2013 (fiscal year ends in June). Industry grew by 9% with strong expansion in construction and small scale manufacturing. 6.7% growth is forecast for 2016.
Inflation slowed to 6.41% in 2015 from 7.35% in 2014 FY.
The balance of payments was USD 5.4 billion in surplus in FY2014 after 10.7% growth in exports and only 0.8% growth in imports.
Bangladesh’s RMG sector is now worth almost USD 25 billion. It is the third largest apparel exporter to the European Union (EU) and fourth largest to the US.
Bangladesh, with a population of 158 million, has the highest density population in the world. Per capita income is USD 1,190, so more than 25.6% of people live below the poverty line.
4. UK and Bangladesh trade
There has been over 119% growth in bilateral trade in goods and services between 2007 and 2012.
The UK exported £450 million of goods and services to Bangladesh in 2013. 71% of this was services.
Exports of goods were £131 million in 2014.
The UK’s main exports to Bangladesh in 2013 were:
- nuclear reactors, boilers, machinery and mechanical appliances / parts
- electrical machinery and equipment / parts; sound recorders and reproducers, television image and sound recorders and reproducers, and parts / accessories
- iron and steel
- residues and waste from the food industries; prepared animal fodder
5. Opportunities for UK businesses in Bangladesh
Department for International Trade (DIT) provides free international export sales leads from its worldwide network. Search for export opportunities.
Access tenders for all major public projects in Bangladesh via the Central Procurement Technical Unit.
The international aid agencies fund projects to improve prosperity in developing countries.
Identify opportunities to supply products and services to the international aid agencies. Contact Department for International Trade (DIT)’s Aid Funded Business Service for more information.
5.1 Education and training
Bangladesh relies more than most developing countries on its human resources. About 20% of the total population (around 29 million people) are students.
The international aid agencies strongly supports the education sector in Bangladesh. Education sector programs have been defined and funded by institutions such as:
A Cross Border Higher Education (CBHE) regulation has been introduced making it part of Bangladesh national education policy. This regulation recognises foreign qualifications. Foreign Universities/education providers can now offer their programmes and open campuses or study centres in Bangladesh.
The new CBHE policy opens up opportunities for UK educaiton organisations in higher and vocational education:
- English Language and IT training centres
- content and curriculum development according to industry need
- e-learning programmes
- qualification assessment and quality assurance programmes
- teaching and leadership training programmes
- education facility management and consultancy
- capacity building of the Technical Training Institute
- introduction of Level 3 and above for vocational curriculum so that vocational students can go for higher education.
- international standard laboratory
- publication house
Contact Dhaka.Commercial@fco.gov.uk for more information on opportunities in the education and training sector.
Natural gas is currently the only local non-renewable energy resource being produced and consumed in large quantities. Around 85% of the power generated is gas based.
The Bangladesh Power Development Board forecasts that total electricity demand will be more than 12,000 Megawatts (MW) by 2016. Current generation capacity is about 10,000 MW.
Fertiliser production is also fuelling demand for gas production.
Opportunities for UK companies include:
- supply of machinery and equipment
- consultancy services
- construction of power projects
Contact Dhaka.Commercial@fco.gov.uk for more information on opportunities in the energy sector.
5.3 Environment and water
The government published the Bangladesh Climate Change Strategy and Action Plan (BCCSAP) in 2009. BCCSAP has identified 44 different programmes within 5 areas including:
- food security
- social protection
- comprehensive disaster management
There are opportunities for UK companies in:
- supply of machinery and equipment
- consultancy services
Contact Dhaka.Commercial@fco.gov.uk for more information on opportunities in the environment and water sector.
5.4 Information and Communication Technology (ICT)
Growth in Bangladesh’s software and ICT industry has resulted from:
- export demand
- increasing ICT automation in domestic market
Local demand has come from large automation projects by the:
- telecom industry
- banking sector
- garments/textile industry
There are opportunities for UK companies in:
- upgrading the telecommunication infrastructure
- joint venture projects with local companies for Business Process Outsourcing (BPO)
- consultancy services
Contact Dhaka.Commercial@fco.gov.uk for more information on opportunities in the ICT sector.
5.5 Biotechnology and pharmaceuticals
Life sciences is one of the fastest growing sectors in Bangladesh. In 2013 the domestic market grew by 24.3% to USD 1.136 billion.
Many companies are looking to partner foreign investors.
There are 260 registered pharmaceutical companies with 191 in operation. These companies meet 97% of domestic demand.
Products still being imported include:
- anticancer products
- haematological products
- biotech products
Contact Dhaka.Commercial@fco.gov.uk for more information on opportunities in the life sciences sector.
6. Start-up considerations
British companies can approach the Bangladesh market in several ways including:
- export direct
- set up an office
- appoint a distributor
You can set up a business in Bangladesh within 11 days.
You should have a local representative either on a commission basis or as an agent if you intend to export directly. A local partner can deal with Bangladeshi bureaucracy and advise on the best type of advertising. An agent is allowed to participate in international tenders on behalf of their foreign principle. Dhaka based agents should be able to cover all of Bangladesh.
The 1972 Contract Act details the rights and liabilities of an agent and also of the principal.
Most agency agreements have a clause permitting either party to give due notice of termination. It is prudent to include a contract clause which agrees to allow an independent arbitrator outside of Bangladesh to settle any disputes between parties.
The Bangladesh International Arbitration Centre (BIAC) was launched in 2011. This is Bangladesh’s first arbitration centre for the settlement of commercial disputes.
6.2 Setting up an office
You can establish an office to sell products and equipment direct to the end user or consumer. Offices can also be set up on a registered joint venture basis with a Bangladeshi trading company.
6.3 Appointing a distributor
You should be aware of the risks of marketing your goods through distributors in Bangladesh. If you choose this route into the market be careful about providing exclusive distribution rights.
7. Legal considerations
Local law is based on English Common Law system.
You should seek professional legal/taxation advice before entering into a joint venture or similar type of agreement.
Contact the Department for International Trade (DIT) team in Bangladesh to help find tax and legal advisers before entering into agreements.
7.1 Standards and technical regulations
The Bangladesh Standards and Testing Institution has regulatory authority for standards. International standards are followed.
Imported goods and their containers must not incorporate any words, pictures or inscriptions with any religious or obscene connotations.
Milk food containers must indicate the ingredients in Bangla. They should also show date of production and expiry in Bangla or English.
7.2 Intellectual property (IP)
Bangladesh signed the agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) on 1 January 1995. TRIPS sets minimum standards for IP regulation as applied to nationals of other WTO members.
The Department of Patents, Design and Trade Marks is responsible for IP in Bangladesh.
8. Tax and customs considerations
Bangladesh has a Double Taxation Convention with the UK.
8.1 Value Added Tax (VAT)
The National Board of Revenue provides information on VAT.
8.2 Corporate tax
The corporate tax rates are:
- 37% for companies whose shares are publicly traded
- 40% for those whose shares are not publicly traded
- 40% minimum for foreign companies
- 45% for foreign banks
8.3 Income tax
The National Board of Revenue provides information on income tax.
Find more information on customs procedures at Custom House Chittagong.
No import duty is applicable for an export oriented industry. For other industries it is 5% ad valorem. The National Board of Revenue provides a listing of customs duty exemptions.
You can find more about import tariffs in the Market Access Database.
UK exporters to Bangladesh should be precise when preparing export documentation. Invoices should clearly state the goods being supplied including specification, packing and country of origin. The invoice should match the Letter of Credit.
Pre-shipment inspection is the norm for Bangladesh.
9. Business behaviour
Bangla is the main language. Written business correspondence and trade literature should be in English.
Women visitors should cover their arms and legs including ankles to avoid giving offence. Women should not wear tight clothing.
Meetings can be subject to interruptions, such as phone calls or staff members walking in to have documents signed. This is an accepted practice as it’s considered rude not to immediately respond to phone calls.
Bangladeshi businesses are generally hierarchically structured. Decisions will not be made unless the owner, company director or senior manager are present at a meeting.
10. Entry requirements
British nationals need a visa to visit Bangladesh.
You should get a visa from the Bangladesh High Commission in the UK prior to travelling.
You must have a work permit to work in Bangladesh. The employer must apply in advance to the Bangladesh Investment Development Authority.
10.1 Travel advice
If you are travelling to Bangladesh for business, check the Foreign & Commonwealth Office (FCO) travel advice beforehand.
Contact the Department for International Trade (DIT) Team in Bangladesh for more information and advice on your opportunities for doing business in Bangladesh.