COST OF DOING BUSINESS IN BANGLADESH

Bangladesh ,officially the People's Republic of Bangladesh is a country in South Asia. It shares land
borders with India and Myanmar (Burma). Nepal, Bhutan and China are located near Bangladesh but do
not share a border with it. The country's maritime territory in the Bay of Bengal is roughly equal to the
size of its land area. Dhaka is its capital and largest city, followed by Chittagong, which has the country's
largest port. Bangladesh forms the largest and easternmost part of the Bengal region. Bangladeshis
include people from a range of ethnic groups and religions. Bengalis, who speak the official Bengali
language, make up 98% of the population. The politically dominant Bengali Muslims make the nation the
world's one of the largest Muslim-majority country.

THE ECONOMY OF BANGLADESH

In the decade since 2004, Bangladesh averaged a GDP growth of 6.5%, that has been largely driven
by its exports of readymade garments, remittances and the domestic agricultural sector. The country has
pursued export-oriented industrialization, with its key export sectors include textiles, shipbuilding, fish
and seafood, jute and leather goods. It has also developed self-sufficient industries in pharmaceuticals,
steel and food processing. Bangladesh's telecommunication industry has witnessed rapid growth over the
years, receiving high investment from foreign companies. Bangladesh also has substantial reserves of
natural gas and is Asia's one of the largest gas producer. Offshore exploration activities are increasing in
its maritime territory in the Bay of Bengal. It also has large deposits of limestone. The government
promotes the Digital Bangladesh scheme as part of its efforts to develop the country's growing
information technology sector.

INDUSTRIES SECTORS IN BANGLADESH

 Textile
 Pharmaceutical products
 Electronics
 Shipbuilding
 Automotive
 Bicycle
 Leather
 Jute
 Glass
 Paper
 Plastic
 Food and beverages
 Cement
 Tea
 Rice
 Natural gas and crude petroleum
 Iron and steel
LABOUR COST OF BANGLADESH
As per the Labour Act of Bangladesh, minimum wages refer to monthly minimum pay for workers
specially in the garment industry including other established Industries which are monitored by the govt.
So these sectors do maintain the formal procedure of payment due to inspection and compliance liability
by the monitoring agencies. Labourers of these sectors are being paid wages as per the scales/rates laid
down by the govt through Labour Law and its supplements/amendments time to time. The present
Labour scenario in Bangladesh (updated on August 2019).

WAGES RATES OF MANUAL LABOURERS

Regulations regarding minimum wages, hours of work and occupational safety and health are not
strictly adhered to as per the existing Labour law for the official employments. Minimum wages set by
law, vary depending on occupation, but are generally ignored for the informal employments. There is no
national minimum wage. In most cases, private sector employers ignore this wage increases, arguing that
low labour productivity vitiates any arguments for set wage.
 In reality, the wages of such informally employed labourers depends on the type of employments, work
place, season, daily/hourly, package deal and negotiations among the concerned parties based on govt
guidance and existing practices. Some of such instances are shown below:

Note: These rates are fixed for particular work and place. OT system is also there if the labourers work
beyond 8 hours a day. It is fixed in the consensus of all the parties involved in the operation in the
presence of Govt Representatives. But in most of the cases, labourers are engaged for such works through
enlisted contractors of particular organizations. In that case, OT and other benefits for the labourers will
be looked after by the contractors, as the total operation will be executed on a pre determined contract
rates.
MARKET OPPURTUNITIES IN BANGLADESH
Low production costs, a large and strong growing home market with 160 million consumers, an
enthusiastic and rapidly emerging private sector and a tremendous international export success for
especially the garment industry, are some of the factors, which have led international companies to focus
on Bangladesh. Bangladesh offers very low production costs and has become one of the most cost-
efficient production hubs in the world. Bangladesh is becoming one of the most popular outsourcing
destinations in the world and even a large number of Chinese companies are now moving to Bangladesh
to seek cost efficient supply. The country is strategically located next to India, China and the ASEAN
markets and as an LDC country Bangladesh has tariff-free access to several regions and countries.
Currently ~60% of the population is below 24 years and the work force is increasing with approximately
1 million people each year. Bangladesh's GDP Per Capita reached 1,827.000 USD in June 2019. The GDP
growth reached 7.86% in 2018 and is set to grow by an 8.13%—the highest ever in the country’s
economic history—in the current fiscal year (FY2018-19). Rapid growth enabled Bangladesh to reach the
lower middle-income country status in 2015. In 2018, Bangladesh fulfilled all three eligibility criteria for
graduation from the UN’s Least Developed Countries (LDC) list for the first time and is on track for
graduation in 2024 (World Bank, 2020 ). Economy has been growing with approximately 6.5% annually
over the last decade with the private sector being the locomotive. Since the Rana Plaza accident in 2013
where 1100 workers died in a building collapse, Bangladesh has undergone a series of improvements in
working conditions - not least related to Ready Made Garments and risk from electricity, fire and building
stability. The sectors mentioned below are in particular believed to represent significant growth potential
in a Danish context:

 Energy – including traditional fossil fuel based, renewable energy and energy efficiency
 Water & Environment
 Pharmaceuticals & Health Services
 Agribusiness
 ICT and business service

FOREIGN DIRECT INVESTMENT IN BANGLADESH

The country ranked 168th out 190 economies in the World Bank's 2020 Doing Business ranking,
rising eight spots compared to last year. Bangladesh suffers from a negative image: the country is seen as
being extremely poor, under-developed, subject to devastating natural disasters and socio-political
instability. However, the country has the advantage of being in a strategic geographical position between
South and Southeast Asia.
 In addition, its domestic consumption potential and the wealth of its natural resources make the country
a good candidate for investment. The government promotes private sector-led growth, foreign currency is
abundant due to remittances, and the central bank respects transferability of foreign currency. A number
of more developed Asian countries have outsourced their factory production, mainly textile, to the
country.

CONCLUSION
Bangladesh has an advantage in labour costs, which can be converted into an exportable product, but
the advantage has many difficulties. The factories in the country have to deal with constraints beyond
their control, such as, power failures, poor communications or increased transaction costs and
cumbersome procedures in customs in many government offices.

However, the situation is expected to improve if the political commitment of the government to promote
and protect FDI in the country can be increased and the policy environment can be changed from one that
is regulatory to one that is supportive/complementary in nature and through mitigation of inter-party
political conflict. Many foreign companies feel disturbed and ultimately are discouraged by disruptions in
the production processes in the country because of frequent power failures, political and labour unrests,
poor infrastructure support.