International Business in Bangladesh- an Investment Destination in South Asia

Scope and objective of the study: The main purpose of the report is to show a concrete Overview of Current International Business Growth & Prospects in Bangladesh. The report will show Private Investment Trend, Investment Incentives Potential Sectors For Investment, Legal security for investment etc. Methodology: The information gathered for the report is through the use of primary and secondary sources. The whole information has been gathered from internet, different books, manuals, class lecture sheet etc. Limitation of the Study:

At the time when I prepare my assignment I face some limitation. These are as follows – 1. There is very short data on international business in Bangladesh 2. Lake of secondary data. 3. I don’t have get enough time for prepare my Assignment because of my job. Literature Review: International Business: International business is a term used to collectively describe all commercial transactions (private and governmental, sales, investments, logistics, and transportation) that take place between two or more nations.

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Usually, private companies undertake such transactions for profit; governments undertake them for profit and for political reasons. It refers to all those business activities which involves cross border transactions of goods, services, resources between two or more nations. Transaction of economic resources include capital, skills, people etc. for international production of physical goods and services such as finance, banking, insurance, construction etc.

A multinational enterprise (MNE) is a company that has a worldwide approach to markets and production or one with operations in more than a country. An MNE is often called multinational corporation (MNC) or transnational company (TNC). Well known MNCs include fast food companies such as McDonald’s and Yum Brands, vehicle manufacturers such as General Motors, Ford Motor Company and Toyota, consumer electronics companies like Samsung, LG and Sony, and energy companies such as ExxonMobil, Shell and BP. Most of the largest corporations operate in multiple national markets.

Areas of study within this topic include differences in legal systems, political systems, economic policy, language, accounting standards, labor standards, living standards, environmental standards, local culture, corporate culture, foreign exchange market, tariffs, import and export regulations, trade agreements, climate, education and many more topics. Each of these factors requires significant changes in how individual business units operate from one country to the next. The conduct of international operations depends on companies’ objectives and the means with which they carry them out.

The operations affect and are affected by the physical and societal factors and the competitive environment. Operations: • Objectives: sales expansion, resource acquisition, risk minimization Means: • Modes: importing and exporting, tourism and transportation, licensing and franchising, turnkey operations, management contracts, direct investment and portfolio investments. • Functions: marketing, global manufacturing and supply chain management, accounting, finance, human resources • Overlaying alternatives: choice of countries, organization and control mechanisms Physical and societal factors: Political policies and legal practices • Cultural factors • Economic forces • Geographical influences Competitive factors: • Major advantage in price, marketing, innovation, or other factors. • Number and comparative capabilities of competitors • Competitive differences by country There has been growth in globalization in recent decades due to the following eight factors: • Technology is expanding, especially in transportation and communications. • Governments are removing international business restrictions. • Institutions provide services to ease the conduct of international business. Consumers know about and want foreign goods and services. • Competition has become more global. • Political relationships have improved among some major economic powers. • Countries cooperate more on transnational issues. • Cross-national cooperation and agreements. Studying international business is important because: • Most companies are either international or compete with international companies. • Modes of operation may differ from those used domestically. • The best way of conducting business may differ by country. • An understanding helps you make better career decisions.

An understanding helps you decide what governmental policies to support. Managers in international business must understand social science disciplines and how they affect all functional business fields. Tom Travis, the managing partner of Sandler, Travis & Rosenberg, PA. and international trade and customs consultant, uses the Six Tenets when giving advice on how to globalize one’s business. The Six Tenets are as follows: 1. Take advantage of trade agreements: think outside the border o Familiarize yourself with preference programs and trade agreements. Read the fine print. o Participate in the process. o Seize opportunities when they arise. 2. Protect your brand at all costs o You and your brand are inseparable. o You must be vigilant in protecting your intellectual property both at home and abroad. o You must be vigilant in enforcing your IP rights. o Protect your worldwide reputation by strict adherence to labor and human rights standards. 3. Maintain high ethical standards o Strong ethics translate into good business. o Forge ethical strategic partnerships. o Understand corporate accountability laws. Become involved with the international business self-regulation movement. o Develop compliance protocols for import and export operations. o Memorialize your company’s code of ethics and compliance practices in writing. o Appoint a leader. 4. Stay secure in an insecure world o Security requires transparency throughout the supply chain. o Participate in trade-government partnerships. o Make the most of new security measures. o Secure your data. o Keep your personnel secure. 5. Expect the Unexpected o The unexpected will happen. Do your research now. o Address your particular circumstances. 6. All global business is personal o Go to the source. o Keep communications open. o Keep the home office operational. o Fly the flag at your overseas locations. o Relate to offshore associates on a personal level. o Be available to overseas clients and customers 24/7. Discussion: Bangladesh – An investment destination in South Asia: Bangladesh is virtually located as a bridge between the emerging markets of South Asia and fastest growing markets of South East Asia and ASEAN countries.

With the proposed concept of a “Bay of Bengal Growth Triangle” with its apex Chittagong port extending south-west to Calcutta, Madras and Colombo and the south-eastern arm extends through Yangon, to Thailand, to Penang with the third arm to Colombo, this region should have growing attention of the investment world. Bangladesh has the potential to be an entry port to the region, a potential small scale Singapore, for the region covering Bangladesh, Nepal, Bhutan, eight north-east Indian states (of Assam, Meghalaya, Monipur, Imphal, Arunachal, Nagaland, Mizoram and Tripura) and resource-rich northern Myanmar, a land locked region.

Bangladesh is poised to become a regional hub where activities relating to assembling, manufacturing, trading and services, would be some of the areas that are picking up over the years. This geopolitico-economic location of Bangladesh indicates its history of being a nation of sea-farers, traders and suppliers. Bangladesh is a developing democratic polity on the Westminister model; secular, but not a theocratic state. Bangladesh is a moderating influence in a consistently volatile and often mutually hostile South Asian scenario.

The current macroeconomic situation in the country is, by and large, stable, characterized by a manageable fiscal deficit and a quite low current account deficit. The stable macroeconomic situation is an outcome of a mixture of prudent monetary and fiscal policies that are being pursued. The external current account deficit has also been low. This reflects the continued high growth of exports, increased flows of remittances, moderate growth in money supply as well as that of imports.

The country has a policy of private sector led, liberal economic approach; export oriented, gradually transforming into assembling & manufacturing; seeking for rapid expansion of the service sector. Also looking for substantial joint venture and Direct Foreign Investment (DFI) from abroad in medium and large-scale industries and enterprises, including infrastructure building. The following facts deserve attention in relation to assessment of Bangladesh as an investment destination: i) Bangladesh has never defaulted in its debt-service liabilities to multi-lateral and bilateral donors. i) Bangladesh grow over 21 million metric tons of food grains, basically rice and some wheat and potatoes which is enough to feed the population of the country, and for building reserve stocks. iii) Bangladesh never experienced negative growth during last 27 years of it’s independence. iv) Bangladesh exports readymade garments, knitwear, brand name wind cheaters, walking shoes, leather goods, shoes and other products, urea fertilizer, pharmaceutical, shrimps andprawn, vegetables, jute and jute products etc. to sophisticated markets of EU, USA, Japan and many other countries.

Garments and related export account for more than US $4 billion. v) The frequency and intensity of natural disasters are far less in Bangladesh than those in the Philippines, Japan and even the USA, Bangladesh is located outside the major earthquake zones. Reforms and liberalization A significant array of reforms, deregulation and liberalization have been carried out over the recent years in policies relating to virtually every sector of the economy including financial reforms with the aim of globalization challenges for the economy through introduction of international competitiveness and productive efficiency.

We have opened up our economy. We are one of the top exporters of readymade garments to USA and Europe. Our shrimp and leather products exports are rising sharply. We have removed all barriers to investment and business. Government is offering unparalleled facilities to investors. 100% foreign investment is allowed, excepting four reserved items/areas: i. e. (a) production of arms and ammunition and other defense equipment, and machinery, (b) forest plantation and mechanized extraction within the bounds of reserved forests, (c) production of nuclear energy and d) security printing (currency notes) and minting. All other areas are open to private investment. We are providing tax holidays and duty free import of capital machinery, raw materials import for export manufacturing. Expatriates’ work permits are easily obtained and unhindered remittance of dividends, capitals, gains on capital etc. are allowed. We have eliminated licensing system and simplified government approval procedure for investment in Bangladesh. Government has enacted a law in the parliament enabling the private investors to set up private Export Processing Zones (EPZ).

The units in private EPZ will enjoy facilities similar to those in government EPZs. The Private Power Generation Policy has been formulated paving the way for private investment in power generation for which a new Electricity Act and a regulatory commission is on their way. Private investments have already been allowed in gas exploration, gas development, power generation and other mining & exploration activities. An attractive investment destination Following are some positive aspects which make Bangladesh an attractive location to foreign investors: ) Bangladesh have opened up our economy with rapid liberalization of import policies helping globalization of our economy. ii) According to a Survey of the Economist-risk factors for FDI in Bangladesh are minimum compared to many other countries of this region. iii) Cost of production especially cost of labor both skilled and semi-skilled is comparatively lower. ix) Cost of living is also quite low and reasonable and there is no communal or ethnic problems. v) English language is widely spoken and understood. i) Working capital loan as well as term loan from local commercial banks allowed to the industries setup with foreign capital. vii) Citizenship by investing a minimum of US $5,00,000 or by transferring US $10,00,000 to any recognised financial institutions (non-repatriable). viii) Permanent residentship is granted to an expatriable by investing a minimum of US $75,000 (non-repatriable). ix) Avoidance of Double Taxation Agreements and Bilateral Investment Promotion Treaties has been signed with many countries including U. K. Legal security for investment ) Foreign Private Investment (Promotion and Protection) Act, 1980 ensures legal protection to foreign investment. ii) Bangladesh is a member of Multi-Lateral Investment Guarantee Agency (MIGA), Overseas Private Investment Corporation (OPIC) of USA and International Centre for Settlement of Industrial Disputes (ICSID) iii) Member of World Intellectual Property Organization (WIPO) and World Association of Investment Promotion Agencies (WAIPA). Private Investment Trend Board of Investment (BOI), the government’s investment promotion agency, is at the forefront of the country’s efforts to attract and facilitate nvestment. Board of Investment headed by the Hon’ble Prime Minister, was created in 1989 to implement governments’ investment policy and promote private participation in the industrial sector. As a result of reformed policy measures undertaken by the government, private investments especially foreign investments in the country have increased manifold. This has been achieved due to adoption of various programmes including holding of seminars/symposium, bilateral talks, press briefings and other interactive processes at home and abroad.

From the analysis of investment trend, it reveals that from 1991-1992 to 1999-2000 as many as 10412 industrial projects both local & foreign have been registered with BOI having total investment outlay of US$ 19074 million with employment opportunities of 1442568 persons. During that period a total of 998 industrial projects both under joint venture and 100% direct foreign investment was registered with Board of Investment having proposed investment of US$ 11667million with employment opportunities of 257159 persons.

The top investing countries are USA, UK, Malaysia, Japan, Hong King, Singapore, Republic of Korea. France, India, Germany, China, in that order. During the fiscal year 1999-2000, 135 projects involving an estimated foreign investment of US $2119 million have been registered with Board of Investment. Several major oil companies e. g. Shell, UNOCAL, etc. have already invested. Burlington Resources have notified their intent to have major investment in gas and oil exploration. The French TNC LaFarge, the world’s largest cement producer is setting up a US $240 million cement factory with 1. million MT initial capacity, to be raised to 2. 4 MT in phase-wise. Several international telecom companies have set up successful joint ventures and others are expected to make substantial investment in infrastructure projects. Bangladesh – Investment Incentives: The democratic government is highly keen to stimulate the economy and transform a poverty-stricken economy to NIE within short time. Government has liberalized the industrial and investment policies in recent years by reducing bureaucratic control over private investment and opening up many areas.

Major incentives are as follows: |1. Tax Exemptions : |Generally 5 to 7 years. However, for power generation exemption is allowed for 15 years. | |2. Duty : |No import duty for export oriented industry. For other industry it is @ 5% ad valorem. | |3. Tax Law : |i. Double taxation can be avoided in case of foreign investors on the basis of bilateral agreements. | | |ii. Exemption of income tax upto 3 years for the expatriate employees in industries specified in the relevant | | |schedule of Income Tax ordinance. |4. Remittance : |Facilities for full repatriation of invested capital, profit and divided. | |5. Exit : |An investor can wind up on investment either through a decision of the AGM or EGM. Once a foreign investor completes | | |the formalities to exit the country, he or she can repatriate the sales proceeds after securing proper authorization | | |from the Central Bank. | |6. Ownership : |Foreign investor can set up ventures either wholly owned on in joint collaboration with local partner. | Incentive Details:

Tax Holiday Tax holiday facilities will be available for 5 or 7 years depending on location of the industrial enterprise. |Dhaka and Chittagong Divisions (excluding 3 hill tract districts of Chittagong Division) |5 years | |Khulna, Sylhet, Barisal and Rajshahi Divisions And 3 Chittagong hill tract districts |7 years | Tax holiday facilities will be provided in accordance with the existing laws. The period of tax holiday will be calculated from the month of commencement of commercial production.

Tax holiday certificate will be issued by NBR for the total period within 90 days of submission of application. This facility can be availed of by industries set up within June 30, 2000 ADb. Accelerated Depreciation Industrial undertakings not enjoying tax holiday will enjoy accelerated depreciation allowance. Such allowance is available at the rate of 100 per cent of the cost of the machinery or plant if the industrial undertaking is set up in the areas falling within the cities of Dhaka, Narayangonj, Chittagong and Khulna and areas within a radius of 10 miles from the municipal limits of those cities.

If the industrial undertaking is setup elsewhere in the country, accelerated depreciation is allowed at the rate of 80 per cent in the first year and 20 per cent in the second year. c. Concessionary Duty on Imported Capital Machinery Import duty, at the rate of 5% ad valorem, is payable on capital machinery and spares imported for initial installation or BMR/BMRE of the existing industries. The value of spare parts should not, however, exceed 10% of the total C ; F value of the machinery. For 100% export oriented industries, no import duty is charged in case of capital machinery and spares.

However, import duty @ 5% is secured in the form of bank guarantee or an indemnity bond will be returned after installation of the machinery. Value Added Tax (VAT) is not payable for imported capital machinery and spares. Rationalization of Import Duty Duties and taxes on import of goods which are produced locally will be higher than those applicable to import of raw materials for producing such goods. Incentives to Non-Resident Bangladeshis (NRBs) Investment of NRBs will be treated at par with FDI. Special incentives are provided to encourage.

NRBs for investment in the country. NRBs will enjoy facilities similar to those of foreign investors. Moreover, they can buy newly issued shares/ debentures of Bangladeshi companies. A quota of 10% has been fixed for NRBs in primary public shares. Furthermore, they can maintain foreign currency deposits in the Non-resident Foreign Currency Deposit (NFCD) account. Other Incentives • Tax exemption on royalties, technical know-how fees received by any foreign collaborator, firm, company and expert. • Tax exemption on the interest on foreign loans under certain conditions. Avoidance of double taxation in case of foreign investors on the basis of bilateral agreements. • Exemption of income tax up to 3 years for the foreign technicians employed in industries specified in the relevant schedule of income tax ordinance. • Tax exemption on income of the private sector power generation company for 15 years from the date of commercial production. • Facilities for full repatriation of invested capital, profit ; dividend. • 6 months multiple entry visa for the prospective new investors. • Re-investment of repatriable dividend treated as new investment. Citizenship by investing a minimum of US$ 5,00,000 or by transferring US$ 10,00,000 to any recognized financial institution (non-repatriable). • Permanent residentship by investing a minimum of US$ 75,000 (non-repatriable). • Tax exemption on capital gains from the transfer of shares of public limited companies listed with a stock exchange. • Special facilities and venture capital support will be provided to export-oriented industries under “Thrust sectors” There will be no discrimination in case of duties and taxes for the same type of industries set up by foreign and local investors and in the public and private sectors.

Incentives to Export-Oriented and Export-Linkage Industries Export-oriented industrialization is one of the major objectives of the Industrial Policy 1999. Export-oriented industries will be given priority and public policy support will be ensured in this respect. An industry exporting at least 80% of its manufactured goods or an industry contributing at least 80% of its products as an input to finished exportables, and similarly, a business entity exporting at least 80% of services including information technology related products will be considered as an export-oriented industry.

To make investment in 100 percent export-oriented industries attractive, the following incentives and facilities will be provided : • Duty free import of capital machinery and spare parts up to 10 percent of the value of such capital machinery will continue. • Existing facilities for Bonded Warehouse and back-to-back Letter of Credit will continue. • The system for duty drawback will be further simplified and to this end, duty drawback will be fixed at a flat rate on exportable and potentially exportable goods.

Exporter will receive duty drawback at a flat rate directly from the relevant commercial banks. • The arrangement for providing loans up to 90 percent of the value against irrevocable and confirmed Letter of Credit/Sales Agreement will continue. • To ensure backward linkage, incentives will be extended to the “deemed exporters” supplying indigenous raw materials to  export-oriented industries. Export-oriented industries including export-oriented RMG industries, using indigenous raw materials will be given facilities and benefits at prescribed rates. The export-oriented industr4ies, further to the provisions of Bangladesh Bank foreign exchange regulations, will be entitled to receive additional foreign exchange, on case to case basis, for publicity campaign, opening overseas offices and participating in international trade fairs. • The entire export earning from handicrafts and cottage industries will be exempted from income tax. For all other industries, income tax rebate on export earning will be given at 50 percent. • The facility for importing raw materials, which are included in the banned/restricted list, but required in the manufacture of exportable commodities, will continue. The import of specified quantities of duty-free samples for manufacturing exportable products will be allowed consistent with the prevailing relevant government policy. • The local products supplied to local industries or projects against foreign exchange L/C will be treated as indirect exports and be entitled to all export facilities. • The Export Credit Guarantee Scheme will be further expanded and strengthened. • 10 percent products of the enterprises, located in both public and private EPZs will be allowed to be exported to domestic tariff area against foreign currency L/C on payment of applicable duties and taxes. 100% percent export-oriented industry outside EPZ will be allowed to sell 20% percent of their products in the domestic market on payment of applicable duties and taxes. • The Export-oriented industries which are identified by the government as “Thrust Sector” will be provided special facilities and venture capital support. Apart from the above-mentioned facilities, other facilities announced and provided in the Export Policy will be applicable to export-oriented and export-linkage industries. Bangladesh – Potential Sectors For Investment:

Bangladesh, traditionally known for jute and tea exports, has recently attracted world- wide attention for readymade garments and leather exports. Bangladesh foresees an expansion of her agricultural sector, as well as increased diversity in non traditional industries and business. Below is a short account of a few potential investment areas. Textile Bangladesh is a land of nearly 112 million people with annual per capita income of US$ 386. Clothing being the second basic need there exists a vast market for textile products in this country. The readymade garments (RMG. ) is the manufacturing success story in Bangladesh from US$ 7. 0 million in 1981-82 to US$ 1949 million in 1995-96 and from 11% to 50% of total export earning during the period. Only knit fabric for the knitted garments and hosiery are domestically produced. But the predominant raw materials for readymade garments are woven fabrics, most of which are now imported. Due to lack of quality woven fabrics required by buyers, the readymade garments sector in Bangladesh had to import a total of 2. 5 billion linear yards of fabrics in 1995. The projected fabrics demand for the RMG. industry for 1996 is around 2. 85 billion yards light woven, heavy woven and mixed woven 2. 8 billion yards, and knit 0. 47 billion yards) Currently 240 readymade garments units spend approximately 65% of their export earnings on import of fabrics. It is estimated that in order to meet the demand gap by the year 2000 additional investment in 156 spinning mills (each having 25000 spindles), 371 weaving mills (each having 300 shuttles or 120 shuttles looms) and 371 dyeing, printing and finishing units (each having production capacity of 10 million meters annually) will be required to setup. Leather goods There is already a substantial domestic leather industry, mostly export-oriented.

The leather includes some readymade garments, although that, aspect is confined mainly to a small export-trade in ‘Italian made’ garments for the US market. Footwear is more important in terms of value added, accounting for just over US$ 4 million exports in FY 1992-93. The figure raised at US$ 22. 77 million in FY 1996-97. This is the fast growing sector for leather products. Bangladesh produces between 2 and 3 percent of the world’s leather market. Most of the livestock base for this production is domestic which is estimated as comprising 1. 8 percent of the world’s cattle stock and 3. percent of the goat stock. The hides and skins (average annual output is 150 million sq. ft. ) have a good international reputation. Foreign direct investment in this sector along with the production of tanning chemicals appears to be highly rewarding. Having the basic raw materials for leather goods as well as for the production of leather shoe, a large pool of cheap but trainable labour force together with tariff concession facility to major importing countries under GSP coverage Bangladesh can be a potential off shore location for leather and leather products manufacturing with low cost but high quality.

Frozen food The frozen fish export sector is the second largest export sector of the country with annual turnover of US$ 321 milion (17. 05 M. Lbs) in 1996-97. The average annual growth rate is 28%. This 100% export oriented industry includes the following sub-sectors which need proper attention for augmentation of production and export earning. Hatcheries-sustainable aqua-culture technology-feed meals plants-processing unit for value added products. Foreign investment with technology in this potential sector has been recognised as most viable areas in Bangladesh.

This sector has various incentive for foreign investment/jointventure in one of the above mentioned areas or may be under a composite project with potential high return. Jute goods Bangladesh is one of the leading producers of jute in the world. At present the annual production is 890,000 MT. In 1996-97 Bangladesh exported raw jute worth US$ 116. 32 million and jute goods worth US$ 317. 86 million in the form of sacking hessian. carpet ; carpet backing cloth, jute yarn/twine etc. This is one of the very prospective areas for investment with higher technology. Oil and Gas Bangladesh has an estimated gas reserve of about 23 TCF.

Out of this about 14 TCF is considered recoverable. So far 57 wells have been drilled in 19 discovered gas fields and present production is about 280 BCF per annum. The government of Bangladesh has decided that future exploration for oil and gas will be done through the private sector to the maximum extent possible. With this end in view the first round of bidding took place in 1993 and 4 companies eventually signed Production Sharing Contracts (PSCS) with Rexwood Okland, United Meridiam and Occidental. The second round of bidding was held in July 1997 and the bidding process is still continuing.

During this bidding for the remaining 15 blocks bids have been received for 12 blocks. The competition in some of the blocks with good gas prospects has been intensive and all the biggest names in the oil and gas business in the world have shown active interest in Bangladesh. This bidding round will close in December 1997 and exploration activities are expected to begin immediately. So far the private sector oil and gas exploration companies have invested US$ 100 million. With the amount of the contracts in the second round bidding there will be manifold augmentation of investment.

Besides exploration which is an upstream activity in the down stream activities also the international investors have shown keen interest to set up joint ventures on their own as well as with public sector enterprises. Coal Besides Oil and gas a contract has been signed to extract coal from Barapukuria coal mine in Dinajpur district with a Chineses consortium designed to extract 1. 0 million MT coal a year. Another contract has been signed with a North Korean company for the extraction of 1. 6 million MT hard rock per year at Madhyapara in the same district. Power

Bangladesh is still at a low level of electrification with only 16% of it population having access to electricity and per capita generation is only 96 KW per annum. Hence, there is a great need and urgency to expand the electrification programs. The government of Bangladesh has attached priority for the development of the power sector. The present installed generation capacity is 2908 MW. But the available generation capacity is about 2200 MW due to old age of few power plants. The route length of transmission line is 3500 Km, the total length of distribution network is 1,28,000 KM and the number of consumers is 35,00,000 at present.

The present demand of electricity is about 22,00 MW. It is estimated that the peak demand in FY 2000 will be about 3150 MW and this will increase to about 4600 MW in FY 2005. A total of 2700 MW generation capacity is planned to be added to the system during the Fifth Five Year Plan period FY 1998-FY 2002. Bangladesh has amended its Industrial Policy and the power sector is open to private investment. The government has approved the Private Sector Power Generation. Policy of Bangladesh to attract private investment in power generation.

Under the policy, the private power companies shall be exempted from corporate income tax for a period of 15 years and the companies will be allowed to import plant and equipment without payment of custom duties and VAT. Because of the favorable conditions for private investment a large number of Independent power producers (IPPs) have shown interests for setting up power plants in Bangladesh. A Rural Power Plant is being implemented by RPC at Mymensingh. A Rural Power Company (RPC) has been created A 60 MW Gas Turbine Power Plant is being implemented by RPC at Mymensingh.

Contracts with four IPPs selected through competitive bidding have already been negotiated and are expected to be signed shortly. Bids received for setting up a 360 MW combined cycle power plant at Haripur and 450 MW combined cycle power plant at Meghna Ghat in the private sector are being evaluated. There is need for more private investment in power generation to meet the increasing demand in future. The government of Bangadesh has undertaken some reform measures with a view to achieving operational and management efficiency and commercial characteristics in the power sector.

Power Grid Company of Bangladesh (PGCB) has been created. Initially PGCB will own the transmision lines associated with Meghna Ghat Power Project. Ultimately it will take over the entire transmission system of the country. Dhaka Electric Supply Comapny (DESCO) has been created to manage the distribution area of Mirpur. DESCO will eventually take over the entire distribution responsibilities of Dhaka metropolitan city area. Telecommunication The recent revolution in information technology has opened up a new area for private investment in the telecommunication sector. Previously in the public sector. his has now been opened up for private investment. Bangladesh Telegraph and Telephone Board (BTTB) is developing communication facilities with modern technology, Communications with the outside world are also being developed. Private sector operations in the rural telecommunications, paging, cellular telephones and reverine radio trucking have already been allowed. BTTB has already started providing VSAT (Very Small Aperture Terminals) facilities to the private sector. In the meantime two private companies have been given license for providing telecommunication in 390 thanks, till now they have covered 221 upa-zillas.

So far licenses have been issued to four private operators for cellular or mobile telephone services in the country. Air Transportation In air transport, the government has given provisional domestic air transport operating licenses to six private companies for STOL Services. Seven airports have been refurnished to cater to their needs. International air ; cargo transport in the private sector is now allowed for operation in Bangladesh. Electronics Bangladesh’s experience in basic electronics spans over two decades.

In recent years, European and Asian electronic firms have established technical collaboration with their Bangladeshi counterparts to produce some electronic goods at competitive prices. This has tremendous potentiality for expansion. Light engineering industries Light industries in Bangladesh produce a multitude of labour intensive goods including toys, consumer items, small tools and paper products for the domestic market. Further development of these industries offers various investment opportunities. Export oriented production in light industries has gained momentum in the past few years.

Entrepreneurs from Hong Kong, Japan and Korea have taken advantage of Bangladesh’s cheap and easily trainable labour and its infrastructure facilities to manufacture products for the export market. Tourism With growing international interest in travelling through Asia tourism is taking roots in Bangladesh. Bangladesh offers a variety of historically significant and culturally unique sites for tourists. Sylhet’s tea gardens, Cox’s Bazar sea-beach, the Royal Bengal Tiger, Deer and the Sundarbans, the largest mangrove forest in the world with unique bio-diversity offer tourist attractions.

Ancient mosques, Buddhist monasteries, Hindu temples, monuments and other landmarks dot the countryside. Additional hotel and resort facilities could be created for attracting tourists from home and abroad. Dhaka and Chittagong also have an unmet demand for additional hotel rooms, restaurants, entertainment and recreational facilities. Agriculture Raw jute, tea, tobacco, vegetables, spices and tropical fruits are the key potential products. Agiculture is the biggest private sector operation contributing 35% of GDP.

The government has gradually removed the contsraints imposed by state intervention deregulated and liberalised the markets to allow further private participation particularly in the supply of imputs and distribution of outpus. The govenment has drastically rediced duties and taxes on a rage of agriculture imputs. Fertizer is exempted from customs duties and VAT. Bangladesh continues to grow about 2 percent of the world’s tea in some 150 plantations on the North-East region of Sylhet. Tropical fruits and vegetables are grown seasonlly and have recently begun to be exported in various forms. Tobacco farming is also well established.

Agro based industries Bangladesh has the basic attributes for successful agro based industries, namely, rich alluvial soil, a year-round frost free environment, an adequate water supply and an abundance of cheap labour. Increased cultivation of vegetables, spices and tropical fruits now grown in Bangladesh could supply raw materials to local agro processing industries for both domestic and export markets. Progressive agricultural practices, improved marketing techniques and modern processing facilities would enable the agro processing industry to improve its quality and expand production levels significantly.

Computer software development, data entry & data processing. Availability of substantial number of unemployed qualified young people in various branches of engineering, science and technologies have opened up the scope of profitable investment in these sectors. Comparatively short training period and low investment have made such ventures highly profitable. Recommendation: Though Bangladesh has lots of opportunity for business but still there are many problems. Some of this is as follows – 1. Transportation facility should improve. 2.

Sometime political harassment discourages foreign investor for business expansion. 3. Unstable political condition hampers business, so govt. should improve this situation. 4. Bureaucratic complicity discourages foreign investor. To attract the foreign investor one stop service should required. Conclusion: Bangladesh has 130 million population with 50 million civilian labour force . Trained and educated workforce at low wage rate. Sizeable domestic market and steady growth of GDP. Stable rate of exchange, low interest rate, low rate of inflation, comfortable foreign exchange reserve.

So In Bangladesh there is a huge growth advantage for international business. Govt. just need proper care & concentration on this matter and Bangladesh will be An investment destination in South Asia.

Reference: 1. According to C. K. Prahalad & S. Hart,2002, The fortune at the bottom of the pyramid, Strategy & Business, 26: 54-67, and (2) S. Hart, 2005, Capitalism at the Crossroads (p. 111), Philadelphia: Wharton School Publishing. 2. www. google. com 3. http://en. wikipedia. org/wiki/International_business 4. http://www. bizbangladesh. com 5. http://www. asiatradehub. com/bangladesh