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Doing Business In Bangladesh
Geographical Overview of Bangladesh
Bangladesh, situated in South Asia, spans an area of approximately 144,000 square kilometers. The country can be divided into two major geographical regions: a vast deltaic plain in the central and southern parts, and a smaller hilly region in the southeast, particularly in the Chittagong Hill Tracts. These contrasting landscapes have shaped Bangladesh’s environment and economy, with the deltaic plain being dominated by the Ganges-Brahmaputra-Meghna river system, making the country prone to seasonal flooding and fertile for agriculture.
The country is bordered by India to the west, north, and east, and by Myanmar to the southeast. The southern coastline stretches for 580 kilometers along the Bay of Bengal, which forms a vital part of Bangladesh’s maritime boundary. The coastal region is known for the Sundarbans, the world’s largest mangrove forest and a UNESCO World Heritage Site, which acts as a natural barrier against cyclones.
The present borders of Bangladesh were established in 1947 following the British partition of India, which led to the creation of East Pakistan (now Bangladesh) as part of Pakistan. Bangladesh’s path to independence culminated in the Bangladesh Liberation War of 1971, driven by political, economic, and linguistic differences with West Pakistan.
Despite its relatively small size, Bangladesh is one of the most densely populated countries in the world, with a population of over 174 million. Its strategic location between South and Southeast Asia has made it a critical player in regional trade and geopolitics. The deltaic region’s rich alluvial soil supports rice and jute farming, while the hilly regions are home to tea plantations and diverse indigenous communities. The nation’s geography is also shaped by frequent monsoons and cyclones, which pose both challenges and opportunities for sustainable development.
Demographic Overview-
Bangladesh, with an estimated population of approximately 174.7 million as of 2024, ranks as the eighth most populous country in the world. The country faces significant challenges due to its high population density, which stands at about 1,342 individuals per square kilometer. Despite this, Bangladesh has managed to maintain a steady annual growth rate of approximately 0.99%. The demographic landscape is primarily Bengali, accounting for around 98.5% of the population, and features a relatively young median age of 27 years. This youthful populace is predominantly Muslim, with Islam practiced by nearly 89% of the citizens, while about 10% adhere to Hinduism. Notably, Bangladesh has made remarkable progress in education, achieving an impressive literacy rate of around 94%, which includes 93% for males and 96% for females. This emphasis on education has played a vital role in the country’s development trajectory, helping to foster a more informed society capable of tackling the challenges that come with rapid population growth.
Bangladesh Demographics Overview (2024)
|
Demographic Aspect |
Details |
|
Population |
Approximately 174.7 million |
|
Ranking |
8th most populous nation |
|
Population Density |
About 1,342 individuals per sq km |
|
Annual Growth Rate |
Approximately 0.99% |
|
Ethnicity |
Predominantly Bengali (98.5%) |
|
Median Age |
27 years |
|
Religion |
Islam: ~89%, Hinduism: ~10% |
|
Literacy Rate |
Approximately 94% |
|
Males: 93% |
|
|
Females: 96% |
Economy:
Bangladesh’s economy has demonstrated remarkable resilience and growth over the past few decades, transitioning from a primarily agrarian society to a more diversified economy. As of 2024, the country has a Gross Domestic Product (GDP) of approximately $460 billion, making it one of the fastest-growing economies in the world. The annual GDP growth rate hovers around 6-7%, driven largely by the garment industry, which accounts for over 80% of the country’s total exports. This sector has positioned Bangladesh as the second-largest apparel exporter globally, benefiting from competitive labor costs and favorable trade agreements.
Agriculture remains a critical sector, employing nearly 40% of the workforce and contributing about 14% to the GDP. Major crops include rice, jute, tea, and various fruits and vegetables. In addition to agriculture, the services sector has seen significant growth, contributing around 53% to the GDP, with notable expansions in telecommunications, banking, and tourism.
GDP Growth Projections for Bangladesh (2024-2033):
|
Year |
Projected GDP Growth Rate (%) |
|
2024 |
6.2 |
|
2025 |
6.5 |
|
2026 |
6.7 |
|
2027 |
6.8 |
|
2028 |
7.0 |
|
2029 |
7.1 |
|
2030 |
7.3 |
|
2031 |
7.5 |
|
2032 |
7.6 |
|
2033 |
7.8 |
Trade Overview:
Bangladesh’s trade landscape in the 2022-23 fiscal year reflects a dynamic economy heavily reliant on its export-oriented sectors. The total exports reached approximately USD 55.56 billion, with the Ready-Made Garments (RMG) sector dominating the scene, contributing around 85% of total export earnings. Major markets for Bangladeshi RMG products include Europe—particularly Germany, Spain, Italy, and France—along with North America, specifically the United States and Canada. This sector has positioned Bangladesh as one of the leading garment exporters globally, taking advantage of competitive labor costs and a skilled workforce.
In addition to textiles, the pharmaceuticals sector has shown significant promise, with the country’s capacity to meet global demand for generic drugs bolstered by the Trade-Related Aspects of Intellectual Property Rights (TRIPS) exemption, which allows Bangladesh to produce these medications without infringing on patents for a few more years. This opportunity places Bangladesh in a favorable position in the international pharmaceutical market, as it aims to expand its exports in this domain.
On the import side, Bangladesh recorded total imports of approximately USD 68.23 billion during the same fiscal year. The major imported commodities include cotton (necessary for the textile industry), sugar, refined petroleum, palm oil, wheat, and machinery. The country’s primary sources of imports are diverse, with China accounting for 25.3% of total imports, followed by India (16.9%), Singapore (4.8%), the USA (4.4%), Japan (3.9%), and Indonesia (3.6%). This trade scenario underscores the challenges and opportunities Bangladesh faces. While the economy remains export-driven, particularly in textiles, it is crucial for the country to diversify its export base and reduce dependency on specific sectors and trading partners. Additionally, ongoing efforts to improve infrastructure and address challenges related to trade logistics will be vital for sustaining economic growth and enhancing Bangladesh’s competitive position in the global market.
Graphical presentation of Import scenario of BD
Overview of Foreign Remittances in Bangladesh
Contribution to GDP: Foreign remittances are a vital source of foreign exchange for Bangladesh, accounting for around 5-7% of the country’s GDP. This inflow of money helps stabilize the economy and is essential for sustaining economic growth.
Volume of Remittances: As of the fiscal year 2022-23, Bangladesh received approximately USD 24 billion in remittances. This figure can fluctuate based on global economic conditions, labor market demands in host countries, and the exchange rate.
Key Source Countries: The majority of remittances come from Bangladeshi expatriates working abroad. The leading countries contributing to remittances include:
- Saudi Arabia
- United Arab Emirates
- Qatar
- Oman
- Kuwait
- Malaysia
- USA and UK (for communities living there)
Infrastructure :
Bangladesh has made significant advancements in its infrastructure development, playing a crucial role in the country’s economic growth and improving the quality of life for its citizens. The government has prioritized various sectors, including electricity, transportation, and water supply, to meet the demands of a rapidly growing population.
Electrification and Energy Production
As of 2024, Bangladesh has achieved remarkable progress in electrification, with 100% of the population having access to electricity. The country produced a record 15,000 MW of electricity, effectively eliminating daily load shedding, which has dropped to nearly 0% since mid-2021. This energy stability is essential for supporting industrial growth and enhancing overall productivity.
Water Supply and Quality
Despite significant improvements in access to water supply across the country, challenges remain concerning the quality of water. While the Global Competitiveness Report reflects an upward trend in water quality—scoring increased from 2.9 out of 7 in 2017 to 3.1 in 2019—the actual quality of supplied water still requires attention. Ensuring safe drinking water is vital for public health and well-being.
Major Infrastructure Projects
Bangladesh has embarked on several ambitious infrastructure projects aimed at enhancing connectivity and promoting economic growth:
- Padma Bridge Rail Link: This critical infrastructure project is expected to significantly improve transportation and trade between the southwestern regions and Dhaka.
- Dhaka Elevated Expressway: Aimed at easing traffic congestion in the capital, this expressway will facilitate quicker transit and enhance connectivity for commuters and goods.
- Bangabandhu Sheikh Mujibur Rahman Tunnel: This project is designed to improve connectivity between the capital and the southern districts, enhancing trade and economic activities.
- Hazrat Shahjalal International Airport (Third Terminal): The expansion of the airport is expected to boost capacity and support the growing demand for air travel.
- Chattogram-Cox’s Bazar Rail Line: This project has connected the major tourist destination of Cox’s Bazar with the national railway network, promoting tourism and trade.
Ongoing Projects
- Rampal Power Project: Designed to address the increasing energy demands, this coal-fired power project aims to add significant capacity to the national grid.
- Matarbari Coal Power Plant: Another key energy project expected to play a vital role in ensuring energy security.
- Rooppur Nuclear Power Plant: This project signifies Bangladesh’s commitment to diversifying its energy sources and reducing dependency on fossil fuels.
The infrastructural developments in Bangladesh are pivotal for the country’s socio-economic growth, providing essential services and enhancing connectivity. The government’s commitment to these projects demonstrates a proactive approach toward sustainable development, aiming to position Bangladesh as a key player in the regional economy.
Overview of Bangladesh’s Debt (2024)
As of 2024, Bangladesh’s debt situation remains stable, supported by prudent fiscal management and a commitment to keeping the fiscal deficit below 5% of GDP. The government has successfully maintained this target, which reflects its commitment to sustainable economic practices.
Current Debt Levels
- Total Central Government Debt: In recent years, total central government debt levels have been measured at 41.4% of GDP in 2021 and 42.5% in 2022. As of 2023, the debt level was reported to be sustainable at approximately 35% of GDP.
- Debt Risk: Bangladesh is classified as being at low risk of debt distress, with public and publicly guaranteed external debt constituting about 15% of GDP and external debt at approximately 12.15% of GDP. This favorable assessment allows the government to pursue necessary development initiatives without immediate concern for fiscal instability.
Foreign Reserves and Current Account Deficit
- Foreign Reserves: Bangladesh has successfully maintained foreign reserve levels at around USD 33 billion, providing a buffer against external shocks and supporting the local currency.
Current Account Deficit (CAD): The current account deficit has been relatively low, averaging just 0.086% of GDP over the past five years. However, the IMF projects that over the medium term, the CAD will stabilize around 2% of GDP. This stabilization will be influenced by lower remittances as a percentage of GDP, increased imports of capital goods, and liquefied natural gas, which may counterbalance the strong performance of exports.
Economic Context
- Growth Prospects: The economy has shown resilience, and despite challenges such as fluctuating remittances, the government’s focus on infrastructure and export-oriented growth remains crucial for maintaining a healthy debt-to-GDP ratio.
- Fiscal Management: The commitment to prudent fiscal policies has played a significant role in keeping the debt levels manageable, allowing for continued investment in critical sectors without jeopardizing economic stability.
| Demographic Aspect | Details |
| Population | Approximately 174.7 million |
| Ranking | 8th most populous nation |
| Population Density | About 1,342 individuals per sq km |
| Annual Growth Rate | Approximately 0.99% |
| Ethnicity | Predominantly Bengali (98.5%) |
| Median Age | 27 years |
| Religion | Islam: ~89%, Hinduism: ~10% |
|
Literacy Rate |
Approximately 94% |
| Males: 93% | |
| Females: 96% |
| Year | Projected GDP Growth Rate (%) |
| 2024 | 6.2 |
| 2025 | 6.5 |
| 2026 | 6.7 |
| 2027 | 6.8 |
| 2028 | 7.0 |
| 2029 | 7.1 |
| 2030 | 7.3 |
| 2031 | 7.5 |
| 2032 | 7.6 |
| 2033 | 7.8 |
Graphical presentation of Import scenario of BD
Infrastructure :
Bangladesh has made significant advancements in its infrastructure development, playing a crucial role in the country’s economic growth and improving the quality of life for its citizens. The government has prioritized various sectors, including electricity, transportation, and water supply, to meet the demands of a rapidly growing population.
Electrification and Energy Production
As of 2024, Bangladesh has achieved remarkable progress in electrification, with 100% of the population having access to electricity. The country produced a record 15,000 MW of electricity, effectively eliminating daily load shedding, which has dropped to nearly 0% since mid-2021. This energy stability is essential for supporting industrial growth and enhancing overall productivity.
Water Supply and Quality
Despite significant improvements in access to water supply across the country, challenges remain concerning the quality of water. While the Global Competitiveness Report reflects an upward trend in water quality—scoring increased from 2.9 out of 7 in 2017 to 3.1 in 2019—the actual quality of supplied water still requires attention. Ensuring safe drinking water is vital for public health and well-being.
Overview of Bangladesh’s Debt (2024)
As of 2024, Bangladesh’s debt situation remains stable, supported by prudent fiscal management and a commitment to keeping the fiscal deficit below 5% of GDP. The government has successfully maintained this target, which reflects its commitment to sustainable economic practices.
Current Debt Levels
- Total Central Government Debt: In recent years, total central government debt levels have been measured at 41.4% of GDP in 2021 and 42.5% in 2022. As of 2023, the debt level was reported to be sustainable at approximately 35% of GDP.
- Debt Risk: Bangladesh is classified as being at low risk of debt distress, with public and publicly guaranteed external debt constituting about 15% of GDP and external debt at approximately 12.15% of GDP. This favorable assessment allows the government to pursue necessary development initiatives without immediate concern for fiscal instability.
Foreign Reserves and Current Account Deficit
- Foreign Reserves: Bangladesh has successfully maintained foreign reserve levels at around USD 33 billion, providing a buffer against external shocks and supporting the local currency.
Economy:
Bangladesh’s economy has demonstrated remarkable resilience and growth over the past few decades, transitioning from a primarily agrarian society to a more diversified economy. As of 2024, the country has a Gross Domestic Product (GDP) of approximately $460 billion, making it one of the fastest-growing economies in the world. The annual GDP growth rate hovers around 6-7%, driven largely by the garment industry, which accounts for over 80% of the country’s total exports. This sector has positioned Bangladesh as the second-largest apparel exporter globally, benefiting from competitive labor costs and favorable trade agreements.
Agriculture remains a critical sector, employing nearly 40% of the workforce and contributing about 14% to the GDP. Major crops include rice, jute, tea, and various fruits and vegetables. In addition to agriculture, the services sector has seen significant growth, contributing around 53% to the GDP, with notable expansions in telecommunications, banking, and tourism.
Trade Overview:
Bangladesh’s trade landscape in the 2022-23 fiscal year reflects a dynamic economy heavily reliant on its export-oriented sectors. The total exports reached approximately USD 55.56 billion, with the Ready-Made Garments (RMG) sector dominating the scene, contributing around 85% of total export earnings. Major markets for Bangladeshi RMG products include Europe—particularly Germany, Spain, Italy, and France—along with North America, specifically the United States and Canada. This sector has positioned Bangladesh as one of the leading garment exporters globally, taking advantage of competitive labor costs and a skilled workforce.
In addition to textiles, the pharmaceuticals sector has shown significant promise, with the country’s capacity to meet global demand for generic drugs bolstered by the Trade-Related Aspects of Intellectual Property Rights (TRIPS) exemption, which allows Bangladesh to produce these medications without infringing on patents for a few more years. This opportunity places Bangladesh in a favorable position in the international pharmaceutical market, as it aims to expand its exports in this domain. On the import side, Bangladesh recorded total imports of approximately USD 68.23 billion during the same fiscal year. The major imported commodities include cotton (necessary for the textile industry), sugar, refined petroleum, palm oil, wheat, and machinery. The country’s primary sources of imports are diverse, with China accounting for 25.3% of total imports, followed by India (16.9%), Singapore (4.8%), the USA (4.4%), Japan (3.9%), and Indonesia (3.6%). This trade scenario underscores the challenges and opportunities Bangladesh faces. While the economy remains export-driven, particularly in textiles, it is crucial for the country to diversify its export base and reduce dependency on specific sectors and trading partners. Additionally, ongoing efforts to improve infrastructure and address challenges related to trade logistics will be vital for sustaining economic growth and enhancing Bangladesh’s competitive position in the global market.
Contribution to GDP: Foreign remittances are a vital source of foreign exchange for Bangladesh, accounting for around 5-7% of the country’s GDP. This inflow of money helps stabilize the economy and is essential for sustaining economic growth.
Volume of Remittances: As of the fiscal year 2022-23, Bangladesh received approximately USD 24 billion in remittances. This figure can fluctuate based on global economic conditions, labor market demands in host countries, and the exchange rate.
Key Source Countries: The majority of remittances come from Bangladeshi expatriates working abroad. The leading countries contributing to remittances include:
- Saudi Arabia
- United Arab Emirates
- Qatar
- Oman
- Kuwait
- Malaysia
- USA and UK (for communities living there)
Major Infrastructure Projects
Bangladesh has embarked on several ambitious infrastructure projects aimed at enhancing connectivity and promoting economic growth:
- Padma Bridge Rail Link: This critical infrastructure project is expected to significantly improve transportation and trade between the southwestern regions and Dhaka.
- Dhaka Elevated Expressway: Aimed at easing traffic congestion in the capital, this expressway will facilitate quicker transit and enhance connectivity for commuters and goods.
- Bangabandhu Sheikh Mujibur Rahman Tunnel: This project is designed to improve connectivity between the capital and the southern districts, enhancing trade and economic activities.
- Hazrat Shahjalal International Airport (Third Terminal): The expansion of the airport is expected to boost capacity and support the growing demand for air travel.
- Chattogram-Cox’s Bazar Rail Line: This project has connected the major tourist destination of Cox’s Bazar with the national railway network, promoting tourism and trade.
Ongoing Projects
- Rampal Power Project: Designed to address the increasing energy demands, this coal-fired power project aims to add significant capacity to the national grid.
- Matarbari Coal Power Plant: Another key energy project expected to play a vital role in ensuring energy security.
- Rooppur Nuclear Power Plant: This project signifies Bangladesh’s commitment to diversifying its energy sources and reducing dependency on fossil fuels.
The infrastructural developments in Bangladesh are pivotal for the country’s socio-economic growth, providing essential services and enhancing connectivity. The government’s commitment to these projects demonstrates a proactive approach toward sustainable development, aiming to position Bangladesh as a key player in the regional economy.
Current Account Deficit (CAD): The current account deficit has been relatively low, averaging just 0.086% of GDP over the past five years. However, the IMF projects that over the medium term, the CAD will stabilize around 2% of GDP. This stabilization will be influenced by lower remittances as a percentage of GDP, increased imports of capital goods, and liquefied natural gas, which may counterbalance the strong performance of exports.
Economic Context
- Growth Prospects: The economy has shown resilience, and despite challenges such as fluctuating remittances, the government’s focus on infrastructure and export-oriented growth remains crucial for maintaining a healthy debt-to-GDP ratio.
- Fiscal Management: The commitment to prudent fiscal policies has played a significant role in keeping the debt levels manageable, allowing for continued investment in critical sectors without jeopardizing economic stability.