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FY 1999: Bangladesh |
I. EXECUTIVE SUMMARY This Country Commercial Guide (CCG) presents a comprehensive look at Bangladesh's commercial environment, using economic, political and market analyses. The CCG's were established by recommendation of the Trade Promotion Coordinating Committee (TPCC), a multi-agency task force, to consolidate various reporting documents prepared for the U.S. business community. Country Commercial Guides are prepared annually at U.S. Embassies through the combined efforts of several U.S. government agencies. Bangladesh's economy grew by an estimated 5.6% in FY98 (July 97 to June 98), slightly down from the 5.9% of FY97, which was the highest growth rate achieved during the nineties. In FY98, rice production was down, offsetting a fairly strong recovery in the industrial sector, primarily fueled by growth in the export of garments. Severe and extensive flooding in the summer of 1998, however, highlighted the fragility of the country's economy and the perseverance of the nation's people: much of the winter rice crop could not be planted and millions of people were displaced, facing hunger and sickness. Supply lines were cut in many areas of the country, including the main road from Chittagong, the largest port, and Dhaka, the capital. Despite these serious impediments, however, the garment sector managed to meet most of its export obligations. The Government and donors are still determining the extent of the damage caused by the flooding; many economists believe GDP growth could fall by two percent, to about 3.3 percent. Driven in part by the need to import more food, the authorities are receiving short-term emergency balance of payments assistance from both the International Monetary Fund (IMF) and the World Bank. Bangladesh and the IMF will likely begin negotiations in early 1999 over the terms of an Enhanced Structural Adjustment Facility (ESAF). Since the election of the Awami League government in June 1996, the political situation has stabilized. However, except in the energy and telecommunications sectors, the government has yet to pursue vigorously pro-market reforms necessary for higher growth levels. About 36% of the country's 125 million people live below the poverty line. The IMF estimates current per capita GDP at only $338 annually. Bangladesh has an investment regime friendly to foreign investment, but implementation of these policies has been a continuing problem. As a result, actual foreign investment has lagged well behind potential. Labor is inexpensive, but productivity is low. Infrastructure such as electric power, telecommunications, and water and rail transport is poor, even by regional standards. The country's legal system is outdated and undermanned, leading to long delays in resolving cases. Many officials view their role more as controlling commercial activity than stimulating it. Corruption is common. However, these impediments have not stopped development, and real per capita income growth is positive. The limited pro-market economic reforms enacted since the late 1980's have brought concrete results and are especially visible in the oil and gas and power sectors, areas where foreign direct investment has been greatest and where interest remains relatively high. Relations between Bangladesh and the United States are excellent. The Bangladesh business community is well disposed towards American products. Business opportunities for U.S. firms are expanding as the economy grows. Commercial imports now make up approximately 78% of Bangladesh's import bill, with aid-financed imports accounting for the remainder. Principal U.S. exports to Bangladesh are raw cotton, wheat, and a wide variety of industrial inputs and machinery. U.S. investment will increase markedly in 1998/99, as planned oil and gas exploration/production investments are made. Two-way trade will surpass $2 billion in 1998; the U.S. had a $1.4 billion trade deficit with Bangladesh in 1997 (calendar year). Best prospective sectors for American firms include oil and gas exploration/production, power generation and related equipment, telecommunications, computers, aircraft parts and ground support equipment, textile machinery/equipment, architecture/construction/engineering services, and agricultural chemicals. U.S. wheat and cotton exports continue to be strong. Many of the larger Bangladeshi firms express interest in joint ventures with U.S. companies. Keys to success in doing business in Bangladesh are being patient and having strong, effective local representation. Country Commercial Guides (CCG's) are available for U.S. exporters from the National Trade Data Bank's CD-ROM or via the Internet. Please contact STAT-USA at 1-800-STAT-USA for more information. Country Commercial Guides can be accessed via the World Wide Web at http://www.stat-usa.gov; http://www.state.gov; and http://www.mac.doc.gov. CCG's can also be ordered in hard copy or on diskette from the National Technical Information Service (NTIS) at 1-800-553-NTIS. U.S. exporters seeking general export information/assistance and country-specific commercial information should contact the U.S. Department of Commerce, Trade Information Center by phone at 1-800-USA-TRADE.[end of document]
Note* International Copyright, United States Government, 1998 (or other year of first publication). All rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside the United States. U. S. copyright is not asserted under the U.S. Copyright Law, Title 17, United States Code.