COUNTRY ANALYSIS REPORT

Bangladesh
In-depth PEST Insights
Publication Date: October 2010

Catalyst
This profile analyzes the political, economic, social, and technological structures in Bangladesh.

SUMMARY
Key highlights
• Formerly East Pakistan, Bangladesh was formed after the liberation war of 1971. It was under military rule from 1975 to 1990. In 1991, the constitution was amended to restore the parliamentary system. • In December 2008, the Awami League alliance led by Sheikh Hasina won a landslide victory in general elections. She is currently the prime minister of the country. • The economic growth averaged around 5.7% during 2000–07. The GDP growth rate fell from 6.14% in 2008 to 5.6% in 2009. • The budget deficit was around 4.5% of GDP in 2009 and for the financial year 2010, the deficit is expected to rise to 5% of GDP. The 2010–11 budget outlay is BDT1.32 trillion ($19 billion) compared with BDT1.14 trillion ($16.1 billion) in the 2009–10 fiscal year. • The latest Doing Business Survey of the World Bank places Bangladesh in the 119th position out of 183 countries in 2010. In 2008, the FDI flow increased to $1.08 billion and decreased to around $716 million in 2009. • Healthcare spending accounted for around 3% of GDP in Bangladesh during 2000–08, which amounted to around over 12% of total government expenditure. • In September 2010, the high court of Bangladesh directed the government to end child labor in a number of industries across the country by the end of 2011.

Bangladesh: Country Analysis Report–In-depth PEST Insights
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Summary

The Bangladesh Telecommunications (Amendment) Bill 2010 was passed in July 2010, which aims at bringing about technological improvement in telecom sector and implementing the government's Digital Bangladesh program.

Bangladesh: Country Analysis Report–In-depth PEST Insights
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Table of Contents

TABLE OF CONTENTS
Catalyst Summary Key facts and geographic location Key facts Geographical location Political landscape Summary Evolution Structure and policies Performance Outlook Economic landscape Summary Evolution Structure and policies Performance Outlook Social landscape Summary Evolution Structure and policies Performance Outlook Technological landscape Summary Evolution Structure and policies Performance Outlook APPENDIX Ask the analyst 1 1 7 7 8 9 9 9 10 13 14 15 15 15 16 17 22 23 23 23 23 26 27 28 28 28 28 28 29 30 30

Bangladesh: Country Analysis Report–In-depth PEST Insights
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This brief is a licensed product and is not to be photocopied Published 10/2010 Page 4 .Table of Contents Datamonitor consulting Disclaimer 30 30 Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor.

This brief is a licensed product and is not to be photocopied Published 10/2010 Page 5 .Table of Contents TABLE OF FIGURES Figure 1: Map of Bangladesh Figure 2: Bangladesh– key political events timeline Figure 3: Bangladesh – Head of the state and government Figure 4: Distribution of seats by political parties in the 2008 elections of Bangladesh Figure 5: Evolution of GDP growth in Bangladesh. 2001–08 Figure 7: Sector specific GDP in Bangladesh Figure 8: Major religions in Bangladesh 8 9 10 12 16 18 19 25 Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor. 1991–2009 Figure 6: GDP and GDP growth rate of Bangladesh (constant prices).

This brief is a licensed product and is not to be photocopied Published 10/2010 Page 6 .Table of Contents TABLES Table 1: Bangladesh – key facts Table 2: Mid-year population by age (millions) in 2009 7 24 Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor.

chemicals. km Bengali (official language) and English Major exports include garments. iron and steel.bd Demographic details Life expectancy 60. jute and jute goods.6% Others– 0. textiles. frozen fish and seafood. leather.9% Country area Language Exports Imports 144. foodstuffs. DAT AMONITOR Source: CIA Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor.5% Hindu – 9.000 sq.03 years (women) Ethnic composition (2000 data) Bengali 98%.57 years (men) 63. and cement. Machinery and equipment.Key facts and geographic location KEY FACTS AND GEOGRAPHIC LOCATION Key facts Table 1: Bangladesh – key facts Country and capital Full name Capital city People’s Republic of Bangladesh Dhaka Government Government type Head of state Head of government Parliamentary democracy President Zillur Rahman Prime Minister Sheikh Hasina Wajed Population 156 million Currency Bangladeshi Taka (BDT) GDP per capita (PPP) $1.25 years (total population) 57.500 Internet domain . petroleum products. non-Bengali Muslims) Major religions (1995 census) Muslim – 89. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 7 . other 2% (includes tribal groups.

bordering the Bay of Bengal. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 8 .Key facts and geographic location Geographical location Bangladesh is located in Southern Asia. Figure 1: Map of Bangladesh Source: CIA The World Factbook DAT AMONITOR Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor. between Burma and India.

the Awami League alliance led by Sheikh Hasina won a landslide victory in general elections. as ititwas Tahrir. General In 1982. the Awami League alliance Awami League alliance led by former Sheikh led by former Sheikh Hasina won a landslide Hasina won a landslide victory in general victory in general elections elections •• In October 2009. Evolution Figure 2: Bangladesh– key political events timeline Pre –1971 1971–72 1972–1994 1995–2001 2002 Onwards •• In 1947. A largely Muslim state Muslim state comprising East and comprising East and West Pakistan was West Pakistan was established.Political landscape POLITICAL LANDSCAPE Summary Formerly East Pakistan. parliamentary In 1986. In December 2008. Bangladesh was formed after the liberation war of 1971. won Mujibur Rahman. became the prime minister and prime minister and began a programme of began a programme of nationalizing key nationalizing key industries industries •• In 1975. Iajuddin Ahmed was sworn in Ahmed was sworn in as the president as the president •• In 2005. General Zia In 1977. a In January 2007. The voting system is characterized by universal suffrage for persons above 18 years of age. Ershad was elected for Ershad was elected for a five-year term. Sheikh Mujib became the president became the president of Bangladesh. recognize the results. the In December 2008. He suspended the constitution and the constitution and political parties political parties •• In 1983. martial law was lifted following was lifted following elections. as was alleged to be a threat alleged to be a threat to maintaining peace in to maintaining peace in the country the country Source: Datamonitor DAT AMONITOR Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor. the Constitution was amended to restore the parliamentary system. Awami League leaders proclaimed the leaders proclaimed the independence of the independence of the province of East province of East Pakistan on 26th Pakistan on 26th March. the Awami In 1949. which led to riots which led to riots •• In 1971. The government in West government in West Pakistan refused to Pakistan refused to recognize the results. martial law In 1979. limited In 1983. a state of emergency state of emergency was declared amidst was declared amidst violence in the run up violence in the run up to elections to elections •• In May 2007. became the returned. either side of India of India •• In 1949. In addition. Sheikh Mujib was arrested and was arrested and taken to West taken to West Pakistan. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 9 . around 350 small bombs were small bombs were detonated in towns and detonated in towns and cities in Bangladesh cities in Bangladesh •• In January 2007. the Awami League was League was established to established to campaign for East campaign for East Pakistan's autonomy Pakistan's autonomy from West Pakistan from West Pakistan •• In 1970. dominate the political landscape and frequent clashes between supporters of these parties are common. won an election victory in an election victory in East Pakistan. Sheikh Mujib In 1975. under Sheikh Mujibur Rahman. British In 1947. He abolished martial law abolished martial law and reinstated the and reinstated the constitution constitution •• In 1987. Islam was adopted in the adopted in the constitution constitution •• In 1979. Zia's elections. interim government was government was established with established with military support military support •• In December 2008. 16 Indian and three Bangladeshi three Bangladeshi soldiers were killed in soldiers were killed in border clashes border clashes •• In 2002. Being in exile. state of emergency was emergency was declared after declared after opposition opposition demonstrations and demonstrations and strikes strikes •• In 1996. 16 Indian and In 2001. Around 10 million 10 million Bangladeshis fled to Bangladeshis fled to India as troops from India as troops from West Pakistan were West Pakistan were defeated with Indian defeated with Indian assistance assistance •• In 1972. the Awami In 1970. He was later on assassinated later on assassinated in a military coup in the in a military coup in the same year. Martial law was imposed was imposed •• In 1977. Sheikh In 1996. the In October 2009. under Sheikh League. limited political activity was political activity was permitted. Sheikh Mujib returned. East Pakistan March. led by Khaleda Zia and the Awami League. The Bangladesh Nationalist Party. Sheikh Mujib In 1972. corruption allegations against several political leaders and government functionaries have troubled successive governments. He suspended coup. Being in Pakistan. elections were held. either side established. It was under military rule from 1975 to 1990. Ershad permitted. General Ershad assumed Ershad assumed power in an army power in an army coup. Sheikh Hasina Wajed became Hasina Wajed became prime minister prime minister •• In 2001. Martial law same year. General Zia Rahman assumed the Rahman assumed the presidency. British colonial rule over India colonial rule over India ended. A largely ended. Sheikh Mujib In 1971. parliamentary and presidential and presidential elections were held. the Awami League. East Pakistan was then renamed to was then renamed to Bangladesh. The East Pakistan. interim In May 2007. Zia's Bangladesh National Bangladesh National Party (BNP) won Party (BNP) won •• In 1982. Islam was presidency. He was of Bangladesh. state of In 1987. the government banned government banned the local branch of the the local branch of the global Islamist global Islamist organization Hizb-ut organization Hizb-ut Tahrir. Ershad became president became president •• In 1986. Awami League exile. Iajuddin In 2002. In 1991. He a five-year term. The growth in religious extremism and the deteriorating law and order situation are major sources of concern for the government. Around Bangladesh. led by Sheikh Hasina. around 350 In 2005.

The constitution of Bangladesh proclaims the president as the head of state. He is elected by the parliament for a term of five years. Sheikh Hasina was elected president of Bangladesh Awami League in 1981. the party has achieved a majority in parliament. Zillur Rahman participated in the Bengali language movement of 1952. The caretaker government is headed by the Chief Adviser. The cabinet is appointed from the major party in the parliament. Sheikh Hasina Wajed has been the president of Bangladesh since January 2009. He assumes the role of the prime minister until a regular government is formed. During the Bangladesh Liberation War. Legislature Bangladesh has a 300 member unicameral parliament called the House of Nation (Jatiyo Sangshad). who is appointed by the president. Under her leadership. The prime minister is the head of government and the cabinet and is appointed from the major party in the Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor. he was elected as a member of parliament in the 1970 national elections of Pakistan. The members of the House of Nation are elected for a term of five years through universal suffrage. Rahman actively participated in the government-in-exile. the 13th Amendment to the Constitution legalized a unique system of transfer of power. Sheikh Hasina and her party Awami League participated in the 1986 parliamentary elections held under Lieutenant-General Hossain Mohammad Ershad. Later. Her party achieved a landslide victory in 2008 elections. the f ounding father (and f irst president) of Bangladesh. whereby power is handed over to a caretaker government for an interim period of three months at the end of the tenure of the outgoing government. She served as the leader of the opposition between 1986–87. controlling 230 seats out of 299 in 2008. In 1996.Political landscape Structure and policies Key political figures • • Head of the state: President Zillur Rahman Head of the government: Prime Minister Sheikh Hasina Wajed Figure 3: Bangladesh – Head of the state and government Mohammad Zillur Rahman has been the president of Bangladesh since February 2009. is appointed by the president on the advice of the prime minister. constituting the heads of various ministries. Rahman served as a minister in the Awami League government between 1996 and 2001. Source: Datamonitor DAT AMONITOR Structure of government Bangladesh is governed under a parliamentary democracy with president as the head of the state and prime minister as the head of the government. She is the eldest of five children of Sheikh Mujibur Rahman. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 10 . as an Awami League candidate. The cabinet. although the post is largely ceremonial.

the AL secured 49% of the vote and 230 seats. Composition of government Bangladeshi parliament is dominated by two dominant parties namely AL and BNP. saw the Awami League-led coalition (Grand Alliance) emerge victorious with 230 seats out of total 200 seats in their share. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 11 . Subsequently. Rajshahi. Khulna. in October 2005. from1996 and 2001. the BNP emerged as the second largest party with 33% of the votes and 30 seats and became the opposition party. The AL has formed the government on two previous occasions. the party has formed the government for three separate terms and is currently headed by former Prime Minister Khaleda Zia. thereby becoming the ruling government. Provincial governments Bangladesh is divided in 7 divisions. Barisal. and Sylhet. The party favors pro-market economic policies and advocates a foreign policy that is aimed at promoting friendship and cooperation between Bangladesh and both Islamic and western countries. leads the party presently. Sheikh Hasina. Chittagong.Political landscape parliament. Rangpur. The party was founded in 1949 as the Awami Muslim League but was later renamed the Awami League to secularize the party. resulted in the BNP-led government drawing severe criticism for failing to curb militancy. In the 2008 parliamentary elections. Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor. allegedly by Islamic terrorist groups. the government banned a terrorist organization called the Harkatul Jehad Al Islami. A string of bomb attacks in August 2005. Dhaka. During its last term. Since its inception. In the 2008 parliamentary elections. The party has also been criticized because of growing allegations of corruption within its upper echelons as evidenced by the recent seizures of government relief materials from the private residences of several former BNP ministers. the daughter of Sheikh Mujibur Rehman. Led by the late Sheikh Mujibur Rehman. a long standing dispute with India over sharing water of the river Padma was successfully settled and a peace treaty with tribal rebels was signed. The last parliamentary elections held in December 2008. the party played a key role in the Liberation War of 1971. Bangladesh Nationalist Party (BNP) The Bangladesh Nationalist Party was founded in 1978 by General Ziaur Rahman. Structure of legislature Key political parties Awami League (AL) The Awami League is the oldest political party in Bangladesh.

Bangladesh's government is also preparing to launch a new licensing round comprising of onshore and offshore blocks during December 2010. 40 BNP. Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor. the monopoly of Bangladesh Telephone and Telegraph Board was terminated and private service providers were allowed to operate. The role of state-owned enterprises in the economy is being reduced gradually and privatization of enterprises in various sectors is being encouraged. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 12 . production sharing contracts have been signed with prominent private energy companies such as Cairn Energy and Rexwood Oakland for oil and gas exploration. 30 AL.Political landscape Figure 4: Distribution of seats by political parties in the 2008 elections of Bangladesh Others. These developments have paved the way for the planned bidding round. after lifting the ban for offshore regions in July 2006. the government has been trying to promote private investment since the late 80s. 230 Source: Datamonitor DAT AMONITOR Key economic policies Political stability has been always a central issue historically in the country. Industrial Policy 2005 aims to accept private initiatives as the main driving force of economic development. However. Areas disputed with India or Myanmar will be excluded from the licensing round. private investment has been encouraged in several sectors. Bangladesh's High Court lifted a nine-year ban on offering onshore exploration licenses in January 2010. In the same year. The Board of Investment was created in 1989 to implement the government’s investment policy and promote private participation in the industrial sector. Keeping this in mind. For instance.

Bangladesh was admitted to the United Nations in 1974 and was elected to a Security Council term in 1978-1980 and again in 2000–02. Bangladesh ranked in the 30. In September 2010. the parliament amended the constitution and introduced a provision for reserving 45 seats for women and distributing them among political parties in proportion to their numerical strength in the parliament. Bangladesh has served in the chairmanship of SAARC and has participated in a wide range of ongoing South Asian Association for Regional Cooperation (SAARC) regional activities. along with freedom of expression. $490 million plan as part of the Poverty Reduction and Growth Facility (PRGF). there was opposition from the AL. and the availability of free media. Bangladesh has received substantial economic aid from international development institutions such as the IMF and the World Bank.7 percentile. Bangladesh is at a lower rank than India and is ranked at 16. At present EU is the top export destination of Bangladesh's products (48% of the total product). Relations with the European Union and its member states remain a priority in the foreign policy. freedom of association. The AL’s stand was supported by several women’s groups who also demanded the direct election of women to fill the reserved seats. Daniel Kaufmann and Massimo Mastruzzi of the World Bank Institute and Aart Kraay of the World Bank Development Economics Research Group carried out the study. Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor. regulatory quality. government effectiveness. Political stability and absence of violence measures perceptions of the likelihood that the government will be destabilized or overthrown by unconstitutional or violent means. Bangladesh has a lower rank than its neighbor India which is at percentile rank of 58. which was followed by $536 million of interest-free loans from the World Bank. In May 2004. However.6 percentile on political stability and absence of violence in 2008. the high court in Bangladesh has directed the government to end child labor in a number of industries across the country by the end of 2011. For any country. Voice and accountability measures the extent to which a country's citizens are able to participate in selecting their government. Bangladesh ranked in the 9.8 percentile on the voice and accountability parameter in 2008. The US is an aid donor to Bangladesh and thus the government maintains close ties with the US. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 13 . political stability and absence of violence. rule of law. Bangladesh was the second largest provider of UN peacekeepers. including domestic violence and terrorism. and control of corruption as indicators for 212 countries and territories over the period 1996–2008. Until June 2008. These were aimed to support the government's economic reform program. In June 2003 the IMF approved a three year. which did not take its share of the reserved seats arguing that they did not support the indirect election or nomination of women. reduce poverty and improve the social infrastructure. Performance Governance indicators The World Bank report on governance uses voice and accountability.Political landscape Social The social policies have been historically focused on alleviation of poverty and public healthcare. Foreign and defense policies Since independence the country required a great deal of foreign assistance in the effort to keep its social fabric intact.7. a percentile rank of 0 puts it at the lowest rank and 100 corresponds to the highest rank.

after lifting the ban for offshore regions in July 2006. Bangladesh rank’s lower than India which is ranked at 46. With AL winning a landslide victory in the December. youth under 18 years of age may be banned from political activity in Bangladesh under a draft policy for children announced in September 2010 by the government. Bangladesh’s rank on this indicator is lower than that of India. the quality of policy formulation and implementation. and the courts. Bangladesh stays behind India which is at 44. Low ranking indicates inefficient implementation of policies and regulations for the private sector. It exported over $ 10 billion worth of apparel goods in 2009. including both petty and grand forms of corruption. which is ranked at the 53. as well as the appropriation of the state by elite and private interests.3 percentile on the rule of law parameter in 2008. the police. Regulatory quality measures the ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development. Furthermore. the EU and Turkey. Control of corruption measures the extent to which public power is exercised for private gain.9 percentile. Such production was particularly suited to a female workforce and thus proved to be another avenue for providing employment to women and thus empowering them. Rule of law measures the extent to which agents have confidence in and abide by the rules of society. as well as the likelihood of crime and violence. Bangladesh was the fourth largest exporter of apparel after China. Bangladesh ranked in the 27. and in particular the quality of contract enforcement. economic. One of the important initiatives taken by the government has been prioritizing industrial development that can be profitably marketed globally. Bangladesh's High Court lifted a nine-year ban on offering onshore exploration licenses in January 2010. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 14 . As of 2009.7 percentile on government effectiveness in 2008. Bangladesh ranked in the 20. Government effectiveness measures the quality of public services. 2008 elections. Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor. the democratic constitution was reinstated in the country. These developments have paved the way for the planned bidding round. the quality of the civil services and the degree of its independence from political pressures.5.6 percentile on the control of corruption parameter as of 2008. The political advances in Bangladesh can be described as commendable because in an era salient with the menace of Islamism and terrorism. The country is ranked in the 10.8 percentile on regulatory quality in 2008. In an act to decrease social violence and youth participation into politics.6 percentile. Areas disputed with India or Myanmar will be excluded from the licensing round.0 percentile. Outlook The key to country’s development and progress has been combination of political. Bangladeshi government has most wisely and foresightedly chosen to establish itself as a secular democracy. Bangladesh rank is lower than India which is ranked at 56. It was the apparel or garment industry that was chosen for stimulation and expansion. social and cultural changes that complement one another.Economic landscape Bangladesh ranked in the 22. and the credibility of the government's commitment to such policies.

14% in 2008 to 5.7% respectively.4% in 2001. • Bangladesh has experienced steady economic growth since 1991. Bangladesh remains a poor country in absolute terms.6% in 2009. The subsequent decline in jute prices and exports and negligence by the central government in West Pakistan resulted in the region becoming poorer. The industrial sector is dominated by export-oriented garment manufacturing. However. has reduced the role of the state-owned enterprises to promote economic growth. The economic growth averaged to 5. • The global economic slowdown in 2001 and the concomitant fall in exports and domestic investment resulted in growth declining from 5. Economic stagnation coupled with political discrimination triggered popular dissatisfaction leading to the Liberation War in 1971 and the establishment of Bangladesh as a sovereign nation. The jute industry. registering impressive growth rates of 6.7% during 2000–07.9% in the 1990s on the back of improvements in agricultural production and export-oriented garment manufacturing. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 15 .3% in 2003 and 5. Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor. However. which employs the highest proportion of the labor force but contributes a lower amount to GDP than either industry or services. Evolution The following are some of the key events in the economic history of Bangladesh: • During the partition of India in 1947.7% during 2000–07. Bangladesh’s traditional stronghold. the current account balance has shown a surplus due to higher remittances by Bangladeshi nationals working abroad.4% in 2004 on the back of strong agricultural production and a recovery in export-oriented manufacturing. Although foreign direct investment into Bangladesh has increased since 2003. Real GDP expanded by an annual average of 4. The economy is based on agriculture. while manufacturing investment and production maintained their up trends. it still remains quite low. bolstered by strong remittance inflows. Despite this growth.6% in 2009. Bangladesh became a part of Pakistan and was a major producer of jute. • The economy kept up its strong showing in 2005 and 2006 with growth of 5. The sector is also characterized by underemployment and is vulnerable to heavy rains and floods.3% in 2000 to 4. The GDP growth rate fell from 6. the government has gradually allowed private investment in a number of sectors. and in recent years.14% in 2008 to 5. driving industrial growth till the 1960s.5% and 5. with a per capita GDP of just $453 and 45% of the population living below the poverty line. • The economic growth averaged to 5. the economy rebounded subsequently. • Since then.Economic landscape ECONOMIC LANDSCAPE Summary Bangladesh is a poor country with a low per capita GDP although it has experienced steady economic growth in the last few years. The GDP growth rate fell from 6. Higher crude oil prices have led to a widening trade deficit. corruption and infrastructural deficiencies have weakened the country’s business environment. is an important foreign exchange earner. Political instability. Private consumption was the main driver of growth.

The bank is headed by the Board of Directors. No. 1971. Financial authorities/regulators Bangladesh Bank The Bangladesh Bank was established in Dhaka as a body corporate vide the Bangladesh Bank Order.00 0. which consists of the governor. who is also the chairman.Economic landscape Figure 5: Evolution of GDP growth in Bangladesh.00 6.00 Growth rate (%) 4. 1972 (P. 127 of 1972) with effect from December 16. The bank is the chief authority to regulate country’s monetary and financial system.00 1. two Deputy Governors and nine non-executive directors.00 1991 1993 1995 1997 1999 2001 Year Source: Datamonitor DAT AMONITOR 2003 2005 2007 2008 2009 Structure and policies Financial system Overview The Bangladeshi financial system is totally controlled by Bangladesh Bank. The Board of Directors are the Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor. 1991–2009 7. The governor and the three deputy governors are appointed for a term of four years and are eligible for re-appointment.O.00 5.00 2. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 16 .00 3.

however growth rate came down marginally to 5. As of end of December 2009. Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor. The Bangladeshi economy is expected to grow at around 6. the international financial turbulence did not affect the country. according to the government. Bangladesh's High Court lifted a nine-year ban on offering onshore exploration licenses in January 2010.8%). around 5.7% in 2010–11. Bangladesh's government is also preparing to launch a new licensing round comprising of onshore and offshore blocks by the end of December 2010. 903. The government favors an open market. which helped increase private sector growth and investment. regulation and prudential supervision of credit institutions in the country. free repatriation of earned income for foreign investors.6% compared to 6.e. Dhaka stock exchange (DSE) The DSE is the chief stock exchange of Bangladesh.. Furthermore. The stock exchange was established in 1954 as The East Pakistan Stock Exchange Association Ltd. Performance GDP and growth rate Overview Economic growth has remained strong robust during 2000–08 (i.Economic landscape decision-making body of the bank. Its main role is to offer a marketplace for securities transactions. after lifting the ban for offshore regions in July 2006.2 billion ($26. the government has made a regulatory framework that put emphasis on privatization. In 2009. The bank is also responsible for the operation of payment systems of the country. profits and dividends and reliance on market forces in allocating resources. removal of exchange controls.9 billion). In August 1998 automated on-line screen-based trading began and in January 2004 the Central Depository System (CDS) for electronic settlement of share trading was introduced in the DSE. Trading was suspended during the liberation war but resumed in 1976 with a change in the economic policy of the government.. Key policies In the financial sector. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 17 .1% recorded in 2008. which sets the monetary and exchange rate policies. the measures relating to authorization. It is also responsible to ensure fair prices that suitably reflect supply-demand. there were 415 listed companies and the total market capitalization was around BDT1. later on it became Dhaka Stock Exchange in 1964. The Dhaka Stock Exchange became a full Depository Participant (DP) of CDBL to facilitate the trading of its non-DP members. The government also introduced banking reforms during 2007–08.

0 3. Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor.0 30.0 1.6% and agricultural sector contributing 18.0 $ billion 40.0 10.0 7.0 70.0 5. contributing to 52.Economic landscape Figure 6: GDP and GDP growth rate of Bangladesh (constant prices).0 6.0 Real GDP growth rate DAT AMONITOR GDP composition by sector Service sector dominates the economy.0 20.0 0.0 Growth rate (%) 4.0 60.8% to GDP.6%. 2001–08 80. followed by industrial sector contributing 28.0 50. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 18 .0 0.0 2001 2002 2003 2004 2005 2006 2007 2008 Year GDP ($billion) Source: Datamonitor 2.

5% in 2006 as against 2.3 million Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor.6% Services.4 metric tones/hectare over 2000-05 while that of wheat has declined from 2. Over the past several years. food grain yield. 18. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 19 . In addition. the number of microfinance borrowers stood at 24. the agricultural sector has grown steadily. especially that of rice and wheat.Economic landscape Figure 7: Sector specific GDP in Bangladesh Agriculture. The agricultural sector grew by 4. provision of formal banking facilities for the rural poor remains a serious challenge although Grameen Bank and other microfinance institutions have been providing financial services to those falling outside the banking system. 28. fertilizers. improvements in irrigation facilities and development assistance from international development organizations such as the IMF and World Bank. Bangladesh has managed to transform from a food deficient nation to a food surplus one.2 metric tones/hectare to 1. The average yield of rice has remained constant at about 2.1% means that the agricultural sector is facing a serious challenge in absorbing additional manpower while maintaining productivity. High population growth of 2. As of December 2005.6% Source: Datamonitor DAT AMONITOR Agriculture The economy is predominantly agriculture-oriented with the sector employing about 63% of the labor force although it contributes only 18. has stagnated over the last few years due to massive floods and rising cost of inputs.6% of GDP. helped by good quality seeds.2% in 2005. However. 52.8% Industry.9 metric tones/hectare over the same period.

Economic landscape with 90% of them being female. chemicals.474.3%) and the transport. the current-account surplus ballooned to an estimated 2. Germany and the UK and are other important markets accounting for Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor.4 billion (13. foodstuffs. iron and steel.6% in 2006 as against 8. However. the current account might experience a slight deterioration. Machinery and equipment.5% of GDP in 2009 and for the financial year 2010. The 2010–11 budget outlay is BDT1. weighted average tariff rate in Bangladesh was 11% in 2007. In FY 2009. The agricultural output increased from BDT595 billion ($9 billion) in 2002 to over BDT1.0% of GDP as against 3.2%) sectors. which cripples the government’s ability to fund basic infrastructural development. as remittance inflows are likely to moderate throughout the second half of FY 2010. Current account Supported by the slump in the country's imports amid suppressed domestic demand and lower international commodity prices.2% in 2008 from around 22% in 2007. The average customs duty on agricultural products (19. accounting for 20. The jute industry. and as export recovery is projected to be sluggish.3% of GDP in 2008. Fiscal situation Fiscal deficit/surplus situation Bangladesh’s public finance is characterized by a narrow tax base and low revenue collection. The value of total merchandise imports was $20. In 2008. the value of Bangladesh’s total merchandise exports amounted to $15.7%).24% of exports. Total public expenditure was $7. The budget deficit in 2006 (ended June 2006) was 3.14 trillion in the 2009–10 fiscal year. the deficit is expected to rise to 5% of GDP. The industrial sector growth rate came down to 15.777 bales. The growth in the sector was driven by a better performance of wholesale & retail trade (growth of 7.2 billion in FY 2009. frozen fish and seafood.9 billion (13. storage & communication (growth of 8.32 trillion ($19 billion) compared with BDT1. The budget deficit was around 4.9 billion.6%) remains higher than for industrial goods (14.5% in 2006. Bangladesh’s traditional stronghold. petroleum products. Garments. synthetic fibers are posing a major challenge to the industry in the world market.4% growth registered in 2005. Jute was the most important export earner and as of September 2010 jute production amounted to 1. which was slightly higher than the 6.3% of GDP) in 2006 compared to $7. lower than $21. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 20 .5 billion in FY 2008. The sector is dominated by the laborintensive garment industry which contributes about 75% of total export earnings and accounts for about 45% of total industrial employment.7% of GDP in FY 2009 from 1.062 billion ($22 billion) in 2008. However.3% a year earlier. Industry The industrial sector grew by a robust 9. textiles. The US is Bangladesh’s chief export partner.4 billion over FY 2008. jute and leather are the most important exports.5% a year earlier. the service sector grew by 14.3% of GDP remained low. remains a major foreign exchange earner.3%. Services The services sector expanded by 6. and cement are some of the important imports. Total revenue collection at 10. up from $15.8% of GDP) a year earlier. Foreign trade According to Heritage Foundation’s Index of Economic Freedom 2010.

External debt During year ended December 2009. Monetary situation Overview The Bangladesh Bank uses monetary policy to maintain price stability as defined in the monetary policy. prices levels shot up again to 6. The bank adopts a direct inflation targeting strategy to counter the effects of inflation in the country. Around 69% was government debt and rest was by private and public sector debt.3%.2 billion from around $22.5% transmission and distribution loss in 2004. In 2009. $460 million in 2004 and $690 million in 2005.5% in 2006. Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor.08 billion and decreased to around $716 million in 2009. As of June 2010. the external debt stock increased to $23.53% in June 2006. on the back of the global economic recovery and the government’s privatization drive.75% in February 2006 and then increased to 15.16% is the highest on the import side. International investment position Foreign investments Foreign direct investment (FDI) fell sharply from $280 million in 2000 to $79 million in 2001 and $52 million in 2002 in the aftermath of the global economic slowdown. inflation decreased to around 9% and further declined to 8. This was mainly driven by fluctuation in food prices.4% of exports.9%. Data from the Policy Analysis Unit of Bangladesh Bank shows that food inflation fell sharply from 21.75% and 8. In 2007. The latest Doing Business Survey of the World Bank places Bangladesh in the 119th position out of 183 countries in 2010. In 2008. the inflation again rose to 10%. and there was a massive 24. It subsequently rebounded to $268 million in 2003. Singapore and Japan are the other major source markets contributing 12.83 billion recorded in 2008. Inflation fell to 5. among the lowest in the world.88% in November 2004 to -6.5% and 4.Economic landscape 12. 7. The fluctuation in food prices depicts the seasonality of food production.3% in 2004. respectively. Key monetary indicators CPI inflation Inflation has fluctuated in the period over 2002-06. lack of adequate infrastructure is a serious constraint to economic growth. However. corruption and frequent natural disasters. For instance. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 21 . the FDI flow increased to $1.9% in 2008. which is itself a function of prevailing weather conditions and input prices. per capita electricity generation was just 155 KWh.8% in 2002 to 18. which dampened food prices.9% in 2005 due to higher agricultural production. Bangladesh remains a poor business destination with pervasive political violence. India. It rose sharply from 4. China’s share at 16. However. In addition. the inflation rate decreased to 7. the continued uptrend in prices of crude oil (a key import item) and a rapid growth in money supply.6% of the imports respectively. due to increased commodity prices.

Bangladesh's scorecard with a 'BB. the country.7% in 2002 to 36% in 2008.Social landscape Banking sector The financial system of Bangladesh consists of Bangladesh Bank (BB) as the central bank. This is the first-ever rating given by S&P for Bangladesh. mostly because of its low financial connectivity to the world markets. though below India.1% in 2008 to around 5. Furthermore. during 2010–11. This first ever rating of the country is expected to boost confidence for the international investors and creditors on country's real potential as a business partner and an investment destination. According to a Bangladesh Country Strategy Paper of the European Commission. this new agreement is expected to stimulate economic activity considerably in the country.for a long term' is placed above Sri Lanka and Pakistan.4 billion from BDT2.1% in 2009. Bangladesh has signed a landmark 35-year power transmission deal with India in July 2010.6% in 2009. However.561. The percentage of women making up the labor force declined slightly from 37. 9 foreign banks and 29 non-bank financial institutions. 148. the country weathered out the global economic slowdown. Total deposits of the banks in 2008 rose to BDT 2. the country has seen a deceleration in its GDP growth. As per the deal. Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor.000 to 1. India will supply 250 megawatt electricity to the energy starved nation from the latter part of 2012 onwards. The banking system is dominated by the four state owned commercial banks. only 40% of Bangladesh population has access to electricity with the country facing a deficit of 1.9 billion in 2008. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 22 . five government owned specialized banks. The number of banks remained unchanged at 48 in 2008.3% in 2002 to 5. 30 domestic private banks. In a bid to meet its energy needs. four state owned commercial banks (SCB). which employs 63% of the labor force but contributes just 21% of GDP.However. Underemployment remains a major problem in the agricultural sector. is expected to post an economic growth rate of over 6%. 108. which fell from around 6. The number of bank branches increased from 6717 to 6886.2%. These banks had a total number of 6886 branches as of December 2008. Loans and advances amounted to BDT2. As of June 2010. Employment The unemployment rate has increased from 4. landless peasants account for about half the rural labor force.9 billion in 2007 showing an overall increase by 19.500 mw. Outlook During 2008–09. which together control more than 30% of deposits and operates 3383 branches (50% of the total). Bangladesh’s potential as a reliable destination for putting in money and investing by international creditors and investors has been positively rated by the US-based credit rating agency Standard and Poor's (S&P) in April 2010. The gradual restructuring and privatization of some state-owned enterprises has resulted in job losses in the industrial sector.

68 per 1. implementation. Bangladesh’s population is young. in September 2010. as of July 2010.9 years and with persons aged 65 and above comprising just 4% of the population.5% and 9. Muslims and Hindus constitute 89. having a median age of just 22. The Rural Development and Cooperatives Division of the government is responsible for planning. Child labor has been historically a problem in country however. respectively. the high court in Bangladesh has directed the government to end child labor in a number of industries across the country by the end of 2011. The sex ratio is even. Evolution Bangladesh has not had efficient administration for many decades until 1990s. monitoring and evaluation of rural development programs. The population density of the country is 875 persons per square kilometer. Poverty alleviation has been a major goal of the successive governments. The population is ethnically homogeneous with 98% of it being Bengali.000 sq.Social landscape SOCIAL LANDSCAPE Summary Bangladesh has a total population of 156 million and spans a total area of 144. the World Health Organization (WHO) and the United Nations Children's Fund (UNICEF) have provided financial and technical assistance for the eradication of diseases and the enhancement of health standards. km. thrust has been being given on socio-economic development of the underprivileged groups.04 males per female. About 70% of the population lives in rural areas.6% of the population. The government adopted a number of policies to improve health sector during 1980s. with 1. was 156 million. Structure and policies Demographic composition Age and gender-wise composition The registered population of Bangladesh.000 population. Since the end of war in 1971. Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 23 . The birth rate in Bangladesh was as high as 28.

2 4.2 9.7 4.3 7. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 24 .2 2.4 1.0 0.6 0.6 7.9% follows other religions.4 6.1 9.6 4.5 0.7 8.3 5.6% constitute Hindus and 0.6 3.9 0.5 1.3 5.8 1.6 5.3 DAT AMONITOR Source: Datamonitor Religious composition Around 89.2 8.4 0. 9.6 5.4 9.1 2.8 3. Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor.7 5.5% of the population is Muslims.1 8.4 1.0 3.9 1.8 6.Social landscape Table 2: Mid-year population by age (millions) in 2009 Mid-year population by age Female Male 0–4 5–9 10–14 15–19 20–24 25–29 30–34 35–39 40–44 45–49 50–54 55–59 60–64 65–69 70–74 75–79 80+ 9.

This system is supervised by the madrasa Board. In addition. There are 11 government universities and approximately 20 private universities in Bangladesh. The government partially subsidizes the funding of many private schools. The University Grants Commission is the apex body of all affiliated universities.000 village health volunteers. The madrasa system emphasizes Arabic medium Islam-based education. who would provide basic medical services. A joint action plan was framed which involved 60. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 25 . expenditure Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor. secondary and higher secondary levels. especially to the poor and vulnerable pockets of the population. Though this policy.Social landscape Figure 8: Major religions in Bangladesh Others 1% Hindus 10% Muslims 89% Source: Datamonitor DAT AMONITOR Education System of education The education system in Bangladesh consists of several public and private schools at the primary. the government seeks to encourage family and community action in healthcare delivery to provide health coverage and accessibility. Healthcare Healthcare services and social welfare The Health and Population Sector Strategy introduced in 1998 forms the basis for national health policy in Bangladesh.

25 years and infant mortality rate has fallen to 59 deaths per 1000 live births in 2010 as compared to 91 deaths per 1000 live births in 1991. gross primary school enrollment was 101% but only 65.33 in 2005. Ministry of Health and Family Welfare (MOHFW) is the regulatory authority. favorable government initiatives and community involvement have resulted in several improvements in the healthcare sector.9% for males and 31. Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor.40 with widening wage income gaps. On the Gini coefficient.1% for the total population and 53. There is a shortage of qualified healthcare professionals.8% for females. Their salary payment is uncertain and is subject to the availability of the government’s development fund. reflective of the gender imbalance that exists in Bangladesh.and out-patient services and care facilities. However.Social landscape on healthcare laid special emphasis on research and population control. In spite of several years of family planning initiatives. about 95% of primary health and family planning services are provided by the government sector and are free of cost.8% of GDP and private expenditure 2.9%. several deficiencies in the healthcare system remain. the population growth rate and the total fertility rate remain high at 1. Most commonly. especially in rural areas. Performance Healthcare Healthcare spending accounted for around 3% of GDP in Bangladesh during 2000–08. as of 2008. which works as a health-care hub. which ranges from 0 (perfect equality) to 1 (perfect inequality). The literacy rate in 2003 was just 43. which amounted to around over 12% of total government expenditure. Education The education expenditure in the country has been low at around 2% of GDP during the period 2000–08. rising unemployment and increasing population. they have inpatient care support with 31 beds. According to UNICEF. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 26 . Presently. while some UHC have over 50 beds. public expenditure is equivalent to 1.2% and 2. Bangladesh was placed at 0. However. Out of the total spending on healthcare. Life expectancy has increased to 60. Over the past several years. it is expected that the Gini coefficient will increase in the coming years to more than 0.65% children/woman respectively. Income distribution Standard of living Bangladesh has not been successful in limiting disparities of income and wealth and restricting poverty in the country. The primary care in the public sector is organized around the Upazila Health Complex (UHC) at sub-district level.1% of all enrolled candidates completed primary school. These units have both in.

children are involved in 430 different types of works in Bangladesh and among them 67 types are identified as the most hazardous. In March 2001. thrust is being given on socio-economic development of the underprivileged groups. Since poverty alleviation is a major goal of the government. the high court in Bangladesh has directed the government to end child labor in a number of industries across the country by the end of 2011. which has been a problem historically in the country. and these will be banned with immediate effect from September 2010. As a part of the integrated approach. The consistent effort put in by the government in all the social spheres is expected to bring in some improvements in the lives of Bangladeshi citizens. the Ministry for Food and Disaster Management has stepped up efforts to distribute 26 lakh tones more food grains under the social safety network in the country during for the rest of 2010. Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor. In September 2010. The main emphasis of government has been on adoption of integrated and comprehensive approach taking the family as the basic unit for social services programs with emphasis on family and group development rather that individual development. According to Bangladesh Shishu Adhikar Forum. child labor has been identified as the main focus since 2008. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 27 . Bangladesh ratified an International Labour Organisation (ILO) convention related to the prohibition of and immediate action for the elimination of the worst forms of child labor.Social landscape Outlook Despite many internal political and economic pressures. the government has been able to provide funding to the healthcare sector with 3% of GDP and between 1%–2% of GDP to education. Furthermore.

it still remains very low compared Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor. broadband and internet The telecommunication sector is underdeveloped in Bangladesh. Indian subcontinent had only a few centers where scientific research was carried out. In 1935. the country has made considerable efforts to bring in technology transfer through universities and exclusive R&D centers in to the country. the Pakistan Academy of Sciences was established in 1953. Bangladesh is dominated by two research institutes both situated in the country’s capital Dhaka: the University of Dhaka (the capital’s main university) and the International Centre for Diarrheal Disease Research (ICDDR). the National Institute of Sciences of India was established and in 1945 the Government of India declared this institute as the premier scientific society of the country. however during 2007–09 there have been dramatic changes. After partition of the subcontinent. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 28 . Evolution During the British rule. Performance Opportunity sectors Telecommunications. reviews the activities of different institutions and provides direction towards R&D activities. A National Science and Technology Policy has been formulated and adopted by the government. The National Council for Science and Technology (NCST) determines science and technology policies. Development plans of Bangladesh have emphasized science and technological research to develop technologies through adoption of imported technology as well as development of indigenous technologies. The need for faster technological development is increasingly felt in Bangladesh. proper planning of effective transfer through acquisition. Although mobile penetration has increased in the last few years. the government formed the Bangladesh Academy of Sciences in 1973. The country is also being helped by the World Bank to develop telecommunication infrastructure. After liberation of Bangladesh.Technological landscape TECHNOLOGICAL LANDSCAPE Summary The science and technology infrastructure in Bangladesh is in a very premature stage with government’s focus more on to economic and social development. helped largely by low penetration levels. As the country is heavily dependent on imported technologies. Currently. However. assimilation and adoption has been government focus. Research and development The science and technology matters in the country are monitored and regulated by Ministry of Science and Information & Communication Technology. Bangladesh Telecommunication Regulatory Commission is the regulatory body for the sector. Structure and policies Intellectual property Bangladesh Intellectual Property Law Office is the regulatory authority and refers patent applications there for preliminary and substantive searches and registration. the country’s R&D focus is mainly into developing infrastructural technologies and technologies useful to social development.

Perceiving the holistic concept. The number of mobile phone subscribers in Bangladesh as of 2009 was 45. A comprehensible shift is prominent. President Zillur Rahman ordered the government on expanding the education of science and technology for transforming the country's huge population into human resources. R&D The share of the country’s budget allocated to science. The number of fixed line telephones was around 1. It also proposed for inclusion of a provision for checking extortion through telephone and for maintaining country's integrity and solidarity. The Bangladesh Telecommunications (Amendment) Bill 2010 was passed in July 2010.000 in 2000. however its coverage is far from adequate. Voice over Internet Protocol (VoIP). a technology that allows telecom companies to route large volumes of calls very cheaply anywhere in the world by buying space on broadband computer servers.APPENDIX to other countries with similar profiles.2 million. technology and innovation has been historically low in Bangladesh.3 million as of 2009. He emphasized on making the country's education curriculum. In March 2010. The number of internet users in Bangladesh as of March 2009 is over 600. The number of fixed line telephones is also increasing steadily over the past few years. This brief is a licensed product and is not to be photocopied Published 10/2010 Page 29 . Prime Minister Sheikh Hasina has declared Vision-2021 as the guiding policy initiative aiming to build IT infrastructure and finish it by country's golden jubilee of independence in 2021. away from agricultural-based industries and traditional manufacturing sectors to more R&D intensive sectors. The annual average growth rate for fixed-line telephones over the period 2002–08 was 13%. . aiming at bringing technological improvement in telecom sector and implementing the government's Digital Bangladesh program. is illegal in Bangladesh.000 compared to 100. including the study of engineering. Bangladesh: Country Analysis Report–In-depth PEST Insights © Datamonitor. Outlook The Bangladeshi economy has increasingly moved towards a knowledge-based economy.6% and 1% of the GDP since 1990. with a view to keeping pace with the global standard of education. The mobile penetration rate showed a tremendous growth of around 217% in 2005 but growth decelerated to 25% in 2008. It has hovered between 0.

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