Independent University Bangladesh (IUB)

MBA: 507 Business Communication: Autumn 2022 (S-2)

Assignment

Submitted By:
Name: Shaon Chandra Saha
ID: 2231258

Submitted To:
Faizul Latif Chowdhury

Date: 23 November 2022

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 Topic: High cost of doing Business in Bangladesh

Abstract
This report has been prepared about cost of doing business in Bangladesh. This
report provides so much information & data about business in Bangladesh and how
costly it is. This report focuses on the major challenges of doing business in
Bangladesh. Given idea of business opportunities & ease of doing business in
Bangladesh, political system of Bangladesh, and the benefits of starting a business
in Bangladesh. In this report, we get an idea about the cost of registering a company
in Bangladesh. This report identifies sectors that are prohibited from private and
foreign investment and government assistance for foreign-owned businesses.

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 Table of Content

Serial No. Topic Name Page No.

Abstract 02
Chapter-1 Introduction 04
Chapter-2 Business environment in Bangladesh 04
Major Challenges of Doing Business in
2.1 Bangladesh 4-6
Business Opportunities & Ease of Doing
2.2 Business in Bangladesh 6-7
2.3 Political System 7
2.4 Benefits of Starting a Business in Bangladesh 8
Requirements for Starting a Business in
2.5 Bangladesh 8
Costs to Incorporate a Company in
2.6 Bangladesh 9
Restrictions of Private sector & Foreign
2.7 Investors for Doing Business 9
Government Assistance for Foreign-owned
2.8 Businesses 9
Chapter-3 Findings of this report 10
Conclusion 10-11
List of References 11

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1. Introduction:

The cost of doing business is the highest in South Asia. Bangladesh is an emerging
economy in South Asia. Today, Bangladesh has become one of the attractive
destinations for foreign investors. Due to its cost-competitive business and low labor
cost, foreign companies eagerly expand their businesses in Bangladesh. The
geographic location of Bangladesh is ideal for global trade. The international air and
maritime connections are quite easily accessible from there. Bangladesh is blessed
with natural gas, water, and productive soil.

This report consists of several issues regarding the business environment in

Bangladesh. This report shows the major challenges of doing business in
Bangladesh, business opportunities & ease of doing business in Bangladesh, political
systems, the benefits of starting a business in Bangladesh, requirements for starting
a business in Bangladesh, costs to incorporate a company in Bangladesh, restrictions
of private sector & foreign investors for doing business and government assistance
for foreign-owned businesses.

2. Business Environment in Bangladesh:

2.1 Major Challenges of Doing Business in Bangladesh: It is no secret that starting

and maintaining a business in Bangladesh is a very challenging task. In fact,
according to the World Bank Group's doing Business 2019 report, Bangladesh ranks
176 globally in terms of ease of doing business. Here are some challenges described
below:

I. Short-termism mentality among vendors: Building strong relationships with

vendors is difficult when one has such a short-term mindset. The issue is so

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 serious that I think we are not the only company in this nation considering
backward supply chain integration as a long-term solution.

II. Unskilled workforce: A company’s greatest strength is its workforce. This is

why a skilled workforce is an asset for a company. In Bangladesh, most
workers’ or laborer’s skills are not up to the mark. Employees with 3-4 years
of experience in the corporate world will struggle with rudimentary Excel
tasks, Microsoft word, PowerPoint, SPSS and English language.

III. Payment delays from corporate clients: When a business is dealing with a
corporate client, especially a large one, it is not unusual even in other countries
for payments to take time to be cleared. However, in Bangladesh, most
corporate clients have taken the art of delaying vendor payments. This is one
of the big problems in Bangladesh.

IV. Corruption: While corruption is pervasive in Bangladesh, it makes life

difficult for business owners. Even in some well-known and reputable
multinational corporations, winning contracts requires rubbing elbows with
the procurement department. Corruption is not just a problem in the b2b scene.
Even in the b2c markets, corrupt market players can make it extremely
difficult for honest businesses to thrive.

V. Immature consumer market: Bangladesh is the eighth most populous country

in the world with 168 million people. So, it stands to reason that a market this
size presents a very lucrative business opportunity for most entrepreneurs.
However, a large market does not necessarily mean a serviceable market.
Your consumers should also be able to afford your product. Most of our

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 population is too poor to afford anything other than necessities. More than
20% of the population is still living in poverty.

2.2 Business Opportunities & Ease of Doing Business in Bangladesh: The

geographic location of Bangladesh is ideal for global trade. It has very convenient
access to international air and sea routes. Bangladesh is blessed with abundant
natural gas, water, and fertile soil. Some potential business opportunities to start a
business in Bangladesh are given below:

• Electronics
• Foreign foods
• Garment and textiles
• ICT and business services
• Agribusiness
• Ceramics
• Leather goods

Bangladesh has been ranked 176th out of 190 economies in the Doing Business 2019
report. “Ease of Doing Business” score has improved slightly from 41.06 to 41.97
in 2019. A comparative table is given below:

Category 2018 2019

Overall 177 176

Starting a business 131 138

Dealing with construction permits 130 138

Getting electricity 185 179

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 Registering property 185 183

Getting credit 159 161

Protecting minority investors 76 89

Paying taxes 152 151

Trading across borders 173 176

Enforcing contracts 189 189

Resolving insolvency 152 153

2.3 Political System: Bangladesh is a moderate, democratic and ethnically

homogeneous country. It is a constitutional republic with a multi-party
parliamentary democracy. The government of Bangladesh has initiated various
policy initiatives to promote socio-economic development in Bangladesh. The Key
aims of the country’s industrial policy are described below:

• To expand the production base of the economy by accelerating the level of

industrial investment.
• To promote the private sector for the growth of industrial production and
investment.
• To increase domestic investment resources, acquire advancing technology,
and gain access to export markets by attracting foreign direct investment into
industries focused on both home and export markets.
• To coordinate with trade and fiscal policies.

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2.4 Benefits of Starting a Business in Bangladesh: Bangladesh has become more and
more appealing, particularly to international investors. The advantages of
establishing a business in Bangladesh are numerous. Low labor expenses are one of
the major advantages. Additional advantages include the following:

• Rapidly growing economy

• A strategic location
• Availability of young and skilled workforce
• Profitable investment opportunities for foreigners
• Multiple trade agreements

2.5 Requirements for Starting a Business in Bangladesh: If a company wants to do

business in Bangladesh, the following list contains the legal requirements for
company registration in Bangladesh:

• Approval of the RJSC

• A bank account in Bangladesh
• Trade license issued by the local authority
• Business Identification Number and Tax Identification Number
• Rent an office in a non-residential location
• Prepare a blueprint and the map of business for factory setup permission
• A copy of the Import or Export license
• Fire certificate for factory setup or corporate office
• Get approval from the respective authority for telecommunication business
approval from BTCL
• Tax Identification Number (TIN)
• Environmental Clearance Certificate (if required)
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2.6 Costs to Incorporate a Company in Bangladesh: The cost of registering a
company in Bangladesh is $3990 a year approximately. This price includes costs for
things like drafting legal documents, registering the business, establishing the
company's legal address, and paying the necessary taxes and fees.

2.7 Restrictions of Private sector & Foreign Investors for Doing Business: Different
business companies can be established, owned, and operated by foreign investors in
Bangladesh. Some sectors, nevertheless, are expressly off-limits to government
investment. Private sector & foreign investments are prohibited for certain sectors
including:

• Arms and ammunition and other defense equipment and machinery

• Forest plantation & mechanized extraction
• Production of nuclear energy
• Security printing
• Minting.

2.8 Government Assistance for Foreign-owned Businesses: For independent power

plants starting their production before 31 December 2022, a tax exemption on
income tax is granted for 15 years. Again, for independent power plants (IPPs)
commencing operations post-1 January 2023, there are some benefits:

• 100% tax exemption in the first five years

• 50% exemption in the next three years
• 25% exemption in the next two years

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3. Findings of this report:

❖ There are so many challenges that exist for private & foreign investors in
starting and maintaining a business in Bangladesh, Like- Short-termism
mentality among vendors, Unskilled workforce, Payment issues, Corruption
etc.
❖ However, the geographic location of Bangladesh is ideal for global trade. It
has very convenient access to international air and sea routes. Bangladesh is
blessed with abundant natural gas, water, and fertile soil.
❖ Bangladesh has been ranked 176th out of 190 economies in the Doing
Business 2019 report for “Ease of Doing Business”.
❖ There are so many advantages to doing business in Bangladesh. Such as Low
labor costs, a rapidly growing economy, strategic location etc.
❖ Needs lots of legal requirements for company registration in Bangladesh.
❖ In this report, we get an idea about the cost of registering a company in
Bangladesh.
❖ Arms and ammunition and other defense equipment and machinery, Forest
plantation & mechanized extraction, Production of nuclear energy, Security
printing. These sectors are prohibited from private and foreign investment and
government assistance for foreign-owned businesses.

Conclusion: It is no secret that launching and running a business in Bangladesh is

a very challenging task but business environment in Bangladesh is being improved.
Bangladesh has limited mineral resources and heavily relies on its land and labor to
drive its economic growth. I think doing business in Bangladesh is not an easy
matter, there are lots of requirements and restrictions also legal issues available here

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though the geographic location of Bangladesh is ideal for global trade. It has very
convenient access to international air and sea routes. Lastly, I can say that there are
lots of opportunities available here along with so many risks and it’s costly.

List of References:

1. Bangladesh Moves Up In Doing Business Rankings – Mahbub & Company

(2022). Available at: https://mahbub-law.com/bangladesh-moves-up-in-
doing-business-rankings/ (Accessed: 16 November 2022).
2. (2022) Uhy.com. Available at: https://www.uhy.com/wp-
content/uploads/Doing-Business-in-Bangladesh.pdf (Accessed: 20
November 2022).
3. https://www.usemultiplier.com/bangladesh/company-registration#section-05
4. 5 Major Challenges of Doing Business in Bangladesh (2022). Available at:
https://www.linkedin.com/pulse/5-major-challenges-doing-business-
bangladesh-muhammed-asif-khan/ (Accessed: 16 November 2022).
5. (2022) Doulah.net. Available at:
https://doulah.net/pdf/doing_busines_in_bangladesh.pdf (Accessed: 22
November 2022).

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