Internship Report

INTERNSHIP REPORT
ON
CHALLENGES AND OPPORTUNITIES OF FOREIGN EXCHANGE OPERATIONS IN
BANGLADESH
i
Internship Report
On
Challenges And Opportunities Of Foreign Exchange Operations In
Bangladesh
Submitted To:
Ashutosh Roy
Assistant Professor
Department of Business Administration
Submitted By:
Hridoy Saha
ID No: 18100078
Batch: 12th
Date of Submission:23 January 2022
Ranada Prasad Shaha University
ii
Letter of Transmittal
23January 2022
Ashutosh Roy
Assistant Professor
Subject: Submission of Internship Report on “Challenges And Opportunities Of Foreign
Exchange Operations In Bangladesh”
Sir;
I have the pleasure to submit an Internship Report after a successful three-month Internship
attachment at SocialIslamic Bank Limited. The Internship Report concentrates on the
“Challenges And Opportunities Of Foreign Exchange Operations In Bangladesh”.
I have concentrated my best effort to achieve the objectives of the report and hope that my
endeavor will serve the purpose. The practical knowledge and experience gathered during the
report preparation will immeasurably help in my future professional life. I will be obliged if you
kindly approve this endeavor.
Thanking You
Hridoy Saha
ID: 18100078
Batch: 12th
iii
Acknowledgement
First and foremost, I would like to express my thanks and respect to Almighty ALLAH who has
given me the strength to complete the internship program successfully. I do thank for the
blessings given by Almighty ALLAH to my daily life, good health, healthy mind and good ideas.
It is indeed a great pleasure and honor on my side to have the opportunity to submit this report
after three months of practical orientation on Social Islami Bank Limited. This internship report
is considered as an honest effort to develop my practical and personal knowledge, which adds to
the theoretical past of my study. The people without whom I could never been able to submit my
report is the following mentioned irrespective of any importance in order.
At first, I would like to express my profound gratitude and deep regards to our honorable
Ashutosh Roy, Assistant Professor, Department of Business Administration,Ranada Prasad
Shaha University, for her exemplary guidance, monitoring and constant encouragement for this
report.
I would like to pass thanks from my core of heart to Principle Manager of SocialIslami Bank
Limited for his random and unconditional support to complete my internship successfully.
I also like to give my thanks to all senior and junior staff of Social Islami Bank Limited at 3, S.
M. Maleh Road (Rupsi Height) Tanbazar, Narayanganj, whose cooperation helped me to
complete my internship properly. I must mention the excellent working environment and the
positive group behavior of this Bank, which helped me tremendously.
iv
Letter of Declaration
23January 2022
Ashutosh Roy
Assistant Professor
Subject: Declaration regarding the validity of Internship Report.

Dear Sir;
This is my declaration that Challenges and Opportunities of Foreign Exchange Operations In
Bangladesh Which is submitted to you not a copy of any other Internship report previously made
by any other student.
I also express my confirmation in support if the fact that the said internship report has neither
been before to fulfill any other course related purpose nor it will be submitted to any other
person or authority in future.
Sincerely,
…………………
Hridoy Saha
ID: 18100078
Batch: 12th
v
Preface
I was assigned at the Narayanganj Branch of SocialIslami Bank Limited to completely internship
program. During my internship program I had a great time with the officials of SIBL, but most
importantly I realized how to work under the pressure of responsibilities. This practical
orientation is necessary for the development and preparation of a person before entering into the
corporate world. The things that I have learned at Social Islami Bank Limited are:
 Meaning of responsibility
 Necessity of commitment
 Punctuality and regularity are very important
 Ability to interact with different sorts of people
Social Islami Bank Limited has always been prepared the internship program for its internees. It
is strictly followed by both parties. There are 4 different departments in Narayanganj branch and
they are:
A. General Banking (GB)
B. Cash Department (CD)
C. Foreign Exchange Department (FED)
D. Investment Department (ID)
I was rotated across all 4 different departments in the past 3 months. However, my main
concentration was Challenges and Opportunities of Foreign Exchange Operations In
Bangladeshand thereby, I allocated maximum time to work at Foreign Exchange
Departmentsection. Therefore, in this report I have described about my job responsibilities at
Foreign Exchange Department.
vi
Letter of Acceptance
This is to certify that Hridoy Saha,ID :18100078 has prepared this internship report on
Challenges and Opportunities of Foreign Exchange Operations in Bangladesh under my
supervision & guidance. This is for the partial fulfillment of four-year graduation degree of BBA
in Major-Finance of Ranada Prasad Shaha University.
I have gone through the Master paper. He has accomplished the report by himself under my
supervision.
I wish his every success in life.
………………………………………..
Ashutosh Roy
Assistant Professor
vii
Executive Summary
Import and export are vital elements for a country to meet its daily obligation and economic
development. In this world, every country depends on another country because not all countries
have the resources and skills needed to produce specific products and services. Bangladesh is a
developing country with a huge population for meeting daily demand and hence must import raw
materials from other countries. Bangladesh imports dairy products, machinery, and raw
materials, on the other hand exports mainly the Ready-Made Garments (RMG)products.
Bangladesh made its highest exports so far in January 2019 which amounts to BDT 465.30
billion on the otherhand the highest export of Bangladesh is BDT 279.82 billion occurred in July
2019 and the difference between export and import is huge. GDP has also reached 347.991
billion in 2019. However, Bangladesh has toovercome this situation to develop its economic
situation. The low-cost manpower and availability of resources increase the opportunity to
improve its economic condition in Bangladesh.
Remittances have been playing a very significant role for the overall economic development of
Bangladesh. The remittance which has sent by the migrant workers is the 11 percent of the total
GDP (Gross Domestic Product) in Bangladesh. The government becomes more beneficial than
family members of migrant workers.
Despite structural limitations in the Bangladesh economy, the export sector performed well
throughout the 1990s. The export growth rate of Bangladesh was higher than that of the world
and the SAARC countries. However, the balance of trade of Bangladesh was always in deficit
and the trade deficit with India is huge. The export share of primary commodities has decreased
while that of manufactured commodities has increased over the years. The import share of
principal primary commodities has declined while that of principal industrial and capital goods
has slightly increased over the past years.
The striking features for the Bangladesh’s exports are commodity and market concentration. This
is the main concern. To address it, there is no alternative but to initiate diversification and quality
improvements. New markets for the country’s exports must also be explored to secure more
stability in the export sector. To reduce the dependence on imported inputs for the readymade
garments and knitwear industries, Bangladesh must make massive investments in both yarn and
fabric manufactures. This would create forward and backward linkages; and current trade deficit
would improve. Furthermore, openness of Bangladesh and its trading partners, infrastructural
development, adequate trade related services, appropriate macroeconomic policy and close
partnership between the government and the business community are crucial to improve the
country’s overall trade balance. To improve the trade balance with the SAARC countries,
especially with India, further currency devaluation, measures to stop border smuggling, removal
of tariff and non-tariff barriers on Bangladesh’s exports, arrangement for more Indian investment
in Bangladesh and political harmony in the region are vital. A customs union within the SAARC
region is likely to offset many of the existing trade related problems.
viii
Bangladesh has achieved an impressive growth, particularly in low-cost labor-intensive
categories of the RMG sector. A combination of global opportunities, managed trade under MFA
and GSP facilities, Low labor cost, and government support had combined to stimulate the
emergence and thriving of the export-oriented apparels sector in Bangladesh.
The summary of current export performance, China, Thailand and Vietnam have modified export
basket over the time adopting and implementing different policies. These countries have
transformed their economy withestablishing export-oriented industries anddiversified their
export. On the other hand,Bangladesh’s export is extremely concentrated insingle industry.
Bangladesh’s adopted policycannot make its export diversified because offailing to implement.
ix
Table of Contents
Chapter 1..................................................................................................................................................14
Introduction.............................................................................................................................................14
1.1 Background of the study...................................................................................................................14
1.2 Objectives of the study......................................................................................................................15
1.3 Methodology of the study..................................................................................................................15
1.4 Scope of the study..............................................................................................................................15
1.5 Limitations of the study.....................................................................................................................16
Chapter 2..................................................................................................................................................17
Literature Review....................................................................................................................................17
2.0 Literature Review..............................................................................................................................17
Chapter 3..................................................................................................................................................21
Overview of Foreign Exchange Operations in Bangladesh..................................................................21
3.1 Foreign Exchange Operations in Bangladesh..................................................................................21
3.1.1 Foreign Currency Account (FCA).................................................................................................22
3.2 Bangladesh Foreign Exchange Reserves..........................................................................................22
3.3 Exports...............................................................................................................................................22
3.3.1 Export Trade of Bangladesh..........................................................................................................23
3.3.2 Export Sector of Bangladesh..........................................................................................................23
3.3.3 Export exempted from repatriation of export proceeds..............................................................24
3.3.4 Export Trade Control Regulations................................................................................................24
3.3.5 Method of receiving payments against exports............................................................................24
3.3.6 Registration of exporters................................................................................................................25
3.4 Foreign Exchange Laws....................................................................................................................25
3.5 Authorized Dealers and The Money Changers...............................................................................26
3.6 Bringing in cash from abroad by a foreign investor or any person...............................................26
3.7 Repatriation of capital and profit.....................................................................................................26
3.8 Imports...............................................................................................................................................26
3.8.1 Imports by Export Processing Zone (EPZ)...................................................................................27
3.8.2 Import Policy Order.......................................................................................................................27
3.8.3 Bangladesh Major Imports............................................................................................................27
3.8.4 Machineries Import........................................................................................................................28
3.8.5 Cotton Import.................................................................................................................................28
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3.8.6 Fuel Import.....................................................................................................................................29
3.8.7 Electronics Imports........................................................................................................................29
3.9 Shipments lost or damaged in transit...............................................................................................30
3.10 Letter of Credit................................................................................................................................30
3.11 LC Authorization Form..................................................................................................................31
3.11.1 LC covering imports.....................................................................................................................31
3.11.2 Terms on which LCs may be opened...........................................................................................31
3.11.3 Period for which LCs may be opened.........................................................................................32
3.11.4 BACK-TO-BACK LCs.................................................................................................................32
3.11.5 Inland back-to-back LC...............................................................................................................32
3.12 SWIFT..............................................................................................................................................33
3.12.1 Benefits of SWIFT........................................................................................................................33
3.13 Foreign Remittance.........................................................................................................................33
3.13.1 Classification of Remittance:.......................................................................................................34
3.13.2 Remittance for academic/ research journal subscription..........................................................34
3.13.3 Impact of Migration and Remittance to the Economy of Bangladesh......................................34
3.13.4 Determinants of remittance Income in Bangladesh...................................................................35
3.13.5 Instruments of Foreign Remittance:...........................................................................................35
Chapter 4..................................................................................................................................................36
Analysis of Challenges and Opportunities of Foreign Exchange Operations in Bangladesh.............36
4.1 Overview of Foreign Exchange in Bangladesh................................................................................37
4.2 Business Environment of Bangladesh..............................................................................................37
4.3. Initiatives for export diversification................................................................................................38
4.3.1 Export Performance: FY 2020-2021..............................................................................................38
4.3.2 A comparative statement of export earnings................................................................................38
4.3.3 National Export, Import & Trade Balance (Goods & Service)...................................................39
4.3.4 Overall Export Position (Goods)...................................................................................................40
4.3.5 Bangladesh Export (Goods) to Major Countries (FY 1972-73 to FY 2020-21)..........................42
4.3.6 Comparative Statement of Major Exportable (Goods) During the FY 2016-17 to FY 2020-2021
..................................................................................................................................................................44
4.3.7 Bangladesh Export Share of Major Products During FY 2020-2021.........................................44
4.3.8 Primary and Manufactured Commodities:..................................................................................45
4.3.9 Export Readymade Garments (RMG) and Non-Readymade Garments (Non-RMG)..............46
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4.3.10 Export Against Target (Goods)...................................................................................................46
4.3.11 Country-wise Export (Goods)......................................................................................................48
4.3.12 Region-wise Export of Bangladesh..............................................................................................49
4.3.13 Bangladesh Export to SAARC Region........................................................................................49
4.3.14 Export Performance of Goods Sector During the FY 2016-17 to FY 2020-21.........................50
4.3.15 Export Against Target (Service)..................................................................................................51
4.3.16 Export Performance of Service Sector During the FY 2016-17 to FY 2020-21........................52
4.3.17 Top Exports Items........................................................................................................................54
4.3.18 Trends of Monthly and Quarterly Export..................................................................................54
4.3.18 Sector Composition of Export Commodities, 2019-20...............................................................55
4.3.19 Export Earnings and Export Growth.........................................................................................56
4.3.20 Most Complex Products by PCI..................................................................................................57
4.3.21 Export Opportunities by Relatedness.........................................................................................57
4.3.22 Most Specialized Products by RCA Index..................................................................................57
4.4 Bangladesh Imports...........................................................................................................................58
4.4.1 Imports of Bangladesh from 2015-16 to 2019-20..........................................................................59
4.4.2 Import by Major Commodities, 2015-16 to 2019-20....................................................................59
4.4.3 Imports of Principal Goods............................................................................................................60
4.5 Bangladesh Remittances...................................................................................................................60
CHAPTER 5............................................................................................................................................62
Analysis of the secondary data...............................................................................................................62
5.1 Major Exports of Bangladesh...........................................................................................................63
5.2 New challenges and opportunities for export industries of Bangladesh........................................64
5.3 Bangladesh Market Challenges........................................................................................................66
5.5 Bangladesh - Trade Barriers............................................................................................................67
5.6 The problems facing Bangladesh’s exports.....................................................................................68
5.7 Factors behind the Success of Bangladesh.......................................................................................69
5.8 Remittance Income in Bangladesh...................................................................................................70
5.8.1 Channels of remitting in Bangladesh............................................................................................71
5.8.2 Challenges faced by Bangladeshi migrant workers......................................................................71
5.8.3 Opportunities of remittance income in Bangladesh.....................................................................71
CHAPTER 6............................................................................................................................................73
Findings, Recommendations, Conclusion..............................................................................................73
xii
6.1 Findings..............................................................................................................................................74
6.2 Recommendations..............................................................................................................................76
6.3 CONCLUSION..................................................................................................................................78
Bibliography............................................................................................................................................79
xiii
Chapter 1
Introduction
1
1.1 Background of the study
Trade is an integral part of the total developmental effort and national growth of all economies
including Bangladesh. It particularly plays a central role in the development plan of Bangladesh
where foreign exchange scarcity constitutes a critical bottleneck.Foreign exchange trading refers
to trading one country’s money for that of another country. The kind of money specifically
traded takes the form of bank deposits or bank transfers of deposits denominated in foreign
currency. The foreign exchange market typically refers to large commercial banks in financial
centers. This report provides a big picture of foreign exchange trading and particularly covers the
details of the “spot market,” which is the buying and selling of foreign exchange. This study is
an attempt to produce a constructive report on Challenges and Opportunities of Foreign
Exchange Operations in Bangladeshwith special reference to the Import&Export procedures,
Remittance Income.I tried my level best to highlight Challenges and Opportunities in the
perspective of Foreign Exchange Operations in Bangladesh which has also fulfilled my query to
gain the knowledge about the foreign exchange business in bank.
1.2 Objectives of the study

The Objectives of the study are shown as under:
 To Gather knowledge and experience about the foreign exchange;
 To know the significance of remittance income for the economic development of
Bangladesh;
 To analyze performances of remittance, export and import in Bangladesh;
 To recommend most preferable solutions based on the findings;
1.3 Methodology of the study

To attain the objectives of the report a combination of primary and secondary data is used.
Primary Sources:
 Talking with bank staff and officer.
 Data with involved in Government website.
Secondary Sources:
 Recently published research article and journal.
 Opinion of professional person who related with this job by the internet.
 Newspaper.
 Bangladesh bank.
1.4 Scope of the study

This is animmense opportunity for me to get myself familiarized with banking environment.
Working in a Bank like an employee is an interesting matter for me. To attain my main
objective, I work in General Banking, Foreign Exchange Department and Investment
Departmentby rotation and giving emphasis on remittance and activity of import & export. This
2
study isbased on theoretical and practical analysis. However, the scope of the study is confined
within the region.
The study will focus on the following areas
 The reason of increase and decline of export & import transaction and remittance.
 The kind of obstacles in Bangladesh foreign exchange business.
 The need of development of Bangladesh trade policy.
 The target and achievement in foreign exchange operation.
 The way of to overcome the barriers Bangladesh foreign business facing.
1.5 Limitations of the study

From the beginning to end, the study has been conducted with the intention of making it as a
complete and realistic one. However, many problems appeared in the way of conducting the
study. The study considers following limitations:
 Limitation of collecting data.
 Short of ampleknowledge.
 Present of not involving directly.
 The ability of less understanding due to shortage of study.
3
Chapter 2
Literature Review
4
2.0 Literature Review
Foreign trade plays a vital role in achieving rapid economic development of a country. Since
Bangladesh is a developing country, foreign trade can be considered and given the pivotal
importance.But unfortunately, trade balance of this country is still very unfavorable. Each year
Bangladesh has to spend a huge amount of money for importing consumer goods and materials
which are not a favorable for our country.This paperreviews the literature onChallenges and
Opportunities of Foreign Exchange Operations in Bangladesh.
There areseveral studies including the Bangladesh Institute of Development Studies (BIDS)
study by Chowdhury S, andMazumdar P. (1991) and the Bangladesh Unnayan Parisad (1990)
study on this topic. Both of these studies useaccepted survey and research methodology to
analyze a wealth of data on the social and economic background,problems and prospects of
female workers in the RMG sector.
Abdin M. J. (2008) in his journal “Overall Problems and Prospects of Bangladeshi ReadyMade
Garments Industries” focused on labor unrest is RMG sector and provide some solution
regarding thisproblem. Sultana S. and et al (2011) presents results from a survey of “Likely
Impacts of Quota Policy on RMGExport from Bangladesh: Prediction and the Reality” which
indicates that despite the concern and fear ofnegative impact on in the aftermath of quota
removal of RMG sector in Bangladesh appears with positive trendsalong with the substantial
increasing rate of export amount, the number of jobs and industries and GDP’s growth.In 2010,
the sector keeps around 20 percent GDP growth of the country.
In another study, Ferdous R. (2012)found that the reason behind the labor unrest is the absence
of legal and institutional arrangements to ensurelabor rights in the RMG sector. Many of the
garment’s factories in Bangladesh are alleged not to comply with theLabor Law and ILO
conventions. The main reason for labor unrest is inadequate wages of the workers.
Fakir et al. (2013) explored the significance of export processing zones in the economy of
Bangladesh and emphasized on the buildup of strong backward linkages and upgradation of the
export related legislations for the purpose of diversification.
Islam M.S, and Ahmad (2010) identified that conveyance, lunch bill and enhancement of casual
leave, increase ofmonthly minimum wages from tk. 1662 to tk. 5000; low house rent and better
supply of water and gas are thereasons for the labor unrest in the ready-made garment industry of
Bangladesh.
Hossain and Nath (2013) found that Bangladesh has RCA in knitted garments, woven garments,
jute and jute goods, other textile articles, frozen fish, leather, footwear and headgear and parts
and, over the years, tea and leather have lost some of their previous comparative advantage.
5
Mirdha R. U.(2012) found that the rumor, fear of job loss, jhoot business, case with police
stations, fear of shutdown offactories, arrears, checking at entry point and identity cards, pay
hike and discrimination in grades, bad relationwith workers and mid-level management,
provocation by locally influential people and international conspiratorsand some NGOs, fear of
police and role of industrial police, sudden order cut by international buyers, productionin piece
rate, accommodation and higher house rent, lack of motivational training program, inflation etc.
are alsothe reasons for labor unrest in ready-made industry of Bangladesh.
The abolition of the quotas constituted a serious challenge as much as a true opportunity for the
RMG industry of Bangladesh. Consequently, the possible consequences of MFA import quota
abolition have received considerable attention in a number of studies. Mlachila and Yang (2004)
argued that planned abolition of the quotas will alter the competitiveness of various exporting
countries and the relatively weak competitiveness makes the Bangladeshi economy highly
vulnerable to the final stage of the quota phase-out. Assessing the quota restrictiveness and
export similarity, and analyzing its supply constraints, the paper concludes that Bangladesh could
face significant pressure on its balance of payments, output, and employment. They estimated
that MFA import quota abolition may result in a decrease in exports of apparel from Bangladesh
by 6.2% to 17.7%. Nordas (2004) does not find an absolute decrease in total export from
Bangladesh but finds a decrease in the market share of Bangladesh‟s apparel in the USA.
However, Adhikari and Weeratunge (2007) argued that despite Bangladesh has achieved an
impressive growth, particularly in low-cost labor-intensive categories of the RMG sector, but its
sustainability is not guaranteed.
Remittance income of Bangladesh is recorded as the second highest foreign currency income.
Bust if the cost of import of raw material is adjusted, then the net earnings from migrant
workers’ remittance is higher than that of the garments sector. According to Bangladesh Bureau
of Statistics (BBS), in 2012, net export earnings from RMG is USD 11.287 billion, whereas in
November, 2012 the earning from remittance is net USD 12.87 billion. But the government
expects that the remittance income will cross USD 13 billion at the end of the year 2012
(Bangladesh Bank).
Ali and Islam (2010) highlighted possible eruption of political and labor unrest, possible fall in
exports, remittances, and foreign investments, possible rise in energy and food prices in global
markets, emerging intense competition from other nations (such as China and India), possible
rise in protectionism in rich country markets, and continued stronger (appreciated) currency
values which may adversely affect exports and remittances are the key threats to Bangladesh.
They recommended that the policy makers should be more proactive by taking appropriate
corrective policy actions ahead of time rather than reactive (waiting to take action until the
adverse effects begins to occur) in dealing with the weaknesses and emerging threats.
Dash and Narayanan (2010) empirically investigated the post-1991 trade dynamics in India in
the light of their influence on foreign exchange reserve by estimating import and export
functions for the period of January 1994 to October 2008. The findings of their study revealed
that there is a long-run statistically significant association among exports, world exports, and real
6
effective exchange rates in the export function, and among imports, domestic demand and real
effective exchange rates in the import mapping.
Remittance constitutes an important source of foreign exchange for the poor countries, which
have substantial development impact as can be understood from micro and macro point of view.
From macro frontier, remittances are used to make import payments and are used for productive
investment by the government (Salim, 1992). World Bank (Ali, 1981) identified overseas
remittances achieving a favorable balance of payments and as well as creating a new resources
base for the country. In Bangladesh, a significant portion of overseas earnings is spent for
consumption purposes, acquisition of assets, investment in trade and business and to finance
import of capital goods. It will positively affect the socio-economic condition of migrant
families. Some of the early studies (Salim, 1992 and Matin, 1994) focused on the
macroeconomic impact of overseas remittances in Bangladesh. However, remittances are not
devoid of adverse effects. Manpower exports are alleged to deprive the country of their services
and upsetting the normal functioning of the economy (Mahmood, 1985).
Foreign Exchange Market allows currencies to be exchanged to facilitate international trade and
financial transactions. The reserve basket of Bangladesh, like most other countries, consists of
different foreign currencies, gold, reserve position in the IMF and special drawing rights (SDR),
which are under control of the central bank and readily available for any balance of payments
financing. Bangladesh Bank, as agent of the government, was the sole purveyor of foreign
currency among the users. It tried to equilibrate the demand for and supply of foreign exchange
at an officially determined exchange rate. Immediately after liberation, the Bangladesh currency
taka was pegged with pound sterling but was brought at par with the Indian rupee.
The Bangladesh Taka, which is the domestic currency of Bangladesh and the country’s foreign
exchange, had been strictly regulated until the early 1990s. Bangladesh Bank used to publish a
daily foreign exchange rate sheet that had two sets of rates; one being the rates for commercial
banks to transact with their customers and the other being rated for the commercial banks to
transact with Bangladesh Bank (Source: Bangladesh Bank).
7
Chapter 3
Overview of Foreign Exchange Operations in Bangladesh
8
3.1 Foreign Exchange Operations in Bangladesh
The Foreign Exchange Regulation Act, 1947 has defined foreign exchange as “foreign
exchange” means foreign currency and includes any instrument drawn, accepted, made or issued
under [clause (13) of Article 16 of the Bangladesh Bank Order, 1972] all deposits, credits and
balances payable in any foreign currency, and any drafts, traveler’s cheques, letters of credit and
bills of exchange, expressed or drawn in Bangladesh currency but payable in any foreign
currency. Foreign trade can be defined as a business activity, which exceeds national boundaries.
These may be between parties or government ones. Foreign trade is justified on the principle of
comparative advantage. It includes the variety of goods, services, investment, technology
transfer etc. Every Forex trade consists of two simultaneous transactions: a buying of one
currency and a selling of another. In a bank where people do transaction in foreign currency is
called foreign exchange. Any kinds of dollar transaction are done by this section. ABL’s foreign
exchange section is working very efficiently to serve the people. The full process is governed by
Bangladesh Bank. Any kind of transaction in foreigncurrency is very sensitive issued. However,
the Foreign Exchange department has 4 wings.They are- (a) FX Division, (b) Export, (c) Import
and (d) Remittance.
3.1.1 Foreign Currency Account (FCA)

Foreign Currency (F.C.) Account may be opened in the following foreign currencies:
 U.S. Dollar (USD)
 Great Britain Pound Sterling (GBP)
 Euro
 Japanese Yen. (JPY)
3.2 Bangladesh Foreign Exchange Reserves

In Bangladesh, Foreign Exchange Reserves are the foreign assets held or controlled by the
country central bank. The reserves are made of gold or a specific currency. They can also be
special drawing rights and marketable securities denominated in foreign currencies like treasury
bills, government bonds, corporate bonds and equities and foreign currency loans.Foreign
Exchange Reserves in Bangladesh averaged 23450.09 USD Million from 2008 until 2021,
reaching an all-time high of 48060 USD Million in August of 2021 and a record low of 7470.90
USD Million in June of 2008. This page provides - Bangladesh Foreign Exchange Reserves -
actual values, historical data, forecast, chart, statistics, economic calendar and news.
9
3.3Exports
Exports are a crucial component of a country’s economy. Exports facilitate international trade
and stimulate domestic economic activity by creating employment, production and revenues. As
of 2017, the world’s largest exporting countries in terms of dollars are China, the United States,
Germany, Japan and South Korea. China has exports of approximately $2.2 trillion in goods,
primarily electronic equipment and machinery. The United States exports approximately $1.6
trillion, primarily capital goods. Germany has exports of approximately $1.4 trillion, primarily
motor vehicles. Japan has exports of approximately $683 billion, also primarily motor vehicles.
Finally, South Korea has exports of approximately $552 billion, primarily electronics, machinery
and motor vehicles. Exports in Bangladesh increased to 232.60 BDT Billion in March from
212.01 BDT Billion in February of 2018. Exports in Bangladesh averaged 42.96 BDT Billion
from 1972 until 2018, reaching an all-time high of 240.22 BDT Billion in August of 2017 and a
record low of 0.05 BDT Billion in February of 1972. Govt. Notifications No. 1(6)/ECS/48 and
1(7)/ECS/48 dated 1st July, 1948 issued pursuant to Section 12 of the FER Act prohibit export of
any goods directly or indirectly to any place outside Bangladesh, unless a declaration is
furnished by the exporter to the Customs Authority or to such other authority as the Bangladesh
Bank may specify in this behalf that foreign exchange representing full export value of the goods
has been or will be disposed of in a manner and within a period specified by the Bangladesh
Bank.
3.3.1 Export Trade of Bangladesh

Export Diversification attributed to changes in a country’s export basket is a very risky strategy
that requires new skills, new technologies and new facilities. But historically, it has proven to be
a very useful tool for a country’s economic nourishment and development. Countries like
Taiwan, South Korea, Malaysia, Thailand, Singapore, China and India have gone through the
motions of export diversification in different time periods and have been highly benefitted. This
is not an unchartered territory for Bangladesh as the country had experienced diversification in
its export sector in the early 1980s when the concentration moved from the then well-established
Jute sector to a very new and burgeoning RMG sector. As diversification buffers a particular
sector from dramatic fluctuations in any other sector, it can be attributed to be the next stepping
stone for expanding the country’s export horizon.
Export trade can largely meet ‘foreign exchange gap’, and export growth would increase the
10
import capacity of the country that, in turn, would increase industrialization, as well as overall
economic activities.Bangladesh's major export item is readymade-garments and others include
shrimps, jute, leather goods and tea. Main export destinations are the United States and the EU.
3.3.2 Export Sector of Bangladesh

Bangladesh is the second fastest growing major economy of 2016 with a GDP of $245.20 billion
(IMF 2016). Bangladesh has come a long way from earning a gross amount of $810.99 million in
1980 to earning a gross amount of more than $37.61billion in 2015-16. Adaption of export-
oriented industrialization policy in the 1980s played a major role in this overwhelming
improvement of GDP within three decades. The last decade also experienced a rapid increment
in GDP growth; from 6.4 per cent in 2004 to 7.1 per cent in 2016 and export was one of the
prime driving factors of this GDP growth.
The major export sectors include RMG and textile, raw jute and jute products, leather and leather
goods, frozen food, shipbuilding, fish and seafood, and self-sufficient industries like
pharmaceutical, steel and food processing, and the major export destinations of Bangladesh
include USA, Canada, Germany, UK, France, Spain and Italy. Export sector is composed with
high concentration; RMG and textile sector alone contributes to about 82 per cent of the total
export earnings of Bangladesh.
The concentration of the economy on the blooming RMG sector has become a crucial concern,
as a simple nudge in this sector is likely to bring about a serious upheaval in the entire export
arena of Bangladesh. Clearly, this kind of vulnerability is not acceptable inan export driven
economy like Bangladesh. This issue seriously brings our attention to the need for diversification
of the exporting commodities. In this regard, it is necessary to identify those exporting products
other than the well-established RMG products that are in need of further appreciation.
3.3.3 Export exempted from repatriation of export proceeds

The prohibition mentioned above does not apply to the export of:
(i) bonafide trade samples sent by registered exporter upto the value prescribed in the Export
Policy in force;
(ii) personal effects, whether accompanied or unaccompanied, of travelers;
(iii) ships stores and transshipment cargo;
(iv) goods shipped under the order of the Government of Bangladesh or of such officers as may
be appointed by the Government in this behalf or of the Military, Naval or Air Force authorities
in Bangladesh for Military, Naval or Air Force requirements.
3.3.4 Export Trade Control Regulations

Foreign exchange regulations regarding exports cover all goods exported to all destinations
regardless of whether they are subject to Export Trade Control Regulations. Similarly, nothing in
the foreign exchange regulations relieves the exporters from the necessity of complying with the
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Export Trade Control Regulations prescribed by the Government, including the necessity of
obtaining export licenses in case of goods the export of which requires such license.
3.3.5 Method of receiving payments against exports

Payment for goods exported from Bangladesh should be received through an AD in freely
convertible foreign currency or in Taka from a non-resident Taka Account. Receipts against
exports under various barter and bilateral arrangements should be settled as per instructions
issued by the Bangladesh Bank from time to time.
The government has categorized different export products according to priorities: leading
sectors, thrust sectors and specialized sectors. There had been different incentive
schemes/programs provided by the government to these exporting industries. Cash incentives,
duty drawbacks and bonded warehouse facilities are the three major incentives. These incentives
are provided at different scale across different industries and the rate also changes over time. It is
necessary to examine how these incentive packages are facilitating the recipient industries.
3.3.6 Registration of exporters

The ADs should, before certifying any EXP form, ensure that the exporter is registered with the
CCI&E under the Registration (Importers and Exporters) Order 1952. The registration number
should be quoted on the relative EXP forms.
3.4 Foreign Exchange Laws

Bangladesh has very strict foreign exchange control laws. Though Taka, the Bangladeshi
currency in freely convertible, transaction of foreign exchange is highly regulated. Remittance of
money outside Bangladesh is allowed only for specific circumstances and is required to be
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supported by appropriate documentation. Foreign Exchange Regulation Act 1947 (“FERA”) is
the basic law in this regard and provides the legal basis for regulating certain payments, dealings
in foreign exchange as well as securities. Bangladesh Bank, the central bank of Bangladesh is
responsible for administering foreign exchange transactions in Bangladesh. Bangladesh Bank
time to time issues directives regarding foreign exchange transaction and summaries of the main
directives are published by Bangladesh Bank and named as Guideline for Foreign Exchange
Transactions (the “Guidelines”). All foreign exchange should be transacted pursuant to the
Guideline and FERA, otherwise criminal charges could be brought in.
3.5 Authorized Dealersand The Money Changers

The authorized dealers (“AD”) are the only entities are allowed to transact and hold foreign
exchange both at home and abroad. Bangladesh Bank issues licenses of AD only to scheduled
banks. In addition to AD, there are registered moneychangers to buy foreign currencies from
tourists and sell them to outgoing Bangladeshi travelers as per entitlement. Some service
institutions like hotels and shops have also obtained limited money changing licenses to accept
foreign currencies the foreign tourists, but those are to be sold to authorized dealers.
3.6 Bringing in cash fromabroad by a foreign investor or any person

A foreigner can bring in foreign exchange in any form including cash without limit. But for
amounts in excess of US$5,000 a declaration on FMJ form is required to be made to the Customs
Authorities at the time of entry. Amounts brought in may also be taken out freely, subject to
production of the declaration where applicable.
3.7 Repatriation of capital and profit

Foreign investors are free to repatriate their invested capital, profits, capital gains, post-tax
dividends, and approved royalties and fees through AD provided the appropriate documentation
is in order. Foreigners employed in Bangladesh with the approval of the Government may remit
50% of salary/net income, actual savings and admissible retirement benefits through an AD. Net
salary of foreign nationals’ payable for the period of leave admissible to them as per their service
contract duly approved by the Government will be remittable.
3.8 Imports
The import expresses meaning according to the law caring out of goods or anything from one
country to another county for Buying. It will be reached by following to the Government
law.Bangladesh pursued an import-substituting strategy of industrialization in the 1970s. The
key objectives of this strategy were to safeguard the country’s infant industries, reduce the
balance of payments deficit, use the scarce foreign exchanges efficiently, ward off the
international capital market and exchange rate shocks, lessen fiscal imbalance, and achieve
higher economic growth and self-sufficiency of the nation. However, in the face of the failure of
an inward-looking strategy delivering the desire outcomes, along with rising internal and
external imbalances, trade policy reforms were introduced in the early 1980s.
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Import of goods into Bangladesh is regulated by the Ministry of Commerce in terms of the
Import and Export (Control) Act, 1950, through Import Policy Order (IPO) in force and Public
Notices issued from time to time by the Office of the Chief Controller of Imports and Exports
(CCI&E). In terms of the Importers, Exporters and Indentors (Registration)Order, 1981 no
person can import goods into Bangladesh unless heis registered with the CCI&E or exempted
from the provisions ofthe said Order. Before Letter of Credit Authorization Form (LCAF)is
issued or Letter of credit (LC) is opened or remittance is madefor imports into Bangladesh the
AD should verify that the importeris registered with the CCI&E or otherwise exempted from
suchregistration. The AD should ensure that the registration number ofthe importer is invariably
furnished on the IMP form. Where theimporter is exempted from such registration, a suitable
mention ofthis fact should be made on the IMP form.
3.8.1 Imports by Export Processing Zone (EPZ)

In order to achieve rapid economic growth of the country by increasing the inflow of foreign
investment, particularly through industrialization, special steps have been taken since 1980 by
setting up Export Processing Zone (EPZ) in the country in Chittagong (Halishahar), Dhaka
(Savar) and Khulna (Mongla) where favorable facilities/ assistance are provided to the potential
investors, both Bangladeshi and foreigners. The Chittagong Export Processing Zone (CEPZ)
started from 1983-84 while the Dhaka Export Processing Zone (DEPZ) started from 1993-94.
Later, EPZs have also been established in Mongla of Khulna, Ishurdi of Pabna, Comilla, Uttara
of Syedpur in the district of Nilphamary, Adamjee of Narayanganj and Karnaphuli of Chittagong
where the investments are classified into three types i.e., A-type (100% foreign investment), B-
type (Joint venture investment between Bangladeshi and foreigners) and C-type (100%
Bangladeshi entrprenuer's investment).
3.8.2 Import Policy Order

Based on product demand and availability of funds, government policy announcements. The
National Council is defined as the import policy for importing goods for a period of time with
approval. The import policy is a guide of the rules set by the intentional government authority of
the trade authority for the registered importers to import the products of the country's authorities.
3.8.3 Bangladesh Major Imports

The following product groups represent the highest dollar value in Bangladesh’s import
purchases during 2019. Also shown is the percentage share each product category represents in
terms of overall imports into Bangladesh.
Machinery including computers: US$5.8 billion (11.5% of total imports)
Cotton: $5.4 billion (10.8%)
Mineral fuels including oil: $4.4 billion (8.7%)
Electrical machinery, equipment: $3.2 billion (6.4%)
Iron, steel: $2.9 billion (5.8%)
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Plastics, plastic articles: $2.2 billion (4.4%)
Vehicles: $1.7 billion (3.5%)
Manmade staple fibers: $1.6 billion (3.2%)
Manmade filaments: $1.42 billion (2.8%)
Knit or crochet fabric: $1.35 billion (2.7%)
Bangladesh’s top 10 imports represent about three-fifths (59.7%) of the overall value of its
product purchases from other countries.Iron and steel posted the fastest growth in cost among
Bangladesh’s top 10 import categories, up by 4.8% from 2018 to 2019. The other top product
category to appreciate year over year was manmade filaments, due to its 1.8% increase.
3.8.4 Machineries Import

In 2019, Bangladeshi importers spent the most on the following 10 subcategories of machines
including computers.
Computers, optical readers: US$319.5 million (down -0.1% from 2018)
Yarn wash/clean/iron machines: $268.1 million (down -17.5%)
Sewing machines, related furniture: $234.6 million (down -17.1%)
Liquid pumps and elevators: $233.1 million (up 23.8%)
Temperature-change machines: $218.1 million (up 62.5%)
Miscellaneous machinery: $211.9 million (down -60.9%)
Knitting/stitching machines: $206.4 million (down -20.7%)
Air or vacuum pumps: $204.7 million (down -5.6%)
Vapour-based boilers: $197.7 million (down -8.9%)
Centrifuges, filters and purifiers: $178.2 million (up 6.5%)
Among these import subcategories, Bangladeshi purchases of temperature-change machines (up
62.5%), liquid pumps and elevators (up 23.8%) then centrifuges, filters and purifiers (up 6.5%)
grew from 2018 to 2019.
3.8.5 Cotton Import

In 2019, Bangladeshi importers spent the most on the following 10 subcategories of cotton and
related products.
Cotton (uncarded, uncombed): US$1.7 billion (down -9.8% from 2018)
Woven fabrics (85%+ cotton): $922.5 million (down -33.6%)
Woven cotton fabrics: $886.4 million (down -20.5%)
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Woven fabrics (mixed): $761.6 million (down -10.5%)
Yarn (85%+ cotton): $757.2 million (down -33.8%)
Woven fabrics (under 85% cotton): $233 million (down -15.1%)
Yarn (under 85% cotton): $92.9 million (down -26.2%)
Other woven fabrics: $21.2 million (down -56.7%)
Cotton (carded, combed): $3.4 million (down -73.1%)
Cotton sewing thread: $994,000 (down -34.6%)
Among these import subcategories, Bangladeshi purchases of uncarded and uncombed cotton
(down -9.8%), woven mixed fabrics (down -10.5%) then woven fabrics consisting of under 85%
cotton (down -15.1%) declined at the slowest pace from 2018 to 2019.
3.8.6 Fuel Import

In 2019, Bangladeshi importers spent the most on the following 10 subcategories of mineral
fuels-related products.
Processed petroleum oils: US$3.6 billion (down -12% from 2018)
Electrical energy: $452.4 million (up 138.3%)
Petroleum gases: $177.8 million (down -59.8%)
Coal, solid fuels made from coal: $71.8 million (down -70.9%)
Petroleum oil residues: $12.3 million (down -84.3%)
Petroleum jelly, mineral waxes: $7.4 million (down -24.6%)
Coke, semi-coke: $5.3 million (down -3.4%)
Lignite: $4.8 million (down -29.2%)
Coal tar oils (high temperature distillation): $2.6 million (up 0.9%)
Distilled tar: $2.2 million (down -23.1%)
Among these import subcategories, Bangladeshi purchases of electrical energy (up 138.3%) and
high temperature distilled coal tar oils (up 0.9%) grew at the fastest pace from 2018 to 2019.
3.8.7 Electronics Imports

In 2019, Bangladeshi importers spent the most on the following 10 subcategories of electronic
equipment including consumer electronics.
Phone system devices including smartphones: US$908 million (down -6.9% from 2018)
Electric generating sets, converters: $268.5 million (down -49.3%)
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Electrical converters/power units: $259.4 million (down -32.3%)
Insulated wire/cable: $204.4 million (down -20.1%)
Electrical/optical circuit boards, panels: $152.4 million (down -26.6%)
Unrecorded sound media: $140.9 million (down -19.4%)
Electric motors, generators: $130.3 million (up 14.5%)
TV/radio/radar device parts: $114.5 million (down -6.5%)
TV receivers/monitors/projectors: $104.9 million (down -22.2%)
Electric storage batteries: $104.2 million (down -19.1%)
Among these import subcategories, only Bangladeshi purchases of electric motors and generators
(up 14.5%) grew from 2018 to 2019.
3.9 Shipments lost or damaged in transit

If shipments from Bangladesh are lost in transit for which payment has not already been received
either by a direct remittance or by negotiation of bills under an LC, the AD must see that an
insurance claim is made as soon as the loss is known. The triplicate copy of the relative EXP
Form should be returned to the Bangladesh Bank with a statement on the reverse thereof, under
the stamp and signature of the AD that the shipment has been lost, together with the following
particulars regarding the insurance covering the shipment:
(a) Amount of insurance (including currency in which drawn).
(b) Name of the Insurance Company
(c) Place where the claim is payable. Where the claims are payable in a currency other than
Taka, they should be realized through the AD who had certified the duplicate copy of the
relative EXP Form and who, on satisfaction of the claim, should certify on the triplicate
copy the particulars of the amount collected by itself and forward the copy to the
Bangladesh Bank.
3.10 Letter of Credit

A letter of credit, also known as a documentary credit or bankers’ commercial credit, or letter of
undertaking, is a payment mechanism used in international trade to provide an economic
guarantee from a creditworthy bank to an exporter of goods. Letters of credit are used
extensively in the financing of international trade, when the reliability of contracting parties
cannot be readily and easily determined. Its economic effect is to introduce a bank as an
underwriter that assumes the counterparty risk of the buyer paying the seller for goods.
Bangladesh is mainly an import-oriented country. So, L/C is a very important import document
which is issued by Bank. In international market two parties are not known to each other. The
importers of Bangladesh give an L/C to exporters of foreign country to provide the assurance of
payment. On this issue the Foreign Exchange Guideline has provided that All LCs and similar
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undertakings covering imports into Bangladesh must be documentary LCs and should provide
for payment to be made against full sets of onboard (shipped) bills of lading, air way bill, railway
receipts, truck receipts, post/courier parcel receipts showing dispatch of goods covered by the
credit to a destination in Bangladesh. All LCs must specify submission of signed invoices and
certificates of origin. If any particular LCAF requires submission of any other document or the
remittance of exchange at certain periodical intervals or in any other manner, the LC should
incorporate those instructions of the LCAF.
3.11 LC Authorization Form

The ADs are authorized to issue 'Letter of Credit Authorization Forms' (LCAFs) in conformity
with the IPO allowing imports into Bangladesh. Import permits or clearance permits are not
required for imports by the Ministries and Government Departments against specific allocation
given to them by the government. But all Ministries and Government Departments except the
Ministry of Defense shall duly submit LCAF to their nominated banks before opening LC for the
purpose of import. The LCAFs, available with the ADs, are issued in sets of 5 copies each. Of
these, the one marked "For Exchange Monitoring Purpose" should be used for opening LC and
for effecting remittances. The ADs should be very careful about compliance with the instructions
of the IPO and relevant Public Notices in the matters of issuance and disposal of LCAFs.
3.11.1 LC covering imports

The ADs may not issue, advise, notify or confirm any LC, authority to purchase, guarantee or
similar undertaking covering imports into Bangladesh the implementation of which would
involve a payment in Taka to a non-resident account or a payment in foreign currency except in
accordance with the instructions prescribed hereunder.
The AD should establish LCs against specific authorization only on behalf of their own
customers who maintain accounts with them and are known to be participating in the trade.
Payments in retirement of the bills drawn under LCs must be received by the ADs by debit to the
account of the concerned customer or by means of a crossed cheque drawn on the drawee's other
bank. These restrictions shall not apply to import of articles for the private use of the importer as
permitted in the Import Policy Order.
3.11.2 Terms on which LCs may be opened

(i) All LCs and similar undertakings covering imports into Bangladesh must be documentary
LCs and should provide for payment to be made against full sets of onboard (shipped) bills of
lading, air way bill, railway receipts, truck receipts, post/courier parcel receipts showing
despatch of goods covered by the credit to a destination in Bangladesh. All LCs must specify
submission of signed invoices and certificates of origin. If any particular LCAF requires
submission of any other document or the remittance of exchange at certain periodical intervals or
in any other manner, the LC should incorporate those instructions of the LCAF. Besides,
following instructions are to be followed by ADs while importing through land ports:
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(a) only one port of entry (land port) is to be mentioned specifically in the letter of
credit/purchase contract (as the case may be);
(b) ADs shall have to send copies of letter of credit and subsequent amendment(s) if any,
including other relevant information to the land port authority;
(c) specimen signatures of the officials working in the import-export desks of the concerned
Authorised Dealer bank, contact phone and fax nos. of the ADs are to be sent to all the land
ports;
(d) ADs, through their agents or representatives shall collect certified invoice & bill of entry
evidencing entry of goods into Bangladesh from the concerned land ports;
(e) letters of credit/purchase contracts shall contain inter alia the following payment terms
instead of reimbursement authority/debit authority:
"Upon receipt of documents complying with credit terms, we shall effect payment as per
instructions of Negotiating Bank/Collecting Bank".
f) LC covering value more than USD 5000 or equivalent should be sent through SWIFT or other
similar arrangements to the advising bank;
(g) NOC(if any) shall contain name of the officials along with P.A. nos. and official seal.
(ii) It is not permissible to open clean or revolving letter of credits or LC with realisation clause
(except EPZ companies). Applications for opening such LCs should be referred to the
Bangladesh Bank with full particulars.
(iii) The ADs may open transferable LCs for imports into Bangladesh under cash LCAF without
reference to the Bangladesh Bank. They may also allow without reference to the Bangladesh
Bank amendments that do not violate foreign exchange regulations and IPO in force.
(iv) It is not permissible to open import LCs in favour of beneficiaries in countries from which
import into Bangladesh are banned by the competent authority.
3.11.3Period for which LCs may be opened

The AD should, before opening an LC, see documentary evidence that a firm order for the goods
to be imported has been placed and accepted. The AD should ensure while opening an LC that
full description of the goods to be imported are given in each Credit along with the unit price of
the merchandise.
3.11.4 BACK-TO-BACK LCs

The ADs may open back-to-back (BTB) import LCs against export LCs received by export
oriented industrial units operating under the bonded warehouse system, subject to observance of
domestic value addition requirement (stated in terms of permissible limit of value of imported
inputs as percentage of FOB export value of output) prescribed by the Ministry of Commerce
from time to time.
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3.11.5 Inland back-to-back LC
Inland back-to-back LCs denominated in foreign exchange may be opened in favor of local
manufacturer-cum- suppliers of inputs, against master export LCs received by export-oriented
manufacturing units operating under the bonded warehouse system, up to value limits applicable
as per prescribed value addition requirement/utilization permit. However, EXP/IMP form will
not be applicable in such cases unless EPZ unit is associated.
Retention of foreign currency in single pool for back-to-back import paymentsunder bonded
warehouse system on encashment of export proceeds equivalent to the portion of value addition,
residual portion of export proceeds against different export bills of the same export unit
operating under bonded warehouse system may be maintained in foreign currency in a single
pool by the ADs. Funds from this pool may be used for different back-to-back import payments
of the same exporting unit on maturity basis to keep minimum involvement of AD's own fund
under the exchange position as well as to keep exporter free from debt burden.
3.12 SWIFT
The Society for Worldwide Interbank Financial Telecommunication (SWIFT), legally S.W.I.F.T.
SCRL, is a Belgian cooperative society that serves as an intermediary and executor of financial
transactions between banks worldwide. SWIFT is an internationally used messaging service that
provides a standardized messaging system between banks across the world. It provides a network
that enables financial institutions worldwide to send and receive information about financial
transactions in a secure, standardized and reliable environment.SWIFT does not facilitate funds
transfer: rather, it sends payment orders, which must be settled by correspondent accounts that
the institutions have with each other. To exchange banking transactions, each financial institution
must have a banking relationship by either being legally organized as a bank or through its
affiliation with at least one bank. While SWIFT transports financial messages in a highly secure
manner, it does not hold accounts for its members nor performs any form of clearing or
settlement.
3.12.1 Benefits of SWIFT

There are a number of known benefits to using SWIFT:
Transparency: SWIFT payments clearly detail the amounts involved in the transaction, the
route it takes between banks, the details of all charges and the nature of the payment (along with
many other details). This information allows all parties involved to track the transaction and to
understand the costs and time period involved.
Traceability: Because SWIFT details the route of the transaction between banks and the amount
of money involved, it provides clear and recognized proof of payment.
Consistency: Due to the consistency of how messages are structured, payment information is
easy to decipher regardless of country or language barriers.
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3.13 Foreign Remittance
Foreign remittance means the transfer of foreign currency from one country to another country.
Actually, foreign remittance is purchase and sale of freely convertible foreign currencies as
permissible under exchange control regulations of the country. Foreign remittance is very
important for the country as valuable foreign exchange is involved in the transfer mechanism. It
is a key driver of economic growth and poverty reduction in Bangladesh. Revenues from
remittances now exceed various types of foreign exchange inflows, particularly official
development assistance and net earnings from export. Considering the role of foreign remittance
in the overall economic development of the country the bank has set top priority for mobilizing
inward foreign remittance fromBangladeshi migrant workers living and working abroad. The
bank has restructured its existing remittance set up with skilled and efficient manpower in order
to provide seamless delivery of remittances to the beneficiaries. Furthermore, the bank has also
taken initiative to strengthen ties with the exchange companies with whom the bank has
arrangement with through strong relationship management and has also taken initiatives to enter
into new arrangements with other exchange companies having potential to send higher volume of
inward foreign remittance. Money sent home by migrants competes with international aid as one
of the largest financial inflows to developing countries. Workers' remittances are a significant
part of international capital flows, especially with regard to labor-exporting countries.
3.13.1 Classification of Remittance:

There are two types of Remittances:
Inward remittance
Remittance coming from our country to another country is called 'Inward foreign remittance' by
the sender through the approved foreign exchange through foreign exchange approved banks.
Outward Remittance
Any amount transferred outside the country is known as a foreign outward remittance. An
Outward Remittance is a process of transferring money in the form of foreign exchange, by a
resident in a particular country, for instance, Bangladesh, to a beneficiary who is located outside
the other country for any purpose and that is been approved under the Foreign Exchange
Management Act (FEMA). Parents sending money to their children studying abroad is one such
example.
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3.13.2 Remittance for academic/ research journal subscription
ADs may allow remittance of subscription fee for academic/research journals to be procured
from abroad by public universities and medical colleges, recognized national research/training
institutions, University Grants Commission (UGC) approved private universities and Govt.
approved private medical colleges up to USD 3000 (three thousand) or equivalent for an
institution per calendar year against production of invoice/relevant supporting documents subject
to establishment of bonafides.
3.13.3 Impact of Migration and Remittance to the Economy of

Bangladesh
Remittance has a considerable contribution to ease foreign exchange constraint,stabilizing the
exchange rate and allowing Bangladesh to import much needed rawmaterials, intermediate goods
and capital equipment. Comfortable reserves offoreign exchange have also contributed to overall
macro stability and have reducedaid dependency. Remittance increases with the expanding
migration process andaccelerating movement of people for overseas employment
market.Remittances from migrants have positive impacts on poverty reduction anddevelopment
in Bangladesh substantially contributing to the achievement of theMillennium Development
Goals. These positive impacts become greater whenremittances can be saved and invested in
infrastructures and productive capacity.Government policy measures induce such use.
Significant barriers to migration andremittance transfers need to be addressed in order to harness
opportunities fordevelopment and poverty reduction, including through easing financial
transfers,setting appropriate incentives, improving policy coherence in migration andremittance
polices, and facilitating the temporary movement of people.
Remittance income is more valuable for any developing country like Bangladesh. The demand of
migrant workers remittances has now increased tremendously in Bangladesh in a number of
reasons. Remittance contributes to our national economy is a large scale by increasing foreign
exchange reserve, per capita income and employment opportunities. Remittance income makes
more strong local currency (Bangladesh) against US dollar.
3.13.4 Determinants of remittance Income in Bangladesh

Bangladesh has been continuously received robust remittance because migrant workers are
working hard aearning huge money in abroad. With these remittances, the government has been
compensating trade deficit. The determinants of remittance in Bangladesh include employment
in abroad, GDP growth, exchange rate and oil price. These determinants are strongly influencing
on the level of remittance inflow of Bangladesh.
3.13.5 Instruments of Foreign Remittance:

T.C.: Travelers Cheque.
F.D.D: Foreign Demand Draft.
T.T: Telegraphic Transfer, Cable transfer or swift transfer.
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M.T: Mail Transfer.
I.M.O: International Money Order.
P.O: Payment Order.
Chapter 4
Analysis of Challenges and Opportunities of Foreign Exchange
Operations in Bangladesh
23
4.1 Overview of Foreign Exchange in Bangladesh
Bangladesh is located in Southern Asia, bordering the Bay of Bengal, between Myanmar and
India. The country has experienced rapid economic growth in recent years mainly driven by
exports of readymade-garments and remittances from migrant workers. The country is
diversifying its export base in terms of products and destinations while tapping into its vibrant
private sector and large pool of inexpensive labour. Bangladesh’s major export item is
readymade-garments and others include shrimps, jute, leather goods and tea. Main export
destinations are the United States and the EU. Bangladesh imports mostly fuel, capital goods and
foodstuff originating in China, India, the EU and Kuwait. Bangladesh is a founding member of
South Asian Association for Regional Cooperation (SAARC), Bay of Bengal Initiative for Multi-
Sectoral Technical and Economic Cooperation (BIMSTEC) and a member of World Trade
Organization (WTO).
In 2019 Bangladesh was the number 40 economy in the world in terms of GDP (current US$),
the number 52 in total exports, the number 47 in total imports, the number 145 economy in terms
of GDP per capita (current US$) and the number 122 most complex economy according to the
Economic Complexity Index (ECI).
4.2 Business Environment of Bangladesh

It is noticeable that Bangladesh’s export trade into the global trade regime is characterized by
significant export performance, especially by the export-oriented manufacturing industries.
Trade procedures in Bangladesh are moderate in nature which is neither so smooth nor so hard.
Number of documents required for the business process is not so high.
But in starting business the traders have to move door to door for different certificates, test
reports, documents etc. It is observed from the Doing Business Reports Bangladesh from 2011-
2014 of World Bank Group, the rank of Bangladesh is gradually lagging behind at economics
sector. According to Doing Business 2012, Bangladesh has gone down four steps than that of
Doing Business 2011; it ranked 122 among 183 economies which was 118 in 2011. The report
Doing Business 2014 showed that Bangladesh was ranked 130th among 189 countries whereas
24
in 2013 the country was ranked 129th among 185 countries. Getting electricity and registering
property, Bangladesh ranked lowest at 189 and 177 respectively both in 2013 and 2014.
Complexities in the country’s import and export processes adverselyaffect Bangladesh’s
international business standing, proving costly for traders and hindering its global
competitiveness. In 2005, foreigners needed 185 days to get the permission of construction in
Bangladesh while it reached at 201 days in 2011. Required days for getting electricity connection
in industries in 2011 was 372 days which increased to 404 days in 2013 and remained unchanged
in 2014. In Bangladesh, to implement a contract, it takes 1,442 days and almost 63 percent of the
demanded property which is the highest time and cost considering the 189 economies. In trading
across borders (export and import), Bangladesh needs 25 and 35 days respectively that is very
high in comparison with the rest of the world.
4.3. Initiatives for export diversification

Export Policy, SFYP and Perspective Plan ofBangladesh 2010-2021 focused on export
diversification as follows:
 Product diversification- introducing range of new products in the export basket
 Geographical diversification- widening the range of destination markets for exports
 Quality diversification- upgrading the value of existing products
 Goods-to-services diversification- seeking opportunities to expand non-merchandise
exports.
 Intermediate goods diversification- product diversification need not imply adding only
final consumer goods in the export basket
4.3.1 Export Performance: FY 2020-2021

National Export Earning of Bangladesh from Goods & Service Sector:
Total export earning of Bangladesh from Goods & Service sector during FY 2020-21 amounted
to US$ 45,367.19 million as against US$ 39,755.27 million during FY 2019-20 showing an
increase of US$ 5,611.92. Hence the growth of export was 14.12%.
Export earning of Bangladesh from Goods and Service sector during FY 2020-21 amounted US$
38,758.31 million and 6,608.88 millionrespectively as against US$ 33,674.09 million and
6,081.18 million in FY 2019-2020.
4.3.2 A comparative statement of export earningsfor 9 years is given

below:
25
4.3.3National Export, Import & Trade Balance (Goods & Service)
National export earnings during FY 2020-21 was US$ 45367.19 million and import payment for
the same year was US$ 61571.40 million which shows that export earning covered 73.68% of
import bill. During 2019-20 and 2018-19 export earning covered 71.46% and 74.99% of import
bill respectively. Export earnings during FY 2020-21 was US$ 38758.31 million and import
payment for the same fiscal year was US$ 54344.40 million of goods sector. On the other hand,
export earnings during FY 2020-21 was US$ 6608.88 million and import payment for the same
year was US$ 7227.00 of service sector. Since inception Bangladesh is having trade deficit
26
mainly due to heavy import of fuel, capital machinery, industrial raw material indications a rapid
industrialization.
A statement of export as a percentage to import for the period FY 2012-13 to FY 2020-2021 is
given below:
4.3.4 Overall Export Position (Goods)

Total export from Bangladesh during the FY 2020-2021 amounted US$ 38758.31 million as
against US$ 33674.09 million during FY 2019-2020 showing an increase of US$ 5084.22million
growth of 15.10%.
A comparative statement of export earnings for 22 years is given below:
27
28
29
4.3.5 Bangladesh Export (Goods) to Major Countries (FY 1972-73 to
FY 2020-21)
30
31
4.3.6 Comparative Statement of Major Exportable (Goods) During
the FY 2016-17 to FY 2020-2021
4.3.7 Bangladesh Export Share of Major Products During FY 2020-

2021
32
4.3.8 Primary and Manufactured Commodities:
Out of total export earnings of US$ 38758.31 million during the FY 2020-2021 the share of
primary and manufactured commodities stood at US$ 1505.51 million and US$ 37252.80 million
i.e., 3.88% and 96.12% respectively.
Primary and Manufactured Commodities:
33
4.3.9 Export Readymade Garments (RMG) and Non-Readymade
Garments (Non-RMG)
Export earnings of US$ 38758.31 million and the share of RMG sector was US$ 31456.73
million. i.e., 81.16% and the share of Non-RMG sector was US$ 7301.58 million i.e. 18.84%
during FY 2020-2021 as against US$ 27949.19 million and US$ 5724.90 million i.e. 83.00% and
17.00% in RMG and Non-RMG sector respectively during FY 2019-2020.
RMG AND Non- RMG Sector:
4.3.10 Export Against Target (Goods)

Export target for the FY 2020-2021 was set at US$ 41000.00 million. As against this target the
actual export earnings stood at US$ 38758.31 million showing decrease of 5.47%.
The table shows below the export target and achievement of export target during FY 2001-02 to
2020-2021:
34
Achievement of Target:
35
4.3.11 Country-wise Export (Goods)
The destination wise export pattern during FY 2020-2021 was that USA with an intake of goods
worth US$ 6974.01 million was the biggest importing Country of Bangladesh. Germany & UK
occupied the second & third position respectively. The other major export destination of
Bangladesh in descending order were France, Spain, Italy, Netherlands, Canada, Belgium, India,
Sweden, Turkey, Japan & Hong Kong.
Export earning of Bangladesh during 2015-2016 to 2020-2021 from 20 major importing
countries were as follows:
Export: Country-wise:
36
4.3.12 Region-wise Export of Bangladesh
4.3.13 Bangladesh Export to SAARC Region
37
4.3.14 Export Performance of Goods Sector During the FY 2016-17
to FY 2020-21
38
4.3.15 Export Against Target (Service)
Export target for the FY 2020-2021 was set at US$ 7000.00 million. As against this target the
actual export earnings stood at US$ 6608.88 million showing decrease of 5.59%.
39
The table shows below the export target and achievement of export target during FY 2012-13
to 2020-2021:
Achievement of Target:
4.3.16 Export Performance of Service Sector During the FY 2016-17

to FY 2020-21
40
41
4.3.17 Top Exports Items
The top exports of Bangladesh are Non-Knit Men's Suits ($7.06B), Knit T-shirts ($6.92B), Knit
Sweaters ($5.71B), Non-Knit Women's Suits ($5.39B), and Non-Knit Men's Shirts ($2.5B),
exporting mostly to United States ($6.86B), Germany ($6.69B), United Kingdom ($3.92B),
Spain ($3.41B), and France ($3.33B).In 2019, Bangladesh was the world's biggest exporter of
Non-Knit Men's Shirts ($2.5B), Jute Yarn ($461M), Jute and Other Textile Fibers ($113M),
Textile Scraps ($84.4M), and Jute Woven Fabric ($80.4M)
Total value of exports in 2019-20 is Tk.2811668 million that reflects 19.24% decreased
comparing to that in 2018-19. As the volume of export of some goods, readymade garments, raw
hides & skin, footwear, made up textile articles, special woven fabrics, the total value of export
has gone up.
4.3.18 Trends of Monthly and Quarterly Export

Below Table presents monthly and quarterly exports that follow throughly upward trend up to
the end of the year.
42
4.3.18 Sector Composition of Export Commodities, 2019-20
This Table explains that Bangladesh earns significantly more from consumer goods and
materials for consumer goods.
Out of ten major items, the exports of Two commodities have been increased and another eight
commodities have been decreased. Exports of Readymade garments have been decreased by
20.67%,Foot wear 16.39%Special woven fabrics 30.91%, Hats and other headgear 14.40 %
Hides, skins and leather 42.86%, Fertilizer 100%, Made up textile articles 16.62%, Vegetable
textile fiber/yarn 3.95% and increased by shrimps and prawn 2.48%, Raw Jute 35.23.
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4.3.19 Export Earnings and Export Growth
The export sector performed rather well throughout the 1990s. This sector achieved a growth rate
of 37.04% in the FY 1994-95. During the twelve years, 1991-92 to 2002-2003, Bangladesh
experienced negative export growth (-7.44%) only in FY 2001-2002. The terrorist incident of
September 11, 2001 in USA and subsequent events may be blamed for this unexpected suffering
of the export sector in the particular fiscal year. However, the export sector achieved a 9.39%
growth rate, an increase of US$ 562.35 million, during 2002-2003, with total export earnings
amounting to US$ 6,548.44 million compared to US$ 5,986.09 million in 2001-2002.
Bangladesh Export earnings keep on impressive growth. It rakes in $4 billion export earnings in
November 2021. Bangladesh's export earnings continue to be buoyant as it clocked the $4 billion
mark for the third successive month in November this year, with an over 31% year-on-year
growth, thanks to a strong rebound of global demand for apparels.
Industry leaders have linked the excellent performance of apparel shipments to shifting of
additional work orders from its key competitors, such as Vietnam, India and Myanmar, which
are still grappling with pandemic shocks.Frozen and live fish, agricultural products, leather and
leather goods, home textile, jute and jute goods, pharmaceuticals and plastic products also posted
impressive growth.However, the export receipts were about $686 million lower than those in
October this year, according to the latest provisional data released from the Export Promotion
Bureau (EPB).Apparel shipments grew by 32.34% to $3.24 billion year-on-year in November,
taking export earnings to $15.85 billion in the first five months of this fiscal year, which was
44
12.33% higher than the target.The lone poor performer – engineering products suffered an over
18% negative growth in November.According to the EPB data, the country's export earnings
amounted to $3.57 billion in November 2020. In July-November this fiscal year, the RMG sector
posted nearly 23% growth year-on-year, according to the latest export data published by the
EPB.
4.3.20 Most Complex Products by PCI

The highest complexity exports of Bangladesh according to the product complexity index (PCI)
are Automatic goods vending, money changing machines, etc (0.83), Frames and mountings for
spectacles, goggles, etc (0.4), Hydrogen peroxide, (including solidified with urea) (0.37), Nickel
waste or scrap (0.34), and Bicycles, other cycles, not motorized (0.22). PCI measures the
knowledge intensity of a product by considering the knowledge intensity of its exporters.
4.3.21 Export Opportunities by Relatedness

The top export opportunities for Bangladesh according to the relatedness index, are Pepper
(0.14), Coconuts, Brazil Nuts, and Cashews (0.14), Nutmeg, mace and cardamons (0.14), Rubber
(0.13), and Cinnamon (0.13). Relatedness measures the distance between a country's current
exports and each product. The barchart show only products that Bangladesh is not specialized in.
4.3.22 Most Specialized Products by RCA Index

Bangladesh has a high level of specialization in Jute Yarn (350), Non-Knit Men's Shirts (67.8),
Non-Knit Babies' Garments (66.8), Textile Scraps (60.1), and Knit T-shirts (57.6). Specialization
is measured using RCA, an index that takes the ratio between Bangladesh observed and expected
exports in each product.
45
4.4 Bangladesh Imports
The top imports of Bangladesh are Refined Petroleum ($3.8B), Raw Cotton ($1.9B), Petroleum
Gas ($1.42B), Heavy Pure Woven Cotton ($1.31B), and Scrap Iron ($1.1B), importing mostly
from China ($17.3B), India ($8.24B), Singapore ($2.96B), Malaysia ($2.33B), and Indonesia
($1.91B).In 2019, Bangladesh was the world's biggest importer of Heavy Pure Woven Cotton
($1.31B), Light Pure Woven Cotton ($919M), Heavy Mixed Woven Cotton ($849M), Woven
Fabric of Synthetic Staple Fibers ($282M), and Light Mixed Woven Cotton ($250M).
Imports in Bangladesh averaged 97.52 BDT Billion from 1976 until 2021, reaching an all-time
high of 526.75 BDT Billion in October of 2021 and a record low of 0.57 BDT Billion in
November of 1976. This page provides the latest reported value for - Bangladesh Imports - plus
previous releases, historical high and low, short-term forecast and long-term prediction,
economic calendar, survey consensus and news.
46
During the last five years, the average growth of imports was recorded to -4.91%, the lowest
decreased by-4.91% in 2019-20 and the highest 21.79% in 2016-17. Average import value
during 2015-16 to 2019-20was Tk. 5051564 million. Total import value in 2019-20 was 5441658
million in taka and million in 64186 US dollars.
4.4.1 Imports of Bangladesh from 2015-16 to 2019-20.
4.4.2 Import by Major Commodities, 2015-16 to 2019-20
This Table analyses the comparative position of major commodities grouped as consumer goods,
materials for consumer goods, capital goods and materials for capital goods.
47
This graph shows that import value of materials for consumer goods remains always
significantly higherthan all other major commodities and it is increasing continuously.
4.4.3 Imports of Principal Goods

The imports of principal goods during the last five years are given below:
4.5 Bangladesh Remittances

In Bangladesh, Remittances refers to inflows of migrants’ and short-term employee income
transfers. Remittances from more than 10 million citizens abroad are very important for
Bangladesh and along with garment exports are key source of foreign exchange. Saudi Arabia
has been the largest source of remittances, followed by UAE, Qatar, Oman, Bahrain, Kuwait,
Libya, Iraq, Singapore, Malaysia, the US and the UK.Remittances in Bangladesh averaged
48
1350.49 USD Million from 2012 until 2021, reaching an all-time high of 2598.21 USD Million
in July of 2020 and a record low of 856.87 USD Million in September of 2017.
Remittances in Bangladesh decreased to 1810.10 USD Million in August from

1871.50 USD Million in July of 2021
49
CHAPTER 5
Analysis of the secondary data
50
5.1 Major Exports of Bangladesh
The country’s merchandise export earnings grew by 10.55 percent year-on-year to $40.53 billion
in the immediate past fiscal year riding on a high volume of garment shipment in a favorable
external business environment. The earnings were 3.94 percent higher than the annual target of
$39 billion in 2018-19. In 2017-18, Bangladesh exported goods worth $36.66 billion. However,
June recorded one of the lowest export receipts at $2.78 billion, which is also 5.27 percent less
than that of the corresponding month in the previous fiscal year, according to Export Promotion
Bureau (EPB) data released yesterday. In June of 2017-18, Bangladesh’s export earnings were
$2.93 billion. une’s receipts were also 22.65 percent lower than the monthly target of $3.60
billion set by the government. In Bangladesh, the fiscal year is counted between July of a year
and June of the next year.Garment export earnings, which accounted for over 84 percent of the
national exports, amounted to $34.13 billion, registering an 11.49 percent year-on-year growth.
Of the amount, $16.88 billion came from knitwear and $17.24 billion from woven garment
products. Earnings from apparel shipment were 4.57 percent higher than the target of $32.68
billion. Some $30.61 billion was earned in fiscal 2017-18.The shipment of frozen and live fish
such as shrimp and crabs rose 1.58 percent to $500.4 million and that of agricultural products
such as tea, vegetables, fruits, spices, dry food, and tobacco surged 34.92 percent to $908.96
million.Pharmaceuticals, furniture, petroleum byproducts, plastic goods, ceramics, handicrafts,
cotton, cotton products (yarn and wastes of fabrics), carpet, terry towel, footwear, wigs, and
furniture performed better in the last fiscal year.However, leather and leather goods and jute and
jute goods continued their poor show. Leather and leather goods fetched $1.01 billion, down 6.06
percent year-on-year. This is largely because many tanneries that have shifted to the leather
estate in Savar have not embarked on full-fledged production yet.The sector is the only segment
that had crossed the $1-billion export mark after garments last year. Exports of jute and jute
goods, another important foreign currency earner, fell 20.41 percent year-on-year to $816.27
million.The sector’s earnings are declining mainly because of higher use of jute goods like sacks
in the domestic market and the anti-dumping duty slapped by India.Home textiles, building
materials, ships and bicycles also performed poorly.Leading the decreases among the top 10
Bangladeshi imports was cotton via its -21.3% drop year over year, ahead of the 21% decline for
imported electrical machinery and equipment.
The Covid-19 induced economic crisis has affected the export and import of Bangladesh by large
margins. The economic crisis has been exacerbated by the closure or limited operation of
businesses during the lockdown at home and abroad. In the financial year 2019-20, there was a
very high negative growth in exports (17 percent)—which was unprecedented in the recent
history of Bangladesh. Although the situation has improved somewhat since the beginning of the
current financial year 2020-21, it is uncertain whether exports will return to normal. There are
fears that the economic recessions in the United States and Europe, two main export destinations
of Bangladesh, are likely to be prolonged, which will slow down the recovery of the export
sector in Bangladesh. In the last financial year, there was high negative growth in the import
trade (8.6 percent) too. The plight of the import trade is by no means conducive to investment
and business expansion in the days to come.
51
Despite several rounds of downward revisions, the IMF still hopes for a global recovery in 2021.
According to the World Economic Outlook Update in June 2020 by the IMF, global growth will
be a negative 4.9 percent in 2020, which is 1.9 percentage points lower than the April 2020
World Economic Outlook forecast. Though the IMF projects for a positive 5.4 percent global
growth in 2021, it admits that the recovery will be more gradual than previously forecasted. Even
with a 5.4 percent growth in 2021, the global GDP in 2020 will be 6.5 percentage points lower
than the pre-Covid-19 projections made by the IMF in January 2020. Europe, on average, will
experience a negative growth of 10 percent in 2020 and a positive growth of 6 percent in 2021.
In the USA the GDP growth will be negative 8 percent in 2020 and 4.5 percent in 2021.
However, the positive economic growth in 2021 remains to be dependent on some factors, the
primary factor being the availability of reliable vaccines for Covid-19. Nonetheless, only the
availability of vaccines in some countries would not help recover business confidence
worldwide. There is a need for a fair distribution of vaccines across countries. Given the fact that
world trade is heavily dependent on global value chains, unless business confidence rebounds in
all segments of the value chains, world trade will continue to remain depressed. According to the
WTO's June 2020 estimates, based on a year-on-year basis, in 2020 the volume of merchandise
trade shrank by 3 percent in the first quarter and further dropped by around 18.5 percent in the
second quarter. No doubt, these declines are historically large.
As far as the major export item of Bangladesh, the readymade garments (RMG), is concerned, in
the financial year 2019-2020, the earnings from RMG exports declined by 18.12 percent from
the previous year. With a much smaller fall in RMG exports, by around 3 percent, Vietnam
outperformed Bangladesh to become the second-largest RMG exporter in the world. Therefore,
the negative impacts of depressed global trade are not uniform across countries. While
Bangladesh has been struggling to cope up with the disastrous situation, its major competitors,
like Vietnam, are in a better position to combat the crisis. The differences in impacts are
primarily due to domestic business enabling factors in which Bangladesh seriously lags behind
its major competitors.
5.2 New challenges and opportunities for export industries of

Bangladesh
Bangladesh has been proudly celebrating fifty years of its Independence. This great achievement
has coincided with the United Nations' acknowledgement of the country's graduation from LDC
to the developing country group. Bangladesh attained the required indicators including GNI per
capita, human asset index and economic vulnerability index for graduating from LDC to
Developing country in 2018. Since then, Bangladesh has been maintaining the economic and
social indicators. We all have reasons to celebrate the achievements. However, there are
suggestions that the country's graduation to developing nation's group will bring for us a number
of challenges in the future.
The current duty-free access to export markets for several commodities of the country will cease
to exist once we leave the LDC group and step into the developing country category. Also,
Bangladesh will not be given low interest loans or grants for financing its development projects.
52
A number of concessional treatments the country so far has been enjoying as an LDC will be no
longer available once our status will be elevated. Besides, loans and financial supports at a
concessional rate will not be offered, rather we have to ensure our export commodity accesses to
international markets paying normal duties and taxes (unless we sign free trade agreements with
the countries of export). Various published reports project that the country may lose
approximately 8-10 per cent exports due to the erosion of preferential benefit, especially duty-
free access to the developed and to some developing country markets.
Experts believe that the country will require among others to improve its economic capabilities
and productivity as well as substantially diversify export of commodities and services to
maintain its export momentum. Our cost of business must be reduced and productivity should be
improved to offset the costs for financing businesses to remain competitive in the export and
domestic markets.
The elevated position and acknowledgement of Bangladesh as a member of the developing
nations will secure its credit worthiness and therefore, should allow more opportunities for
getting commercial loans from international market with competitive rates as a less risk
borrower. The country needs to achieve economic diversity, technological up-gradation and skill
developments as part of human resource development. Also, it will need to put additional efforts
to minimize climate vulnerability and ensure inclusive development.
Bangladesh got five years time to prepare itself for the challenges for stepping in to the
developing nations group. Policy planners, business groups and executing agencies should work
out appropriate strategies to meet the upcoming challenges for the new realities and reform the
deficiencies in scores of areas, including infrastructure and service delivery by the public sector.
A comprehensive plan and strategy need to be worked out for sustainable human resource
development for the new realities.
Already a number of business enterprises have been preparing themselves for competitive
international businesses. As for example, a good number of textiles and garments manufacturers
have converted themselves into 'Green' factories and secured international recognition for
'Leadership in Energy and Environmental Design' (LEED). There are several highly rated green
denim, knitwear and textiles mills in Bangladesh. So far, nearly seventy garments factories have
achieved LEED certification and another 280 factories are in the process of obtaining the same
from the US Green Building Council. Of the top 11 LEED Platinum certified factories, eight are
from Bangladesh. Attaining LEED certification has given opportunities for the Bangladeshi
factories in garments and textiles sector to secure solid reputation and market leadership of
quality products, timely delivery and top class service. The LEED certified factories have to care
for environment protection and sustainable business plan and practices through reduction of
carbon footprint in production processes, reduction of water and artificial energy uses, ensuring
safe and healthy work environment and better labour protection. These factories have been
demonstrating the fact that investments in environmental care and workers' health, safety and
welfare improve productivity and lessen migration of work force from their factories.
53
Harvesting rain water and solar energy and utilising them in a circular economic chain in the
factory, wise combination of natural and artificial ventilation additionally help the LEED
factories to save artificial energy use and carbon emissions. The renowned global retailers and
major brands place work orders at a relatively higher prices (the green factory owners enjoy
advantageous negotiation benchmark for better prices from their customers) to the Bangladeshi
factories and have been comfortable to do business with them. The green initiatives have been
helping Bangladeshi textile and apparel factories to brighten the country image and the industry
sector which in turn help export growth of the sector despite the global economic recessions and
Covid-19 pandemic.
5.3 Bangladesh Market Challenges

Despite relatively strong economic growth over the past decade, investment climate constraints,
deficiencies in energy and transportation infrastructure, and an opaque regulatory environment
have prevented Bangladesh from achieving higher growth.
Scarcity of land, depleting natural gas reserves, and inadequate power distribution remain major
impediments to investment. Electricity generation capacity has grown significantly over the last
decade, but transmission and distribution systems need additional work to ensure more reliable
and inclusive access to electricity. Corruption is also widely perceived to be endemic at all
levels of society, discouraging investments and inhibiting economic growth.
Reputable companies have complained the Bangladesh National Board of Revenue (NBR) has
inconsistently subjected businesses’ prior-year tax returns to renewed scrutiny. While this
process is taking place, normal business activities such as banking, immigration procedures, and
branch office licensing permissions may be slowed or stopped entirely.
Political unrest, largely stemming from local or national elections, has in the past shut down
business operations and impacted supply chains, though not since 2014. Security challenges
have hampered some investment and trade opportunities. Bangladesh saw its largest terrorist
attack in July 2016 (claimed by the Islamic State of Iraq and al-Sham - ISIS) at the Holey Artisan
Bakery restaurant in Dhaka, where twenty-two people, mostly foreigners including one U.S.
citizen, were killed. Prior to July 2016 there were several incidents where foreigners and
bloggers were targeted by ISIS and Al-Qaeda. The government and law enforcement have
implemented security measures and conducted raids to restrain militant groups operating in
Bangladesh. Although extremist attacks remain a concern for the country, relatively high and
steady GDP growth over the last decade has shown the resilience of Bangladesh’s economy in
weathering these challenges.
A series of RMG industry accidents, including the tragic deaths of more than 1,100 workers in
the Rana Plaza Complex collapse in April 2013, highlighted the need for improved worker safety
and prompted Western brand-led initiatives to improve factory safety. By 2021 these initiatives
had broadly improved safety conditions in RMG factories, but conditions in non-export factories
remained poor, a fact highlighted by the July 2021 fire at a food-processing factory in
Narayanganj which killed 52 people. Labor rights continue as a source of international concern,
54
marked particularly by low and delayed wages and government interference in attempts by
workers to organize.
Economic weaknesses also include an undeveloped and undercapitalized financial sector, an
inefficient and chronically loss-making public sector, and a decision-averse bureaucracy that
often resists measures to improve the business climate.
5.5 Bangladesh - Trade Barriers

Foreign companies are allowed to provide services in Bangladesh except in sectors that are
subject to administrative licensing processes. Yet new market entrants face significant
restrictions with respect to most regulated commercial fields (including telecommunications,
banking, and insurance), and the process for establishing legal entities such as financial
institutions is subject to strict regulatory requirements. There have been reports that licenses are
not always awarded in a transparent manner. Transfer of control of a business from local to
foreign shareholders requires prior approval from the Bangladesh Bank (control is defined as the
ability to control the board of directors or a majority of the directors). In 2016, the Bangladesh
Investment Development Authority (BIDA) was formed from the merger of the Board of
Investment and the Privatization Commission. BIDA’s goal is to push for implementation of a
One-Stop Service Act and to become Bangladesh’s one-stop private investment promotion and
facilitation agency. On February 5, 2018, the Parliament passed the One Stop Service Bill 2018.
BIDA prepared the rules, which will be formulated under the Act. After the formulation of the
rules, the authority will able to implement the Act properly. BIDA is currently developing an
automation-based business model, which is fully virtual.
Bureaucratic inefficiencies often discourage investment in Bangladesh. Overlapping
administrative procedures and a lack of transparency in regulatory and administrative systems
can frustrate investors seeking to undertake projects in the country. Frequent transfers of top-
and mid-level officials in various Bangladeshi ministries, directorates, and departments are
disruptive and prevent timely implementation of both strategic reform initiatives and routine
duties.
Repatriation of profits and external payments are allowed under current law. But U.S. and other
international investors have raised concerns that outbound transfers from Bangladesh remain
cumbersome and those applications to repatriate profits or dividends can be held for additional
information gathering or otherwise delayed, if tax disputes arise. Government officials cite
concerns that allowing even limited outward transfers would lead to a flood of capital from
Bangladesh.
U.S. and other international companies have raised concerns that the National Board of Revenue
has arbitrarily reopened sometimes decades-old tax cases, with particular targeting of cases
involving multinational companies.
Extortion of money from businesses by individuals claiming political backing is common in
Bangladesh. Other impediments to business include frequent transportation blockades called by
political parties, which can both keep workers away and block deliveries, resulting in
55
productivity losses. Vehicles and other property are at risk from vandalism or arson during such
blockades, and looting of businesses has also occurred.
Land disputes are common, and both U.S. companies and citizens have filed complaints about
fraudulent land sales. For example, sellers fraudulently claiming ownership have transferred
land to good faith purchasers while the actual owners were living outside of Bangladesh. In
other instances, U.S.-Bangladeshi dual citizens have purchased land from legitimate owners only
to have third parties make fraudulent claims of title to extort settlement compensation.
Likewise, corruption remains a serious impediment to investment in Bangladesh. While the
government has established legislation to combat bribery, embezzlement, and other forms of
corruption, enforcement is inconsistent.
5.6 The problems facing Bangladesh’s exports

Merchandise exports from Bangladesh have been growing at an annual average rate of 11% since
2001, and goods exports in 2018 amounted to US$38.7bn. A vibrant export market for
readymade garments has emerged in Bangladesh, but the sector's high share of total exports is a
cause of concern for the economy. The country's export destinations are also highly
concentrated. Although The Economist Intelligence Unit expects healthy export growth in the
forecast period, there are bottlenecks that need to be dealt with before export growth can achieve
its potential.
Export growth is one of the primary ways in which Bangladesh has prospered. This growth has
been made possible by an ample supply of cheap labour and duty-free access to the EU and US
markets. However, the export basket and destinations are highly concentrated; readymade
garments make up around 70% of exports, and the EU and the US absorb 49% and 12% of
exports respectively.
High dependency on a single type of product and a few markets leaves Bangladesh vulnerable to
external shocks. A spike in the price of cotton or a sudden change in the import regulations of a
major destination would have a significant impact on the economy. It is for this reason that
Bangladesh needs to seek other products into which it can diversify. It also needs to diversify its
export destinations by gaining market share in non-traditional countries. Diversification will also
help exports to grow at a faster rate.
The need for diversification will only become sharper in the future. Bangladesh has already been
removed from the US Generalized System of Preferences, which gave it duty-free access to that
country's market, owing to the Rana Plaza disaster in 2013. Bangladesh is also set to graduate
out of least-developed country status in 2024 and the Everything but Arms agreement (which
provides duty-free access to the EU) in 2027, as we expect it to meet the required economic
growth criteria.
While we do not expect the anticipated global slowdown or the trends towards protectionism and
automation to affect readymade garment exports in our forecast period (2020-24), these factors
do provide downside risks in the medium-to-long term. There are also domestic factors that
56
could disrupt exports, including the risk of worker protests because of low wages and poor
working conditions.
Diversifying into new markets and products
There are many fresh markets into which Bangladesh can diversify. The Association of South-
East Asian Nations (ASEAN) presents an ideal destination for Bangladeshi exports; the region,
with a population of 620m, has a rapidly growing middle class. According to data from the UN
Conference on Trade and Development, Bangladesh is the third-largest exporter of readymade
garments to ASEAN, ahead of Vietnam and India. As those two countries enjoy preferential
trade agreements with ASEAN, it is apparent that Bangladesh possesses a comparative
advantage in exporting to these markets.
The shift of low-cost manufacturing away from China also presents an opportunity. The sheer
scale of China's readymade garment exports provides a huge opportunity, and capitalising on this
would help Bangladesh to diversify its export destinations to ASEAN, Japan and South Korea,
all of which are important markets in which the country could increase its foothold.
Reaching new markets will help Bangladesh, but diversification will remain a fundamental issue
as long as other products do not provide a prominent share of the export basket. The country has
the advantage of cheap labour and duty-free access to the EU, which should help its exports to
expand into other labour-intensive goods. Footwear is one such industry; the global export
market is worth US$150bn, but Bangladesh only accounts for 0.5% of that.
Bottlenecks for growth
China's shift to higher-value manufacturing and the US-China trade war have led to the
migration of exports to other countries. These factors have been among the primary reasons for
the growth of Bangladesh's readymade garment exports in recent years. However, the country
has not been successful in attracting other export sectors that are moving production out of
China. Higher-value exports such as electronics (which total US$3trn worldwide) provide an
immense opportunity for Bangladeshi exporters. However, we do not expect Bangladesh to be
able to diversify its export basket further in the near term, because of the structural impediments
that the economy faces.
Bangladesh's poor port and road infrastructure leads to long delays in the import and export of
products. It is also an energy-deficit country, plagued with issues of inadequate supply, a lack of
infrastructure and poorly managed energy companies. This will hinder the country's efforts at
industrialization. While Bangladesh enjoys the advantage of lower wages, it is bogged down by
poor productivity and a cumbersome business environment; it is ranked 71st out of 82 countries
in The Economist Intelligence Unit's business environment rankings. Other reasons for its low
ranking are the absence of duty-free access to important markets and policy issues such as
unequal access to duty-free imports of inputs for various exports.
We expect the improvement of road and energy infrastructure to continue steadily, but the
freeing-up of access to new markets will not be a priority for the government in the near term.
57
Bangladesh will continue to record strong export growth in 2020 and 2021, at 7.2% and 7.5%,
respectively, but growth in the long term will remain constrained.
5.7 Factors behind the Success of Bangladesh

There are several plausible explanations for Bangladesh’s unexpected and overwhelming
success.
The historical evolution of world apparel business reveals that comparatively lower wage rate
countries were always the major apparel supplier in the world as the industry is highly labor-
intensive. A large number of human labors are embodied in the manufacturing process making
wage rate as an important determinant of production cost. Although the labor productivity is an
issue, low wages have helped Bangladesh focus on high volume mass production of RMG items,
competing directly with countries like China, India and Vietnam.
One of the main reasons for Bangladesh success in the apparel market is price competitiveness.
Bangladesh is one of the lowest prices offering countries in both theUSA, and European Union-
27 countries (Source: BKMEA). Moreover, being a member of LDCs, Bangladesh enjoys duty
free quota free market access to many countries like the Japan, Australia, and the EU etc. which
helped to boost up RMG sector of Bangladesh. The quota system ensured a “reserved” market
status for the new suppliers (and also for the quota restrained countries) and gave them some
time to develop and learn the skills required in the production and marketing.
Due to the enormous contribution of the RMG sector in the economy, the Bangladesh
government has initiated several support measures specifically targetingthis sector. Government
plays an important role for the expansion of RMG sector by providing various policy supports
time to time including bonded warehouse facilities, duty drawback incentive, cash compensation
scheme, and the facility of procuring raw materials. Moreover, relatively stable political situation
further stimulates the export growth.
Although the USA has been the main market for Bangladeshi apparel products, recently it started
to search for new markets, for example: in 1992 about 42 percent of total RMG exports from
Bangladesh were destined to the USA while it reduces to 28 percent in 2008. The RMG export
from Bangladesh showed a huge jump since 2003 whereas the dependency on the USA market
started to decline during these periods. One possible explanation for this may be the fact that the
EU provided the GSP scheme to Bangladesh in 2003, and Bangladeshi knitwear items were most
successful in grabbing that opportunity while woven could not as this sector do not have
sufficient backward linkage to meet the rules of origin. Consequently, the USA has become the
main market for Bangladeshi woven products while the EU for knitwear products.
depreciation of the Bangladeshi currency (Taka) by more than 12%, from 2004 to 2007, has
either enhanced or at least protected the competitiveness of Bangladeshi T&C exporters. Though
this has had a very limited positive impact on the export of woven RMG because of the need to
import major portions of raw materials, but in the case of knit RMG exports, in which almost
80% value addition takes place within the country itself, this has had a major positive impact.
However, Bangladesh’s successes still face difficulties in making the progress sustainable due to
58
inefficient infrastructure, particularly its port and transportation system, lack of adequateefforts
to ensure improved trade facilitation, and the poor state of human capital.
5.8 Remittance Income in Bangladesh

The export of manpower is one of the most significant foreign currency earning sectors of
Bangladesh. It contributes our national economy in a large measure by increasing foreign
exchange reserve, per capita income and employment opportunities. The remittance which has
sent by the migrant workers is the 11 percent of the total GDP (Gross Domestic Product) in
Bangladesh. Beside this, these remittances are 7 times higher than the amount which has got the
government of Bangladesh as foreign aid and 13 times higher than the amount which got the
government of Bangladesh as foreign investment.
5.8.1 Channels of remitting in Bangladesh

Both the formal and informal channels are using by Bangladeshi migrants to send their
remittances to their relatives at home. Among the formal channels, two channels are common,
such as draft issued by a bank or exchange house and electronic funds transfers into accounts.
Some government banks such as Sonali Bank Limited, Janata Bank Limited, Agrani Bank
Limited and Some private commercial banks such as Bank Asia Limited, Prime Bank Limited,
AB Bank Limited, United Commercial Bank Limited, Mercantile Bank Limited and Social
Islami Bank Limited are very much active in the remittance market. Among the informal
channels, the most used channel is hundi system. The sender and remitter are avoiding tax and
violating foreign exchange rules & regulations that may facilitate money laundering.
5.8.2 Challenges faced by Bangladeshi migrant workers

The people who want to go to abroad for job are suffering from information problem because
most of these people are illiterate and they don’t know from where they can collect more
authentic information in this regard.
The people who want to go to abroad for doing job are suffering from efficiency problem
because most of the migrant workers of Bangladesh are unskilled and low-skilled. That is why,
they can’t perform their assigned task & duties with effectively & efficiently like the migrant
workers of other countries in the world.
Migrant workers of Bangladesh often face emergency problems like cheating, frauds and so on
within and outside the country.
The migrant people of Bangladesh are regularly facing passport collection problem because with
the introduction of machine-readable passport people are compelled to travel all the way from
their village and wait a week to get their passport.
5.8.3 Opportunities of remittance income in Bangladesh

Remittances in Bangladesh arise as a poverty alleviating policy tool. It contributesdirectly in
broadening the opportunities to increase incomes.At the community level,remittances generate
multiplier effects in the local economy, creating jobs andspurring new economic and social
59
infrastructure and services. At the national level,remittances provide foreign currency and
contribute significantly to GDP.
Bangladesh has earned a record amount of foreign remittance amounting more than $ 14 billion
and exported the second highest number of workers to Middle- East Countries (Ministry of
Expatriates’ Welfare and Overseas Employment Report, 2012). It has been indicated that the
demand for blue-collar workers are increasing day-by-day in Asian countries, especially Middle
-East and South-East Asian countries. The World Cup Football 2022 will be held in Qatar. That
is why, the authority of this country wants to import huge number of labors from Bangladesh.
Thus, the government of Bangladesh should start diplomatic and high-profile discussion with the
government of Qatar immediately to catch the labor market of this country so that the
government can export huge number of labors to Qatar and earn ample foreign remittance.
60
CHAPTER 6
Findings, Recommendations, Conclusion
61
6.1Findings
Garments exports of Bangladesh are partly protected from exchange rate movements because it
is backed by of the special import credit system which is called back-to-back Letter of Credit
(LC). This LC covers import costs from export proceeds.
Bangladesh is a one of beneficiary country of thedemographic dividend in world.
Unfortunately,Bangladesh cannot utilize this prospect becauseof poor skill level. Unskilled labor
is the mainreason for constraints productivity ofBangladesh. To operate garments required alittle
skill which Bangladesh’s labor earn within afew days. But they are not efficient enough
toemploy in technology-based industry.
Cost, quality, time and reliability are the fourdimensions considered as competitiveness ofexport.
To operate garment factory low level skillis enough. Bangladesh labor cost is cheapcompare to
other competitors in the market. So,Bangladesh has achieved competitive advantagein garments
sector with long years’ experience.But other sectors are far behind to achieve theseadvantages.
Policy makers should come aheadwith the collaboration with entrepreneur to createbranding
image of our non-traditional product.
Bangladesh is one of the Most Favoured Nation(MFN) in exporting garments items so it
caneasily capture specific western market in thissector. But Bangladesh’s other non-
traditionalsectors is facing unfriendly tariffs regime whichcreates anti-export bias.
Bangladesh’s garment industry has achievedefficiency with experience. Single
industryconcentration with ignoring other industriesreduce firm-level productivity for other
privatedomestic firms which hampers the economicprogress. Reformation of domestic policy
iscrucial to diversify export of Bangladesh.
The low FDI orientation also acts as a large barrier for further export expansion and
diversification in Bangladesh. The challenges in attracting FDI in Bangladesh include high cost
of doing business, unfavorable regulatory environment, bureaucratic red-tape, uncertainty in the
reform of policy regime, weak enforcement of intellectual property rights, and slow
implementation of infrastructural projects including the SEZs. Therefore, reforms should focus
on simplifying regulations, enforcing the IPR, and faster and cost-effective implementation of
mega-projects and SEZs.
Considering facilities from the regularityagencies, ease of doing business index isprepared.
Bangladesh performs poor in thisindex particularly for difficulties to get electricity,register
62
property, enforce contracts etc. Barriersgetting from regulators, investors aredemotivated to do
business in Bangladeshespecially Foreign Direct Investment (FDI). Mostof the garments are
managed by local ownerswho already overcome technological barriers.But other sectors are
failing to technology andexperience transfer through FDI for ease of doingbusiness barriers.
Worldwide, there are two frequently used trade indicators are Enabling Trade Index (ETI)
andTrade Logistics Performance Index (LPI). Firstone measure by World Economic Forum
(WEF)and second one is measured by World Bank(WB). Unfortunately, Bangladesh’s position
doesvery poorly most of the indicators including theabove indicators. Bangladesh is lagging for
lowscores in power and transport which appeared asserious barriers to manufacturing sector.
However, most of the garment factories are inmajor cities where these manage constraints
butother industries in local level cannot overcomeconstraints.
Migrant workers face lots of problems in abroad due to lack of information, knowledge &
education. The government and private recruiting agencies should expand their training centers
in different parts of the country in order to reduce this problem.The return workers may help
prospective workers by giving basic knowledge like how to use toilets, how to talk/ behave with
employers, how to proceed in the airport and others, which will minimize the conflicts between
employers and migrant workers that creates a bad reputation of Bangladeshi workers.
63
6.2 Recommendations
Policy makers of Bangladesh should first focus on the current weak export penetration level.
They need to give special attention on priority basis of identified threats. They do not need to
establish any institution or entities; they just act to removal heavy weighted barriers under
existing set up.They should mainly fix the export target and include the non-traditional items in
export basket which are currently exported in little amount but has prospect in the targeted
countries.
To develop the non-tradition sector and enhance export for diversification Bangladesh should
improve current Foreign Direct Investment (FDI) inflows. This will help ensure technology
transfer and expertise enhancement of Bangladesh. Thailand and Vietnam have at least ten times
more FDI than Bangladesh which spur their export sector to diversify.
policy makers of Bangladesh should identify the new commodity to include export list. This will
reduce the heavily dependence on single sector. In this case Bangladesh need to current resource-
based demand driven targeting. Bangladesh has labor forces as resources. Bangladesh’s labors
are not train and equipped. Government can take initiative make them technically educated for
best fit in demand driven industry. Worldwide have huge demand electronics, machinery parts.
Bangladesh can include them in their emerging export list.
Bangladesh can take the experience from Thailand which is agro-processing foods exporter in
world market. Thailand has produces innovative and high value processed products such as
frozen meals, canned foods, halal foods, food seasonings, food supplements, functional foods,
and medical foods. Thailand exports halal products to more than 57 countries, as a Muslim
majority country Bangladesh can take this opportunity of halal brand.
Fragmentation of production processes gave rise to Global Value Chains (GVCs) creating
opportunities for intra-industry trade globally & also between economies within a region.
Bangladesh can easily exploit GVCs to produce parts and components of final products through
proposing FDI and joint ventures.
Bangladesh’s congested transportation and often unsophisticated logistics systems impose high
costs to the economy. By making its logistics more efficient, Bangladesh can significantly
optimise its connectivity, business environment, and competitiveness, putting the country on the
right path to become a dynamic upper middle-income country. Efficient logistic has become one
of the main drivers for global trade competitiveness and export growth and diversification.
64
Vietnam has succeeded in exporting non-traditional items. Bangladesh can utilize the experience
and develop new industrial enterprise. Government needs to offer special facilitiessuch as
corporate tax waiver, importliberalization, property rights, and a developedfinancial system with
upgrading relevant laws.Governments of Bangladesh also take initiativeto protect the non-
traditional exporters, if theyface any loss from foreign exchangemanagement.
Reformation policy should include trade and market liberalisation to remove local market
constraints and strengthen within-firm efficiency, improvements necessary for entry
intoexportmarkets, and investments in research &development.
Policy makersshould ensure trade policy low and uniform tariffsand a seamless export-import
regime which issuitable for competitive export of non-traditionalsector except garments. Also,
Policy makers should bestrong enough to remove the barriers forensuring ease to doing business.
The government of Bangladesh should pay special attention to develop the skills of workers and
also should take necessary measures to build-up the mutual trust and good relation with the
various countries in the world for saving the valuable income generating sector of the country.
The government should establish information booth or center for migrant workers in Union,
Upzila and Zila Parished throughout the country so that the people can collect relevant necessary
information from these booths/ centers. The government of Bangladesh should also establish
these opportunities & facilities in abroad where migrant workers are employed. If the
government could establish these opportunities & facilities for the migrant workers within and
outside the country then the people would be able to reduce their problems and it will create trust
& confidence on government
65
6.3 CONCLUSION
Bangladesh needs to focus on resource-based industrialization and improve bilateral and regional
cooperation to extend international market for diversifying trade.If an industry works for export
under self-selection process, it can improve its productivity from learning by doing effect.To the
extent firms’ learning from exporting is a critical driving force in development. It should make
significant change its trade and financial markets, investment laws and the regulatory framework
to focus on the dynamic and growing domestic sector.Import is one of the moist important
factors responsible for trade balance. Due to trade deficit where import is higher than export, the
imports of Bangladesh need to look from different dimensions.
Bangladesh’s market should be more liberalized as a structural adjustment process to improve
the doing the business ranking to attract the FDI. Policies related to infrastructure, human capital
and institutions should be improved to increase exports and associated firm-level
performance.Reform and restructure the institutions is needed in Bangladesh to remove the
institutional barriers.
Policy makers of Bangladesh should consider diversification related policy implementation as an
emergency. For any circumstances such as changing buyers’ taste, loosing competitiveness,
failing to compliance, importers’ contracts shifting etc. if Bangladesh lost its market of garments
for any uncertainty in garments sector whole economy will devastate because of single sector
concentration.
One of the most significant foreign currency earning sectors of our country is manpower
exporting. The flow of remittance has influenced directly and indirectly by many factors. One of
the important direct factors is competition. There are many countries exporting workers abroad.
Thus, Bangladeshi migrant workers must face tremendous competition with the workers of other
countries in the foreign land.
Coronavirus has given a signal showing emergency of diversification. Due to COVID-19
pandemic already $3.17 billion worth of RMG orders have been cancelled. Moreover,
Bangladesh trading partners GDP is projected to drop about 3%, so people will cut their expense
on non-essential items which might impact on Bangladesh export. If crisis continues,
Bangladesh’s GDP and employment will affect greatly. To shield economy of Bangladesh, they
should focus on diversification through implementing suggested framework.
66
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INTERNSHIP REPORT

Date of Submission:23 January 2022

Ranada Prasad Shaha University

Subject: Declaration regarding the validity of Internship Report.

1.2 Objectives of the study

1.3 Methodology of the study

1.4 Scope of the study

1.5 Limitations of the study

Overview of Foreign Exchange Operations in Bangladesh

3.1.1 Foreign Currency Account (FCA)

3.2 Bangladesh Foreign Exchange Reserves

3.3.1 Export Trade of Bangladesh

3.3.2 Export Sector of Bangladesh

3.3.3 Export exempted from repatriation of export proceeds

3.3.4 Export Trade Control Regulations

3.3.5 Method of receiving payments against exports

3.3.6 Registration of exporters

3.4 Foreign Exchange Laws

3.5 Authorized Dealersand The Money Changers

3.6 Bringing in cash fromabroad by a foreign investor or any person

3.7 Repatriation of capital and profit

3.8.1 Imports by Export Processing Zone (EPZ)

3.8.2 Import Policy Order

3.8.3 Bangladesh Major Imports

3.8.4 Machineries Import

3.8.5 Cotton Import

3.8.6 Fuel Import

3.8.7 Electronics Imports

3.9 Shipments lost or damaged in transit

3.10 Letter of Credit

3.11 LC Authorization Form

3.11.1 LC covering imports

3.11.2 Terms on which LCs may be opened

3.11.3Period for which LCs may be opened

3.11.4 BACK-TO-BACK LCs

3.12.1 Benefits of SWIFT

3.13.1 Classification of Remittance:

3.13.3 Impact of Migration and Remittance to the Economy of

3.13.4 Determinants of remittance Income in Bangladesh

3.13.5 Instruments of Foreign Remittance:

4.2 Business Environment of Bangladesh

4.3. Initiatives for export diversification

4.3.1 Export Performance: FY 2020-2021

4.3.2 A comparative statement of export earningsfor 9 years is given

4.3.4 Overall Export Position (Goods)

4.3.7 Bangladesh Export Share of Major Products During FY 2020-

4.3.10 Export Against Target (Goods)

4.3.13 Bangladesh Export to SAARC Region

4.3.16 Export Performance of Service Sector During the FY 2016-17

4.3.18 Trends of Monthly and Quarterly Export

4.3.20 Most Complex Products by PCI

4.3.21 Export Opportunities by Relatedness

4.3.22 Most Specialized Products by RCA Index

4.4.1 Imports of Bangladesh from 2015-16 to 2019-20.

4.4.2 Import by Major Commodities, 2015-16 to 2019-20

4.4.3 Imports of Principal Goods

4.5 Bangladesh Remittances

Remittances in Bangladesh decreased to 1810.10 USD Million in August from

5.2 New challenges and opportunities for export industries of

5.3 Bangladesh Market Challenges

5.5 Bangladesh - Trade Barriers

5.6 The problems facing Bangladesh’s exports

5.7 Factors behind the Success of Bangladesh