GDP growth of Bangladesh

find us online

TRADE:GDP growth of Bangladesh


Investment treaties for promotion and protection of investment between Bangladesh and the following countries have been concluded
USA, Republic of Korea, UK, Thailand, Germany, Turkey, Romania, France, Belgium, Italy.
Negotiations are going on with a few other East Asian and European countries including the Netherlands and Switzerland.

Avoidance of Double Taxation-Bilateral Agreements : Bilateral agreements have been concluded by the Bangladesh government with the following countries for avoidance of double taxation
Japan, Italy, Singapore, Sweden, Republic of Korea, United Kingdom (including Northern Ireland), Canada, Malaysia, Romania, Sri Lanka, France, Germany, India, Pakistan.
Negotiations are going on for similar agreements with Belgium, the Netherlands and the USA.

Guarantees through Multilateral Agencies :Bangladesh is a signatory of MIGA (Multilateral Investment Guarantee Agency), OPIC (Overseas Private Investment Corporation) of America and ICSID (International Centre for Settlement of Investment Disputes). MIGA is the Multilateral Investment Guarantee Agency of the World Bank group to encourage the flow of foreign direct investment (FDI) to, and among, developing member countries by providing guarantees to foreign investors against loss caused by non-commercial risks. MIGA's guarantee protects investors against losses arising from the risks of currency transfer, expropriation and war and civil disturbances. MIGA may only ensure new investment, privatization and financial restructuring.
OPIC is the most important US government agency which is in a position to promote greater investment interest in countries including Bangladesh by providing loan financing and investment insurance to American investors. OPIC also supports efforts by Bangladesh to attract increased foreign private investment. In order to secure its investment in Bangladesh any organization may seek OPIC insurance coverage.
The ICSID is an international organization established for the settlement of investment disputes between states and nationals of different states. ICSID seeks to encourage greater flows of international investment by providing facilities for the conciliation and arbitration of disputes between governments and foreign investors.

Abolition of Restrictions on Equity:Private investment from foreign sources is welcome in all areas except 5 reserved for public sector investments. There is, however, no restriction on the amount of
investment or equity shares. 100 percent foreign investment and joint ventures with local private partners or with the public sector are freely allowed.

Securities and Exchange Commission :To supervise the smooth functioning of securities and capital, the Securities and Exchange Commission (SEC) has been established recently (1993) through an Act of Parliament. It has the important responsibility to ensure proper issuance of securities. Protection of due interest of the investors in the capital market is also a major objective of SEC. The Commission's main functions include the following - Regulating the business of stock exchange and the securities market;
- Registering and regulating the business of stock-brokers, sub-brokers, share transfer agents, bankers and managers of an issue, trustees of trust deeds, registrars to an issue, underwriters, portfolio managers, investment advisers and other intermediaries in the securities market;
- Registering, regulating and monitoring of collective investment schemes including all forms of mutual funds;
- Prohibiting fraudulent and unfair trading practices related to securities or any securities market;
- Promoting investment education and training of all intermediaries of securities market;
- Prohibiting insider trading in securities;
- Regulating substantial acquisition of shares or stocks and take-overs of companies;
- Compiling, analyzing and publishing indices on the financial performance of any issuer of securities; and
- Conducting research for the above purposes.

Foreign Trade : Foreign trade is of vital importance to the economic development of Bangladesh. The country's import needs are large and the imperative to increase exports is immediate. In order to finance those imports and also to reduce the country's dependence on foreign aid/grants, the government, since liberation, has been trying to enhance foreign exchange earnings through planned and increased exports. The significance of foreign trade to the economy is manifest in a number of facts and figures.
In 1991-92, foreign trade's contribution to government revenue was more than 37 percent; export-oriented industries' contribution to industrial value-addition was 56 percent; export industries' share of employment in the manufacturing sector was 60 percent, and the growth of export earnings was 16.09 percent. During the last decade export earnings at current dollar prices increased by 14 percent per annum.
Export GDP ratio rose to 8.3 percent in 1991-92 from 4.1 percent in 1973-74, and 6 percent in 1985-86. Similarly, import GDP ratio declined from 18 percent in 1985-86 to 14.6 percent in 1991-92. Export-import ratio rose from 33 percent in 1985-86 to 57.7 percent in 1991-92. At present, major exports are raw jute, jute goods, tea, leather, frozen fish and readymade garments, while major imports are capital goods, food grains, petroleum and oil, yarn and textiles.

Export Earnings :
Export growth is one of the cornerstones of development strategy of the present government. In 1990-91 total export earning was US$ 1718 million ; it increased by over 47 percent and was more than US$ 2,533 million in 1993-94 ; during 1994-95 fiscal year the export target has been fixed at US$ 3,100 million. This along with higher remittances from abroad has helped to reduce the country's debt service ratio from over 20 percent in 1990-91, to less than 13 percent in the fiscal year 1993-94. The continued improvement in export trade was accompanied by the benign structural shift in the composition of exports with non-traditional items contributing increasingly higher share of total exports. The share of non-traditional items in the country's total exports which stood at 75 percent in 1990-91 increased to 86 percent in 1993-94. In respect of economic classification of export commodities, the primary as well as the manufactured items and export commodities recorded a balanced growth with their respective shares in total exports remaining more or less at the same levels. Recently a trend of increased price of raw jute is being observed in the international market. The government is determined that restructuring of jute manufacturing industry should move apace for much needed viability and external competitiveness. There is need for requisite technological inputs to adequately exploit the potentials of this fibre. New opportunities have emerged to produce pulp from jute through chemical process. Steps are underway for production of 25,000 MT of pulp for industrial grade paper during the current jute season.
Total import payments increased by 21 percent from US$ 3470 million in 1990-91 to US$ 4191 million in 1993-94. Structure of import now reflects a significant pick up of overall economic activities. Imports of intermediate goods, industrial raw materials and capital and miscellaneous machinery recorded increases during 1993-94 fiscal year. Industrial raw materials which constituted 29 percent of total imports in 1990-91 increase to over 38 percent in 1993-94.
Despite satisfactory performance of the export sector the balance of trade experienced some fluctuations owing mainly to fluctuations in the import levels. However the trade gap which had stood at US$1800 million in 1990-91 has declined to US$ 1650 million in 1993-94. Export earnings as percentage to import payment which was about 50 percent in 1990-91, reached over 60 percent in 1993-94.

Strategies : The government has taken following strategies to boost export
- Simplification of export procedures and strengthening export-led co-operation through reducing regulatory role of the government;
- Rationalization of the value of Taka to make the export trade more attractive; - Creation of an Export Promotion Fund (EPF) for strengthening the export activities;
- Encouraging establishment of backward linkage industries through utilization of locally available raw materials;
- Participation in international trade fairs, single country exhibitions and specialized fairs and sending businessmen delegations abroad for expansion and consolidation of existing markets and creation of new markets;
- Expediting BMRE of existing wet-blue producing tanneries and converting them into finished leather producing and exporting units;
- Accelerating expansion of improved traditional and semi-intensive methods of shrimp cultivation for enhancing export of shrimps;
- Allowing import of high quality foundation-tea for blending and establishing the brand name of Bangladesh tea through marketing overseas;
- Taking measures to improve quality, increase production and expand market of exportable agricultural products;
- Undertaking activities for increasing export of computer software, engineering consultancy and services;
- Expediting steps for export of labour intensive electronic and engineering products, keeping in view the market requirements in the USA and other developed countries;
- Promoting export of electronic components and engineering items to various countries;
- Providing appropriate financing facilities for production of components of electronic and engineering items for marketing on consignment basis; - Expanding the list of products under crash programme beyond 4 products (toys, luggage and fashion items, electronic and leather goods) and including 8 more items such as diamond cutting and polishing, jewelleries making, stationery articles, silk, gift items, cut artificial flower & orchid, vegetables, engineering consultancy & services for export;
- Organizing commodity-wise trade fairs of international standard in the country;
- Developing and expanding infrastructural facilities for export trade; and
- Creating product-development councils for important products.