Bangladesh-Japan Trade and Investment: Opportunities and ... · 6,467 5,986 6,548 7,603 8,655...

Bangladesh-Japan Trade and Investment:

Opportunities and Challenges

Abu Reza Khan

Member, BOI

Dhaka 22 July 2007

Government of Bangladesh

Board of Investment

IBFB Discussions on Trade and Investment Opportunities with

Japan, 22 Jul 2007

© Copyright . BOI. 2007

Bangladesh-Japan Trade & Investment: Opportunities and Challenges

2

1. Bangladesh Macro Economic Scenario

2. Investment Climate, Incentives and Costs

3. Bangladesh-Japan Business Relations

4. Potential Investment Sectors

5. Facilitation Issues

6. Business Process Guideline

Contents

Discussion would adhere to following sequence:



3

Macro Economic

Scenario

.



4

Source: Bangladesh Economic Review 2006.

4.62

5.39 5.234.87

5.94

5.27

4.42

5.26

6.27 5.96

6.71

FY1996 FY1997 FY1998 FY1999 FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006

Rising Trend of GDP Growth (%)

Bangladesh Macroeconomic Scenario



5


Sectoral Contribution in GDP FY 2007

Services

& Others

44.50%

Agriculture,

Fisheries &

Forestry

26.49%

Industry

29.01%

Agriculture 16.91

Livestock 2.93

Forestry 1.79

Fisheries 4.86

Total 26.49

Mining & Quarrying 1.16

Manufacturing 17.05

Utility 1.65

Construction 9.15

Total 29.01

Wholesale& Retail 14.17

Transport & Comm. 10.10

Real Estate etc 7.88

Community services 7.25

Others 5.10

Total 44.50


Sector Share(%)

Manufacturing 17.05

Agriculture 16.91

Wholesale &

Retail 14.17

Transport

& Commn. 10.10

Construction 9.15

Top 5 Sectors - GDP



6

Sustained and Rising Industrial Growth (%)

6.98%

5.80%

8.32%

4.92%

6.17%

7.44%6.53%

7.26% 7.60%8.28%

9.56%






7

Recent Surge in Manufacturing Growth (%)

6.41

5.05

8.58

3.19

4.76

6.68

5.48

6.757.10

8.19

10.45






8

Growth in Bilateral Trade (Million US$)


4,4275,172 5,324 5,752

6,4675,986

6,548

7,603

8,655

10,526

7,1

52

7,5

20

8,0

06

8,3

74 9,3

35

8,5

40 9,6

58 1

0,9

03

13,1

47

14,7

46

FY1997 FY1998 FY1999 FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006

Export Import




9


Growing Private Investment (% of GDP)

Source: Bangladesh Economic Review 2006

6.3

25.024.524.023.423.123.123.022.2

6.26.7 7.4 7.2 6.4 6.2 6.2

18.718.317.817.216.815.815.5 15.6

1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

Total Investment Public Private



10


Annual Private Investment (in Crore Taka)

Source: Bangladesh Economic Review 2006

24,750

30,56033,990

40,150

45,840

51,720

59,370

67,920

77,700

37,010

FY 1997 FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006



11

350460

845700

2003 2004 2005 2006*

In Million US$

Source: World Investment Report 2006 and Bangladesh Bank * = Estimated

FDI Inflow (Mill US$, Calendar Year basis)

7% 31% 50% -17%

Macroeconomic Conditions



12

Broad Sectors2004

(Mill.US$)

Share

(%)2005

(Mill.US$)

Share

(%)

Energy & Power 124.0 27% 208.3 25%

Manufacturing 139.4 30% 219.4 26%

Trade & Commerce 66.6 14% 130.5 15%

Telecommunication 127.5 28% 278.8 33%

Other Services & Misc 2.8 1% 8.4 1%

Total 460.3 100% 845.4 100%


FDI Inflow 2005: Sectoral Break Up



13


FDI Inflow: Distribution of Sources by Region

Sources / Regions FDI US$ Mill Share (%)

Developed Economies 434.90 51.45%

Western Europe 245.90 29.09%

European Union 243.60 28.82%

Other Western Europe 2.30 0.27%

North America 142.50 16.86%

Other Developed Economies 46.50 5.50%

Developing Economies 365.40 43.23%

Africa 48.40 5.73%

Latin America & the Caribbean - -

Asia & the Pacific 317.00 37.50%

Asia 317.00 37.50%

South, East and South-East Asia 260.70 30.84%

Others 45.00 5.32%

Total 845.30 100.00%

FDI Source-2005

Country $.Mill

UK 152.8

USA 141.8

Singapore 97.5

UAE 55.4

Norway 53.5

Japan 46.5

8th among 30 sources



14

Investment Climate,

Incentives & Costs

.



15

Investment Climate

Bangladesh is a profitable investment location, featuring:

• Strategic geographic location

• Natural Resources availability

• Skilled Human Resources

• Good Governance

• Competitive Cost of Doing Business

• Private Sector led economic development strategy(FY 2005-06, share of private investment was 74.8%.)



16

Investment Climate

Bangladesh is a profitable investment location, featuring:

1. No Ceiling, no Flooring on FDI amount.

2. Foreign Investment Protection by Law.

3. Market Access Opportunity.

4. 100% Foreign Ownership allowed.

5. Tax and Duty Exemption for Exports.

6. Specified Export Incentives.

7. Easy repatriation and remittance facility.

8. Unhindered Exit.



17

Investment Costs

Investment Costs

The 17th Survey of Investment-Related Cost

Comparison in Major Cities and Regions in Asia”

conducted by the Japan External Trade Organization

(JETRO) in March 2007 found out that

Bangladesh remains highly cost-competitive compared

to the other economies in Asia.

Let’s see some figures … …



18

Investment Costs

17th Survey Findings of JETRO: Wage/Salary, House Rent

Source: The 17th Survey of Investment-Related Cost Comparison in Major Cities and Regions in Asia JETRO, 2007

57126

310246

597

1,190

164

383

684

174

254

680

Worker Wage Engineer Salary Mid-Manager Salary

Dhaka New Delhi

Bangkok Beijing

Figures in US$



19

Investment Costs


0.0

5

0.3

2

0.0

7

0.7

9

0.4

5

0.1

1

1.0

8

0.0

9

1.0

5

0.7

2

0.0

5

0.5

8

0.6

9

0.6

4

0.0

7

0.7

0

0.2

3

0.6

5

0.6

1

Electricity for Business

/per kWh

Water for Business use

(per cu.m)

Gas for Business use

(per cu.m)

Gasoline (per liter) Diesel Oil (per liter)

Dhaka

New Delhi

Bangkok

Beijing

17th Survey Findings of JETRO: Utility, Gasoline, Telecom

Figures in US$



20

Investment Costs


7.1

10

.0

25

.0

42

.7

10

.5

33

.7

13.7 15.0

37.0

42

.0

10

.0

45

.0

Office Rent (sqm/month) Tax on Royalties (Highest Rate) Personal Income Tax (Highest Rate)

Dhaka New Delhi

Bangkok Beijing

17th Survey Findings of JETRO: Office Rent & Tax Rates-%



21

Bangladesh-Japan

Business Relations

.



22

Bangladesh-Japan Business Relations

Bilateral Business Relations Framework Milestones

a. Bilateral Investment Protection Treaty 10 Nov 1998

b. Avoidance of Double Taxation Treaty 06 Aug 1991

c. Bangladesh Japan Joint Commission

d. Japan Bangladesh Chamber of Commerce & Industry (JBCCI)

e. GSP Facilities to Bangladeshi Products

f. Substantial Equipment and Raw Materials Imports from Japan

g. Bangladeshi Diaspora in Japan



23


Japan’s Export to Bangladesh

Japan is the 5th largest import source of Bangladesh.

Recent Trend in Japan’s Export to Bangladesh (U$ million)

255

336

695647

494

685

846

655605

552 559

651

482483

1985-86 1990-91 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

(Jul-

Feb)Source: Bangladesh Economic Review 2007.

Million US$



24


Currently, Japan is Bangladesh’s 9th largest export market.

In FY1995-96, Bangladesh export to Japan crossed 100 million dollar mark.

Trend in Bangladesh Export to Japan (Million US$)

61.2

41.3

99.7

120.8112.0

92.897.6

107.6

96.1

108.0118.2

122.5

137.8

112.2114.1

1985-

86

1990-

91

1994-

95

1995-

96

1996-

97

1997-

98

1998-

99

1999-

00

2000-

01

2001-

02

2002-

03

2003-

04

2004-

05

2005-

06

2006-

07 (Jul-

Mar)


Million US$



25


FDI Outflows from Japan and Share of Bangladesh

Source: World Investment Report 2006 and Bangladesh Bank

38,333

32,28128,800

45,781

30,951

2001 2002 2003 2004 2005

Japanese FDI in Bangladesh (Million US$)

6.9 17.6 29.1 30.0 46.5

Million US$



26

Potential

Investment Sectors

.



27

Potential Investment Sectors

1.Textile

• RMG

• Yarn & Fabric

• Manmade Fibre

2. Pharmaceuticals

3. Agro-processing

4. Agro-engineering

5. Ceramics Tableware

6. Leather & Leather Goods

7. Steel

8. Frozen Food

Manufacturing – Broad Sectors



28

Potential Investment Sectors

Services & Others – Broad Sectors

1. Information & Communication

Technology (ICT)

2. Infrastructure

3. Natural & Mineral Resources

4. Hospitality and Tourism

5. Health care

6. Education



29

Facilitation

Issues

.



30

Facilitation Issues

Following issues are significant about facilitating Japanese

investments:

• Investment related costs.

• Business Regulatory Framework and Process

• Utility and other infrastructure

• Port

Government has taken note on the comments made by the

JETRO Representative in Dhaka on 19 June 2007.



31

Business Process

Guideline

.



32

Business Process Guideline

Investment Facilitating Agencies

• Board of Investment (BOI)

• Bangladesh Export Processing Zones Authority (BEPZA)

• Registrar of Joint Stock Companies & Firms (RJSCF)

• National Board of Revenue (NBR)

• Bangladesh Bank (BB)

• Ministry of Industries (MOI) &

• Bangladesh Small & Cottage Industries Corps. (BSCIC)



33


Broad functions of BOI:

1. Investment Promotion

Promoting the country, sectors, facilities etc.

2. Investment Facilitation

Business start-up and others approval processes

including Visa-on-Arrival, Registration of Industrial

Projects and Commercial/Branch/Liaison Offices, Work

Permit, IRC, Remittance, Foreign Loan approvals etc.

3. Policy Advocacy

Suggesting coherent and favorable policy regime

specially for private sector development.



34


Business Startup Roadmap

BOIAssistance

Available Getting Structured

Plant Set-up

Commercial Operation

Info Search

Physical Verification

1

2

3

4

5



35

Business Process Roadmap – Details

Intention to

Invest in

Bangladesh

Arrival to Bangladesh

Reception by

BOI Welcome Service

BOI Counseling

at Investment Facilities

& Services Section

Immigration &

Customs Formalities

Decision

to Invest

Information Collection

Information/data on

Country, Industry & Overall

Climate from BOI

Hotel / Accommodation

More Information

& Documents from BOI

Independent

Counseling / Services

at investor’s discretion

Continued …

BOIAssistance

Available

BOIAssistance

Available



36

Plant Set-up

Company Formation

& RJSCF Registration

Commercial Operation

Trade License

from LG Bodies

Project Profile

Memorandum of

Association

Articles of Association

Land Information

Machinery Details

Financing Sources

Application for

BOI Registration

… from previous page

BOIAssistance

Available

BOIAssistance

Available

Business Process Roadmap – Details



37

Contact Points

Contact details are available at the following websites:

• Board of Investment www.boi.gov.bd

• BEPZA www.epzbangladesh.org.bd

• Registrar of Joint Stock http://roc.gov.bd

Companies & Firms

• National Board of Revenue www.nbr-bd.org

• Bangladesh Bank www.bangladesh-bank.org

• Ministry of Industries & www.moind.gov.bd

BSCIC

http://www.boi.gov.bd/

http://www.epzbangladesh.org.bd/

http://roc.gov.bd/

http://www.nbr-bd.org/



http://www.bangladesh-bank.org/



http://www.moind.gov.bd/



38

Thank You

Bangladesh-Japan Trade and Investment: Opportunities and ... · 6,467 5,986 6,548 7,603 8,655...

Documents

Transcript of Bangladesh-Japan Trade and Investment: Opportunities and ... · 6,467 5,986 6,548 7,603 8,655...