Business

Bangladesh Business Environment: Opportunities and Threats

Bangladesh is emerging as the ‘new Asian Tiger’ governed by factors targeting the growth and development of the Bangladesh business environment. With an approximate 3.78% GDP growth observed during the 2^nd quarter of the 2023-24 fiscal year, the capacity to do business is secured under the Bangladesh business environment.

However, the Bangladesh business environment still faces various challenges and threats, diminishing the business landscape’s value for foreign and domestic investment opportunities.

Business Landscape in Bangladesh: Common Perception

The Bangladesh business environment is defined under the external factors and conditions responsible for regulating a legal business entity’s operations, performance, and decision-making factors. The insight of doing business in Bangladesh is responsive enough to create new business opportunities in Bangladesh, as ensured through successful business registration in Bangladesh. Sometimes, the Bangladesh business environment becomes difficult to predict because of unfavorable challenges, business competitiveness, low resources, and fewer business opportunities in Bangladesh.

The Metropolitan Chamber of Commerce and Industry of Bangladesh released a report in 2021 that analyzed and perceived the composite score for the Bangldseh business environment in different sectors. The following is the estimated list of business scores for the diverse industries of Bangladesh:

• The pillar score for the leather and tannery industry is approx. 71.34%;
• The pillar score for the financial intermediaries is approx. 68.37%;
• The pillar score for the electronics and light engineering is approx. 68.43%;
• The pillar score for the real estate industry is approx. 67.01%;
• The pillar score for the agriculture and forestry sector is approx. 63.73%;
• The pillar score for the food and beverages industry is approx. 63.67;
• The pilar score for the construction sector is approx. 62.69%;
• The pillar score for the pharmaceuticals and chemicals industry is approx. 62.689%;
• The pillar score for the transport and storage industry is approx. 60.04%;
• The pillar score for the wholesale and retail trade is approx. 59.33%;
• The pillar score for the textile sector is approx.56.44%;
• The pillars score for the ready-made garment industry is approx. 48.92%.

The Bangladesh business environment has undergone many changes since 2021, ultimately creating havoc in doing business in Bangladesh. Bangladesh’s Business Climate Index of 2021 enables the creation of a new and innovative business environment to secure the rights of Bangladesh’s private investors and government agencies.

Key Features of Bangladesh Business Environment

Bangladesh’s business environment is observed to hold the fastest-growing business economy, which regulates the expansion of business in Bangladesh. There exist five critical pillars in the Bangladesh business environment: ensuring growth (of the country’s economy), innovativeness (evolution of new technological, social, and institutional developments), inclusiveness (business opportunities in Bangladesh’s economic landscape), sustainability (maintaining the environmental boundaries for business setup), and resilience (bouncing back from shocks of Bangladesh business environment).

The progressive Bangladesh business environment witnesses business growth in diverse sectors supporting Bangladesh’s agricultural, garments, textile, pharmaceuticals, and IT industries. The factors or features responsible for observing the growth in the Bangladesh business environment are explained below:

1. Economic Factors

The business landscape in Bangladesh is influenced by several economic factors, including continuous GDP growth, emerging market demands, and a rise in inflation and interest rates in the country’s stable economy.

2. Political Factors

Continuous growth has been observed in the Bangladesh business environment, which is influenced by the political framework that provides a stable political landscape, well-established government and legal policies, regulations, and transparent governance, creating investment-friendly opportunities for business sustainability.

3. Social Factors

Strategic development in the Bangladesh business environment is sometimes regulated by socio-cultural factors, which ensure the demographics, consumer behavior, needs, values, lifestyle, trends, and other social norms in Bangladesh.

4. Technological Factors

Following the growth trend in the Bangladesh business environment, several technological advancements and innovations exist, and new business opportunities are challenging business industries.

5. Legal Factors

Business trends, including opportunities and compliance for doing business in Bangladesh, are secured and governed by various legal factors, including provisions enacted to enable the rules and regulations to protect employment, consumer, environmental, and intellectual property rights in Bangladesh.

6. Competitive Factors

The competitive business landscape in Bangladesh analyses the market dynamics, industry structure, and competitors’ strategies to understand and develop diverse business opportunities in Bangladesh’s competitive business environment.

7. Environmental Factors

The Bangladesh business environment is mainly focused on increasing environmentally friendly business practices like resource utilization, waste management, climate change alignment, and regulating societal expectations to secure business sustainability in Bangladesh.

8. Stakeholder Influences

The long-term sustainability of  Bangladesh business environment is also governed by the business factors influencing the positive relationship among its customers, employees, investors, suppliers, stakeholders, and local community holders of Bangladesh.

Transforming Bangladesh Business Landscape: Vision 2041

Vision 2041 is a master plan designed to transform the Bangladesh business landscape into a prosperous, middle-income country with a thriving business economy offering world-class opportunities for industries to grow and innovate their business ideas in Bangladesh. The government of Bangladesh is working day and night to make Visison 2041 a reality perspective plan of Bangladesh for the years 2021 to 2041. The vision aims at managing macroeconomic developments (through combatting inflation, managing exchange rates, sustaining fiscal deficits, public debts, and balance of payment), dreaming of zero poverty, human development (through the population and health nutrition, education, and training programs); sustaining agricultural development; and accelerating the industrial growth in the Bangladesh business environment. Vision 2041’s plan for accelerating industrial and other trade growth targets medium- and long-term business opportunities to transform the Bangladesh business landscape. The business transformation observed in Bangladesh attributes the following:

• Spreading the fourth industrial revolution through technological developments;
• Advantage of competitive labour in the dynamic business landscape;
• Diversifying the exports to generate the trade infrastructure;
• Removal of policy-induced anti-export bias;
• Tackling the challenges associated with employment prospects by 2041;
• Making sustainable use of power and energy;
• Creating an innovative economy;
• Shifting the focus to a digital and AI-driven business economy;
• Strategizing the transport sector;
• Modernizing the communication strategy;
• Revolutionizing the urban market reforms;
• Addressing the income inequality;
• Ensure trading in the new era of globalization, etc.

Vision 2041 is dedicating its years to maximizing per capita income growth and other aspects of a developed business economy.

Best Business Opportunities in Bangladesh

In 2005, Goldman Sachs characterized the Bangladesh business environment as one of the ‘Next Eleven’ emerging markets. Bangladesh’s business economy continuously offers diverse investment opportunities under its liberalized Industrial Policy. The government has adopted the ‘Open Door Policy’ to attract foreign investments and accelerate the Bangladesh business landscape.

Bangladesh’s rapidly growing business economy offers a diverse landscape for business ventures to comprehend and explore the best business opportunities. If you are looking toward company formation in Bangladesh, you may refer to our guide, which elaborates on common and lucrative business ideas in Bangladesh. 

1. Retail Business

The Bangladesh business environment has prominently observed a rise in the country’s retail sector. The retail business in Bangladesh is expanding day by day through evolving superstores and valued chain stores that ensure the delivery of goods and services.

• Fashion Houses

The textile and garment industry successfully creates business opportunities in Bangladesh that target the operation of fashion houses and branding. The fashion house firms established in Bangladesh are prominent in producing heavy exports, ultimately securing the Bangladesh business environment. The populous rise in the fashion house or branding business in Bangladesh is observed because of the easy availability of resources at a lower price.

• Small Food Chains

Anyone looking for business opportunities in Bangladesh can meet the demand chain by establishing small food businesses in Bangladesh. Starting any food business involves several legal compliances to secure respective trade and other business licenses as applicable in Bangladesh.

• Cosmetic Shops

The following business opportunity in Bangladesh can be garbed through starting a cosmetic showroom or shop, surpassing the growth rate of other retail businesses in Bangladesh.

• Toy and Gift Stores

Bangladesh’s toy market witnessed a boom, which ultimately secured growth in the Bangladeshi business environment. Also, the gifting trend creates rapid business opportunities in Bangladesh by establishing gift stores or firms with little investment.

• Flower Business

Bangladesh’s retail business environment also adores the lowest-investment business setup. The flower business is continuously booming in Bangladesh, with very little investment.

2. IT Business

Bangladesh has emerged as the IT hub for outsourcing IT services and developing a new pool of tech talent through software development, business process outsourcing, and IT consulting. Also, the government of Bangladesh is focused on creating new business opportunities through improved digitalization, well-established IT parks, and investment zones for new businesses to develop. The present guide explains several business opportunities in Bangladesh by setting up the ever-growing IT business under the guidance of skilled professionals and a favorable Bangladesh business environment.

• Software Development Business

Starting a software development company that offers web and mobile application development services is the most prevalent IT industry setup in Bangladesh. This setup is designed to tackle the Bangladesh business environment by offering services in both the local and international business landscape.  

• IT Outsourcing and Consulting Business

An IT outsourcing business set up in Bangladesh offers to outsource and consult for services ensuring software development, data entry, project management, system integration, and call center operations by employing a talented pool of IT professionals and investors regulated by the Bangladesh business environment.

• IT Training and Education Business

The option for starting an IT training and education business is continuously diversifying its business landscape. The IT training institutions must target to offer online and offline business, software development, digital marketing, and cybersecurity courses and certifications in the business environment of Bangladesh.

• Cybersecurity Services

The business opportunities in Bangladesh ensure the establishment of a cybersecurity business firm that secures network security, data protection, and vulnerability assessment services in Bangladesh.

2. Power and Energy Business

The Bangladesh business environment has been observing a thriving rise in energy consumption, which is ultimately threatening Bangladesh’s business landscape. The government of Bangladesh has decided to offer diverse incentives and subsidiaries to energy-generating companies by attracting solar, wind, and hydro energy generation strategies. Attractive investment incentives and subsidiaries tackle the loophole in the power and energy industry, creating business opportunities in Bangladesh.

• Solar Power Generation Plant

Solar power generation plants are designated to operate their business with attractive investment opportunities for offering installation, maintenance, and repair services for solar panels generating power through renewable energy.

• Wind Power Plant

Bangladesh’s Wind power company holds significant business potential for generating wind power through successfully installed, maintained, and well-repaired wind turbines.

• Biomass Energy Production Business

Business opportunities in Bangladesh offer investment incentives to attract the incorporation of companies employing services for the production and generation of biomass fuel, power, and gasification using agricultural, municipal, and organic waste materials.

• Natural Gas Exploration Business

Also, Bangladeshi private investors are offered the option to start a business that explores, produces, distributes, and reserves natural gas in Bangladesh.

3. Online Business

The growing online presence of diversified business industries, brands, and service providers creates affordable online business opportunities in Bangladesh. These options allow many small-scale and foreign investors to freely invest and start a business without securing any compliance requirement. 

• Digital Marketing Business

The establishment of digital marketing agencies is rapidly growing in the Bangladesh business environment. These agencies offer services for search engine optimization, social media marketing, email marketing, and online business presence to reach global customers.

• F-Commerce Business

Business opportunities in Bangladesh are attracted by establishing f-commerce stores or shops to secure a broad customer base by offering a wide range of goods and services at the doorstep.

• E-Commerce Business

Also, there is an opportunity to start an e-commerce business dedicated solely to targeting online customers in the e-commerce marketplace.

4. Infrastructure Business

The Bangladesh business environment is facing rapid business development deficiency in the infrastructure for the transport, construction, logistics, power, and telecommunication industries. Several ideas exist for creating business opportunities in Bangladesh.

• Transport Business

The business opportunities in Bangladesh target developing and improving the critical business areas for establishing the transportation business in Bangladesh.

• Real Estate Business

Starting a real estate business can capture the Bangladesh business environment, ensuring the development, construction, and management of properties and the growth of urbanization in the country.

• Construction Business

The option for private business opportunities in Bangladesh also includes land for businesses involved in road, railway, port, design, construction, and maintenance activities.

• Telecommunication Business Industry

Business opportunities in Bangladesh offer the option of securing services associated with the telecommunication business, internet connectivity, and other mobile services.

• Water Supply and Sanitation Business

Your business option in Bangladesh also allows you to create a business environment offering services for the treatment, distribution, and sanitization of water supply in major areas of  Bangladesh.

5. Tourism and Hospitality Business

The Bangladesh business environment is well-versed with a rich cultural heritage that generally attracts tourism and hospitality business setups, prospering the development of hotels, resorts, ecotourism, travel, reservation, and other associated businesses.

• Hotel and Resort Business

Your option for establishing a hotel and resort business in Bangladesh resorts business opportunities in Bangladesh with services offering for the construction, management, and development of the hospitality business in Bangladesh.

• Tour Operating Business

Your choice of tour operating business activates the master plan for regulating Bangladesh’s tour, transportation, and accommodation industry. 

• Tourism Business

Bangladesh’s business opportunities also extend to indulge in activities associated with and closely connected to Bangladesh’s adventure, cultural, and ecotourism industries.

Predictive Business Threats in Bangladesh

Despite the difficulties and business threats in Bangladesh, our guide is designed to find the best opportunities. A SWOT analysis conducted in Bangladesh uncovers the overall strengths, weaknesses, threats, and risks in the Bangladesh business environment.

 The rapidly growing Bangladesh business environment is overpowered by specific predictive business threats or risks activated when choosing the right FDI strategy and regulating the remittance inflow in the business. These business threats have a significant impact on Bangladesh’s production and inflation rates. The guide provided for the Bangladesh business environment ensures the list of predictive business threats in Bangladesh.

1. Economic Threats or Risks

The business threats in Bangladesh attract various economic risks, which remain unsuccessful in determining Bangladesh’s future economic prospects. The following economic risks are a threat to the Bangladesh business environment:

• Rising inflation rate;
• Economic recession;
• Inequality in wealth and income distribution;
• Heavy debt crisis;
• Illicit economic activities;
• Shortage of assets and skilled laborers;
• Increasing corporate debt;
• Continuous water shortage;
• Ineffective capital market regulations;
• Economic asset bubble burst;
• Industrial collapse;
• Absence of good governance;
• Severe commodity shocks, etc.

2. Societal Threats or Risks

The Bangladesh business environment is continuously facing several societal threats. The business threats in Bangladesh ultimately degrade the value of doing business in the Bangladesh business environment. Some of the societal threats include the following:

• Shortage in supply of energy;
• The problem of unemployment;
• Landk of public investment in health care industry;
• Limitation on civil liberty;
• Collapsing social security system;
• Eroding social cohesion;
• Lack of public infrastructure;
• Involuntary migration, etc.

3. Technological Threats or Risks

Bangladesh’s business threats will also attract various technological risks in the coming years. The following is the list containing diverse technological risks that threaten the Bangladesh business environment:

• The increasing rate of cybercrime;
• Failing cyber security measures;
• Adverse outcomes of AI technology developments;
• An adverse effect of bio-engineering technology development;
• Digital inequality;
• Breakdown of information infrastructure;
• Lack of digital power concentration;
• Lack of technology governance, etc.

4. Cultural Threats or Risks

The Bangladesh business environment faces diverse cultural risks that ultimately streamline the business challenges of managing the norms, practices, and other potential beliefs in Bangladesh. Some of the cultural threats as observed in the Bangladesh business environment are below:

• Cultural inequality;
• Clashing modern business values;
• Gender discrimination in business;
• Improper communication chain;
• Religious diversity;
• Rising corruption;
• Work-life imbalance, etc.

5. Environmental Threats or Risks

Business threats in Bangladesh are deemed to extend its provision toward several environmental risks that continuously degrade the scope of doing business in the Bangladesh business environment. The following is the list of environmental risks in Bangladesh:

• Rise in country’s pollution;
• Extreme weather conditions;
• Natural disasters;
• Loss of biodiversity;
• Ecosystem imbalance;
• Man-made environmental disasters;
• Crisis of natural resources;
• Improper waste management;
• Deforestation, etc.

6. Geopolitical Threats or Risks

The Bangladesh business environment is continuously facing a crisis in the geo-economic climate, which is governed by the following risks providing for:

• Investment screening;
• Rise in tariff;
• Business sanctions;
• Failing public services;
• Rising terrorism;
• Inter-state armed conflict;
• Collapsing multilateral institutions, etc.

Conclusion

Bangladesh has an alluring business environment with a series of factors affecting its business presence. The Bangladesh business environment is currently the most flexible economy globally. The foreign-friendly business culture of Bangladesh is keen on offering remarkable business opportunities, which are ensured by carrying out business activities in Bangladesh. Not only this, but the records also evidence the disruptions in the Bangladesh business environment that are challenging Bangladesh’s industrial growth and business climate. The government of Bangladesh took significant steps to create a business-friendly cultural landscape that would facilitate fiscal and non-fiscal incentives for regulating the Bangladesh business environment.

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