Study the Political, Legal and Economic system of Bangladesh.

1. Jiangxi, PR China
International Masters in International Business (IMIB)
School of International Trade & Economics (SITE)

2. Course Title: International Business
Presentation On:
Study the Political, Legal and
Economic system of Bangladesh.
Date: 29 March 2016

3. Presented To: Prof. JUN Deng
Presented By:
• Saeed Ullah 31540046
• Md Ameer Hossen 31540049
• Mohammad Tawhidur Rahman 31540051
• Rizwana Edris Jyoti 31540053
• Jamshed Alam 31540057

4. EmergingEmerging BangladeshBangladeshEmergingEmerging BangladeshBangladesh

5. Are you missing the OPPORTUNITY !

6. 1. Full Name : People's Republic of Bangladesh
2. President : Md. Abdul Hamid
3. Prime Minister : Sheikh Hasina
4. Chief Justice : SK Sinha
5. Finance Minister : AMA Muhith
6. Central Bank Governor : Fazle Kabir
7. Capital City : Dhaka
8. Local Currency : Taka () (BDT)
9. Exchange Rate (/ $) : 78.4/ 1
10. GDP/ capita (nominal) : $ 1,314 (2015)
11. Average GDP Growth : 6.5%
12. Time zone : GMT +6
13. Area : Total 147,570 km2
14. Population : 169 million (2015)
15. Language : Bengali + English
Short overview of BANGLADESH

7. Geographic Position
The geographical location of
Bangladesh is a preponderant fact
that influences the decision makers
in making foreign policy. Geopolitical
location of Bangladesh gives it both
strength and weakness from
different perspectives. As it is by
location landlocked by India it keeps
Bangladesh in a disadvantage but a
little land boundary with Myanmar
and its entrance in sea Bay of
Bangle give an advantage to its
external orientation.

8. • India's need of corridor through Bangladesh and enhancing global
importance of the south Asian region comes as a hope to
Bangladesh. Also courtiers like Nepal, Bhutan, China, USA and even
Japan and Australia are showing their interest over the geopolitical
location of Bangladesh. Nepal and Bhutan being land locked and not
having sea access very much interested to use Bangladesh sea
ports to foster their foreign trade.
• As China has competing relationship with India always seeks
opportunities to contain India geostratagically, where Bangladesh
becomes one of the perfect positions to her intention. Though USA
has its biggest naval base in Andaman Nicober islands its intend to
use Chittagong Sea ports to strengthen its strategic position in the
south Asia considering the importance of the region in World politics.
Japan and Australia also for their national interest maintain good
relations with Bangladesh.
Geo-Political Importance

9. Geo-Strategic Position

10. Export Import of Bangladesh
Exports $ 30.77 billion (2014-15)
Export
goods
textiles, leather goods,
processed and frozen
food, jute, jute products
Main Export partners
United States 14.3%
Germany 13.6%
United Kingdom 7.9%
France 5.2%
Spain 4.3%
Italy 4.1%
Imports $ 40.69 billion (2014-15)
Import
goods
cotton, petroleum,
machinery and equipment,
palm oil, foodstuffs, iron
and steel, automobiles
Main Import partners
China 18.8%
India 14.8%
Singapore 5.8%
Malaysia 4.2%
Foreign Credit Rating BB- (stable)

11. Political System in Bangladesh
Electoral system and form of government:
• Bangladesh practices multi-party democracy influenced by the British
parliamentary system. Executive power is in the hands of the prime
minister, who is the head of the cabinet.
• The president is the constitutional head of state and is elected for a 5-
year term by the parliament.
• All adult citizens (18 years old and over) are eligible to vote, including
women and ethnic minorities.
• In Bangladesh, parliament is called Jatiya Sangsad. Parliamentary
elections take place every five years. It is a unicameral legislature
consisting of 350 members of which 300 Members from 300 territorial
constituencies on the basis of adult Franchise. The remaining 50 seats
are reserved for women who are elected by the parliamentarians.

12. Political Institutions of Bangladesh

13. Political Parties of Bangladesh
Major political parties:
• Bangladesh Awami League (BAL)
• Bangladesh Nationalist Party (BNP)
• Jatiya Party
• Bangladesh Jamaat-e-Islami (this party is appeared to be ban for its role
against Bangladesh’s Independence, in the period of liberation war in 1971)
Politics of alliance:
• The politics of Bangladesh is dominated by mainstream two large parties,
Bangladesh Awami League and Bangladesh Nationalist Party (BNP). However,
though the center-left Awami League and center-right BNP dominated
Bangladesh politics for a long time, currently both are heading coalitions of
like-minded parties with the AL leading the secular and liberal elements while
BNP is rallying the right-of-centre parties.

14. Policy & steps of current government
• The ruling Government’s “Vision 2021” aims to eliminate extreme poverty
completely and achieve Middle Income Country status by the start of the
next decade.
• Currently different infrastructural development works are going on to
ensure smooth connectivity all over the Bangladesh and with neighboring
countries.
• The government declared few Special Economic Zones to attract more
foreign investment. They allotted a large part of that special zone for
Chinese investment.
• All political parties are united in their views towards the foreign
investment. There is no barrier to invest in Bangladesh. So Bangladesh is
open and safe zone to invest for international companies. Now Bangladesh
is one of most preferable country to the foreign investors because of low
wage.

15. Legal System in Bangladesh
• Bangladesh has a mixed legal system of mostly
English common law and Islamic law. However, unlike
other common law jurisdictions, Bangladesh’s Supreme
Court has the power to not only interpret laws made by
the Parliament, but to also declare them null and void
and to enforce fundamental rights of the citizens.
• The Judiciary of Bangladesh acts through—
(1) The Superior Judiciary having Appellate, Revision &
Original Jurisdiction &
(2) Sub-Ordinate Judiciary having Original Jurisdiction

16. Courts of Bangladesh
The Supreme Court:
• The Supreme Court is the highest court of law in Bangladesh, other
Courts and Tribunals are subordinate to it. This is also the office of
the Chief Justice, Appellate Division Justices, and High Court
Division Justices of Bangladesh.
The High Court Division:
• The HCD shall have appellate jurisdiction from the lower Courts.
HCD can also exercise the power of original jurisdiction in certain
cases.
The Appellate Division:
• Appeal to the Appellate Division from the judgment, decrees, order
and sentences made by the High Court Division are to be filed
directly for certain reasons.

17. Courts of Bangladesh
The Subordinate Courts and Tribunals:
• There are a wide variety of subordinate courts and tribunals. The
subordinate courts in Bangladesh can be divided in two broad
classes, namely, civil courts and criminal courts. Certain tribunals
are termed as administrative tribunals, Nari-o-Shishu Nirjaton
Daman Tribunals, Special Tribunals, International crimes tribunal
etc.

18. Legal System for Business
Legal system for business development:
• Following the political turmoil in 2013, law and order is
restored, helping to facilitate business and economic
growth. The Rana Plaza tragedy forced the government
to introduce certain compliance requirements in the
garments sector by enacting the Labor (Amendment)
Act 2013. A new Companies Act is being finalized to
replace the Companies Act 1994. The draft proposes
certain treatments in line with the Organization for
Economic Co-operation and Development (OECD)
compliance framework.

19. Legal System for Business
Private sector investment is prohibited for certain sectors including:
1. Arms and ammunition 2. Defense equipment
3. Forest plantation 4. Extraction of reserved forests
5. Nuclear energy 6. Security printing
7. Minting.
There is no restriction on foreign investment except in sectors
controlled by administrative licensing processes. These include:
1. Banking 2. Finance 3. Insurance
4. Merchant banking and brokerage 5. Telecommunication
6. Aviation 7. Broadcasting
To acquire a stake in local companies, foreign investors require prior
approval from the Bangladesh Bank, if control of the business is
transferred from local to foreign shareholders.

20. Legal System for Business
Open for all:
• There is no general restriction on doing business with certain countries or
jurisdictions. However, the Chief Controller of Import and Export (CCIE)
amends the import and export policies, addendums and Statutory
Regulatory Orders (SROs) regularly, to prohibit or impose limits on import
and export of certain commodities from or to certain countries for certain
periods of time.
Investor rights protected:
• Foreign investor rights are protected under the Foreign Private Investment
(Promotion and Protection) Act 1980.The Bangladesh Bank has outlined
relevant procedures and formalities for all inward and outward remittance
in its Guidelines for Foreign Exchange Transactions (GFET). Any
transaction that has not been outlined in the GFET must obtain approval
from the Bangladesh Bank.

21. Legal System for Business
Incentives available for investors:
In Bangladesh different types of incentives for foreign investors are available. In
some cases local export oriented industries also get incentive opportunities. These
include-
• Duty free import of capital machinery and spares, bonded warehousing for
businesses exporting 80% or more of goods or services.
• 90% loans against letters of credit and funds for export promotion;
• Cash incentives and export subsidies are granted on the free on board value
(this includes inland freight, export duty and other expenses, but not ocean
freight, insurance and consular fees) in the form of drawbacks and rebates on
import and excise duties paid on direct inputs and so on;
• For 100% export oriented industries, no import duty is charged on raw
materials.
Incentives to foreign investors. These include:
• 100% foreign ownership and repatriation of invested capital, profit, and
dividends;
• Double taxation can be avoided;
• Private sector power generation companies are tax exempted for 15 years;
• New investors are granted six month multiple entry visas.

22. Legal System for Business
Customs duties:
Imports are taxed at the following rates (subject to
certain exemptions):
• Capital machinery : 3%.
• Basic raw materials : 7%.
• Intermediate raw materials and semi-finished products
: 12%.
• Finished products : 25%.
Exports are in general duty exempt.

23. Economy System (Base)
Comprised of three broad fragmented sectors
• Formal Sector - The formal sector includes all regulated institutions like
Banks, Non-Bank financial institutions (FIs), Insurance companies, Capital
Market Intermediaries like Brokerage houses, bourgeois Banks etc.; micro
Finance institutions (MFIs).
• Semi-Formal Sector - The Semi formal sector includes those institutions
which are regulated otherwise but don't fall into the jurisdiction of financial
organization, Insurance Authority, Securities and Exchange Commission or
any other enacted financial regulator. This sector is principally pictured by
specialised financial institutions like House Building Finance Corporation
(HBFC), Palli destiny Sahayak Foundation (PKSF), Samabay Bank,
Grameen Bank etc., Non Governmental Organizations (NGOs and
separate government programs.
• Informal Sector - The informal sector comprises of the institutions which
are free and fully unregulated.
The sectors are categorized with their regulations.

24. Financial System of Bangladesh

25. Free Market Economy in Bangladesh
• The economic system of Bangladesh after liberation
was neither capitalist nor socialist. Recently dramatic
changes were made in the economic system of the
country. Policies were made to liberalize the economy
where 100% foreign direct investment and same
treatment for both local and foreign investors were
granted.

26. Bangladesh is classified as
• Emerging market: According to IMF Bangladesh is in the 2nd
Position.
• Next Eleven: having a high potential of becoming, along with the BRICs,
among the world's largest economies in the 21st century.
• EAGLE (Emerging and growth-leading economies) Member: The
EAGLE economies are expected to lead global growth in the next 10
years, and to provide important opportunities for investors.
• 3G countries or Global Growth Generating countries: 11 countries
which have been identified as sources of growth potential and of profitable
investment opportunities.
• SAARC founding member.
• Has the second most pro-capitalist population in the developing world.
• Increasingly led by export-oriented industrialization.
• Has the potential to emerge as a regional economic and logistics hub.

27. Doing business 2015
• Doing Business 2015 covers regulations measured from June 2013
through June 2014 in 189 economies. The report marks the 12th edition of
the Doing Business series.
• For the first time this year, Doing Business collected data for 2 cities in 11
economies with more than 100 million inhabitants.
• The economies are: Bangladesh, Brazil, China, India, Indonesia, Japan,
Mexico, Nigeria, Pakistan, the Russian Federation and the United States.
• The added city enables a sub national comparison and benchmarking
against other large cities.
• Differences between cities are more common in indicators measuring the
steps, time and cost to complete a standardized transaction where local
agencies play a larger role, finds the report.

28. GDP & GDP Growth Rate
It shows that after the financial crisis in 2009-2010 the GDP growth rate steadily
increased per year and estimation is that if the political stability and economical build
up prevails the strong domestic demand base, gradually improving investment
climate, moderate single digit inflation and export-oriented economy are expected to
raise and gross GDP growth to 6.3 percent in FY 2015-2016.
Source: World Bank & Bangladesh Bank

29. Economic Growth & Stability

30. Employment
Primary : Agriculture
Secondary : Industry
Tertiary : Service
Unemployment Rate : 4.3 % (2013)

31. Agriculture, Industry and Services
contribution to GDP
Declining trend in contribution of Agricultural sector to GDP though
Agriculture could be one of the most potential earning sectors as Bangladesh
is known as an agriculture based country. Income inequality is rising as major
work force is working in agricultural sector (48%, 2010).
Industrial and Service sector is increasing at a very low rate. Rise of service
sector can attribute to income generated from RMG export, workers’
remittances and crop production.
Source: World Bank

32. Overall Trade Scenario
Source: World bank
Chronic Deficit in Trade Balance – More imports of Bangladesh is one of the most
significant factors responsible for unfavorable trade balance.
But economists now look at this positively despite the growing trade deficit.
Because Import of capital machinery and raw materials are on the rise.
“More import means there are more investments in the country”. This will have a
positive impact in industrialization and on the economy as a whole.
In recent the imports influence the domestic production very little because of importing
more capital goods than consumer goods.

33. Focus on RMG- The Biggest Trading Sector
• The readymade garment sector is the golden goose for Bangladesh. The country
has emerged as the 2nd largest exporter of readymade garment products
trailing just behind China.
• It is the biggest earner of foreign currency.
• Bangladesh's exports industry alone comprised USD 31.2 billion in FY 2014-15,
81.69% of which was made up by ready-made garments.
• The RMG sector has experienced an exponential growth since the 1980s. The
sector contributing significantly to the GDP.
• It also provides employment to around 4.2 million Bangladeshis, mainly women
from low income families.

34. Pen Picture of Bangladesh RMG Export

35. Bangladesh Export by Major Products (2013-14)

36. Remittance Scenario
Source: Bangladesh Bank

37. Remittance Scenario Cont’d
• Generally, Bangladesh is considered a trade deficit country but statistics
show current account balance during FY 2005-06 to 2010-11 remained
positive due to high remittance inflow, which in turn indicates that
remittances play a significant role in Bangladesh economy.
• Our way of earning foreign currency is limited. In state, in recent times, it is
recorded that our reserve is at maximum level where remittance is one of the
largest contributing sectors.
• Bangladesh is the 8th
largest remittance earning country.
• Along with the readymade garment (RMG) sector and non-farm activities
in the agricultural sector, remittances have been identified as one of the
three key factors that have been responsible for reducing the overall
incidence of poverty in Bangladesh
• Remittance is the second largest sector of foreign exchange
earnings after garments sector.

38. FDI Scenario
Source: Bangladesh Bank

39. Closing of FY 2014-15 (Gain and Loss)
Gain - Bangladesh’s FY2015 has
closed with a number of
macroeconomic advantages
including
Loss - Some of the fault lines of
the elapsing fiscal year included
Lower Inflation Unachieved revenue targets
Declining Interest Rate Low flow of foreign assistance
Stable Exchange Rate Sluggish exports to the US market
Manageable fiscal deficit, positive
balance of payment and augmented
foreign exchange reserves.
Failure to ensure incentive price to
the rice farmers
The low level of global commodity
prices including that of oil has also
provided some respite in terms of
resources needed to meet subsidy
demands.
Acceleration in private investment
remained an illusive target. Efforts to
bridge the infrastructure gap did not
experience much discernible
success.

40. Bangladesh in Regional and Bilateral Trade
1. Asia Pacific Trade Agreement (APTA)
2. BIMSTEC Trade Negotiating Committee (TNC) meeting
3. SAARC Preferential Trading Arrangement (SAPTA)
4. The Agreement on South Asian Free Trade Area (SAFTA)
5. SAARC Framework Agreement on Trade in Services (SAFAS)
6. Bilateral FTA with India, Pakistan and Sri Lanka
7. Standing Committee for Economic and Trade Cooperation (COMCEC)
8. Standing Committee for Economic and Trade Cooperation (COMCEC)
9. Trade Preferential System Among the OIC Members (TPS-OIC)
10. Preferential Trade Agreement (PTA) among D-8 Countries (D-8)
11. Bangladesh Foreign Trade Institute (BFTI)
12. International Trade Centre (ITC)
13. International Trade Centre (ITC)
14. United Nations Conference on Trade and Development (UNCTAD)
15. United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP)
16. Canadian International Development Agency (CIDA)
17. European Commission (EC)

41. The future is OursThe future is Ours
In 2030, BANGLADESH will become
30th
largest economy of the world.
BANGLADESHBANGLADESH
your ultimate business destination

42. THANK YOU