PRESENTATION 1: NATIONAL

DEVELOPMENT PLANS FOR

STRENGTHENED GROWTH AND

PRIVATE SECTOR DEVELOPMENT IN

BANGLADESH

Bangladesh Employers’ Federation

Colombo, October, 2012

Introduction to BEF

Bangladesh Employers’ Federation (BEF) is the national organization of employers, representing all major industrial associations as well as individual enterprises

Our objective is to protect and promote the rights of

the employers, and represent their interests on industrial relations, employment and related socio-economic issues at the national, regional, and international level.

BEF actively participates in formulation of national policies and laws related to labor and employment.

Mission and Vision

Mission:

– To protect and promote the legitimate rights of employers, and represent their views on employment and related Socio economic policy issues at national and international level

– To facilitate labor market efficiency and skills development for enterprise sustainability and national economic growth.

Vision: – “We will be the leader in ensuring harmonious Industrial

Relations and productive employment for robust, sustainable socio economic development”

International Recognition: Bangladesh

o Positive sovereign credit ratings in 2011 and 2012 with stable

outlook- Standard & Poor’s and Moody’s

o Steady growth prospects

o Macroeconomic and policy stability

o Stronger donor commitment

o One of the Frontier Five markets- JP Morgan Chase

o Bangladesh in ‘Next Emerging 11 Economies’ after BRICs-

Goldman Sachs

o One of the potential growth economies- Price Waterhouse

Coopers

4

Where is Bangladesh?

o However, Bangladesh termed as N-11 by Goldman

Sachs, because of:

Steady, resilient economic growth amid repeated internal and

external shocks

Private sector as the lead driver of growth

Competitive low cost labor, in a large population pool in working

age

Growing exports and workers’ remittance inflows bolstering

external sector viability

Low external debt service liability

Favorable sovereign ratings with stable outlook

5

Steady, resilient growth performance amid

repeated internal and external shocks

FY95: July 94-June95 * Projections External shocks Internal disaster

6

Economic growth gaining pace

o With brisk output activities, Bangladesh economy is

on course for near 7% real GDP growth in FY 11.

o Growth rate projected to accelerate to 8.0% by FY

15.

5.0

6.0

7.0

8.0

9.0

FY 09 FY 10 FY 11* FY 12* FY 13* FY 14* FY 15* FY 16*

Real GDP Growth Rate (%)

* Projections

7

Middle-income country status not

far off

Per capita GNI likely to reach middle income

group threshold by FY 13.

0

200

400

600

800

1000

1200

FY

99

FY

00

FY

01

FY

02

FY

03

FY

04

FY

05

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

*

FY

12

*

FY

13

*

Threshold of middle income country group (USD 996)

FY 99: July 98-June 99, * * Projections**

8

9

Bangladesh’s Private Sector is Leading the Way

9

o Unlike many developing nations, Bangladesh’s private sector is

the overwhelming driver of growth.

75.5% 69.2%

74.8%

4.4% 5.6%

5.4%

16.9% 20.5%

19.7%

7.9% 7.1% 4.6%

-4.7% -2.4% -0.8% -5.0%

15.0%

35.0%

55.0%

75.0%

95.0%

115.0%

2001 2005 2010

Private enterprises account for roughly 90% of economic activity

Net Exports Govt. Investments Private Investments

Govt. Consumption Private Consumption

10

Strong external trade growth reflects

vibrancy of the economy

10

o Both exports and imports nearly doubled during the last 5 years.

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

50.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

10P

Gro

wth

in

Exp

ort

s a

nd

Im

po

rts (

%)

Exp

ort

s a

nd

Im

po

rts (

billio

n U

S$)

Exports (billion US$) Imports (billion US$)

Growth in Exports (%) Growth in Imports %)

Apparels exports bounced back strongly

o Low labor costs

retained competitive

edge even after recent

wage hike.

o In the post-crisis surge,

exports to new markets

and exports of newer

items like marine

vessels and IT are

gaining momentum.

0

5

10

15

20

25

30

35

40

45

FY 07 FY 08 FY 09 FY 10 FY 11 (upto

March)

Apparels export

Gro

wth

ra

te (

%)

11

12

Buoyant agricultural output helps

preserve food security

o Agricultural output remains buoyant, supported by timely access

to inputs and financing.

o Near self-sufficiency in food grain output (rice production meeting

96% of domestic needs).

13

2

4

6

8

10

12

14

10

15

20

25

30

35

40

FY 06 FY 07 FY 08 FY 09 FY 10

Gro

wth

ra

te (

%)

Fo

od

gra

in o

utp

ut

(mill

ion

m’t

on

s)

Food Grain Output

Growth Rate

Trends & medium term projections

of major macroeconomic indicators

Indicators FY09 FY10 FY11* FY12* FY13* FY14* FY15* FY16*

(Growth rate in percent)

1. Real GDP( FY96 prices) 5.7 5.8 6.7 7.0 7.2 7.6 8.0 8.2

2. Broad money (M2) 19.2 22.4 16.0 15.8 15.8 15.7 15.5 15.5

3. CPI inflation (Base : FY96) 6.7 7.3 8.0 7.5 7.0 6.8 6.5 6.2

4. Export 10.1 4.2 30.0 16.0 16.0 16.5 16.5 17.0

5. Import 4.2 5.4 45.0 14.0 14.0 14.5 14.5 15.0

6. Workers’ remittance 22.4 13.4 1.0 5.0 9.0 11.0 12.0 13.0

(percent of GDP)

7. Domestic savings 20.1 19.0 18.8 20.7 21.5 22.4 24.1 25.2

8. Investment 24.4 25.0 26.5 28.8 29.6 31.0 32.5 33.3

9. Revenue income 10.4 10.9 12.0 13.2 13.4 14.0 14.6 15.2

10. Overall budget deficit 3.9 3.7 4.3 5.0 5.0 5.0 5.0 5.0

11. Government debt

outstanding (i+ii) 45.0 39.5 38.4 38.2 38.0 37.8 37.6 37.4

i. Domestic 20.7 19.5 20.1 20.7 21.2 21.6 21.9 22.2

ii. External 24.3 20.0 18.2 17.5 16.8 16.2 15.7 15.2

12. Current account balance

: surplus(+)/deficit(-) 2.7 3.7 -1.1 -1.4 -1.3 -1.1 -0.8 -0.5

13. Foreign exchange

reserves (billion USD) 7.5 10.7 9.5 9.3 9.6 10.3 11.3 13.1

Source: BBS and Bangladesh Bank

15 * Projections

Bangladesh’s progress towards MDGs

o Reduction in child mortality (recently awarded by

UN)

o Among the top 10 performers in achieving gender

equality

o Gender equality in primary school enrollment

already achieved

o Improved maternal health

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Rankings

Bangladesh (in 2010) is :

o 21st fastest growing GDP country

o 7th largest remittance recipient country

o 70th largest exporter

o 68th largest importer

o Among the world’s top 30 destinations for IT outsourcing

o Dhaka, the capital of Bangladesh, is ranked 4th among the

top global destinations of online work

17 Source: World Trade Organization (WTO), World Bank

Foreign Investment: opportunities and facilities

o No prior permission required for investment in industrial

sector (except in 4 reserve sectors).

o Investment proposals need only to be registered with the

Board of Investment (BOI).

o No ceiling on percentage of foreign ownership, both wholly

foreign owned and joint ventures permissible.

o With long coastline beaches and millennium old inshore

historical sites, Bangladesh presents substantial unexploited

investment opportunities in developing hotels, resorts and

other tourist sites.

o Public Private Partnership (PPP) in infrastructure investments

- a new window of opportunity for foreign investors.

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Foreign Investment (..Cont’d)

o Fully serviced existing Export Processing Zones (EPZs), and

Special Economic Zones (SEZs) being expanded and developed

for export-manufacturing with duty free import of inputs.

o Capital market is open for foreign portfolio investment.

o Foreign investment is protected by the Foreign Private

Investment (Promotion and Protection) Act, 1980 and a number

of bilateral intergovernmental agreements.

o Profits/dividends on FDI and FPI are freely repatriable, so are

disinvestment proceeds and capital gains.

o Capital gains are free of income tax.

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BANGLADESH ECONOMY & TRADE POLICY

Growing market

Private sector led

Steady growth

Capable labour force

Close proximity to China & India

Innovative entrepreneurs

Open-door policy

Democracy

Homogenous culture

Vision 2021

o Achieve Middle Income Country status

o Attain and sustain 10.0% inclusive economic growth

o Unleash creative talents of the broad population

with promotion and nurturing of innovation in

agriculture, manufacturing and services

o Promote agricultural research in developing new

crop varieties and farming techniques suited to

climate change threats

o Develop a digital Bangladesh

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Thank you