Introduction
Bangladesh, a country with mass population and limited land area, may not be considered as a rich country but its economy is changing gradually. Income level of people both in urban and rural area is shifting to upward level in some extent. Change of its economy is evident by considering the country’s outlook in capital and even district areas. People are also getting familiar with hi-tech equipments and fashionable materials. As a result market growth as well as world market leader’s interest for more investment is also increasing remarkably.
Change of People’s Life Style (Newspaper report also reflect the fact)
Change of Bangladeshi people’s life style is evident from facts evident around us. It can be noted that the number of mobile phone subscribers recorded a significant increase of 1.103 million in January (2012) last reaching the total to 86.558 million in the country1.(Official figure on March 2011 was 72.8 million8) These mobile phone users definitely use mobile sets and many of them frequently change phone sets after some interval- which reflects the size of market of mobile set in the country. Due to improvement of purchasing power of this country’s middle class people, sell of expensive, hi-tech and fashionable sets is getting higher.
Transport use is also getting higher day bay day. From 2003 to June 2010, about 220,000 motor cars, jeeps and micro-buses were registered with Bangladesh Road Transport Authority (BRTA) in Dhaka. Fast rising fuel cost, grid-locked roads and import duties could not limit the number of privately owned vehicles despite the government’s implicit discouragement toward private transport sector2.
To book an expensive venue for social or cultural program someone need to book the venue at least three to four month before.
Now in Eid vacation it is difficult to find airline ticket to visit tourist spots, business purpose or for emergency need around the country.
Multi storied shopping malls are growing urban cities to upazillas. Many people come from outside districts to expensive markets on Eid season for marketing.
Remittance flow to the country touched 10 billion dollar in fiscal year 2009-10 and in 2010-11 it reached to 10,987.4 million dollar which is 13.4 percent higher than previous year. According to world remittance Data base, position of Bangladesh was 8th and in 2011 (predicted by Migration and remittance Fact book 2011) it came to 7th position7. This remittance flow is strengthening purchasing power of people of this country.
Although officially the number of people with greater than Tk.10 million wealth has been reported at 13,000 plus, the real number is estimated to be much larger. The flourishing number of private schools, private universities, private medical facilities, expensive restaurants and parlors all support the assumption2.
The market size is remarkably big also. Statistics show that 30 million people make up the middle income bracket; this is more than the population of Sweden, Norway, and Denmark combined3. Atiur Rahman, the governor of the Bangladesh Bank, told in an interview with foreign television Al Jazeera, “In a decade or so we will be one of the 30 largest economies of the world, and one should keep that in mind. It is not the size of the country that matters, it’s the population and it’s a very entrepreneurial population, and there lies our strength.” Despite only one per cent direct foreign investment, the country’s GDP is growing more than six per cent a year. The rising middle class is investing heavily in the stock market and in domestic businesses. It is they who are behind the economic growth3.
Impact on Hospitality Industry
The economic growth and people’s life style is also evident from the growth of tourism and hospitality industry. The capital’s hospitality industry has almost doubled in size and earnings over the last four years [2004 to 2007]. The luxury hotels in Dhaka have earned Tk 1.18 billion revenue as room rent in calendar year 2007 while it was Tk 577.29 million four years back in 200410. Foreign businessmen, ready-made garment buyers in particular, have contributed to the growth of the hospitality industry. Optimistic ideas says that the hospitality industry in Bangladesh will flourish further in the coming days as the country’s economy is growing fast with the increased flow of tourists and businessmen to the country.
Improvement on Health Consciousness
Due to the rise of middle class as well as improvement on health consciousness people is getting careful on quality of health and medicine. Which is directly and indirectly improving Pharmaceutical industrial sector. In this regard, quality of products, packaging on medicine are also improving. So that total sell is also growing.
Potential segment of the pharma market is now 130 billion US dollars. Presently, a good number of local firms meet 97 per cent of the demand of the local market that stood at Taka 7,000 crore. Export earnings from pharmaceuticals totalled $44.27 million in the last fiscal surpassing $ 40.97 million earned in 2009-10 fiscal, Export Promotion Bureau (EPB) data shows 12.
In an interview with a news paper General Secretary of Bangladesh Oushod Shilpo Somity said 5 percent GDP growth helps the pharma industry grow at 15 percent, and 6 percent and 7 percent growth makes it 20 percent and 25 percent respectively 13.
Investment by Market Giants
On Automobile Industry
The attractiveness of Bangladesh market may be not largely pronounced in many countries but even though companies with huge investment are considering seriously to get in and its not only for trading but also for manufacturing. Newspaper report shows interest of market leaders like Mitsubishi Motors is interested to assembling project in the country. There we saw- Mr. Osamu Masuko, global president of Mitsubishi Motors visited Bangladesh on February, last year (2011); on his visit he strongly mentioned “It is an easy target to sell 200,000 units of (sedan) a year in the next five to 10 years, considering the country’s population size and growing economy”4. These are defiantly encouraging news for investment climate of the country.
Due to rappid market growth and also having potential manpower market leaders are considering for technology transfer to the country. Which was also reflected from the statement of Mr. Osamu Masuko, global president of Mitsubishi Motors. It need to be noted that Mitsubishi Motors explained Hyundai Motor, a Korean automaker, that has become a global player due to transfer of technology. But it took 39 years for to transfer technology. Mr. Mauko thinks, for the case of Bangladesh it may take only 10 to 15 years for the same task and it is just because of lot of potential in the automobile sector with its huge number of educated young people of Bangladesh4.
Similar investment news has been learned from Intraco-Hindustan motors company, who invested $10 million to build an assembly plant in Savar to assemble 5,000 cars on first two years5.
It need to be mentioned that presently, Bangladesh’s annual car market is around 30,000 units, dominated by reconditioned Japanese cars4. It automatically explains the huge opportunity of investment for Japanese automobile industry in the country.
Giant local and foreign Motor cycle industries including Walton, Runner are also expanding manufacturing of motor bike factory in the country. Honda is on the process to set up their factory soon in Tongi area.
Expanded Electronic Market
Due to the rise of middle class people consumption of electronic product has also increased, which is also evident by steps of famous companies’ steps. We have seen the news that ACI Limited plans to set up a plant in Bangladesh to assemble Panasonic-branded products after embarking on electronics business with distributorship of the Japanese company’s audiovisual items11.
The company [ACI] had projected to sell 5,600 pieces of Panasonic audiovisual products worth Tk 128 million in the first year [after 2009], which will be 2.5 percent value share of the audiovisual product market2.The product profile comprises colour television, flat panel television (LCD and Plasma), DVD home theatre, DVD player, mini hi-fi system, digital still camera and video camera11. Among the product profile, liquid crystal display (LCD) and plasma-televisions are premium products that targeted high-end customers, corporate houses and hotels and motels. The company’s target is not only selling the premium products, but also regular or common items for middle income group to upper level11.
ACI Consumer Brands, a strategic business unit of ACI, has already sold four 50’’ plasma televisions each at Tk 3.82 lakh, eight 42’’ plasma televisions each at Tk 2.30 lakh and eight 42’’ LCD televisions each at Tk 1.51 lakh11.
( It need to be noted that the company is superior in manufacturing television with hi-definition plasma and LCD).
It need to be noted that Colour television is the biggest segment of the Tk 1,330 crore electronics market, with 15 percent annual growth, according to industry sources. Around 400,000 television sets worth Tk 440 crore were sold in 200811.
News paper reports expressed that among the television brands, Chinese Konka is the top player with 21 percent market share, followed by TCL with 18 percent, Singer with 12 percent, LG with 11.25 percent and Samsung with 10 percent in 200911. So that it is a place where many Japanese industries can easily come with investment to expand their business.
Electronic Industry for Home Appliance
News also published about intention of World famous electronic company LG-Butterfly’s plan for investment of $500 million to assemble electronics products in Bangladesh6. It is likely that the company will start assembling refrigerator in first stage and gradually produce other electronic items including television, microwave oven, air-conditioner, washing machine and other home appliances at their factory at Bhaluka in Mymensingh. The factory will be able to create job opportunity for 5000 people6.
Investment by domestic investors was recorded as 8,806 crore taka in 2001-02 which increased to 17,117.49 crore taka in 2008-09 fiscal year, it increased to 27,413.69 crore taka in 2009-10 and finally on nine month of 2010-11 it improved to 39,976.41 crore taka. At the same time direct foreign investment and joint venture investment with foreign companies’ record shows in 2007-08 it was 4,356.99 crore taka which increased to 14,457.72 crore taka in 2008-09 and finally on nine month of 2010-11 it increased to 26,519.37 crore taka9.
If investment climate continuously move with this positive trend than automatically lot of supporting industry, technology improvement, business environment will develop in this country.
1. Financial Express, March 26, 2012
2. The Daily star, November 12, 2010
3. Aljazeera news, http://www.aljazeera.com/video/asia/2011/09/20119411515723874.html
4. The Daily star, February 10, 2011
5. The Daily Star, November 20, 2011
6. The Daily Star, December 16, 2011
7. Bangladesh Economic Review 2011.
8. Bangladesh Economic Review 2011, p-218.
9.Bangladesh Economic Review 2011, p-207 to210.
10. Financial Express, November 1, 2008; http://www.thefinancialexpressbd.com/more.php?page=detail_news&date=2008-11-01&news_id=49576
11. The Daily Star, April 21, 2009; http://www.thedailystar.net/newDesign/news-details.php?nid=84890
12. http://bangladesheconomy.wordpress.com/category/pharmaceutical-industryhealthcare/
13. The Daily Star, January 16, 2011; http://www.thedailystar.net/newDesign/news-details.php?nid=170187
Bangladesh Economy 