subject: Bangladesh as a China Alternative [print this page] Bangladesh as a China Alternative Bangladesh as a China Alternative
The tradeoff between risk and reward is one that every businessman faces. This is true everywhere in OECD states, in China, in India, and is especially the case in Bangladesh.
Bangladesh's government has one of the highest failure rates of any country, switching between civilian government and military rule. Corruption is endemicBangladesh's ranking on Transparency International's Corruption Index has remained approximately the same as Pakistan's notorious for its high levels of graft for a number of years. As a result, civil strife and the threat of terrorism remains a concern.
Bangladesh is also highly susceptible to natural disasters i.e. cyclones and major floods with reports suggesting that 17 percent of Bangladesh will be underwater by 2050 due to rising sea levels. This has taken a toll on its already poor infrastructure. Railway and roads are not a reliable means to transport goods, leaving only air transport, however costly.
Surprisingly, though, Bangladesh, as nation, has consistently encouraged foreign investment roughly since its inception. The state declared its independence from Pakistan in 1972, and The Foreign Investment (Promotion and Protection) Act was passed in 1980. Since then, The Civil Procedure Code Act of 2002, which facilitated arbitration procedures for foreign firms, was passed. One goal that's remained consistent throughout Bangladesh's various political regimes, whether civilian or otherwise, has been their continued support for foreign investment, particularly in the form of foreign-direct investment, or FDI.
The World Bank Doing Business Index places Bangladesh 28 countries behind its regional neighbor China in the ease of conducting business, meaning bureaucratic procedures involved in setting up a company and paying taxes are not significantly more cumbersome. Moreover, given Bangladesh's relatively low level of development, operating costs in monetary sense are comparably inexpensive. In Bangladesh, mean wages were US$0.58 per man-hour in 2009, compared to US$19 in Shanghai, China according to estimates made by the International Monetary Fund. And, given China's continued development, such wage growth has shown zero signs of abating.
Bangladesh's huge supply of unskilled labor places it squarely on the low-end of the value chain, with textiles making up more than three-fourths of the nation's export revenue. In 2009, Bangladesh overtook India in apparel exports in 2009, with its exports at US$2.66 billion, ahead of India's US$2.27 billion. The World Trade Organization ranked it as the fourth-largest clothing exporter worldwide. On the other hand, two-thirds of Bangladeshis are farmers, and the country is a significant producer of rice (4th largest producer), mango (9th), onion (16th), banana (17th), and potato (11th).
