Due to the increased production cost in China & India, Bangladesh has emerged as a lucrative outsourcing market due its low infrastructure and production cost and investment friendly legislation.
In a report published in the Bangla daily 'Prothom-alo', Deutsche Bank has identified Bangladesh as the perfect field for next generation outsourcing. The Bank has recently launched aXess Bangladesh – an institutional platform that provides equity investors with synthetic access to the Dhaka Stock Exchange (DSE) via participatory notes or total return swaps.
According to the report, although there are risks involved, there are good opportunities of investment in Bangladesh. Dhaka Stock Exchange (DSE) allows electronic transaction to enable the foreign investors to conduct transactions online. Foreign investors can invest any amount of money in the market and they don’t need to pay any extra tax on profit.
To give an idea about the capital market in Bangladesh, the DSE general index has gone up by 46.1% in 2003-2007 period compared to MSCI index’s increase of 34.5% in the same period.
The report also described the strong legislative structure that has been put in place to protect foreign investors’ interest. Foreign investors and NRBs can open a Beneficiary A/C via brokerage houses, merchant banks, custodian banks or any authorised foreign exchange dealers.
Deutsche Bank also thinks the GDP growth is quite strong compared to other South-Asian countries. The bank termed the growth better than Pakistan and just falling short of India’s GDP growth- quite similar to Vietnam’s growth.
The foreign exchange reserve of Bangladesh has doubled over last five years and is on the rise. In the RMG sector Bangladesh is one of the strongest producers in the world with most of its export income coming from this sector.
Although Bangladesh is the 31st biggest economy in the world in terms of purchasing power parity, some risks in the Bangladeshi market identified by Deutsche Bank are the liquidity problem of the market, lack of solid transportation network, electricity crises and inflation.