Bangladesh WT/TPR/S/270 
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IV. TRADE POLICIES BY SECTOR 
(1) INTRODUCTION  
1. Changes in the sectoral distribution of GDP indicate that Bangladesh's economy has 
undergone important structural transformation over the past four decades.  At independence in 1971, 
agriculture was the dominant sector, accounting for over half of total GDP.  The manufacturing sector 
was small, contributing less than 10% of GDP, wh ile services, including transportation and power, 
accounted for the rest.  However, following strong gr owth in the ready-made garments' sector, the 
contribution of manufacturing industry to GDP ha d almost doubled to over 17% and the share of 
agriculture and forestry had fallen to under 15%, wh ile that of services had risen to over 50% by the 
beginning of the review period (Table IV.1). 
Table IV.1  
GDP by sector, 2005/06 to 2010/11  
2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 
Share of main sectors in GDP (%)  
Agriculture and forestry 15.5 15.4 15.2 15.1  15.0  14.9 
Fishing 4.1 3.9 3.8 3.7  3.6  3.5 
Mining and quarrying 1.2 1.2 1.2 1.2  1.2  1.2 
Manufacturing 17.2 17.8 17.9 17.9  17.9  18.2 
Electricity, gas and water supply 1.3 1.2 1.2 1.1  1.1  1.0 
Construction 8.2 8.2 8.3 8.4  8.3  8.2 
Services 52.5 52.4 52.5 52.6  53.0  53.0 
Wholesale and retail trade 14.2 14.5 14.9 14.9  14.9  15.0 
Hotels and restaurants 0.7 0.7 0.7 0.8  0.8  0.8 
Transport, storage and communication 10.8 10.7 10.8 10.8  10.7  11.0 
Financial intermediation 1.7 1.7 1.7 1.7  1.8  1.9 
Real estate and business activitie s 8.0 7.6 7.2 7. 0  6.8  6.5 
Public administration and defenc e 2.8 2.8 2.7 2.8  2.8  2.9 
Education 2.5 2.6 2.6 2.6  2.7  2.8 
Health and social work 2.3 2.3 2.2 2.3  2.3  2.3 
Community, social and personal services 9.6 9.5 9.5 9.8  10.2  9.9 
Growth (%) 
Agriculture and forestry 5.2 4.7 2.9 4.1  5.6  4.8 
Fishing 3.9 4.1 4.2 4.2  4.1  5.4 
Mining and quarrying 9.2 8.3 8.9 9.8  8.8  4.9 
Manufacturing 10.8 9.7 7.2 6.7  6.5  9.5 
Electricity, gas and water supply 7.7 2.1 6.7 5.9  7.3  6.0 
Construction 8.3 7.0 5.7 5.7  6.0  6.4 
Services 6.4 6.9 6.5 6.3  6.5  6.6 
 Wholesale and retail trade 6.8 8.0 6.8 6.2  5.9  6.1 
 Hotels and restaurants 7.4 7.5 7.6 7.6  7.6  7.6 
 Transport, storage and communication 8.0 8.0 8.5 8.0  7.7  7.9 
 Financial intermediation 8.5 9.2 8.9 9.0  11.6  9.4 
 Real estate and business activ ities 3.7 3.8 3.8 3.8  3.9  4.0 
Table IV.I (cont'd) WT/TPR/S/270 Trade Policy Review 
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2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 
 Public administration and defe nce 8.2 8.4 6.2 7.0  8.4  9.6 
 Education 9.0 9.0 7.8 8.0  9.2  9.5 
 Health and social work 7.8 7.7 7.0 7.2  8.1  8.3 
 Community, social and personal services 4.1 4.6 4.6 4.7  4.7  4.8 
 
Source : Bangladesh Bank; viewed at:  http://www.bangladesh- bank.org/pub/monthly/econtrds/dec11/ econtrds.php. 
2. Despite these changes in the sectoral compos ition of GDP, agriculture continues to account 
for the bulk of employment.  The agriculture sector is the single largest contributor to income and 
employment generation and an important elemen t in the country's challenge to achieve self-
sufficiency in food production, reduce rural poverty and foster sustainable economic development.  
The Government has, therefore, accorded high priori ty to this sector to enable the country to meet 
these challenges and to make this sector commercia lly profitable.  Of the total labour force in 
Bangladesh, around 52% are engaged in agriculture.  The Government employs around one-third of 
all workers in the formal sector, either directly in  the civil service or through SOEs.  However, most 
people are employed in the informal sector, especia lly in agriculture.  According to the latest Labour 
Force Survey , for 2005/06, 15% of the country's workers were employed in the industrial sector, 
while 37% had jobs in services.  External trade is  currently dominated by exports and imports of 
manufactures in contrast to the situation prevailing 30 years ago when jute and jute products were the 
principal export items.   
(a) Vision 2021 
3. Vision 2021 sees Bangladesh achieving an annual GDP growth rate of at least 8% by 2015, 
driven by accelerated growth in the industrial and ser vice sectors, diversification of the export base 
and markets, increasing global market access by Bangladeshi firms and high foreign exchange earnings from the export of semi-skilled and skil led labour (Table IV.2).  Successive national 
development strategies (National Strategy for Accelerated Poverty Reduction II 2009-11;  the  
Perspective Plan of Bangladesh 2010-21- Making Vi sion 2021 a Reality;  and the Sixth Five-Year 
Plan 2011-15)
1 emphasise the central role of trade in Bangladesh's economic development.  
Table IV.2 
Industrialization and trade policy targets under Vision 2021  
Sector share of GDP (%) Average (FY2004/10) Target FY2015 Target FY2021 
Agriculture 19.5 15.5 15.0 
Industry 
 Manufacturing 28.0 
17.3 32.0 
21.1 37.0 
28.0 
Services 52.5 52.5 48.0 
External Sector (% of GDP) 
Export 16.1 22.0 26.0 
Import 21.4 30.0 32.0 
Trade Balance -5.3 -8.0 -6.0 
Remittances 8.3 8.0 12.0 
Current A/C balance 1.0 -0.7 -1.0 
 
Source : Planning Commission (2010), Outline Perspective Pl an of Bangladesh 2010-2021, pp. 37 and 39. 
4. According to the Perspective Plan, Bangladesh 's industrialization process will need to be 
accelerated if the macroeconomic performance target s for 2021 are to be achieved.  The overarching 
goal for the country's industrialization is to enhan ce the industrial sector's GDP contribution to 37% 
                                                      
1 Planning Commission (2010).   Bangladesh WT/TPR/S/270 
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over the next decade, with a share of 28% for th e manufacturing sector.  So far, manufacturing has 
been narrow-based with concentration of growth in a few sectors - textiles, wearing apparel and 
leather, and frozen food and beverages.  The Plan makes it clear that Bangladesh's trade and industrial 
policies need to be well integrated to support the twin ambitions of export promotion and rapid 
industrialization.  Bangladesh has experienced trad e policy reforms and import liberalization since the 
1990s.  This has been accompanied by promotiona l measures for exports, including reduction of the 
anti-export bias and setting up facilities such as bonded warehouses and duty drawback, subsidised 
interest rates on bank credit, cash compensa tion schemes, duty-free import of machinery and 
intermediate inputs and exemption from income ta x and other taxes.  EPZs and SEZs have been 
established to promote domestic and foreign export-oriented investment.  Overall, the key trade policy 
objectives are: ensuring export competitiveness in gene ral, reducing the anti-export bias of the trade 
regime and reducing the anti-diversification bias.  
5. In the Sixth five-year Plan, the focus is on export diversification (i n terms of products, 
markets, for good and services).  It highlights opp ortunities for Bangladesh to plug into regional 
supply chains by diversifying its manufacturing base and producing a wide range of intermediate 
goods for export within globalized production chains.  To achieve this goal, the Sixth Plan contains 
detailed strategies for "thrust manufacturing sector s":  notably the RMG sector, non-RMG textiles, 
jute, footwear and leather, light engineeri ng, pharmaceuticals, agro-processing, shipbuilding, 
electronics, steel and engineering, software  and ICT products, home textiles, ocean-going 
shipbuilding industries, toiletry products, chemical s, and small and micro enterprises across different 
sectors.  The strengthening of key trade support institutions is also envisaged.2  The Sixth Plan is also 
specific about areas requiring attention, such as the need to strengthen the legal framework and 
compliance related inter alia  to intellectual property rights, standards and metrology, and trade 
facilitation. 
6. While the Ready-made garments (RMG) sector h as witnessed some diversification in terms of 
market destinations in recent years, the export base of Bangladesh is still narrow and undiversified, 
demonstrating the need to enhance its productive capacity ( Table IV.3).  
Table IV.3 
Export Performance of Major Products (in US$ millions) 
 Jute Goods Leather Frozen Food Engineering Products  Pharmaceuticals RMG 
FY2008 318  284  534  220 43  10,700 
FY2009 269 398  454  189 45  12,348 
FY2010 540  226  445  311 41  12,497 
 
Source : Bangladesh Bank (Table 2.2 of Sixth Plan Accelerating Gr owth and Reducing Poverty Part-2:  Sectoral Strategies, 
Programs and Polices). 
7. The Sixth Plan identifies some of the reasons  for Bangladesh's inability to capitalize on its 
success in RMG exports, which are also indicative of  the interventions required to drive forward the 
trade-led growth:  (i) anti-export bias of trad e policy which still favour s production of domestic 
import substitutes and creates barriers for new export i ndustries;  (ii) chronic power shortages due to 
the exponential growth in electricity demand which h as outpaced the available supply;  (iii) shortage 
of serviced land, as well as difficulties with titling and registration;  (iv) inadequate access to 
commercial credit;  (v) low labour productivity and s hortages of skilled labour;  (vi) low participation 
                                                      
2 The Sixth Plan identifies the followi ng institutions as needing support, inter alia :  Board of 
Investment, Privatization Commission, Chamber of Commerce and Industries, Export Promotion Bureau, 
Bangladesh Tariff Commission, Bangladesh Standard Tes ting Institute, Bangladesh Institute of Management, 
Bangladesh Industrial Technical Assistance Centre and the National Productivity Organization. WT/TPR/S/270 Trade Policy Review 
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rates among female workers due to gender bias;  (vii) weak innovation and low investment in 
technology;  (viii) constraining gove rnment regulations and enforcemen t in the areas of tax, contracts 
and red tape;  and (ix) slow pace of privatiza tion of state-owned enterprises.  Recent World Bank 
Doing Business Indicator rankings suggest that a ccess to electricity, registering property and 
enforcing contracts stand out as particular areas where Bangladesh lags behind in comparison with 
neighbouring countries. 
(b) Infrastructure  
8. Strong economic growth in recent years has ra pidly increased demand for energy, transport, 
and telecommunications services but insufficient in frastructure investment has created a severe 
infrastructure deficit.  Inadequate power supply is  perceived as the single greatest impediment to 
private sector development.  Bangladesh endures  long power interruptions causing substantial 
economic losses, estimated by the Government to exceed 0.5% of gross domestic product per year.  
Many industrial and commercial es tablishments depend on expensive and inefficient captive power 
generation during power interruptions.  At the sa me time, only 47% of the population has access to 
electricity.  Power-generating capacity in Banglad esh has not kept pace with demand growth, and 
existing generating stations do not operate at  maximum efficiency or availability.   
9. The Government adopted its Power Sector Refo rm Road Map for 2006-08, which identified a 
number of actions:  (i) making the Bangladesh Energy Regulatory Commission fully functional as a power sector regulator;  (ii) improving the transparency, corporate governance, and accountability of the sector entities;  (iii) restructuring the Bangl adesh Power Development Board (BPDB) to make it 
financially viable;  (iv) further unbundling th e sector by establishing several generation and 
distribution companies under the Companies Act;  (v) introducing a more streamlined process for 
promoting private-sector investment in power gene ration;  and (vi) mobilizing financing from the 
domestic capital markets to financeviable power sect or entities.  In addition, the Government has 
adopted a comprehensive energy development strategy as part of its Sixth Five-Year Plan.  It includes 
measures to boost power supply and encourage demand management, emphasizing higher power 
generation, energy trade, and diversified primary ener gy sources.  The plan signals the need to ensure 
proper pricing of power based on a review of good in ternational practice.  The Government has taken 
Public-Private Partnership (PPP) initiatives to m eet the investment deficit in infrastructural 
development and maintenance in the area of power plants, land ports and other infrastructures. A PPP 
Office has been established with financial and f unctional autonomy, and a law and policy guidelines 
have been drafted, with eight projects under five ministries identified on a pilot basis (Box IV.1).  Bangladesh WT/TPR/S/270 
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Box IV.I:  PPP Programme in Bangladesh 
In August 2010, the Government of the Peop le’s Republic of Bangladesh issued the Policy and Strategy for Public Private 
Partnership (PPP ) to facilitate the development of core sector public  infrastructure and services vital for the people of 
Bangladesh.  The PPP programme is a part of the Government’s  Vision 2021 goal to ensure a more rapid, inclusive growth 
trajectory, and to better meet the need for enhanced, high quality public services in a fiscally sustainable manner. 
Through the PPP programme the Government will develop and imple ment a structured approach to working in partnership 
with private sector investors in order to accelerate the deve lopment and delivery of vital public sector infrastructure and 
services.  The PPP programme will help to open up significant opport unities for the priv ate sector to invest and participate 
in the building, operation and maintenance of projects that were previously delivered by the public sector. 
Under this new national policy, the PPP Office was establis hed in September 2010 as a se parate, autonomous office under 
the Prime Minister's Office to act as a catalyst to proactivel y realize PPP projects.  The PPP Office supports line ministries 
to facilitate identification, development, formulation and tendering and selection of i nvestors of PPP projects to 
international standards.  For interested investors the PPP Offi ce provides a professional, transparent, centralized portal to 
high quality PPP Projects.  The PPP Office helps augment governm ent sector line ministry project-development efforts 
with world-class external PPP resources, with the goal of incr easing the quality, attractiveness,  and sustainability of PPP 
projects while realizing them in an efficient and cost-effective manner. 
The PPP Office, together with the line mi nistries are developing a pipeline of pot ential PPP projects which will be placed 
for open market tender to attract private sector investors participation in the development and implementation of these 
projects.  Eight pilot pr ojects covering 5 different sect ors have already been announced in March 2012 and these projects 
are currently at different stages of development. 
Source: PPP Office. 
 
10. One of the biggest short-term challenges will be  to improve the supply of electricity.  The 
main obstacles here are a shortage of gas (the main  fuel used by generating plants in Bangladesh) and 
the large number of old, inefficient power stations .  The Government has managed to boost electricity 
supplies by buying power produced at a number of privately owned diesel-powered plants, and aims to raise generating capacity further by encouragin g foreign energy firms to search for new gas 
reserves in Bangladesh.  In the longer term it hopes to  build a nuclear power plant in partnership with 
a foreign nuclear corporation. 
(2) A
GRICULTURE  
11. Though the share of GDP of the agriculture sect or has decreased slightly during the review 
period, its indirect contribution to the overall growth of GDP is significant.  The growth of the services sector, particularly the growth of wholesale and retail trade, hotel and restaurants, transport 
and communication sector is strongly supported by the agriculture sector.  Exports of agricultural 
products account for 4% of total ex port earnings.  In addition to the exports of main agricultural 
commodities, such as raw jute, jute goods, tea, frozen foods, the Government has taken steps to 
increase exports of non-traditional agricultural commodities.
3  However, food imports account for 
nearly 13% of total imports, making Bangladesh a net food-importing country.   
12. The combined contribution of all sub-sectors of  agriculture (crop, livestock, forestry and 
fisheries) to GDP was 18.4% in FY 2010/11.  A ccording to the authorities, the crop subsector 
accounts for over 70% of the agriculture and for estry sector GDP, and remains the single largest 
economic activity in Bangladesh.  The authorities have continued to assist crop farmers through 
intervention in the agricultural input markets (seeds,  fertilizer, irrigation, concessional interest rates, 
                                                      
3 For example, Bangladesh has been successfully ex porting citrus fruits to European markets since 
November 2011and expects exports to increase.   WT/TPR/S/270 Trade Policy Review 
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electricity tariffs) and in public food procurement.  In their most recent notification to the WTO, the 
authorities indicated that they did not give export subsidies to agricultural products during the period 
2000/01 to 2006/07.4 
(a) Regulatory and policy framework  
13. Several ministries and agencies are involved in agriculture, rural development, and natural 
water resource management, including:  the Ministry  of Agriculture;  Ministry of Food and Disaster 
Management;  Ministry of Water Resources;  Bangladesh Water Development Board;  Local Government Engineering Department;  Ministry of Fisheries and Livestock;  and Ministry of Local 
Government, Rural Development, and Cooperatives.  Under the ministries are outreach and extension 
agencies, research institutes, and organizations r esponsible for technology dissemination.  Delivering 
high-quality services is hampered by authority bei ng divided across agencies, capacity constraints, 
and a lack of coordination.  
14. The sixth five-year plan recognizes the need to  raise agricultural productivity, foster crop 
diversification, and boost public spending on rural in frastructure.  The plan indicates that more rapid 
progress in improving farm-to-market roads and the increased availability of  rural power will be 
achieved by refocusing agricultural spending away from  subsidies and into rural infrastructure.  The 
plan emphasizes improving the enabling environmen t for agribusiness development by enhancing 
production scale, focusing on quality and standards fo r export markets, and developing private trade 
logistical assets such as cold storage facilities.  
15. Overall sectoral development policy objectives and priorities are contained in the National 
Food Policy (2006), its associated Plan of Action (2008-15)
5, the Bangladesh Country Investment 
Plan (2010-15)6 aimed at improving food output and food security in the country and the national 
Agricultural Policy 2011.  Since the global food crisis of 2007-08, donor commitments to invest in food security and agricultural development have in creased.  More funding for food security offers a 
significant opportunity for Bangladesh as well as th e challenge of ensuring resources are channelled 
to where they are needed most.   
(b) Food security 
16. The core objectives of the policy are related to food security:  an adequate and stable supply 
of safe and nutritious food;  increased purchasing po wer of the people to access food;  and adequate 
nutrition for all.  Broadly defined, food security ai ms to ensure all people ha ve access to sufficient, 
nutritious and affordable food, where about two-thir ds of the consumption basket comprises food.  
The Government has recently taken severa l measures to better ensure food security.
7  First, official 
subsidies on various inputs ha ve helped protect against rising costs.   In response to the increasing cost 
of urea fertilizer, the Government has expanded the resources available for fertilizer subsidies (about 
0.7% of GDP in FY2011).  It has also continued to  subsidize diesel, used to run the irrigation pumps, 
and to encourage banks to expand fa rm loans (agricultural loans cons titute around 6% of total loans). 
Bangladesh Bank (BB) also continues to make lendi ng to agriculture a priority sector for banks.  
Second, a number of food-related social safety-net progammes exist, which focus on meeting food 
                                                      
4 Notification of 4 May 2011 to th e WTO in document G/AG/N/BGD/4.  
5 Ministry of Food and Disaster Management (2008). 
6 Ministry of Food and Disaster Management (2011). 
7 In addition, according to the authorities, Bangladesh Bank has issued directives to commercial banks 
to increase disbursement of agricultural credit to meet th e working capital needs of small farmers.  It has been 
made mandatory for every bank to deliver agricultural loans to enhance the agricultural production base and promote product diversification.  Bangladesh WT/TPR/S/270 
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needs of vulnerable groups, providing food-for-work and undertaking open market sales of strategic 
food reserves at subsidized prices.  Through its fo od distribution system, the Government released 
2.3 million metric tons of food grains in FY2011, c onsisting mostly of rice and wheat.  Third, food 
grain imports increased sharply in FY2011 through government purchases used for open-market sales 
and strategic reserves;  some food grain imports ha ve been sold in the local market and the rest 
retained as part of official food reserves.  Fina lly, food imports have become more diversified which 
has helped to control their cost;  food grains ha ve been increasingly imported from Pakistan, Thailand 
and Vietnam as Bangladesh moves away from traditi onal-source markets such as India, where export 
bans on rice have created supply disruptions.  
17. The national Food Policy Plan of Action 2008-15 translates the core objective of food 
security into strategic areas of in tervention, which are particular ly relevant for trade-related 
agricultural support and intervention.  Key areas are:  agricultural research and extension;  supply and 
sustainable use of agricultural inputs, in particul ar fertilizers;  agricultural credit and insurance;  
market infrastructure development;  producer pri ce support;  public stock management and price 
stabilization and water resource management. 
18. Bangladesh's  most recent notification on domestic support commitments to the WTO.  
During the period up to FY2006/07, AMS, which was within the de minimis  level, exceeded Green 
Box outlays.  The entire amount of product-specifi c AMS-related expenditure was used for price 
support operations for rice and wheat, and non- product specific AMS was mainly devoted to 
subsidizing fertilizer imports.  Most Green Box- type support was directed towards extension and 
advisory services8 as well as research and development activitie s (Table IV.4).  According to the 
Ministry of Finance, a total subsidy of US$2.1 billion (Tk17,092 crore) was granted for urea and non-
urea fertilizer in FY2009/10, 2010/11 and 2011/12 and an allocation of US$730 million (Tk 6000 
crore) has been proposed for agricultural subsidy in the budget for FY2012/139.   
Table IV.4 
Developments in domestic support to agriculture, 2002-07  
(US$ million) 
 2002/03 2004/05 2006/07 
Total domestic support (I+II+III)    
Share of total domestic support to GDP 0.19 n.a. n.a. 
Share of total domestic support to total tax revenue 2.27 n.a. n.a. 
Share of total domestic support to total government expenditure 1.29 n.a. n.a. 
I. Aggregate Measurement of Support (AMS) 
(a) Product-specific AMSa    
Rice -3.85 -18.7 -7.4 
Wheat -0.58 -0.03 0 
(b) Non-product-specific AMS    
Indirect subsidy through the use of electricity fo r irrigation at subsidized rate 7.32 5.4 34.8 
Indirect subsidy to farmer through imported urea fertiliz er 44.53 96.9 107.2 
Indirect subsidy provided to farmer thr ought imported non-urea fer tilizer n.a. 42.5 49.3 
II. Measures exempt from the reduction commitment - "Green Box" 
General services 52.4 95.5 75.1 
Table IV.4 (cont'd)  
                                                      
8 Include training, demonstrations, field days, publications, and input delivery/distribution in 
emergency situations.  
9 Minister of Finance (2012). WT/TPR/S/270 Trade Policy Review 
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 2002/03 2004/05 2006/07 
(i) Research and development of non-ri ce crops, (fruit, vegetables, spices) 
except sugar cane, jute, cotton, and tea 9.32 10.9 23.6 
(ii) Research and development of rice crops 2.73 4.0 4.0 
(iii) Research and developmen t of sugar cane 1.07 1.1 1.5 
(iv) Research and development of cotton 0.35 0.36 0.2 
(v) Pest and disease control 0.46 0.52 0.8 
(vi) Training services 1.21 1.32 1.5 
(vii) Extension and advisory services 27.44 64.5 32.7 
(viii) Marketing and promoti on services 1. 49 0.50 3.7 
(ix) Infrastructure services 0.06 0.0 0.0 
(x) Research and extension for im proving dairy sector 2.19 6.4 2.1 
(xi) Research and extension for im proving poultry sector 3.22 5.8 2.1 
III. Measures exempt from the reduction commitment  
Special and Differential Treatment "Development programmes" 
Investment subsidies available to poor a nd marginal farmers (including fisheries 
and livestock subsectors) 0.18 0.09 2.7 
(i) Re-finance facilities provided to farmers at a concessional rate of interest at 
1.5% per annum for credit to "Sp ecial Economic Zone of the country" 0.09 0.09 2.7 
(ii) 2% interest rebate for repayment of  loan on schedule.  This is generally 
available to marginal farmers  0.09 n.a. n..a. 
 
n.a. Not applicable. 
 
a Product-specific support was provided through market price support measures.  
Source : Notification from Bangladesh, G/AG/N/BGD/3, 4 May 2011 covering FY2002/03, 2004/05 and 2006/07. 
19. For the past 20 years, a strategy of self-reliance in food grains has been adopted, essentially 
on the back of imports of cheaper rice from India.  Broadly, this has worked  well, with the private 
sector importing sufficient rice in a timely manne r when the need arose.  Bangladesh normally 
produces enough rice to feed its population, although imports may be required to cope with natural 
calamities such as droughts and floods.  However, the strategy was put to the test in 2007/08 when a 
number of major grain exporters impos ed export restrictions that made  sourcing of staples from global 
markets problematic.  Importing from international markets during this period was difficult although 
the potentially negative impacts were ameliorate d by an all-time high harvest in Bangladesh.  
20. The concern that global markets may not always be reliable as a source of food when needed 
was reflected in the new Government's election ple dge of achieving self-sufficiency in food grains by 
2013.  In following up on this pledge, the Government inter alia  cut fertilizer prices in 2009 and 
reduced the price of diesel to farmers through cash  subsidies and, in 2010, promoted the increase in 
subsidies to farmers to ensure food security.  (Appendix Table AIV.1)   
21. As the staple food for Bangladesh, rice production is the most important economic activity in 
rural Bangladesh.  Rice alone constitutes about 90% of the total food grains produced annually and 
Bangladesh is the world's fourth largest producer of rice.  Production has increased significantly from 
about 6 million tonnes in 1971/72 to 33.53  million tonn es in 2010/11.  Staple food grain consumption 
is primarily of rice with less consumption of wheat, a staple that is only produced in relatively small 
amounts.  Although domestic production of food grains has increased significantly over the past four decades, imports have always constituted a significant proportion of total availability of food grains in 
the country, constituting around 10% of total availa bility in recent years.  Rice imports, although Bangladesh WT/TPR/S/270 
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averaging only 3% of net availability during 1980- 2004 contrast to wheat, where imports accounted 
for about two-thirds, play a critical role in food security and rice price formation. 
22. Overall, trade policy with respect to importable  food staples is characterized by interventions, 
which have been formulated primarily on the basis of food-security concerns, and, as a result, these 
policy interventions have thus been variable in  terms of levels of protection and support.  
(c) Export policy  
23. A key component of export policy for the past decade has been the u se of cash incentives for 
the promotion of the export of certain agricultura l products, primarily to ge nerate foreign exchange, 
but also to support producers of these commodi ties.  The cash incentive scheme was initially 
introduced to assist the export of locally produced jute  products and other local textiles.  Since then it 
has been progressively increased in scope (both in  terms of the overall outlays on cash incentives and 
the number of products, which has increased to fourteen , with frozen shrimps and other fish, fruits and 
vegetables and processed agro-products included in  the programme since 2002-03, potatoes added in 
2004 and hatching eggs and day-old ch icks in 2005 (Table IV.5).  The cash incentives are provided to 
internal and international handling, transport and freight charges, which are allowed under Article 9.4 
of the WTO Agreement on Agriculture.  The cash  incentive is provided on the net FOB value, 
calculated using a fixed administered price set by  BB.  The cash incentive varies across products and 
across time in the range of 3% to 20%.  
Table IV.5 
Cash incentives for selected products, 2012  
(f.o.b. value)  
Product Rate of subsidy/cash incentives (%) 
Frozen shrimp and other fish 10.0 
Agricultural and agri-processed goods 20 
Potato 20 
Jute  10 
Hatching eggs from poultry and day-old chicken  15 
Liquid glucose (Earshardi EPZ) 20 
100% halal meat 20 
 
Source:  FE Circular No.10 of 13 July 2011;  Bangladesh authorities. 
24. Further protecting and supporting the development of these export sectors has been the use of 
high tariffs on frozen shrimp and fish, and on jute, desp ite the fact that they ar e major exports.  Tariffs 
are also high on some import substitution crops, for example vegetables, fruits, nuts and spices.  The 
Export Policy 2009-12 prohibits the export of "r aw shrimp, and agro-food processing, including 
frozen food", as it declared as a highest priority sector.  The approach of trade policy towards 
exportable products therefore reflects the perceived importance of the processing and trading sectors.  
25. The selected support to different sub-sectors appears to have contributed to a significant 
change in the export pattern.  While the agricultura l share in total exports has fallen from 37% in the 
1970s to 6% in 2011, the recent growth in shrimp exports, which now has a 65% share of agricultural 
exports, and vegetables with a 76% share, has been dr iven to a large extent by the cash incentives and 
by subsidized freight charges; increase of supply capacity, strict adherence to compliance 
requirements and improvements in prod uct quality and competitive advantage. 
26. For example, frozen shrimp exports increas ed from 9.86 thousand tonnes in 2001/02 to 
23.52 thousand tonnes in 2007/08, while the value of these exports increased from US$252 million to WT/TPR/S/270 Trade Policy Review 
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US$445.4 million.  The percentage increase in the expor t of other frozen fish was even higher, albeit 
from a lower base.  More than 80% of total shrimp  exports go the EU and total shrimp exports are 
currently estimated to be worth over US$600 mill ion per annum. Both the volume and value of 
vegetable exports also increased significantly, w ith volumes increasing from 3.75 thousand tonnes in 
1990/91 to 30.93 thousand tonnes in 2007/08.  In value terms this represented an increase from 
US$4.37 million to US$60.47 million.  During the cash -incentive period alone, the quantity of exports 
increased 2.4 times, and by 4 times in value terms. 
27. The 2009-12 Export Policy lays out a number of measures to develop the shrimp industry.  
These include:  use of venture capital for producing,  processing and exporting value added products in 
the frozen food sector;  initiatives to establish in valu e terms "Seal of quality organization" or similar 
organizations under public-private partnership to ensure the quality of shrimp and shrimp products;  
necessary steps to establish an Accredited Testin g Laboratory of high quali ty, under public and 
private or joint initiatives, to ensure high quality of products and SPS-related standards;  the setting up 
of laboratories in the private sector will be allowe d and steps will be taken for research and remedial 
measures to improve the quality of shrimps and pr otect them from diseases;  import of indispensable 
machinery for quality control will be encouraged so  as to strengthen the efforts for controlling the 
quality of frozen food.  The Department of Fisher ies and BCSIR will take initiatives to improve their 
accredited testing laboratories;  in order to reduce the risk of exporting contaminated frozen food, a 
special supervision or traceability system will be  developed for all the steps from hatching to 
production of fish, processing and packaging;  a monito ring cell will be set up to control the quality of 
exportable shrimps;  customs aut horities will ensure, before the release of the goods, whether the 
imported fish-feed is usable or whether there is any contaminated or prohibited substance in it. 
28. Despite significant increases, the volume of e xports of both vegetables and shrimps depends 
not only on the cash incentive but on the ability of the sectors to comply with market and hygiene 
requirements in the form of HAACP, SPS and pesticide residue constraints.  
(3) INDUSTRY SECTOR  
29. The industrial sector as a whole, including both formal and informal manufacturing, mining, 
power and construction, engaged ar ound 16% of the employed labour force in 2008.  By 2010/11 the 
industrial sector provided about 30.3% of GDP, reflec ting the growth of manufacturing, particularly 
export-oriented manufacturing.  The manufacturing sector alone accounts for over 18% of GDP.  Manufacturing includes a relatively modern formal sector that consists of larger firms that are 
formally registered (providing about 70% of manufacturing output) and an informal sector, 
comprising many micro-scale unregistered firms.   
30. The mining and quarrying sector forms a small part of the economy, accounting for around 
1% of GDP.  Mining and mineral exploration are ca rried out under the auspices of the state-owned 
Bangladesh Oil, Gas & Mineral Corporation (Pet robangla) and under production-sharing contracts 
with international oil and gas exploration firms.  Minerals that are commercially exploited include 
limestone, china clay and coal.  The construction sec tor has experienced strong growth since the early 
1990s, especially in urban areas, where high-rise ap artment complexes are being built to meet the 
needs of the growing middle class.  The constructi on sector’s share of GDP has been broadly steady, 
at over 8% during the review period.  Growth in th e construction of residential buildings has increased 
the strain on power, gas, water and sanitary services in the major cities, but such construction projects 
have also generated grow th in related industry. 
31. Manufacturing in Bangladesh is driven by a number of sectors: garments, jute yarn and twine, 
pharmaceuticals, tobacco manufacturing, beverages, cement, and shipbuilding.  A relatively recent Bangladesh WT/TPR/S/270 
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development is private investment in the constr uction and export of small ships, a segment where 
Bangladesh appears to enjoy a competitive edge.  Ba ngladesh has enjoyed robust  growth in the past 
decade, partly due to expansion of the manufacturing sector.  Given its inherent strengths - especially 
a vibrant private sector and a large pool of inexpe nsive labour-the prospects for continuation of such 
growth are relatively good.  Unit labour costs in  the dominant garment industry are around 50% below 
the nearest competitor and only about one-third of tho se in China.  Not surprisingly, foreign investors 
are showing interest in large-scale relocation of labo ur-intensive industries, particularly garments and 
related textile manufacturing.  In addition, sector s such as pharmaceuticals, ceramics, and processed 
and frozen foods have shown dynamism in recent years. 
(a) RMG sector 
32. Ready-made garments manufactured in Bangladesh are divided mainly into two broad 
categories:  woven and knit products.  Shirts, T- shirts and trousers are the main woven products;  
undergarments, socks, stockings, sweaters and ot her casual and soft garments are the main knit 
products.  Export earnings from knitwear are now great er than those of woven garments.  According 
to data provided by the authorities, in 2010/11, export earnings from knitwear were US$9.5 billion 
against US$8.4 billion from woven garments.  In the case of knitwear, around 90% of fabrics are 
being produced locally.  However, much of the fabric and yarns required by the RMG sector are 
imported, meaning that the net export earnings are co nsiderably lower.  It was feared that the phasing 
out of the Agreement of Textiles and Clothing (ATC ) in 2005 would adversely affect Bangladesh, but 
by then the country had achieved sufficient compe titiveness to survive without the protection offered 
by ATC quotas and the garment sector has continued to achieve significant growth.  
33. One of the main reasons for Bangladesh i success in the apparel market is price 
competitiveness.  Bangladesh in 2010 had one of the lowest garment wages in the world of around 
US$64 per month, compared to minimum wages in China's coastal industrial provinces ranging from 
US$117 to US$147 per month.10  The country's textile sector stands to be the main beneficiary of 
labour shortages, rising wages and capacity constraint s in China, which is the largest apparel-sourcing 
centre in the world.  Bangladesh  currently boasts 5,000 garment factories (compared with 2,450 in 
Indonesia, 2,000 in Vietnam and 260 in Cambodia) employing 3.6 million people, mainly women.  
34. Moreover, being an LDC, Bangladesh enjo ys duty-free and quota-free access to many 
countries like Japan, Australia and the EU.  The garm ent industry is expected to remain the largest 
contributor to growth in output for the foreseeable  future, in particular since the 2011 change in EU 
import rules which gives Bangladesh and other LDCs  duty-free access if imported components of the 
final product do not exceed 70%.  Previously, du ty-free access was granted for goods with a 
maximum imported content of 30%. 
35. During the review period, government suppor t measures included the provision of bonded 
warehouse facilities, technological upgrading (conce ssionary duty rates and tax exemptions for the 
import of capital machinery), cash subsidies for the use of local fabrics as inputs for exporting RMG 
enterprises and an export credit guarantee scheme covering risks on export credits at home and 
commercial and political risks occurring abroad.  Th e Government also supports market promotion 
efforts of RMG exporters and subsidizes utility charges.   
36. Because of the significant contribution of the RMG sector in the economy, the Government 
has initiated several support measures specifically ta rgeting this sector.  These include providing 
various policy supports such  as bonded warehouse facilities, duty drawback incentives, cash 
compensation schemes and facilities to procure raw ma terials.  Under the Special Economic Zone Bill 
                                                      
10 New York Times, "Bangladesh with low pay moves in on China", 16 July 2010. WT/TPR/S/270 Trade Policy Review 
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(2010), the Government is committed to buildi ng seven Special Economic Zones (SEZs) over the 
short to medium term. SEZs are seen by the author ities as "engines of growth" and "islands of good 
governance".  The Government believes that a number of foreign investors, particularly textile firms 
based in China, India and South Korea, are keen to set up operations in SEZs, which boast 
infrastructural facilities and logistical support. 
37. In the Export Policy 2009-12, a number of product-specific export facilities for the RMG 
industry are enumerated, including the following:  steps to reduce the lead time for RMG exports 
through improvement of port mana gement and simplification of pr ocedures for releasing goods;  
establishment of garment villages with adequate infrastructural and utilities' facilities;  product 
diversification by improving skills of workers and staff and appropriate training;  subject to the 
submission of a bank guarantee of the equivalent amount of duty for imported raw materials, an 
enterprise without a bond licence will be allowed to produce exportable hand-woven sweaters from 
natural and artificial wool outside the bond areas.11  
(b) Industrial diversification 
38. The prime objective of the New Industrial Policy 201012 (NIP) is to ensure the industrial 
sector contributes up to 40% of GDP and 25% of new jobs (currently 16%) by 2021.  The 
Government is working to ensure the necessary ec onomic stimulus packages, infrastructure facilities 
and policy support for achieving this objective.  The NIP has identified 32 thrust sectors and 32 
industrial service sectors for developing indus trial growth and economic development. 
39. Detailed steps towards diversification are laid out in the current Export Policy, which notes 
that the Ministry of Commerce has formed sev eral sector/product and service-specific Business 
Promotion Councils as a joint initiative of the Governme nt and the private sector  within the scope of 
the Company Act 1994, to diversify exports, impr ove and ensure the quality of products, acquire 
appropriate technologies, fulfil compliance requirement s, marketing of products etc.  Development 
projects will be initiated in cooperation with the development partners, if necessary, to accelerate 
product/service/sector-based development activities.  Such initiatives of the Ministry of Commerce 
will complement the export promotion and export diversification activities of the Export Promotion 
Bureau.  The South Asian Regional Standard Or ganization (SARSO) has been established to set 
appropriate quality standards for manufactured goods , enhance quality-control capacity in order to 
facilitate expansion of exports in SAARC counties and alleviate intra-trade technical problems.  
40. Some product sectors have been identified as "high est priority sectors" and others as "special 
development sectors" depending on the level of pr oduction and supply, potential contribution to the 
export sector, demand in the international market and above all the capacity to contribute to the socio-
economic development.  The Government will regul arly modify this list, and provide special 
privileges to encourage the export of these products. 
41. Highest priority sectors are those product-sectors which have special export potential, but 
such potential could not be achieved properly due to certain constraints, but more success is attainable 
if adequate support is given.  These are:  agro-products and agro-processed products;  light 
engineering products (including auto-parts and bicycles);  footwear and leather products;  
pharmaceutical products; software and ICT prod ucts;  home textiles;  sea-bound shipbuilding 
industries;  and toiletry products. 
                                                      
11 Ministry of Commerce (2008).  
12 Ministry of Industries (2010). Bangladesh WT/TPR/S/270 
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42. Benefits and facilities to be provided to these sectors include:  project loans at reduced 
interest rates on a priority basis;  income tax ex emptions;  possible financia l benefits or subsidies 
consistent with the WTO Agreement on Agri culture, and the Agreement on Subsidies and 
Countervailing Measures, including concessionary ra tes for utility services such as electricity, water 
and gas;  export loans with soft terms and at re duced interest rates;  air transport facilities at 
concessionary rates;  duty draw-back/bond facilities;  facilities for setting up of backward linkage industries including infrastructural development so as to reduce production cost;  expansion of institutional and technical facilities to improve a nd control quality of products;  assistance in 
production, marketing and assistance in searching for foreign markets;  and necessary initiatives to 
attract foreign investments.  
43. Special development sectors are those which have export potential but whose production, 
supply and export base are not consolidated.  The sectors concern:  crushed and finished leather 
production;  frozen fish production and processing;  handicrafts;  electric and electronic products;  
fresh flowers and foliage;  jute and jute produc ts;  hand-woven textiles from hilly areas;  uncut 
diamonds;  producing herbal plants, medicines an d medicinal products;  ceramic products and 
melamine;  plastic products;  and furniture industrie s.  The main benefits and facilities comprise:  
consideration for export loans with soft terms and at reduced interest rates;  subsidies consistent with 
WTO rules;  shipments of products at reduced air fa res;  duty draw-back/bond facilities;  expansion of 
technical facilities to improve the quality of products ;  assistance in marketing of products and in 
searching for foreign markets;  possible financial bene fits for utility services such as electricity, water 
and gas;  and initiatives to attract foreign investments. 
(4) S
ERVICES  
44. Services represent half of Bangladesh's GDP (2010) and have been the fastest growing 
component of the economy in the last decade (avera ge growth rate per year 6%-7%).  Within the 
services sector, wholesale and retail trade is th e largest component, accounting for about 15% of 
GDP, followed by transport, storage and communica tions with 11%.  The services sector employs 
about one-third of the labour force, mainly in tr ade, hotel and restaurant services.  Leading services 
include:  wholesale and retail services;  telecommu nications;  transport;  and social and personnel 
services.  The services sector is expected to maintain its fast growth in the coming years as the Government continues to focus on developing services trade, in particular the country's outsourcing 
capabilities, including call centres.  
45. In the context of privatization across all i ndustries, which has intensified since the 1990s, 
liberalization measures have been taken especially in financial services, telecommunications and transport services.  The telecommunications sector was also opened up to competition with the participation of both domestic private and foreign capita l.  The effect of liberalization is significant;  
for example, the entry into the market of pr ivate operators since 1998 has led to mobile-phone 
subscriptions increasing from a negligible number to  nearly 90 million by early 2012.  Measures have 
also been taken to allow for private participa tion in shipping and port services with a view to 
increasing efficiency and competitiveness in logistics services.  
(a) Services trade  
46. Exports of commercial services remain sma ll, generating only US$1.2 billion and accounting 
in 2010 for 1.2% of GDP and 5.9% of goods' and co mmercial services' exports.  Exports, equivalent 
to one-third of imports in terms of value, are concentrated on commercial services.  WT/TPR/S/270 Trade Policy Review 
Page 84 
  
47. Tourism exports are currently limited but the authorities consider that the industry has 
significant potential.  The National Tourism Polic y 2010 was formulated and the Bangladesh Tourism 
Board Act 2010 enacted to facilitate the developmen t, operation and promotion of tourism services.  
Under the Act, a statutory organization called the Bangladesh Tourism Board, under the Ministry of 
Civil Aviation and Tourism, has been established w ith private sector participation.  The Bangladesh 
Conservation and Preservation of Tourism Area a nd Exclusive Tourist Zone Ordinance 2010, has 
been enacted to identify and preserve  prospective tourist spots and attract foreign investment in these 
zones.  In addition, the 1992 national tourism po licy has been updated and included in the Bangladesh 
Tourism Policy 2010, focusing on the development of eco-tourism, community tourism, youth 
tourism, rural tourism, pilgrimage  tourism, riverine tourism, arch aeological tourism and other forms 
of tourism in the context of Bangladesh's traditi onal culture.  In 2010, Bangladesh enacted a law on 
"Tourism Protected Areas" for sustainable tourism development and the Bangladesh Parjatan Corporation is working on the implementation of this  law.  Physical infrastructure and communication 
systems of the leading tourism centres - Cox's Baza r, Kuakata and Bandarban - have been developed 
and, according to the authorities, Cox's Bazar Deve lopment Authority Act 2012 has been approved in 
principle by the cabinet.  
48. The experience of Bangladesh shows that forei gn market access for services provided through 
the temporary movement of workers and professionals  can have significant positive effects in terms of 
improved availability of scarce foreign currency, im proving the current account balance, financing of 
higher levels of imports, economic  growth, employment generation and poverty reduction.  The value 
of remittances to the Bangladesh economy is many ti mes larger than aid or FDI.  Remittances more 
than doubled during the review period, reaching near ly US$11 billion in 2009-10.  Substantial inflows 
of remittances are crucial to Bangladesh's macroeconom ic stability, as they offset to a large extent the 
trade, services and income deficits. 
(b) GATS and other agreements  
49. Bangladesh has not changed its GATS commitm ents since its previous Review.  The 
activities of five star hotel and lodging services, and telecommunications services are the only 
commitments covered by its Schedule of Specific Commitments.  For most of the telecommunication 
services scheduled, bypass of netw ork facilities of the government opera tor is not allowed for mode 1, 
and mode 3 is reserved to exclusive supply by the go vernment operator.  Apparently, at least for mode 
3, actual market-access conditions are now  more liberal than its commitments. 
50. To date, Bangladesh has not made any services  offer in the on-going round of negotiations.  
However, in 2000 the requests of the EC to Banglad esh were released.  In this document the EC 
encouraged Bangladesh to improve its commitments  in the following sectors:  business services, 
telecommunications services, construction and rela ted engineering services, environmental services, 
financial services and transport services.  Regarding the Doha Round, as an LDC, Bangladesh is not 
expected to submit a services offer according to th e Hong Kong Ministerial Declaration.  Compared 
to most LDC Members, Bangladesh is active in the services negotiations, especially on LDC-related 
matters, such as the LDC collective request on mode 4 and the LDC waiver.  On the latter issue, the 
LDC group secured a waiver on services liberaliza tion which gives legal cover to those WTO 
Members willing to offer privileged access on a non -reciprocal basis to LDC service providers.  
51. Bangladesh is among the few LDCs that have si gned bilateral investment treaties with the 
United States
13, covering about 80% of services sub-sectors.  Like other U.S.-promoted treaties these 
                                                      
13 Bilateral Investment Promotion and protection Agreement 1986 and the Investment Incentive 
Agreement 1998. Bangladesh WT/TPR/S/270 
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provide for full national treatment pre- and post-est ablishment, thus removing virtually all 'policy-
space', which is in striking contrast with the country's shallow commitments under the GATS. 
(c) Financial Services  
52. While small and relatively unde rdeveloped, contributing less than 2% of GDP, the finance 
sector in Bangladesh is diverse, dominated by banks, and oriented towards short-term finance.  There 
is still a certain degree of state involvement alt hough this is declining.  The sector comprises the 
money and capital markets, insurance, and microfinan ce.  The financial sector is dominated by banks, 
with 47 banks holding 90% of the sector's total assets.  
53. In addition to BB (the central bank), there ar e four state-owned commercial banks (SCBs), 
four specialized banks, 30 domestic private comme rcial banks, nine foreign commercial banks, and 
30 nonbank finance institutions.  The Microcredit Regulatory Authority has licensed 610 microcredit 
organizations, as of February 2012.  BB has regul atory and supervisory jurisdiction over the entire 
banking sector and nonbank financia l institutions, while the Securities and Exchange Commission 
exercises similar functions over stoc k exchanges and merchant banks. 
54. In addition to regulating and supervising banking companies and financial institutions, the 
main functions of the BB14 are inter alia :  to formulate and implement monetary policy and 
intervention policies in the foreign exchange market ;  and to give advice to the Government on the 
interaction of monetary policy with fiscal and exch ange-rate policy, on the impact of various policy 
measures on the economy, and to propose legislative measures it considers necessary or appropriate to 
attain its objectives and perform its  functions.  Bangladesh Bank also plays an important role in 
expanding financial inclusion and access  to financial services which have emerged as a tool to achieve 
inclusive growth for poverty reduction.15   
55. The Sixth Five-Year Plan, FY2011/15 recognizes that finance sector performance is a major 
determinant of private-sector growth in a mark et economy.  The plan emphasizes strengthening 
prudential regulations and improving the supervision and oversight capacity of the central bank.  It 
recognizes the importance of greater private sector  involvement in banking and the capital market, 
and of fostering prudential soundness by reducing the nonperforming assets of the SCBs.  The plan 
emphasizes developing an inclusive strategy to provide the poor and vulnerable groups access to 
credit.  Special programmes will continue to be supported to provide credit to farmers, SMEs, and 
women entrepreneurs, as well as to cooperate with microcredit and social enterprises.  The plan 
recognizes that restructuring the financial system by streamlining the operation of SCBs is central to 
macroeconomic stability and financing private sector-l ed growth.  The plan stresses that the capital 
market must be developed to raise funds cost-effe ctively.  The Government is addressing credit 
constraints on investors by developing term-financ e instruments and institutions, establishing a new 
agency for loan recovery, promoting lease financing,  and paying special attention to the financing 
needs of SMEs and women entrepreneurs. 
 Banking   
56. There are 47 scheduled banks in Bangladesh, which operate under the full control and 
supervision of BB.  It is empowered to do so through Bangladesh Bank Order 1972 and the Bank 
Company Act  1991 (amended in 2003).  In the banking sector, private commercial banks, including 
foreign banks have grown significantly in the past  decade, accounting for 59% and 6% respectively 
                                                      
14 According to Article 7A of the Bangladesh Bank Order 1972 and the Bangladesh Bank 
(Amendment) Act 2003. 
15 Bangladesh Bank (2011). WT/TPR/S/270 Trade Policy Review 
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(of total banking assets in 2011 Table IV.6).  Curre ntly, there are thirty private domestic banks and 
nine foreign banks in competition with the stat e-owned/controlled banks.  Foreign banks enjoy 
national treatment in terms of business scope, access to credit from the central bank, clearing facilities, etc.  A number of proposed amendments  to the Bank Companies Act has been prepared by 
BB and sent to Ministry of Finance (MOF).  A committee set up by the Ministry of Finance is 
reviewing amendments to the proposals and the ta rget date of submission to parliament is by 
September 2012.  Recently, BB has issued Letters of Intent to nine new commercial banks including 
three non-resident Bangladeshi-owned banks.  Li censing is still under process for these newly 
approved banks. 
Table IV.6 
Financial Soundness Indicators, 2006, 2008, 2010, 2011 
(Per cent, end-of-period) 
 2006 2008 2010 2011 
June 
Capital adequacy 
 Regulatory capital to risk-weighted as sets (unadjusted) 5.6 10.4 9.3 9.7 
 State-owned commercial banks -2.1 7.9 8.9 9.5 
 Specialized development ba nks -4.5 -3.3 -7.3 -7.1 
 Private commercial banks 9.0 11.2 10.1 10.4 
 Foreign commercial banks 24.5 23.8 15.6 17.1 
Asset quality 
 Nonperforming loans to total loans 12.8 11.2 7.3 7.1 
 State-owned commercial banks 22.8 28.0 15.7 14.1 
 Specialized development banks 14.3 11.7 24.1 21.8 
 Private commercial banks 4.9 5.1 3.1 3.5 
 Foreign commercial banks 2.8 3.7 3.0 3.1 
Profitability 
 Return on assetsa -2.1 1.6 1.8 1.3 
 State-owned commercial banks -9.2 1.2 1.1 0.6 
 Specialized development banks -0.9 -0.6 0.2 -0.3 
 Private commercial banks 1.5 1.9 2.1 1.6 
 Foreign commercial banks 3.3 2.9 2.9 3.6 
Memorandum items 
 Share of assets (as a percentage  of total banking system assets) 
 State-owned commercial banks 33.3 29.8 28.5 28.8 
 Specialized development banks 7.9 6.6 6.1 5.8 
 Private commercial banks 50.5 55.2 58.8 59.0 
 Foreign commercial banks 8.3 8.3 6.6 6.3 
 
a Bangladesh Bank defines return on assets as the ra tio of net income after taxes to total assets. 
 
Source : Bangladesh Bank;  and IMF staff estimates in 2011 Article IV report, Table 6. 
57. The gross nonperforming loan (NPL) ratio has fallen considerably, from 28% at end-2002 to 
6.1% as of December 2011.  The authorities note this  trend implies that this financial soundness 
indicator is gradually improving.  BB has increased its close supervision of bank accountability and is 
updating the Bank Companies Act and reviewing its policy on loan classification, provisioning and 
rescheduling.  Nevertheless, the financial system still suffers from elevated levels of nonperforming 
loans (NPLs), and the official figures probably u nderstate the problem.  State-owned commercial 
banks hold around 28% of the country 's bank deposits.  Although the financial soundness indicators of 
the finance sector have improved and are genera lly favourable, the relatively high NPLs ratio, 
especially of state-owned banks, remains a concern.  According to the IMF, The NPL problem of the 
banking subsector can be traced to  priority lending to loss-making st ate-owned enterprises in the past, 
a deficient legal and debt-recovery  framework, weak loan screening and supervision, bank officials' 
lack of accountability, and a frail credit culture. Bangladesh WT/TPR/S/270 
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58. Since January 2010, BB has made it compulsory for banks to adopt the Basel II capital 
adequacy framework.  Under Basel I, the Minimum Capital Requirement (MCR) was computed considering only credit risk.  Since January 2010, ma rket and operational risks are also considered.  In 
addition, the Capital Adequacy Ratio (CAR) is now determined against comprehensive risk under 
their Supervisory Review Process.  Bangladesh Bank has allocated the minimum-required CAR and 
MCR for banks at 8% up to June 2010, 9% up to June 2011 and 10% from July 2011 onward.  
Following Basel II criteria, a semi-annual stress testing has been made mandatory for banks.  
According to the IMF, CARs have improved across all banks, with 40 out of 47 in compliance with 
Basel II-consistent requirements in mid-2011.
16 
 Capital markets 
59. Despite recent improvements, Bangladesh's cap ital market remains at a nascent stage of 
development.  Bangladesh lacks a well-articulated  regulatory framework to provide oversight and 
investor protection or to ensure disclosure, acc ounting standards, and governance as required.  The 
market is dominated by two stock exchanges, one  in Dhaka and the other in Chittagong.  The Dhaka 
Stock Exchange (DSE) is registered as public lim ited company and is regulated by its Articles of 
Association rules and regulations along with the Securities and Exchange Ordinance 1969, Companies 
Act 1994 and Securities and Exchange Commission Act 1993.  The market capitalization of the 
Dhaka Stock Exchange was 87% higher in November 2010 than a year earlier, reflecting the listing of 
new companies and a rapid rise in share prices.  The Chittagong Stock Exchange index rose by 166% 
in the same period.  In January-February 2011, a technical correction in equity prices began, 
contributing to rapid outflows from the capital mark et and to unrest among a number of capital market 
investors.  The process of correction continued until late into the year.  The boom-and-bust experience 
of 2010 and 2011 illustrates the close links between stock market performance and finance sector stability. 
60. The Securities and Exchange Commission (SEC) regulates the capital market intermediaries 
and issuance of capital and financial instruments by public limited companies.  It was established in 
1993 under the Securities and Exchange Commission Act, 1993.  The five-member commission has 
the overall responsibility to administer securities le gislation and the Commission is attached to the 
Ministry of Finance.  The mission of SEC is to prot ect the interests of securities investors, to develop 
and maintain fair, transparent and efficient secu rities markets and to ensure proper issuance of 
securities and compliance with securities laws.  De spite rapid growth in 2010, Bangladesh has the 
lowest ratio of market capitalization to gross do mestic product in South Asia.  The capital market 
enjoys little market supervision, and major market players like stock exchanges, brokers, dealers, and 
asset managers have limited capacity.  Transparency is limited and there is inadequate disclosure both 
in trading and in the quality of information prov ided for listed companies.  Frequent changes in 
regulatory policies and the introduction of commercial banks into merchant ba nking have contributed 
to market uncertainty.  Delays in privatizing state-owned enterprises, high listing costs, the 
predominance of closely held and family-managed  firms, and few initial public offerings leave a 
dearth of high-quality equity on the exchanges. 
61. In order to increase supervision and monitori ng and ensure transparency and accountability in 
the capital market, the authorities state that an impr oved surveillance system will be established.  To 
ensure discipline and eliminate conflicts of interest s, the ownership right of the stock exchanges will 
be segregated from transaction right through Demutu alization of Stock Exchanges.  To eliminate 
market uncertainty, the merchant banking functi on has been separated from commercial banks by 
establishing a separate subsidiary company co mplying with regulatory requirements.   
                                                      
16 IMF (2011). WT/TPR/S/270 Trade Policy Review 
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62. Debt markets in Bangladesh need to be devel oped to finance long-term capital investments, 
including economic infrastructure.  The development of an active market for corporate debt, mutual 
funds, and other financial instruments is nec essary where both banks and nonbank financial 
institutions can play the role of large investors.  The bond market is in its infancy, as fixed-income 
securities came into existence only in 1987 with the flotation of debentures by two companies.  The 
trading of government treasury bonds started only in December 2005 on the Dhaka Stock Exchange. 
Government securities and savings instruments acc ount for almost all nonbank debentures issued in 
the country.  A well-functioning money market is criti cal to developing the corporate debt market, as 
it provides a benchmark for pr icing other debt securities. 
63. To develop the bond/debt market, the Securities and Exchange Commission has taken the 
initiative to establish exclusive Rules for issuing co rporate bond/debt.  BB acts as the debt manager 
for the Government.  The treasury Bills and Bangl adesh Government Treasury Bonds (BGTB) are the 
main instruments of government bank borrowing.  BB has been issuing BGTB since 2003.  Since a 
well-functioning money market is the pre-requisite for development of a bond market, BB strives to 
improve the depth and efficiency of the money ma rket.  BB issues T-Bills and Bangladesh Bank Bills 
and operates repo and reverse repo operations for banks and financia l institutions.  To develop the 
government bond market, BB has taken several steps,  including a review on widening the investor 
base of government securities to develop a comprehensive provident fund system and try to bring mutual funds and insurance funds into this market. 
64. The securities market has an adequate legal and regulatory framework but lacks enforcement.  
In order to ensure enforcement against the pers ons who violate securities-related laws, rules and 
regulations, in addition to regular enforcement ac tivities of Securities and Exchange Commission, an 
initiative has been taken for the establishment of a special court to resolve capital market-related cases 
in the shortest possible time.  The market capitali zation of listed companies was 14% of GDP in 2008 
and the debt securities market repr esented 17% of the financial-syst em assets in 2006.  As of 
May 2012, the market capitaliza tion of listed companies is 33.5% of GDP and the debt securities 
market represents 11.4% of the fina ncial system assets in June 2011.  
 Other financial services 
65. The Insurance Development and Regulatory Aut hority (IDRA) was established in 2011 as the 
regulator of the insurance industry.  The IDRA  is empowered by the Insurance Development and 
Regulatory Act (2010) and replaces its predecessor, th e Chief Controller of Insu rance.  IDRA operates 
under the Ministry of Finance and is responsible for the general supervision and direction of business.  
The mission of IDRA is:  to protect the interests of  the policyholders and other stakeholders under an 
insurance policy;  supervise and regulate the insura nce industry effectively;  and ensure orderly and 
systematic growth of the insuran ce industry.  The insurance services sector has a small share of GDP 
(0.4% on average during the review period).  Currently, 62 companies are operating under the 
Insurance Act 2010:  18 are life insurance companies including one foreign company, and one is state-
owned.  There are 44 general insurance companies including one state-owned company.  Insurance 
companies in Bangladesh provide the following ser vices:  life insurance, general insurance, 
reinsurance, micro-insurance, a nd takaful (or Islamic insurance). 
66. The Microcredit Regulatory Authority (M RA) was established under the Microcredit 
Regulatory Authority Act 2006 to promote and foster  sustainable development of the microfinance 
sector through the creation of an enabling envir onment for NGO-MFIs in Bangladesh.  MRA is the 
central body to monitor and supervise microfinan ce operations of NGO-MFIs, though only 400 of the 
1,200 MFIs operating are registered with the MRA.  A license from the Authority is mandatory to 
operate microfinance operations in Bangladesh as an  NGO.  During the review period, there was an Bangladesh WT/TPR/S/270 
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increase in non-traditional banking activities which create new risks and a need for updating the 
existing legislation.  The most prominent sector with loans corresponding to 3% of GDP is the 
Microfinance Institutions (MFIs) sector.  The la rgest MFI is Grameen Bank and operates under the 
Grameen Bank Ordinance of 1983.  
(d) Telecommunications 
 Overview 
67. The emergence and rapid growth of the telecommunications sector has been a key success 
story for Bangladesh during the review period.  With  one of the world's lowest tariffs, growth in 
telecommunications penetration has accelerated in r ecent years, fuelled by rapid growth in mobile-
phone connections and low tariffs.  The number of mobile phone subscriptions rose to 92 million by 
2012, eight times the number in 2006 (Table IV.7 ).  There are 10 million internet users accessing 
cyberspace primarily through mobile internet.  The industry has become an important source of tax revenue and the largest sector for FDI inflows. 
Table IV.7 
Mobile Phone Subscribers  in Bangladesh in 2012a 
Operators Active Subscribers (million) 
Grameen Phone Ltd. (GP) 38.4 
Orascom Telecom Bangladesh Limited (Banglalink) 25.3 
Robi Axiata Limited (Robi) 18.7 
Airtel Bangladesh Limited (Airtel) 6.6 
Pacific Bangladesh Telecom Limited (Citycell) 1.7 
Teletalk Bangladesh Ltd. (Teletalk) 1.3 
Total 92.0 
 
a As of end May 2012. 
 
Source : BTRC.  Viewed at:  http:// www.btrc.gov.bd/index.php?view=arti cle&catid=49%2Atelco-news&id=466%. 
68. The telecoms sector has emerged as a very  competitive mobile telephone market with 
significant foreign participation.  Bangladesh curren tly has six mobile-phone operators, the largest of 
which by market size is Grameen Phone, a joint venture between a local telecoms firm, Grameen 
Telecom, and Telenor of Norway.  Banglalink,  also known as Orascom Telecom Bangladesh, is the 
second largest cellular service provider and is fully ow ned by Orascom Telecom, originated in Egypt.  
The operator Robi Axiata is a joint venture between  Axiata Group Berhad Malaysia with a 70% share 
and NTT Docomo of Japan holding a 30% share of th e company;  it is the third largest phone operator 
in Bangladesh with more than 17 million subscriber s.  Airtel Bangladesh is a joint venture between 
Telekom Malaysia and a local company, and Wari d Telecom (a UAE-based conglomerate).  Citycell 
was the first cellular service provider of Ba ngladesh and is currently owned by Singapore 
Telecommunications, Pacific Group and Far East Teleco m.  Teletalk Bangladesh is a public limited 
company, totally government owned. 
69. Growth in the industry has remained exceptiona lly strong, despite fairly tight regulations, 
such as the imposition of a tax on mobile-phone network cards (SIMs) and the fact that registration is 
mandatory for subscribers.  Competition is fier ce: the effective price per minute has dropped from 
Tk8 (12 US cents) in 2002 to Tk1 in 2008.  In J une 2008 Japan's top mobile operator, NTT DoCoMo, 
announced that it would buy a 30% stake in Aktel for US$425m.  By June 2010, mobile subscribers represented 98% of the telephone market share where Grameenphone had the largest share of 
subscribers (45%), followed by Banglalink and Robi (with 23% and 21% respectively).  This increase WT/TPR/S/270 Trade Policy Review 
Page 90 
  
in mobile subscribers is due to the reduction in the average mobile tariff which by the FY2009/10 was 
Tk0.88 per minute.  In 2008 the mobile sector re presented 8% of the national revenues and was the 
leading destination for FDI inflows.  Of the seven million internet users, 95% use mobile internet.  
70. Regarding fixed phone subscribers, their num ber increased from 1.7 million in 2009 to 
two million in 2010 although fixed ph one penetration remains as low as 1.2% in the country.  There 
are several operators, of which the government -owned Bangladesh Telecommunications Company 
(BTCL) is the most important, providing landlin e services in urban areas, domestic long-distance 
calling and international services.  
71. In May 2006 Bangladesh was connected up to the global information superhighway via a 
submarine cable, greatly enhancing internet conn ectivity and giving a boost to the country's nascent 
information and communications technology (ICT) sector.  The link gives Bangladesh greater voice 
and data transmission bandwidth, enabling the coun try to offer outsourcing services such as call 
centres, data-processing and medical transcriptions.  In early 2008 BTRC reduced internet tariff 
charges by 20%-40% in a bid to bring about an acceler ation in the growth of the country's ICT sector.  
The regulator also announced plans to allocate ne w frequencies, to conduct an open bidding process 
for a second (private) submarine cable and to  launch a communications satellite by 2015. 
72. In 2006 Bangladesh was formally connected to the Information Super Highway through a 
submarine cable, which has enhanced overseas voi ce communication.  The Bangladesh Submarine 
Cable Company is the only company providing bandwidth service;  other initiatives in process are the licensing guidelines for a submarine cable system and services, and a communication satellite for 
Bangladesh which will reduce the price of the bandwidth and provide uninterrupted 
telecommunications services. 
73. BTRC is interested in boosting the activity of cer tain services, such as call centres, which they 
believe is a promising sector in Bangladesh.  The BTRC started issuing Call Centre licences in 2007 and cyber café licences in 2009.  In 2008, the BTRC gave international gateway operator licences to 
three private companies, BanglaTrack Communications Ltd., Mir Telecom Ltd and Novotel Ltd., and 
to the state-owned Bangladesh Telecommunications Company Ltd. (BTCL).   
74. Bangladesh's nascent information technology (IT) sector has been growing steadily in recent 
years.  The size of the IT and IT-enabled-services sector stood at US$250 million in 2010, according to the Bangladesh Association of Software and Information Services.  The sector employs 20,000 workers at present, whose wages are substantia lly lower than those of established outsourcing 
centres such as India and the Philippines.  It has a ttracted interest from Indian investors (some of 
whom have already set up call centres) as  well as other international investors. 
 Regulatory framework  
75. The government-controlled Bangladesh Telephone and Telegraph Board (BTTB) used to be 
both a telecom service provider as well as the regulator in Bangladesh.  The Bangladesh 
Telecommunications Act of 2001 created th e Bangladesh Telecommunications Regulatory 
Commission
17 (BTRC) to regulate the industry.  BTTB continued to control international voice and 
data traffic within the country until the in troduction of the International Long Distance 
Telecommunications Services Policy (ILDTS) in 2007,  subsequently revised in 2009.  BTTB was 
                                                      
17 The main objectives of BTRC are:  issue licen ces to operators;  manage the radio frequency 
spectrum;  resolve disputes;  control tariffs;  regulate technical standards;  encourage investment;  promote competition in the sector;  and investigate complaints gainst licensed operators.  Bangladesh WT/TPR/S/270 
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divided into three private entities to provide fixed, internet and cellular services, and also to manage 
the submarine cable infrastructure in Bangladesh.18 
76. In addition to ending the long-standing monopol y of BTTB, the ILDTS policy of 2007 aimed 
to:  provide low-cost telecom services using modern technologies;  encourage next-generation 
network technology and ensure proper revenue-ear ning of the Government.  However, the 2007 
policy did not fully succeed in facilitating low price/hi gh quality international calls for residential or 
business customers.  A new ILDTS policy was in troduced in 2010 that provided for awarding 
multiple licences in the private sector in a numb er of areas, including international gateway, 
interconnection exchange, international in ternet gateway and submarine cable.  
77. Under the 2001 Act, as a statutory body, BTRC's ma ndated role is to ensu re a fair, transparent 
market place for all players in the telecom sector.  As the telecoms regulator, it was envisaged that BTRC would oversee the issuance of necessary licen ces, allocate scarce resources, i.e. the spectrum, 
implement an efficient interconnection regime, set and regulate tariffs for telecoms-related services, 
and protect the interests of both subscribers and te lecoms operators.  However, the Act was amended 
in 2010 and under the new provisions the Ministry of  Post and Telecommunication, instead of BTRC, 
became the final decision-making body on licensing, tariff and policy-related issues.  In addition, 
provisions for heavy fines and legal action agains t operators and individua ls involved in illegal 
activities have been included. 
78. The Government is planning to establish the "D igital Bangladesh" by 2021 as detailed in their 
2010 "Plan of Connecting People".  To develo p the Information and Communication Technology 
(ICT) sector, the Government revised the ICT Act of 2006 and the National ICT policy in 2009, 
which aims inter alia  at:  the expansion of telecommunications services to rural areas, digital literacy, 
and the introduction of e-governance
19, e-commerce and e-banking.  Mobile phones play an important 
role in the digitalization of Bangladesh because now many activities can be done through the mobile 
phone, such as payment of electricity and gas b ills and reservation of railways tickets.  The 
Government is also promoting local ICT indus tries and ICT-based trade and commerce through 
establishing a network of ICT incubators, software technology parks and hi-tech parks.  To support 
these initiatives, the Government is promoti ng human resource development for capacity 
enhancement through encouraging ICT education and training. 
(e) Transport 
79. Bangladesh has an extensive and diversified tr ansport system of roads, railways, inland 
waterways, two seaports for maritime shipping, a nd civil aviation facilities.  There has been little 
integration of transport modes in Bangladesh, causi ng heavy dependence on road transport.  Roads 
carry over 80% of national passenger and freight tr affic, providing the backbone of the transport 
sector.  Railways, which are focused on passenge rs, handle about 7% of national passenger and 
freight traffic.  The railway system has deterior ated since 1980, and the rail system is underutilized 
because of poor management, and weak administra tion.  With some 700 rivers and tributaries, 
Bangladesh has one of the largest inland waterway networks in th e world, which is underused for 
domestic transport.  Although air transport infrast ructure in Dhaka and Chittagong has substantially 
improved, the limited capacity of cargo transpor t services remains a major bottleneck to expanding 
                                                      
18 BTCL is responsible for fixed phone and internet services, Teletalk for mobile services and BSCCL 
(Bangladesh Submarine Cable Company Ltd) to ov ersee the submarine cable infrastructure.   
19 All ministries, directorates and departments have established their own websites.  E-tendering and e-
government procurement have been in troduced in government offices on a pilot basis, facilitating access to 
government gazettes, necessary forms, circulars and other publications.   WT/TPR/S/270 Trade Policy Review 
Page 92 
  
trade.  Intermodal transport linkages are weak, yet will become increasingly important if trade within 
South Asia expands. 
 Regulatory framework   
80. The organization and management of the transpor t sector are characterized by:  a high level of 
centralization concerning investment decisions; sector al fragmentation relating to land, water and air 
transport;  and the use of government department s (rather than financially autonomous SOEs) to 
provide transport services and manage infrastructure.   The Planning Commission is partly responsible 
for coordinating investment planning and key sectoral policies.  Several transport-related ministries 
implement the investment plans and carry out the policies:  (i) the Ministry of Communications, 
which is responsible for roads, rail and urban transpor t;  (ii) the Ministry of Ports and Shipping, which 
is responsible for ports, maritime transport and inland  water transport;  and (iii) the Ministry of Local 
Government, which is responsible for rural infrastructure. 
81. The Government of Bangladesh aims, under the draft integrated multimodal transport policy 
of 2012, to provide safe, reliable, effective, and fully integrated transport operations.  The policy 
seeks to improve transport services, minimize thei r cost, and provide opportunities to integrate 
existing transport services with the regional transport network.  The draft policy covers all transport 
modes:  roads, railways, ports and shipping, inland waterways, air, and rural and urban transport.  A 
road masterplan has been developed for the syst ematic and planned deve lopment of the highway 
network.  The Inland Water Transport Masterplan w as finalized by the Transport Sector Coordination 
Wing of the Planning Commission.  The Dhaka Transport Coordination Authority Act 2012  aims to 
better coordinate transport in the congested capital.  
82. Under the Sixth Five-Year Plan, (2011/15), the Government aims to develop a balanced and 
integrated transport network.  Development will be concentrated on five main corridors:  Dhaka–
Chittagong, Dhaka–northwest, Dhaka–Khulna, Dhaka–Sy lhet, and Khulna–northwest.  In addition, 
road linkages passing through Khulna, Barisal, Bhol a, Lakshmipur, and Chitta gong will be improved. 
 Road transport 
83. The Roads and Highways Depart ment (RHD) is responsible for managing the country's 
principal road network of about 22,000 km.  The Bang ladesh Road Transport Authority regulates road 
transport and collects fees from road users.  Multip le agencies are involved with road safety, including 
the National Road Safety Council.  The Local Govern ment Engineering Department is responsible for 
developing rural road networks. 
84. Economic expansion in Bangladesh has been accompanied by rapid growth in transport 
demand.  Much of this growth has been met by ro ad transport, which has emerged as the dominant 
mode of transport over the years.  The improvement of the road transport system is one of the most 
prioritized goals of the Bangladeshi Government.  Th e inefficient functioning of this sector is slowing 
down the performance of the economy.  For this r eason, the Government has engaged in a series of 
projects that have developed the road network over the past years.  One of the main objectives in the 
land transport sector is easing the transport of containers and reducing its cost along the Dhaka-
Chittagong corridor, which generates an estimated 50% of Bangladesh's GDP, and handles about 85% 
of its international maritime trade.  In its current st ate, this corridor will not be able to cope with the 
increasing levels of traffic and will become a bottle neck to Bangladesh's expor t-led economic growth.  Bangladesh WT/TPR/S/270 
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 Railway transport 
85. Railway transport used to be managed by  Bangladesh Railway (BR), a government 
department under the Ministry of Communications.  The Government has recently created a new 
Ministry of Railways and taken initiatives to cha nge BR into a corporate organization.  As a 
government agency, BR's revenues  went  into the Tr easury and its operating and investment budget is 
provided by the central Government.  The perform ance of Bangladesh Rail way has declined with 
decades of underinvestment and inefficient manageme nt.  BR lacked infrastructure, and efficiency, 
reforms and investment in BR are under way in orde r to improve its efficiency.  Bangladesh signed 
the Intergovernmental Agreement on the Trans-Asia n Railway (TAR) Network.  In an attempt to 
modernize the railway system, train ticket information is available through mobile phones since 
September 2009 and online-ticketing since March 2010. 
 Water transport and port services 
86. Several public and private institutions are invol ved with the provision and regulation of inland 
water transport.  The Bangladesh Inland Water Transp ort Authority is the main agency responsible for 
regulating IWT services, which are provided mainly by private operators on the main routes and by 
the government company, Bangladesh Inland Water Tr ansport Corporation, on  secondary routes.  The 
Department of Shipping (DOS) is also responsible fo r regulating the IWT system in parallel.  It is 
responsible for issuing the survey and regi stration certificates of IWT vessels, whereas the 
Bangladesh Inland Water Transport Authority (BIWTA) issues the route permit only for the passenger 
vessels, subject to the issuance of the su rvey and registration certificate by DOS. 
87. The port of Chittagong handles around 92% of seaborne import-export trade, while the port of 
Mongla handles the rest.  The Bangladesh Land Port Authority, established in 2001, manages 17 land 
customs stations, out of a total of 180 border chec kpoints. Of the 17 land ports, six are managed by 
private operators on a build- operate-transfer arrangement. 
88. Chittagong Port is considered the heart of the economy of Bangladesh and used to be known 
as one of the most costly and risky ports in the wo rld, although this has now changed significantly.  
The tariff rate of Chittagong Port, fixed by the Govern ment, is much lower compared to other ports in 
the South Asia region.  This port is service-oriented  and it follows a cost-based tariff system.  Service 
and operational efficiency for the port users, in cluding vessel operators, have improved over recent 
years.  There is little waiting time for vessels calling at Chittagong Port and outer anchorage.  Other indicators, like vessel turn-around time, container dwell time etc. have been greatly reduced while 
container-handling productivity has improved (Table IV.8).   
Table IV.8 
Chittagong Port:  Container Handling and Port Performance 
Financial Year Total handling  
(in TEUs)a Ship's waiting time  
(in days)b Ship's turn around 
time (in days)b Productivity (per ship 
per day) (in TEUs) 
2000-01 490386 3.49 6.32 142.54 
2005-06 827174 2.53 4.82 239.84 
2010-11 1468914 1.62 2.67 372.69 
2011-12 (up to May) 1341007 0.59 2.52 618.11 
 
a TEU - Twenty-foot equivalent unit.  
b As a tidal port, waiting time and turn-arount time  depend upon tidal conditions which cannot be ignored. 
 
Source : Bangladesh authorities. WT/TPR/S/270 Trade Policy Review 
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89. Chittagong Port Authority has recently implem ented a Container Terminal Management 
System (CTMS).20  In 2004, the CPA introduced a risk-asse ssment and risk-management tool to 
determine appropriate security measures to safeguard port facilities against security threats.  Scanners 
and radiation detection devices have been installe d for detecting and reducin g carriage of contraband 
items, nuclear and radioactive materials through Chittagong Port.  Recent achievements of security 
measures in Chittagong Port has been appreciated by RECAAP (Regional Co-operation Agreement to 
Combat Piracy and Armed Robbery against Ships in Asia), a Singapore based organization and the 
International Maritime Bureau of USA.   
90. There is still considerable scope to improve service quality through private participation in 
existing land ports, cargo-handling facilities and se rvices, and container operations;  the Chittagong 
port access road and the container and new mooring te rminals in the port will be handed over to the 
private sector for operation and maintenance.  Since 1995, the Chittagong Port Authority (CPA) has 
been encouraging the private sector to deliver port- related services.  One of the initiatives is to strip 
and deliver containerized cargo from private depots instead of port protected areas.  At present there are 22 private depots that receive import containers at their premises and deliver the cargo to the 
importers.  The private depots allow storage of empty containers at their premises instead of 
Chittagong Port, which has facilitated operations by  increasing container-storage capacity at the 
yards.  The CPA has also appointed a terminal  operator and berth operators through competitive 
bidding, following Public Procurement Regulations 2008 (PPR 2008) to fac ilitate smooth handling of 
containers and cargo in competitive and in effici ent ways.  The process fo r the appointment of a 
Global Terminal Operator, through competitive biddi ng, is under way for operation and management 
of the Newmooring Container Terminal. 
91. At Mongla Port only 33% of its capacity is u sed.  It has gone through similar reforms to the 
Chittagong Port.  The main objective of these reforms is to have port facilities of an international 
standard.  The Government and the Mongla Port Author ity have taken steps to improve the situation.  
Following a government initiative, 40% of food grain & fertilizer are being handled at Mongla Port, 
and it is expected that timber from Myanmar will so on be arriving.  Mongla Port has the capacity to 
handle 6.5 million metric tons of car go and 50 thousand container TEUS.   
 Other modes of transport  
92. The Bangladesh Shipping Corporation (BSC) h as a mixed fleet of 13 vessels with a carrying 
capacity of  0.2 million metric tons.  Most of the v essels of the BSC fleet are old, with an average age 
of over 28 years.  BSC can carry only 6% - 7% of export and import cargo with its existing fleet;  
there is a large deficit in transportation service balance-of-payments.  Among the 13 vessels, ten are 
multipurpose cargo vessels, two-oil lighterage tanke rs and one a cellular container vessel. BSC 
vessels are engaged in transportation of break bulk car go under voyage charter/time charter, crude oil 
lighterage and food grain lighterage.  BSC plans to modernize its fleet by acquiring 21 vessels of 
different types and sizes during the period up to 2021. 
93. In order to streamline the maritime policy of the country, a "Shipping Policy - 2000" was 
promulgated by the Government.  The policy addr esses all the maritime aspects of the country, 
including ensuring maritime safety, security, prevention of marine pollution and achieving efficient shipping and efficient port management.  The policy al so promotes the liberalization of shipping trade 
                                                      
20 A recent research work on "Bench marking the Efficiency of Asian Co ntainer Ports", published in the 
African Journal of Business Management Vol.5(4), pp.1397-1407, 18 February, 2011.  The research, conducted 
by Susila Munisamy and Gurcharan Singh, compared Asian ports located in Bangladesh, Philippines, China, 
Cambodia, India and Singapore and rank ed Chittagong port as the most effi cient container port in the Asia 
region (page 1402). Bangladesh WT/TPR/S/270 
 Page 95 
 
 
where possible in order to safeguard the interests of the national fleet.  The key role of the Department 
of Shipping is to ensure maritime safety, secur ity and protection of the marine environment.  
Meanwhile, the DoS has simplified the ocean -going ship registration procedures.   
94. The Civil Aviation Authority of  Bangladesh (CAAB), under the Ministry of Civil Aviation 
and Tourism, is responsible for saf e, secure and expeditious air-traffi c movement within the territorial 
air space of Bangladesh.  To discharge the above duties, CAAB gives aeronautical and navigational 
services to follow the rules and regulations of ICAO.  The Authority is responsible for the 
construction of new airport and maintains all ex isting airport facilities including navigation aids.  
There are three international airports in Banglad esh located at Dhaka, Chittagong and Sylhet, as well 
as seven domestic airports.   
95. The state-owned airline, Bangladesh Biman Corpor ation, was converted into a Public Limited 
Company (Biman Bangladesh Airlines Ltd.) in July  2007.  Biman has already initiated the process of 
off-loading 49% of shares through an initial pub lic offering (IPO).  However, due to unfavourable 
market conditions, the process has been deliberatel y kept slow.  Further, as a consequence of 
increases in the cost of fuel, Biman has sustaine d losses for the past three consecutive years.