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U.S. Department of State 
Bangladesh 1996 Country Commercial Guide 
Office of the Coordinator for Business Affairs 
 
 
                              BANGLADESH
                      COUNTRY COMMERCIAL GUIDE

 
This Country Commercial Guide (CCG) presents a comprehensive look 
at Bangladesh's commercial environment through economic, 
political and market analyses.   
 
The CCGs were established by recommendation of the Trade 
Promotion Coordinating Committee (TPCC), a multi-agency task 
force, to consolidate various reporting documents prepared for 
the U.S. business community.  Country Commercial Guides are 
prepared annualy at U.S. Embassies through the combined efforts 
of several U.S. governement agencies.   
 
                      Table of Contents 
 
 
I.     EXECUTIVE SUMMARY 
 
II.    ECONOMIC TRENDS AND OUTLOOK 
 
       Major Trends and Outlook 
       Principal Growth Sectors 
       Government Role in the Economy 
       Balance of Payments Situation 
       Infrastructure Situation 
 
III.   POLITICAL ENVIRONMENT 
 
       Nature of Political Relationship with the United States 
       Major Political Issues Affecting Business Climate 
       Synopsis of Political System 
 
IV.    MARKETING U.S. PRODUCTS AND SERVICES 
 
       Distribution and Sales Channels 
       Use of Agents/Distributors; Finding a Partner 
       Franchising 
       Direct Marketing 
       Joint Ventures/Licensing 
       Steps to Establishing an Office 
       Selling Factors/Techniques 
       Advertising and Trade Promotion 
       Pricing Product 
       Sales Service/Customer Support 
       Selling to the Government 
       Protecting your Product from IPR Infringement 
       Need for Local Attorney 
 
V.     LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT 
 
       Best Prospects for Non-Agricultural Goods and Services 
       Best Prospects for Agricultural Products 
 
VI.    TRADE REGULATIONS AND STANDARDS 
 
       Trade Barriers, Including Tariffs, Non-Tariff Barriers 
       and Import Taxes 
       Customs Valuation 
       Import Licenses 
       Export Controls 
       Import/Export Documentation 
       Temporary Entry 
       Labeling, Marking Requirements 
       Prohibited Imports 
       Standards 
       Free Trade Zones/Warehouses 
       Special Import Provisions 
       Membership in Free Trade Arrangements 
 
VII.   INVESTMENT CLIMATE 
 
       Openness to Foreign Investment 
       Conversion and Transfer Policies 
       Expropriation and Compensation 
       Dispute Settlement 
       Political Violence 
       Performance Requirements/Incentives 
       Right to Private Ownership and Establishment 
       Regulatory System: Laws and Procedures 
       Efficient Capital Markets and Portfolio Investment 
       Bilateral Investment Agreements 
       OPIC and other Insurance Programs 
       Labor 
       Foreign Trade Zones 
       Capital Outflow Policy 
       Major Foreign Investors 
 
VIII.  TRADE AND PROJECT FINANCING 
 
       Brief Description of Banking System 
       Foreign Exchange Controls Affecting Trading 
       General Financing Availability 
       How to Finance Exports/Methods of Payment 
       Types of Available Export Financing and Insurance 
       Project Financing Available 
       List of Banks with Correspondent U.S. Banking Arrangements 
 
IX.    BUSINESS TRAVEL 
 
       Business Customs 
       Travel Advisory and Visas 
       Holidays 
       Business Infrastructure 
 
X.     APPENDICES 
 
Appendix A - Country Data 
 
       Population  
       Population Growth Rate  
       Religion(s) 
       Government System 
       Languages(s) 
       Work Week  
 
Appendix B - Domestic Economy 
 
       GDP 
       GDP Growth Rate  
       GDP Per Capita 
       Government Spending as a Percent of GDP  
       Inflation 
       Unemployment 
       Foreign Exchange Reserves 
       Average Exchange Rate for USD 1.00 
       Debt Service Ratio 
       U.S. Economic Assistance 
 
Appendix C - Trade 
 
       Total Country Exports 
       Total Country Imports 
       U.S. Exports 
       U.S. Imports 
 
Appendix D - Investment Statistics 
 
Appendix E - U.S. and Country Contacts 
 
       U.S. Embassy Trade Related Contacts 
       American Chamber and/or Bilateral Business Councils 
       Country Trade or Industry Associations in Key Sectors 
       Country Government Offices Relating to Key Sectors and/or 
       Significant Trade Related Activities 
       Country Market Research Firms 
       Country Commercial Banks 
 
Appendix F - Market Research 
 
Appendix G - Trade Event Schedule 
 
 
 
I.     EXECUTIVE SUMMARY 
 
Bangladesh's macroeconomy remains stable and healthy, with 4.6 percent 
GDP growth, a balance of payments surplus, and inflation under five 
percent.  The microeconomy, however, remains stagnant.  About 45 percent 
of the country's 120 million people continue to live below the poverty 
line.  GDP growth over the current period is expected to be 4.6 to 5 
percent.  Increased industrial growth over the period partially 
compensated for the impact of a large drop in rice production and 
consequent rise in inflation.  Economic reforms, necessary to the 
revival of the microeconomy, will continue to move slowly as Bangladesh 
gears up for national elections to be held by early 1996.  
 
Despite Bangladesh's difficult commercial environment, foreign firms 
successfully market their goods and services to the country, and a few 
have made major investments.  Labor is inexpensive, but suffers from low 
productivity.  Politically motivated strikes are frequent.  Power, 
telecommunications and rail transport are poor by regional standards.  
The country's legal system is outdated and inefficient.  A large and 
recalcitrant bureaucracy often views its role more as controlling 
commercial activity than as stimulating it.  Corruption is endemic.  Yet 
the economy has been registering positive rates of growth in per capita 
GDP.  The increasing private sector orientation of government policy is 
beginning to show results, particularly in the oil and gas sector. 
 
Relations between Bangladesh and the United States are excellent.  The 
Bangladesh business community is well disposed towards American 
products.  Business opportunities for U.S. firms are expanding.  
Commercial imports now make up approximately 65 percent of Bangladesh's 
import bill, with aid-financed imports accounting for the remainder.  
Recent U.S. sales to Bangladesh's private sector include textile 
machinery, power generation equipment, computer equipment, grain, and 
cotton.  U.S. sales to the public sector in recent years include grain, 
oil drilling equipment, aircraft, telecommunications equipment, and 
power generation/transmission equipment.  U.S. consultants have provided 
advice on rural finance, banking and capital markets, natural resource 
management, rural electrification, fertilizer distribution, and 
government policy in industry and agriculture. 
 
Best prospects for American firms include fossil fuel exploration and 
production, telecommunications, and power generation.  U.S. wheat and 
cotton exports soared over the past year, and are expected to increase 
in the coming year.  Many of the larger Bangladeshi firms express 
interest in joint ventures with U.S. companies.  A key to success in 
doing business in Bangladesh rests on having strong, effective local 
representation.   
 
Country Commercial Guides are available on the National trade Data Bank 
on CD-ROM or through the Internet.  Please contact STAT-USA at 1-800-
STAT-USA for more information.  To locate Country Commercial Guides via 
the Internet, please use the following worldwide WEB address:  WWW.STAT-
USA.GOV.  CCGs can also be ordered in hard copy or on diskette from the 
National Technical Information Service (NTIS) at 1-800-553-NTIS.   
 
 
 
II.    ECONOMIC TRENDS AND OUTLOOK 
 
Major Trends and Outlook 
 
Lying between the eastern arm of India and the Bay of Bengal, Bangladesh 
is a semitropical riverine nation with fertile soil and high 
vulnerability to floods.  Most Bangladeshis make their living from 
agriculture.  With 120 million people crowded into an area the size of 
Wisconsin, Bangladesh has the highest population density of any country, 
excepting city-states like Singapore. 
 
Present-day Bangladesh became part of Pakistan when the British withdrew 
from the sub-continent in 1947.  Disputes with the West Pakistanis led 
to a bloody war of independence in 1971, resulting in the creation of 
the new nation of Bangladesh.  Since 1971, Bangladesh has remained one 
of the world's poorest countries, although agricultural output has 
increased steadily over the nation's 23-year history.  During that time, 
Bangladesh's difficult circumstances have drawn significant assistance 
from developed nations.  Bangladesh receives annually the equivalent of 
6-8 percent of GDP in foreign assistance, and would get even more were 
it not for local bottlenecks that cause projects to back up in the aid 
"pipeline." 
 
Economic performance in 1994 was in large part a continuation of the 
trends of the past several years.  The macroeconomy remained healthy.  
Changes in Bangladesh's tax and tariff regimes and the liberalization of 
the foreign exchange regime have helped open markets.  Stagnant imports 
as well as the continued growth of non-traditional manufactured exports 
resulted in a drop in the current account deficit.  The overall balance 
of payments was positive.  By mid-1995, foreign exchange reserves topped 
$3.4 billion, about 10 months of import cover.   
 
The overall microeconomic picture is less encouraging.  Rice production 
dropped by an estimated 9 percent in 1994/95 due to a severe drought and 
a fertilizer shortage.  As a result, Bangladesh is importing 600,000 
metric tons of rice.  Inflation, while below two percent in FY94, has 
recently edged upward to over four percent with a 24 percent surge in 
rice prices.  The government made little progress in privatizing 
inefficient state-owned industries or reducing the public payroll.  
Bureaucratic bottlenecks, labor strife and a deteriorating law and order 
situation continue to discourage domestic and foreign investors, keeping 
Bangladesh from reaching the 6-7 percent sustained annual economic 
growth rate necessary to lift it out of poverty.  The Bangladesh 
Government (BDG) hopes to boost GDP growth from its current estimated 
five percent to an ambitious six percent in the coming year.  This will 
require a better rice crop, a rise in foreign aid utilization, and 
significant progress in expanding the role of the private sector.  At 
the current growth rate, the country's population is expected to double 
in the next 35 years.  Without accelerated industrialization and greater 
private sector involvement, population growth threatens to undermine 
future economic stability. 
 
Import Trade:  (Note:  Bangladesh's fiscal year (FY) runs from July 1 to 
June 30.  All trade figures are calculated in nominal dollar terms.)  
Imports appear to be picking up in 1995, with a surge of imports in 
machinery, industrial raw materials and intermediate goods, and crude 
petroleum, implying more robust industrial activity.  Official imports 
were more or less stagnant in FY94 compared to FY93.  This appears to 
have been due to lower petroleum prices, lower food imports, and a 
significant drop in imported milk products and edible oil.  In FY94, 
stagnant industrial growth and slower growth in the garment industry 
dampened imports of raw materials and intermediate goods.  Many buyers 
deferred imports, anticipating lower duties in FY95.  By all accounts, 
unofficial imports, basically border trade with India, has continued to 
increase. 
 
Export Trade:  Export figures for the first seven months of FY95 point 
to a 30 percent increase over FY94.  While exports of frozen food, jute 
goods, and leather are continuing to grow moderately, garment exports 
appear to be up significantly, as are exports of other manufactured 
items.  Export growth increased by 9.7 percent in FY94, down from 12.5 
percent growth in FY93.  The growth in garment exports in FY94 dropped 
dramatically, from about 35 percent annually in FY90-92 to 18.3 percent 
growth in FY93 and 16 percent growth in FY94.  At over $1.4 billion in 
FY94, garments account for 61 percent of Bangladesh's total exports.  
However, because most of the trade consists of assembling imported cloth 
for re-export, the total value added to garments in Bangladesh is only 
about one fourth of the exported value. 
 
Bangladesh began exporting garments only in the early 1980s, but growth 
in the industry since that time has been phenomenal, partly due to the 
imposition under the Multi-Fiber Arrangement (MFA) of U.S. textile 
import quotas on Bangladesh's Asian competitors.  Sharing credit for the 
success of garment exports is the Bangladesh Government, which permitted 
garment manufacturers to skip customs formalities by providing access to 
bonded warehouses and to back-to-back letters of credit (which enabled 
foreign banks to finance operations) and otherwise leaving the 
manufacturers alone.  However, this laissez faire approach has given way 
to a 30 percent domestic value added requirement for quota items (25 
percent for non-quota items), intended to force garment exporters to 
source some of their cloth from local textile mills.  The FY94 slump in 
export growth may be attributable to declining garment prices as a 
result of heightened international competition as well as an increase in 
the price of imported fabric and raw cotton.  Some observers also blame 
the diversion of demand to other countries because of frustrations with 
Bangladesh's power outages, congested port, and frequent strikes.  
Garment exports rebounded in the first half of FY95, but have recently 
begun to taper, apparently because of a slump in the U.S. market.  It is 
an open question whether Bangladesh's garment industry will continue to 
grow as the phase out of the Multi-Fiber Arrangement forces the sector 
to compete on the world stage without the benefit of quotas. 
 
Bangladesh's non-garment exports continued to grow slowly in FY94.  
Frozen food exports (mostly shrimp) rose by 23 percent in FY94 to $249 
million.  Leather exports increased by only 4 percent.  FY94 was a bad 
year for jute.  The export of jute goods fell by 11 percent, while raw 
jute exports dropped by 14 percent, to the lowest level in seven years.  
A World Bank-financed jute restructuring program has so far fallen flat, 
with the government's failure to close even one jute mill.  For the 
short term, jute exports seem likely to continue to suffer from stagnant 
world demand, excessive regulation, and over-staffing in the state-run 
jute mills.  The two percent depreciation of the taka in FY94 over the 
average exchange rate prevailing in FY93 may have helped exports. 
 
Given Bangladesh's low domestic demand, hopes for accelerated economic 
growth must rest with exporters.  To promote exports, the Bangladesh 
Government will need to follow the pattern it established with the 
garment industry in granting relatively easy letter of credit facilities 
and bonded warehousing.  Further arbitrary interventions such as the ban 
on wet-blue leather exports, or the 30 percent domestic value added 
requirement for garments, will short circuit export promotion efforts.  
Reforms in export policy have been slow, with continued export bans on a 
wide range of commodities and manufactured products, ostensibly to 
"protect" consumers.  Bonded warehouse facilities and duty drawback 
schemes are inadequate.  Exporters still face limits in foreign exchange 
retention.   
 
U.S.-Bangladesh Trade:  With the steady growth of Bangladesh's garment 
exports to the U.S. and a slump in overall imports from the United 
States, the U.S. trade deficit with Bangladesh increased from $641 
million in calendar year 1993 to $846 million in calendar year 1994.  
The U.S. imported $1.08 billion worth of goods from Bangladesh in 
calendar year 1994, mostly ready-made garments.  U.S. exports to 
Bangladesh totaled $233 million in 1994, down five percent over 1993.  
Half of the 1993 performance is accounted for by a $111 million lease of 
McDonnell Douglas DC-10 aircraft and $7 million in parts and spares.  If 
these items are deducted from the 1993 export figures, U.S. exports to 
Bangladesh increased by 90 percent in 1994, almost all due to a tripling 
of exports in wheat, cotton, and fertilizer.  Tobacco exports also 
tripled and soybean oil exports surged, although from a small base.  
Total agricultural exports increased by 47 percent, while non-
agricultural exports were up 16 percent. 
 
Bangladesh is shifting a larger share of its garment exports towards the 
United States.  U.S. garment imports from Bangladesh rose from $668 
million in calendar year 1993 to $910 million in 1994.  U.S. and 
Bangladeshi negotiators met in 1994 to extend the bilateral textile 
agreement, retaining a 7 percent annual growth rate for garment quotas, 
adding new flexibility in some categories and inserting anti-
circumvention language.  It also changed the end of the quota year from 
January to December.  Recent years have seen some challenges to 
Bangladeshi garment exporters from U.S. labor groups and buyers 
protesting child labor practices.  The garment exporters association has 
been working with UNICEF and the ILO to draft an agreement to phase out 
child labor from the garment industry.  U.S. imports of jute and jute 
products increased by over 50 percent, while frozen food imports 
tripled.   
 
1995 should be even brighter than 1994 for U.S. agricultural exports.  
1995 may also bring the sale of U.S. commercial aircraft, which would 
significantly boost U.S. trade.  Unless this happens, however, garment 
imports will likely push the U.S.-Bangladesh trade deficit to around $1 
billion in calendar year 1994. 
 
Principal Growth Sectors 
 
Agriculture:  Rice production fell by nine percent, down from 18.04 mmt 
in FY94 to 16.5 mmt in FY95--the second biggest drop since independence 
in 1971.  A dramatic drop in monsoon rainfall resulted in a significant 
decline in "aman" (fall/winter) rice production.  A shortage in urea 
fertilizer, resulting from exporting too much of local production and 
increased government controls over distribution, contributed to a large 
decline in the "boro" (winter) crop. Bangladesh responded to the 
shortfall by importing an estimated 600,000 mt of rice, raising 
questions whether Bangladesh will be able to maintain market self-
sufficiency in rice.  Rice prices in FY95 jumped 17 percent over FY94.  
Given high prices and a predicted normal monsoon, rice production in 
FY96 should rebound significantly. 
 
The FY95 drought proved a boon for dry season crops, since farmers could 
plant these crops earlier than normal.  With a 10 percent increase in 
area planted, this year's wheat crop is expected to reach record levels 
of 1.2 mmt (up five percent from 1.14 mmt in FY94).  In addition, 
farmers recorded a bumper potato crop, with area planted up by around 20 
percent, production up 37 percent, and prices on a downward trend.  
Production has also increased for mustard, sweet potatoes, maize, and 
other dry-season minor crops. 
 
Wheat:  Wheat imports declined in FY94 to 880,000 mt, from 1.14 mmt in 
the previous year.  Because Bangladesh had reached market self-
sufficiency in rice production in FY93, wheat donations dropped.  The 
total amount of wheat provided through various food-aid programs in FY94 
was 654,000 mt, down from 716,000 mt in FY93.  U.S. contributions to 
Bangladesh, under Title II and Title II PL-480 programs, remained nearly 
the same at 247,000 mt.  Bangladesh also imported 230,000 mt of wheat on 
commercial terms.  Commercial rice and wheat imports as well as 
donations of food grains to Bangladesh are expected to increase this 
year, in response to the shortfall in rice production and the lowering 
import duty on rice (from 7.5 percent to zero) and wheat (15 to 7.5 
percent). 
 
Jute:  Jute, the traditional "golden fiber" of Bengal, is Bangladesh's 
main cash crop, cultivated in rotation with rice on the country's wet, 
fertile fields.  Although Bangladesh is still the world's leading jute 
exporter, the fiber's prominence has slipped in recent years as world 
demand for such jute products as carpet-backing and burlap bags has 
stagnated or fallen.  Heavy government involvement in procurement and 
processing has also contributed to jute's decline.  Production of raw 
jute has decreased by 10 percent, partly in response to lower prices in 
FY93.  The value of jute and jute goods exports continues to decline 
from $342 million in FY93 to $303 million in FY94. 
 
Cotton:  Bangladesh's raw cotton trade is expanding.  Total cotton 
imports in FY 94/95 are forecast at 100,000 mt, up 43 percent from the 
depressed previous year's import level.  FY 95/96 imports are forecast 
to reach a record of 110,000 mt.  Growth in the cotton import level 
shall continue to meet growing consumption by local textile industries.  
U.S. cotton exports to Bangladesh in FY 94/95 are forecast at 65,000 mt 
(estimated value: $115 million).  This represents a phenomenal growth 
over past years.  U.S. sales are in medium staple cotton, which has 
traditionally been imported from Pakistan.  Pakistani cotton is 
currently under import embargo by Bangladesh's textile mills 
association.  Central Asian cotton poses some competition, but a growing 
number of buyers are coming to rely on the dependability and quality of 
U.S. shipments. Cotton production in FY94 rose by seven percent to 
78,000 bales. 
 
Industry:   Industrial production continues to grow at about a moderate 
10 percent a year.  Industry's contribution to real GDP, if the figure 
includes manufacturing, construction, power, and utilities, was around 
19 percent in FY94.  The state owns 40 percent of industrial capacity, 
primarily in jute and textile milling and in the production of steel and 
chemicals.  However,  employment in government industries represents 
less than 10 percent of total industrial employment.  In 1994, the World 
Bank negotiated a jute restructuring package to privatize or close a 
large number of public sector jute mills.  This and other privatization 
efforts have moved slowly.  Further privatization of any industry is not 
expected until after elections, expected before February 1996. 
 
Reforms in the oil and gas sectors have begun to yield results.  
International oil firms have negotiated production contracts with the 
BDG.  Reform plans for the power and telecommunications industries have 
stalled.  The private sector still struggles with over-regulation, 
inadequate commercial laws, frequent strikes, power outages, and other 
factors which dampen investment.  Real GDP growth in FY94 was 4.6 
percent.  Growth in FY95 will most likely be around 5 percent, with 
increased industrial growth balanced by dampened production this year's 
poor rice crop and the lack of significant economic reforms.  
  
Government Role in the Economy 
 
Bangladesh's industrial development has been hampered by a strong 
government commitment, common in South Asia, to intervention in trade 
and industry.  Efforts at market reform often run afoul of vested 
interest groups, such as public sector labor unions or domestic 
producers in import-competing industries.  The public sector accounts 
for only about one fourth of Bangladesh's industrial output (although 
less than ten percent in manufacturing).  However, it exercises a 
dominant influence in many prominent industries (for example, jute, 
textiles, steel and chemical production, and sugar).  Most public sector 
industries, including textiles, jute processing, and sugar processing, 
are perennial money losers, draining the treasury and setting high wages 
that their private sector counterparts often feel compelled to meet out 
of fear of union action.  Even worse, the fact that crucial non-
manufacturing industries--power, telecommunications, railroads, and the 
national airline--are in the public sector tends to limit private sector 
productivity. 
 
Balance of Payments Situation 
 
The current account deficit, having increased marginally to $618 million 
in FY93 from $578 million in FY92, narrowed to $420 million (or 1.6 
percent of GDP) in FY94.  This reflected stagnant imports, offset by a 
slight drop in the net investment income deficit, slow-growing exports, 
and growth in overseas remittances.  Despite a slight drop in aid 
disbursements, Bangladesh ran a substantial balance of payments surplus 
of about $625 million.  This surplus in turn generated continued growth 
in the Bangladesh Bank's (central bank's) foreign exchange reserves, 
from $2.1 billion (end-FY93) to $2.8 billion (end-FY94), equivalent to 
eight months of imports.  As of March, 1995, reserves stood at $3.4 
billion, about 10 months of import cover.  While the increase in 
reserves is itself intrinsically desirable, it also reflects the low 
demand for imported investment goods and the moderate rate of economic 
growth.   
 
Hard currency remittances from Bangladeshi workers abroad, principally 
in the Middle East, continue to increase, promising to offset further 
the current account deficit in FY95.  The share of remittances passing 
through the formal banking sector has increased as currency 
liberalization makes this channel more attractive. 
 
The exchange rate depreciated by two percent during FY94 to 40.01 taka 
to the dollar at end-FY94.  The Bangladesh Bank follows a semi-flexible 
exchange rate policy of revaluing the currency on the basis of a 
weighted basket of economic indicators.  Standard indicators--the high 
level of reserves and a black market rate close to the official rate--
suggest the Bank has done a good job fixing the exchange rate close to 
its equilibrium level.  The taka's market value, however, is bolstered 
by the large sums of foreign exchange Bangladesh receives every year 
through aid transfers.  Noting that the real exchange rate for the taka 
has risen vis-?-vis exchange rates for the currencies of export 
competitors like India and China, some economists and exporters now 
argue for further devaluation.  The government recently declared the 
taka fully convertible on the current account.  Capital account 
convertibility was promised in the June 1995 budget speech. 
 
Assessed on the basis of outstanding principal, Bangladesh's national 
debt was $13 billion in FY93, up seven percent from the June 1992 debt 
of $12.2 billion, and six percent less than the projected FY94 debt of 
$13.9 billion.  Because virtually all of the country's outstanding 
external debt has been granted on highly concessional terms (e.g., one 
or two percent interest, 30-year maturity, and a 20-year grace period) 
by donor nations and multilateral lending institutions, the net present 
value of the debt is far lower than the face value.  In addition to the 
national debt, Bangladesh owes about $1.24 billion to the United States 
as an obligation incurred through PL-480 Title I and $21.2 million in 
Title III food disbursements as of June, 1995.   
 
Infrastructure Situation 
 
Most observers give the transport sector mixed marks.  The 36,000-
kilometer primary road network is in relatively good shape, giving rise 
to a substantial private trucking industry.  Inland waterways are 
extensive.  Inland water transportation accounts for about 65 percent of 
domestic cargo transportation and about 38 percent of inter-district 
passenger traffic, despite some siltation and inadequate port 
facilities.  Bangladesh's two major seaports, Chittagong and Mongla, 
handled 9.8 million metric tons of cargo in 1993/94.  Chittagong (by far 
the largest port, with two container terminals) suffers from inefficient 
space management and a shortage of handling equipment which causes 
serious delays and traffic congestion.  Bangladesh's 2,800-kilometer 
railway system is in poor shape, hobbled by a mix of gauges, widespread 
ticketless travel, and old equipment.  Bangladesh is modernizing Dhaka 
airport and plans to expand Chittagong and Sylhet airports.  The 
government-operated Bangladesh Biman Airlines runs a fleet of nine 
aircraft, and some 15 airlines connect Dhaka with Europe, the Persian 
Gulf, and South, Southeast, and East Asia. 
 
Bangladesh's power sector is inadequate and rife with corruption.  
Overloading and a lack of maintenance cause frequent outages.  Damaged 
equipment, investments in standby generators, and wasted production time 
caused by power failures have cost some firms up to 30 percent of their 
value of production.  The country's telecommunications services are also 
inadequate.  The government-controlled telephone service provides about 
2.5 telephones per 1,000 people and a call connection rate of 30 
percent.  Most lines are analog, and the quality of service is poor, 
undermined, as in the case of power, by widespread petty corruption.  
Efforts are under way to upgrade the telephone system, including 
expanding domestic and international capacity and installing digital 
exchanges.  Private telecommunications firms provide cellular telephone 
and internet electronic mail services in Dhaka.  
 
 
 
III.   POLITICAL ENVIRONMENT 
 
Nature of Political Relationship with the United States 
 
U.S.-Bangladesh relations are excellent.  U.S. policies have focused 
primarily on efforts to promote Bangladesh's economic development and 
political progress in the context of a democratic system.  The United 
States committed $62.7 million in economic aid to Bangladesh in 1995.  
Since Bangladesh's independence in 1971, the United States has provided 
over $3 billion in economic assistance.  
 
Major Political Issues Affecting Business Climate 
 
There are no major bilateral or international political issues which 
affect the business climate.  However, domestic politics has had a 
negative effect.  Political demonstrations and general strikes, called 
hartals, regularly disrupt business operations.  Hartals were 
particularly frequent and disruptive in 1994.  The local business 
community has voiced its concerns about the economic impact of such 
political agitation and has appealed to all parties to restrict their 
disagreements to the Parliament.  As of July 1995, hartals are somewhat 
less frequent than a few months ago.  
 
Synopsis of Political System 
 
Bangladesh is a parliamentary democracy headed by Prime Minister Khaleda 
Zia of the Bangladesh Nationalist Party (BNP) which won the most seats 
in elections in 1991.  The BNP holds a slim but secure majority in the 
Parliament.  Members of Parliament are elected at least once every five 
years.  The Parliament has 300 elected members, with 30 additional seats 
reserved for women who are chosen after the election by the seated 
Parliament.  Candidates may contest a maximum of five seats in any one 
election but may only hold one.  Parliament elects Bangladesh's 
president to a five-year term.  The President's duties are largely 
ceremonial.  The parliamentary opposition is led by Sheikh Hasina Wajed, 
head of the largest opposition party, the Awami League.   
 
Following its war of independence in 1971 and the establishment of a new 
Constitution in 1972, Bangladesh held its first parliamentary election 
in March 1973, which solidified the Awami League's ruling majority.  In 
August 1975, the elected government of Sheikh Mujibur Rahman, long the 
most prominent leader in the nationalist movement, was overthrown in the 
first of a series of military coups and military rule which plagued the 
country for the next fifteen years.  During this military coup, Sheikh 
Mujibur Rahman was murdered.  (His daughter, Sheikh Hasina, was out of 
the country and survived.  She now leads the Awami League.)  In 1981, 
President Ziaur Rahman, an army general who came to power in the turmoil 
following the death of Sheikh Mujib, was himself assassinated.  (His 
wife, Begum Khaleda Zia, is the current Prime Minister.)  In 1982, then 
Army Chief of Staff, General H.M. Ershad, seized power and declared 
himself President in December 1982.  Despite efforts to legitimize his 
rule through coercion and political manipulation, Ershad was forced to 
resign in December 1990, following months of popular demonstrations. 
 
In February 1991, former President Zia's Bangladesh Nationalist Party 
(BNP) won a parliamentary plurality and formed the government.  The 
Awami League won 90 seats; Ershad's Jatiyo Party, 35; and the Jamaat-e-
Islami, 18.  Domestic and foreign observers described the election as 
free and fair, perhaps the most honest since Bangladesh won 
independence.   
 
The Awami League won municipal elections in 1994 in Bangladesh's two 
largest cities, Dhaka and Chittagong.  The opposition charged that a 
March 1994 by-election won by the BNP was rigged.  In protest of this 
election and other government actions, the opposition boycotted 
Parliament and called for new elections under a neutral caretaker 
government.  In December 1994, 147 deputies from the three major 
opposition parties resigned from Parliament in protest of government 
refusal to meet their demands.  
 
There are few if any policy differences among three of the major 
contenders for power--the BNP, the Awami League, and Jatiyo Party.  The 
Jamaat-e-Islami calls for establishment of an Islamic state in 
Bangladesh, but Jamaat leaders also profess a commitment to tolerance, 
democracy and economic freedom.  Despite a remarkable degree of policy 
consensus among major parties, the inability of government and 
opposition to resolve the ongoing political stalemate and continued 
uncertainty whether the opposition will participate in the next 
elections persists as of early July 1995.    
 
 
 
IV.    MARKETING U.S. PRODUCTS AND SERVICES 
 
Distribution and Sales Channels 
 
The primary channel for selling U.S. merchandise in Bangladesh is 
through a resident agent or representative (importer, wholesaler, or 
distributor).  An agent may be appointed on an exclusive or non-
exclusive basis.  Approximately half of Bangladesh's imports  are made 
through tender or direct purchase by public sector corporations, 
autonomous bodies, and government-controlled corporations.  These 
agencies prefer to deal with local firms acting as exclusive agents or 
distributors of foreign manufacturers and suppliers.  An exclusive 
agency or distributorship arrangement ensures that foreign suppliers 
submit only one bid.  In the private sector, deals with exclusive agents 
generally are preferred to ensure after-sales service, continuous supply 
of spare parts, and to solve possible future technical problems.  It is 
also helpful for a foreign firm to have an exclusive distributor in 
order to monitor the progress of major projects, provide information on 
upcoming sales opportunities, and work out strategies to win tenders.  
Non-exclusive arrangements are common for commodities such as cotton, 
wheat, edible oil, chemicals, and metals, where brand names are not 
important.   
 
Urban retailers usually purchase or obtain on credit supplies sufficient 
to last them for a week.  Rural retailers generally travel to large 
cities like Dhaka or Chittagong to inspect goods and to place orders 
sufficient to last a month or more. While many retail stores carry 
general merchandise, only a few carry a wide enough range to be 
considered small department stores.  The typical retail shop sells a 
single commodity, such as, tires, cooking utensils, or jewelry.  It is 
frequently located in a crowded bazaar area near other shops carrying 
similar goods and is likely to be small. 
 
Use of Agents/Distributors; Finding a Partner 
 
The primary channel for selling U.S. products or services in Bangladesh 
is through a local agent.  U.S. firms may appoint a Bangladesh firm or 
individual as an exclusive or non-exclusive agent.  The local agent 
should be imaginative, active, politically astute, and technically 
competent.  A local agent may be authorized to service industrial 
consumers, to bid on government tenders, or to place orders or book 
indent orders for his own account.  The Embassy's experience suggests 
that a local organization which represents many foreign companies may 
not be as effective as a smaller one which can be more aggressive in 
pursuing a product or product line.  An American firm seeking an agent 
in Bangladesh may wish to contact its district Department of Commerce 
office and request and pay for an Agent/Distributor Service (ADS) before 
deciding on a local representative.  U.S. firms should carefully check a 
potential agent's financial soundness, sales capabilities, and contacts 
with public and private sector organizations.  Personal interviews are 
useful in discussing a business proposal with a potential agent or 
distributor.   
 
Franchising 
 
Franchising is not practiced in Bangladesh, although there are no 
regulations barring franchise operation.  Because of market limitations, 
franchising is not considered viable for U.S. firms in Bangladesh.   
 
Direct Marketing 
 
Direct marketing in Bangladesh is difficult because of widespread 
illiteracy and inadequate media services.  Most imports, especially 
government procurements, are made through local agents. 
 
Joint Ventures/Licensing 
 
Bangladesh business people are eager to collaborate with foreign 
partners, and the Bangladesh Government (BDG) has amended conditions for 
joint ventures to be more attractive in recent years.  Joint ventures in 
which the foreign partner provides the foreign exchange capital, 
equipment, technology, and expertise are particularly welcome.  One 
hundred percent foreign ownership is permitted for export-oriented 
investments. 
 
The Industrial Policy of 1991/1992 ensures equal treatment for local 
investment, joint venture, and 100 percent foreign investment.  
According to the policy, no permission of the government is required to 
set up a joint venture project.  However, for obtaining facilities such 
as import entitlement for raw materials and spare parts, land, and 
utility connections all industries are required to be registered with 
the Board of Investment (BOI).  Aside from completing its two-page 
registration application, the BOI does not require any additional 
documentation.  Joint ventures with public sector corporations are also 
allowed.   
 
Steps to Establishing an Office 
 
A business in Bangladesh may be organized as a sole proprietorship, a 
partnership, or as an incorporated or unincorporated association.  
Foreign investors establishing enterprises in Bangladesh normally form 
corporations.  Two broad categories of corporations exist in Bangladesh: 
public and private.  Companies of either type may be limited or 
unlimited.  The liability of the shareholders of a limited company is 
restricted to the amount of share capital subscribed by them or held in 
their name.  The liability of the shareholders of an unlimited company 
is not as restricted.  A minimum of seven shareholders is required to 
establish a public limited company; there is no limit on the number of 
shareholders it may have.  A private company requires a minimum of two 
shareholders, and its total number of shareholders may not exceed 50. 
 
Any foreign firm incorporated outside of Bangladesh must be registered 
in Bangladesh in order to carry out business.  Business firms are 
incorporated and registered under the provisions of the Companies Act of 
1994.  The incorporation/registration is done by the Registrar of Joint 
Stock Companies, 24-25, Dilkusha C/A, Dhaka 1000, telephone: 236398.  
Any foreign firm with its corporate head office outside Bangladesh 
wishing to open a branch or liaison office must apply in a prescribed 
form to the Ministry of Industries, Shilpa Bhaban, Motijheel C/A, 
telephone: 230590.  Copies of original or attested (by the Bangladesh 
Mission in the United States) copies of the certificate of incorporation 
should be submitted with the application. 
 
Selling Factors/Techniques 
 
One of the most important selling factors in marketing U.S. products is 
selecting an efficient and effective local agent.  U.S. firms should be 
careful in terms of considering potential agents' financial soundness, 
sales capabilities, and, most importantly, close contact with public and 
private sector organizations.  The local agents should be instructed to 
provide advance information regarding potential government purchases.  
Since the government's tender procedures are complicated and require a 
lot of paper work, advanced notice is essential to be competitive in 
bidding.  Local companies should be given adequate product information 
and training in order to promote U.S. firms products/services in the 
local market.  Promotional materials such as product brochures, 
catalogs, posters for display and specific media advertisement strategy 
greatly assists local agents to sell their principal's 
products/services.  U.S. firms should also consider promoting their 
products/services through the annual U.S. trade show held in Dhaka.  
Details on the trade show are available from the Executive Secretary, 
American Bangladesh Economic Forum (ABEF), Room 319, Dhaka Sheraton 
Hotel, 1 Minto Road, GPO Box 504, Dhaka 1000; telephone: 880-2-863391, 
fax: 880-2-832915. 
 
Advertising and Trade Promotion 
 
Bangladesh has a small but growing advertising market research sector.  
Product and trade advertisements are popular in Bangladesh and are 
carried primarily through newspapers, magazines, radio and television, 
billboards, posters, film shorts, and local exhibitions.  Newspapers are 
published in English and Bangla.  Over 200 newspapers and magazines, 
including over 100 dailies, circulate throughout the country.  The 
principal English-language dailies published in Dhaka are "Daily Star", 
"Independent", "Morning Sun", "New Nation", "Bangladesh Observer", 
"Financial Express", and "Bangladesh Times."  The primary Bengali 
dailies are "Ittefaq", "Inquilab", "Banglar Bani", "Dainik Bangla", 
"Jana Khanta", and "Sangbad."  Television and radio operate under the 
government and broadcast nationwide.  Radio Bangladesh offers commercial 
advertisements generally in Bangla, but Bangladesh Television (BTV) also 
carries advertisements in English.  Radio Bangladesh broadcasts over 20 
hours per day; BTV broadcasts primarily in the evening.  U.S. Cable News 
Network (CNN) and British Broadcasting Corporation (BBC) are transmitted 
six hours a day via BTV.  Satellite television is increasingly popular 
among city dwellers, who watch mostly programs beamed from Hong Kong 
(Star TV) and India (Door Darshan).  Local cable companies have started 
operations in Dhaka. 
 
Pricing Product 
 
Since most government purchases are through open public tenders, 
contracts are usually awarded to the lowest bidder.  The private sector 
is also price sensitive.  Other than a few essential pharmaceutical 
products, the government does not have price controls over most 
consumable items.  Bulk commodities like imported fertilizer, edible 
oil, milk powder, and petroleum products are subject to price controls.  
Current inflation is slightly over four percent. 
 
Sales Service/Customer Support 
 
Sales service and customer support is critical particularly for private 
sector customers.  Marketing products, such as electric generators, 
capital machinery, and large air conditioning plants requires sound 
technical support for installation as well as maintenance needs.  Agents 
of U.S. firms dealing with these products should maintain sufficient 
spare parts stock to support their customers. 
 
Selling to the Government 
 
The Bangladesh Government is the largest importer.  Most government 
agencies, autonomous organizations, and public sector corporations 
import directly through public tenders, which are publicly announced or 
issued to registered suppliers.  Major BDG direct importers are the 
Bangladesh Chemical Industries Corporation (BCIC); Bangladesh Steel & 
Engineering Corporation (BSEC); Bangladesh Oil, Gas and Mineral 
Corporation (BOGMC); Bangladesh Sugar & Food Industries Corporation 
(BSFC); Trading Corporation of Bangladesh (TCB); Bangladesh Power 
Development Board (PDB); Bangladesh Telephone & Telegraph Board (BTTB); 
Directorate General of Defense Purchase (DGDP). 
 
Major and bulk purchases to be made by public tender are published in 
the local media.  The Economic/Commercial Section of the Embassy 
monitors all bid announcements and reports them promptly to the Office 
of International Projects (OIMP), Room 2015-B, International Trade 
Administration, U.S. Department of Commerce, Washington D.C. 20230, 
telephone (202) 377-2373.  This office also tracks all multilateral 
development bank projects valued at over $5 million.  Information on 
tenders under $5 million is received by the Office of South Asia's 
Bangladesh Desk Officer (202) 377-2954.   
 
Protecting your Product from IPR Infringement 
 
The BDG has not given intellectual property rights a high priority.  
Enforcement is lax.  Intellectual property infringement is common, but 
is of limited significance for U.S. firms, with the possible exception 
of pharmaceutical products and audio and video cassettes.  Bangladesh 
intellectual property law dates from the pre-independence era.  The 
Patent and Design Act of 1911, as amended by the Patent and Design Rule 
of 1933, the Trade Mark Act of 1940, and the Copyright Ordinance of 1962 
govern patents, trademarks, and copyrights in Bangladesh.  An effort to 
update trademark and patent law has been underway since 1990.  The 
latest draft of this law is currently under review to ensure compliance 
with treaty obligations under the trade-related aspects of intellectual 
property provisions of the World Trade Organization agreement.  
Bangladesh has been a member of the World Intellectual Property 
Organization (WIPO) in Geneva since 1985. 
 
Need for Local Attorney 
 
Legal assistance may be required to settle business disputes.  A 
representative list of Bangladesh attorneys handling commercial law 
cases follows below.  No responsibility for professional ability or 
integrity of those listed is implied, but the firms have been chosen 
with care.  Names are listed alphabetically. 
 
-- Chamber of Law 
B-167, Malibagh C/P 
Dhaka 1015 
Tel: 402935 
 
-- H & H Company 
Shareef Mansion (2nd floor), 56-57 Motijheel C/A 
Dhaka 1000 
Tel: 232447, Fax: 832915 
 
-- Huq & Company 
47/1, Purana Paltan 
Dhaka 1000 
Tel: 232196, Fax: 235953 
 
-- Dr. Kamal Hossain & Associates 
Chamber Building (2nd floor), 122-124 Motijheel C/A 
Dhaka 1000 
Tel: 864966, Fax: 863409 
 
-- The Law Center  
Isphani Building (1st floor), 14-15, Motijheel C/A 
Dhaka 1000 
Tel: 239335, Fax: 863803 
 
-- Syed Ishtiaq Ahmed 
69/1 New Circular Road 
Dhaka 1000 
Tel: 230479 
 
 
 
V.     LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT 
 
Best Prospects for Non-Agricultural Products 
 
1. - Oil, Gas, Mineral Production/Exploration Services (OGS):  The 
official estimate of Bangladesh's proven natural gas reserves is 10.7 
trillion standard cubic feet (SCF).  Subsidiaries of the national 
petroleum company, Petrobangla, produce an average of 670 million SCF 
per day, supplying 70 percent of Bangladesh's commercial energy 
consumption.  The outlook for significant additions to gas reserves is 
promising.   However, a serious gas supply bottleneck has developed due 
to insufficient investment in developing known fields and in 
constructing adequate distribution pipelines to carry gas from fields in 
the Northeast to the industrial users in the center and south of the 
country.  Gas-fired power plants and urea fertilizer plants have placed 
increased demands on the gas supply.  The total shortfall is estimated 
at 100 million SCF per day. 
 
In order to meet this need for increased investment and expertise in 
developing known fields and adding to proven reserves, Petrobangla has 
signed exploration and development contracts with two international oil 
firms, including the U.S. firm Occidental Petroleum.  Several other 
international firms are in advanced stages of negotiating production 
sharing contracts with Petrobangla.  The distribution bottleneck is 
being addressed through projects financed by the World Bank and the 
Asian Development Bank.  Under the Third Gas Infrastructure Development 
Plan, the World Bank contributed $120 million as the major component of 
a $170 million project to construct a major northeast to center pipeline 
(Ashuganj-Bakhrabad pipeline) and provide gas dehydration facilities, as 
well as other components.  This project requires considerable contract 
technical assistance, including consulting services for project 
engineering and construction supervision and institutional development 
support in gas network management and environmental and safety 
management.  Petrobangla and its subsidiaries regularly publish bid 
notices for piping and facilities construction.  During 1995 Petrobangla 
plans to install at least four gas surface processing plants.    
 
2. - Telecommunications equipment (TEL):  The Bangladesh Telegraph and 
Telephone Board (BTTB), under the Ministry of Post & Telecommunications, 
held an absolute monopoly over Bangladesh's telecommunications sector 
until 1992.  In 1992, the Bangladesh Government (BDG) allowed two 
private sector telephone companies to operate public service telephone 
networks in rural Bangladesh.  At present BTTB has approximately 290,000 
telephone lines to serve 120 million people.  About 75 percent of these 
lines use analog switches, mostly from Siemens.  The remaining 25 
percent of the lines use digital switches from NEC.  Through a French 
government financing project, the French company Alcatel is installing 
150,000 digital lines in Dhaka and 30,000 lines in Chittagong.  BTTB 
plans to install an additional 140,000 digital lines which includes 
replacement of 40,000 Siemens analog switches.  The total cost of this 
project is approximately $150 million.  To upgrade the existing 
transmission network to support digital exchanges and private rural 
operators, BTTB has proposed four transmission link upgrading projects 
costing approximately $152 million.  These projects includes 
installation of fiber optic and microwave links.  There is a projected 
need for another 650,000 lines by the year 2000. 
 
U.S. companies have done well in the private sector, which holds the 
dominant role in the more technically advanced telecommunications 
services.  A U.S. company is the main equipment supplier to what until 
recently was the only cellular phone licensee.  BTTB plans to invite 
bids from potential cellular telephone service providers to establish a 
competing urban cellular service which will also provide radio trunk and 
marine telephone service.  Several U.S. companies are supplying 
telecommunications services and equipment to the two private rural 
telecommunications providers.      
 
3. - Electrical Power Systems (ELP):  Bangladesh currently possesses an 
installed capacity of 2,563 MW, all government owned and operated, with 
an annual generation of 10,000 MKWH.  With a population of 120 million, 
Bangladesh's per capita power generation is only 80 KWH per person.  BDG 
officials have announced their goal of a 2,619 MW increase in installed 
capacity, which they say can only be met by opening the power generation 
sector to private investment.  However, before Bangladesh can join the 
South Asia-wide shift in favor of private power generation, the BDG must 
resolve some major problems affecting the government's ability to 
purchase power, attract concessionary project financing, and implement a 
supportive regulatory framework for private power development.  The 
government must also decide if private power is to be pursued using 
solicitation procedures or case by case negotiations.  While not yet 
making a decision on this point, the BDG has signed memoranda of 
understanding with eight international power development firms, 
including six U.S. firms.  Preparations are underway for the next phase 
of negotiations covering fuel supply and power purchase agreements.  The 
Asian Development Bank and the World Bank are both involved in promoting 
the necessary policy reforms and, if policy goals are met, in financing 
plant construction.   
 
The average electricity tariff is $0.058 per kilowatt hour. With the 
public utility's average delivery cost at $0.065 per kilowatt hour, the 
cost includes a subsidy of just over 10 percent.  The dominant primary 
energy source is natural gas, which, at least in the near term,  will be 
in short supply.  There is also scope for coal-fired power plants.  
Short-term U.S. export prospects are for transformers, treated wood 
poles, insulators, surge protectors, line tools, commercial diesel and 
gas generator sets, and spare parts for U.S. and U.S.-licensed turbines 
for government-run power plants.  If the government is prepared to move 
forward with private power plants, and additional gas reserves are 
discovered and developed, U.S. firms should be well-positioned to win 
power project contracts. 
 
4. - Aircraft/Parts (AIR) and Airport/Ground Support Equipment (APG):  
The primary customers in the aviation sector are government-owned Biman 
Bangladesh Airlines and the Civil Aviation Authority of Bangladesh 
(CAAB), also a government entity.  Biman recently took over maintenance 
of its five DC-10s (four of which are owned by Biman), enhancing 
opportunities for sales of spares, including engines.  Biman has 
recently signed a contract to purchase two Airbus A-310 mid-haul 
aircraft (with U.S. engines) for its Middle East routes.  Biman plans to 
buy four long-haul aircraft in the near future.  The CAAB is expanding 
its airports in Dhaka and Chittagong and anticipates procuring radar, 
navigational aids, HF and VHF radios, runway lighting, ground support 
and emergency vehicles, and additional boarding bridges. 
  
5. - Computers/Peripherals (CPT) and Computer Software (CSF):  
Bangladesh's approximate market size for computer hardware, peripherals, 
and software is $13 million (based on 1993-94 imports).  The U.S. share 
of this market is about 40 percent.  The remaining market share belongs 
to cheap clone makers from the Far East.  However, due to strong 
customer preference for U.S.-made computers, the prospects for 
increasing personal computer and software sales are good.  There will be 
significant opportunities should either the central bank or the 
government-owned commercial banks computerize their operations. 
 
6. - Textile Machinery/Equipment(TXM):  Bangladesh has a thriving ready-
made garment industry which exported $1.3 billion worth of garments in 
FY94.  Bangladesh is only able to produce five percent of the export-
quality fabric it needs and consequently imports nearly all of its 
requirements.  Many large Bangladeshi business houses are building 
composite textile mills.  The Bangladeshi textile industry prefers new 
machinery from Japan, Korea, Britain, Switzerland and Germany.  However, 
there have been recent signs of increased interest in used and 
reconditioned equipment from the United States, from which some of the 
leading textile manufacturers have obtained their machinery.  U.S. 
equipment is often cheaper than that of competitors of similar quality 
and better than that of lower-priced competitors.  However, Bangladeshi 
businessmen have complained about a lack of information and 
responsiveness from U.S. firms selling used and reconditioned textile 
equipment. 
 
7. - Architect/Construction/Engineering Services (ACE):  U.S. 
architectural/ construction/engineering services, mainly in the form of 
design and supervision consultancy, are competitive in Bangladesh.  Most 
donor-funded infrastructure projects require consultancy services.  The 
estimated total market for engineering consultancy is over $20 million 
each year.  The U.S. market share hovers around 40 percent.  While Asian 
construction firms usually are competitive in construction work, the BDG 
seems to prefer U.S. or European consultants to do project design and 
supervision.  With new road and bridge construction projects in the 
works, the need for engineering consultancy will increase.     
 
8. - Agricultural Chemicals (Fertilizer) (AGC):  The market for U.S. 
fertilizer in Bangladesh is at a historic low, but is expected to 
rebound in the future.  Fertilizer imports were formerly a government 
monopoly, with a large quantity funded by donor aid.  The government set 
prices below world levels.  Fertilizer imports dropped after the BDG 
privatized fertilizer imports and distribution in December 1992.  In 
1993-94, imports started picking up, reaching $33 million.  Bangladesh 
mostly imports TSP phosphate, SSP phosphate and DAP phosphate.  The U.S. 
fertilizer market share started to decline in 1991 mainly because of 
extremely low prices for potash from the Commonwealth of Independent 
States and China.  Tunisia, which enjoys shipping cost advantages over 
the United States, is the main U.S. competitor for TSP phosphates.  
Bangladesh imports an estimated 70-75 percent of its potash and 100 
percent of its phosphate requirements.  1993-94 imports from the U.S. 
totaled $2.5 million, with $4.3 million imported from Tunisia. 
 
Best Prospects for Agricultural Products  
 
Wheat:  In spite of the growth in production during the late 1980s and 
early 1990s, Bangladesh will probably import large amounts of food 
grain.  In response to a sharp reduction in rice production, the 
Government and private traders are expected to import 600,000 mt of rice 
and 850,000 mt of wheat in FY 94/95.  The United States has managed to 
retain a 90 percent share of Bangladesh's commercial wheat imports 
through the Export Enhancement Program of the U.S. Department of 
Agriculture.  Total wheat imports (commercial plus concessional) are 
expected to reach 1.84 million mt in FY 94/95, with the U.S. share 
accounting for 1.13 million mt (worth about $192 million).   U.S. wheat 
imports are forecast to be about the same in FY95/96, with more 
commercial and less concessional wheat due to the sharp reduction in the 
PL 480 (III) allocation for Bangladesh in FY95.  
 
Although the government claims continued support for private sector 
wheat (and rice) imports, it is clearly concerned about the inflationary 
(and demand driven) impact on rice and wheat prices.  The Government 
apparently plans to maintain larger food grain stocks in order to 
promote price stability, decreasing reliance on the private sector to 
determine the price and availability of food grains.  
 
Cotton:  Total cotton imports in FY 94/95 are forecast at 100,000 mt, up 
43 percent from the depressed previous year's import level.  FY 95/96 
imports are expected to reach a record of 110,000 mt.  Cotton imports 
will likely continue to grow with increasing consumption from the 
textile industry.  U.S. cotton exports to Bangladesh tripled in FY 94/95 
and are expected to total around 65,000 mt (worth $115 million).  This 
is a major break-through for the United States, since medium staple 
cotton was traditionally imported from Pakistan (currently under an 
import embargo sanctioned by the association of private sector textile 
mills in Bangladesh).  Central Asian cotton poses some competition, but 
a growing number of buyers favor U.S. sources because of the commitment 
of U.S. shippers to maintain quality and timely delivery.  
 
Apples:  While India remains a dominant supplier, over the past six 
years U.S. exports of apples to Bangladesh have increased from nothing 
to 400 mt (worth $400,000) in FY 94/95 (5 percent of the market).  
Importers typically import U.S. apples between April and July, when the 
supply dwindles in India and other nearby countries.  While the quality 
and flavor of U.S. apples (only Washington red apples are imported) make 
them the apple of choice among consumers, their high price hinders their 
growth in the Bangladesh market.  Because consumption is growing at a 
rate of about 10 percent a year, U.S. apple exports to Bangladesh will 
continue to rise.  
 
 
 
VI.    TRADE REGULATIONS AND STANDARDS 
 
Trade Barriers 
 
Bangladesh has made significant progress in liberalizing one of the most 
restrictive trade regimes in Asia.  The Bangladesh Government (BDG) 
announced further trade liberalization in the June 1995 budget.  Customs 
duty rates will be compressed to a range of 7.5-50 percent over the next 
year.  The 2.5 percent import permit fee is the only other protective 
instrument for most imports (a trade neutral value-added tax is also 
applied).  The import permit system is now automatic.  The cumbersome 
procedure for opening letters of credit has been simplified. 
 
Customs duties are levied on all imports except raw cotton, textile 
machinery, certain machinery used in irrigation and agriculture, animal 
feeds used by the poultry and dairy industries, and certain drugs and 
medical equipment.  Duty rates are determined along the following lines: 
 
-few items, mostly inputs               7.5-15  percent  
-basic raw materials                    15-22.5 percent 
-intermediate products                  22.5-30 percent 
-finished products                      30-50   percent 
 
A supplementary duty is levied on luxury items like cars with engine 
capacity greater than 1,000 cc and "undesirable" items like cigarettes.  
Excise duties have been abolished on all items except on manually 
prepared cigarettes, bank accounts, and textiles.  Certain agricultural 
products are exempt from the value-added tax (e.g., feed and medicines 
for poultry, dairy machinery, aircraft & spares, textile machinery, raw 
cotton, certain types of medical equipment and items from small and 
cottage industries).  Manufacturers who are 100 percent export-oriented 
can import duty free through bonded warehouses.   
 
Customs Valuation 
 
The customs valuation of imported goods for the purpose of assessment 
and realization of customs duty is based on the normal value concept.  
Ad valorem duties are generally assessed on the basis of the CIF (cost, 
insurance, freight and other charges) cost of goods.  Duties are 
collected in Bangladesh currency by Customs authorities under the 
Bangladesh Customs and Excise Departments of the Ministry of Finance's 
National Board of Revenue.   
  
Import Licenses 
 
Import licenses are not required for any imported items not listed in 
the restricted list.  Importers, mainly manufacturers, need an 
importer's passbook to import items specified in the restricted list.  
Prior permission from the Ministry of Commerce is required to import 
such items.  Commercial importers do not require a passbook.  To 
simplify the import of restricted items, the government is considering 
waiving the passbook system for manufacturers. 
 
Export Controls 
 
The following items are banned for export: 
 
-all imported goods in their original or unprocessed form 
-ferrous and non-ferrous metals and scraps thereof 
-petroleum and petroleum products except naphtha and furnace oil 
-oil seeds and edible oils except kapok seeds 
-jute seeds and sunn-hemp seeds 
-food grains including rice products and flour products 
-milk and milk products 
-gur and khandseri sugar 
-animals, animal skins and wildlife covered by the Bangladesh Wildlife 
(Preservation) Order, 1973 
-arms and ammunition, explosives and, ingredients thereof 
-fissionable materials 
-maps and charts, except unclassified maps of scale smaller than 1/4 
inch or 1/250,000 scale, as well as educational/scientific charts and 
guide/relief maps 
-beef, mutton, and animal fats 
-green coconuts, coconuts, and copra 
-rare items of archaeological interest 
-human skeletons 
-pulses 
-eggs and poultry 
-prawns and shrimp, except frozen and processed 
-feature films not certified by the Bangladesh Film Censorship Board as 
fit for export 
-onions 
-rice bran (except de-oiled rice bran) 
-shrimp of count 71/90 and sizes below for sea water and 61/70 and sizes 
below for fresh water, excluding two varieties (Harina and Chaka) 
-oil cake 
-bamboo and cane in whole form and wood log 
-frogs of all species (live or dead) and frog legs 
 
In addition, the following items are restricted for export, requiring 
Ministry of Commerce permission on a case-by-case basis: 
 
-molasses  
-de-oiled rice bran  
-wheat bran 
-stainless steel scrap 
 
Quality control licenses issued by the Bangladesh Standards and Testing 
Institute are required to export the following items: cane molasses, 
shrimps and prawns (except frozen deveined or cooked), oil cake, wet 
batteries and dry battery cells, electric fans and other select electric 
appliances, biscuits, and PVC electric cables.  An inspection 
certificate is required for exports of raw jute.  All plants and plant 
materials for export must be inspected and certified that they are free 
of insects or disease.   
 
Import/Export Documentation 
 
Unless otherwise specified, all imports transacted through a bank 
require a Letter of Credit Authorization (LCA) Form.  Obtaining an LCA 
is not onerous, and many of the documents required for submission by 
importers can be kept on file with their banks.  There is no problem in 
availability of foreign currency for import.  However, as a safety 
cushion against currency fluctuation, banks prefer to source foreign 
currency for L/Cs more than $500,000 from the central bank.  Typically, 
1-2 days is required to obtain registration from the central bank.  
Unless otherwise specified, all imports must be made by opening an  
irrevocable letter of credit.  Import against an LCA may be made without 
opening an L/C in the following areas: 
 
-import of books, journals, magazines, and periodicals on sight draft of 
issuance bill basis; 
 
-import of any permissible item for an amount not exceeding $3,000 only 
during each local fiscal year against remittances made from Bangladesh; 
 
-imports under commodity aid, grant or such other loan for which there 
are specified procurement procedures for import of goods without opening 
any L/C; 
 
-imports of "International Chemical References" through bank drafts by 
recognized pharmaceutical (allopathic) industry on the approval of the 
Director, Drug Administration, for the purpose of quality control of 
their products. 
 
Importers must submit to their nominated banks the following documents 
along with the LCA: 
 
-L/C application form duly signed by the importer; 
 
-indents for goods issued by indentor or a proforma invoice obtained 
from the foreign supplier; 
 
-insurance cover note. 
 
Public sector importers also need to provide the following 
documentation: 
 
-attested photocopy of allocation letter issued by the allocating 
authority in favor of the concerned public sector agency specifying the 
source, amount, purpose, validity, and the terms and conditions; 
 
-attested photocopy of sub-allocation letter, if any, issued in favor of 
the importing agency or unit; 
 
-attested photocopy of sanction letter from the administrative ministry 
or authority where applicable; 
 
-a declaration by the authorized officer of the importing agency 
indicating the amount of utilized/unutilized government funds and that 
imported raw materials will not be sold. 
 
Private sector importers need to furnish the following additional 
documents: 
 
-valid membership certificate from the registered local chamber of 
commerce and industry or any trade association, established on an all-
Bangladesh basis, representing any special trade or business; 
 
-proof of payment of renewal fees for the Import Registration 
Certificate (IRC) for the concerned fiscal year; 
 
-a declaration, in triplicate, that the importer has paid income tax or 
submitted an income tax return for the preceding year; 
 
-any such documents as may be required by import policy order or public 
notice, or instruction issued by the Chief Controller of Imports and 
Exports. 
 
In the following case, neither an LCA nor the opening of an L/C will be 
necessary, but an import permit (IP) or clearance permit (CP) will have 
to be obtained by the importer: 
 
-import of books, magazines, journals, periodicals and scientific and 
laboratory equipment against surrender of UNESCO coupons; 
 
-imports under pay-as-you-earn scheme for a limited number of cars, 
fishing vessels, cargo or passenger vessels, and new machinery on the 
basis of clearance from the Bangladesh Bank; 
 
-import of items by passengers coming from abroad in excess of the 
permissible limits as per permitted allowance; 
 
-import of free samples, advertising materials, and gift items above 
prescribed ceilings. 
 
Temporary Entry 
 
Agents and representatives of foreign manufacturers are allowed to 
import machinery and equipment from their principals for purposes of 
demonstration or exhibition, subject to the following conditions: 
 
-the goods brought into Bangladesh will be re-exported within a period 
of one year 
 
-the importer shall execute a bond and furnish a bank guarantee or 
understanding or a legal instrument to the satisfaction of Customs at 
the time of clearance indicating that the goods will be re-exported in a 
timely manner 
 
-if the goods include any banned or restricted items, prior permission 
is required from the Chief Controller of Imports and Exports. 
 
Equipment or machinery imported on a temporary basis is exempt from duty 
if the importer obtains an import cum export permit. 
 
Labeling, Marking Requirements 
 
Imported goods (including their containers) must not bear any words or 
inscriptions of a religious connotation, the use or disposal of which 
may injure the religious feelings and beliefs of any class of the 
citizens of Bangladesh.  In addition, imported goods should not bear any 
obscene picture, writing, inscription, or visible representation. 
 
Milk food can be imported in cans and in bulk.  The container must 
indicate the ingredients in Bangla as well as the manufacturing and 
expiration dates (in Bangla or English).  A measuring spoon must be 
supplied in all containers of baby food.  Non-fat dried milk is 
importable only in airtight containers, with the date of manufacture and 
expiration noted in Bangla or English.   Pesticide containers must be 
able to withstand "handling by sea," indicate the chemical contents, and 
meet other specifications.   
 
Prohibited Imports 
 
Bangladesh's Import Policy Order 1993-95 places controls on some 
imports.  Items banned from import include: 
 
-maps, charts and geographical globes which indicate the territory of 
Bangladesh but do not do so in accordance with the maps published by the 
Bangladesh Government's Department of Survey; 
 
-horror comics, obscene and subversive literature; 
 
-printed material, posters, video tapes, etc. containing matters likely 
to outrage the religious feelings and beliefs of any class of the 
citizens of Bangladesh; 
 
-unless otherwise specified, old, second-hand and reconditioned goods; 
 
-unless otherwise specified, all kinds of waste; 
 
-goods bearing pictures or writing which is obscene or of a religious 
connotation which may injure the religious feelings of any class of 
Bangladesh citizens. 
 
Other items completely banned are: live pigs, pig and poultry fat, poppy 
seeds and dried posto dana, grass and vung, opium, tendu leaves, lard, 
lard and tallow oil, solid or semi-solid palm oil, raw sugar, un-
denatured ethyl alcohol (80 percent or higher) and other spirits 
denatured of any strength, wine, artificial mustard oil, woven fabrics 
of silk or silk waste, pig hair, some kinds of cloth, nylon and 
polyethylene ropes, fishing nets, used or new rags, padlocks up to three 
inches, vessels more than 15 years old, and single phase electricity 
meters. 
 
In addition, goods from, originating in, or imported in flag vessels 
from Israel are prohibited. 
 
Standards 
 
Quality standards are set and monitored by the Bangladesh Standards and 
Testing Institute.  Bangladesh also recognizes and accepts goods bearing 
certification from standard institutions of other countries.  Standards 
for pharmaceuticals are controlled by the Department of Drugs 
Administration under the Ministry of Health and Family Welfare.  The 
Bangladesh Atomic Energy Commission tests all imported food items to 
ensure that the prescribed standard for radioactivity is maintained. 
 
Free Trade Zones/Warehouses 
 
Bangladesh has two Export Processing Zones (EPZs), one in Chittagong and 
one in Savar (near Dhaka).  The EPZs offer tax breaks, union-free labor, 
a relatively secure power source, the duty-free import of capital 
machinery, warehouse facilities, and other benefits to 100 percent 
export-oriented industries.  Chittagong port has 116,375 square meters 
of covered warehouse space, with a capacity to hold 50,000 metric tons.  
The port also has a warehouse for hazardous cargoes (102 metric tons) 
and for cold storage (500 tons).  Mongla port in Khulna (southwest 
Bangladesh) also has warehouse facilities.  For industries outside the 
EPZs, the National Board of Revenue provides bonded warehouse facilities 
to 100 percent export oriented industries or to industries whose raw 
materials/components are mainly imported.  Production within bonded 
areas is free of import duties, with a minimum of customs formalities.  
 
Special Import Provisions 
 
Bangladesh has encouraged counter-trade for many years as a means to 
promote exports while conserving foreign exchange.  Barter trade in 
commodities is carried out with countries in Eastern Europe, the CIS, 
China, and North Korea.  Bangladesh also allows special trading 
arrangements through the Trading Corporation of Bangladesh. 
 
Membership in Free Trade Arrangements 
 
Bangladesh is a member of the South Asia Preferential Trade Agreement 
(SAPTA) under the umbrella of the South Asia Association for Regional 
Cooperation (SAARC).   
 
 
 
VII.  INVESTMENT CLIMATE 
 
Openness to Foreign Investment 
 
The policy of the Bangladesh Government (BDG) is to pursue foreign 
investment actively.  It has placed advertisements in international 
print media promoting Bangladesh for foreign investment and regularly 
arranges official and private trade delegations to Asian, European and 
North American cities.  In January 1995 the Bangladesh Board of 
Investment and Euromoney Publications co-hosted an investment conference 
that was well attended by international fund managers and the top ranks 
of the Bangladesh Government.  The Prime Minister and cabinet ministers 
addressed the conference.   
 
Although it welcomes foreign investment, Bangladesh has not yet 
attracted a significant amount of it.  To date, the Embassy estimates 
just over 100 foreign firms have invested in Bangladesh, of which 26 
operated prior to independence in 1971.  Since 1986, overall private 
investment in Bangladesh has amounted to only six percent of GDP or 
less, the lowest in Asia.  Foreign investment is expected to rise 
significantly during the coming year as an Australian/U.S. firm 
continues exploration of a coal source and two foreign oil and gas 
exploration and development firms (one U.K., one U.S.) begin work on 
their respective tracts.   
 
Some of the difficulty in attracting foreign investment has been with 
overcoming a dated and inaccurate image of dire poverty, devastating 
disasters, and near-total lack of development.  However, there are major 
weaknesses in the investment climate.  Domestic businesses generally 
cite such problems as government red tape and corruption, an uncertain 
law and order situation, poor infrastructure, inadequate commercial laws 
and courts, and policy instability.  In early 1995, a U.S. investor in a 
medical products manufacturing plant was imprisoned briefly over a 
dispute with his state-owned bank creditor.  His treatment appeared to 
be arbitrary, disproportionate, and possibly arising from extra-judicial 
motives.  It is generally recognized that domestic investment will not 
rise before these problems are addressed.  Foreign investment will 
follow, not anticipate, domestic investment, except in specialized 
sectors such as mineral extraction. 
 
Many of the small number of foreign investors in Bangladesh, including 
U.S. firms, have had favorable experiences and are earning profits in 
Bangladesh.  However, when existing foreign investors encounter problems 
with policies and regulations, the BDG often does not pay adequate 
attention.  Three prominent foreign firms, the U.S. company Pfizer 
Laboratories, the Dutch firm Philips, and the Swedish firm Swedish 
Match, divested in 1993.  Pfizer was the last of three U.S. 
pharmaceutical firms to leave Bangladesh.  The investment climate is 
only now recovering from the BDG's holding up for a year in 1991, 
following a change of government, the $520 million KAFCO fertilizer 
plant project, financed with loans and equity from foreign governments, 
private corporations and the BDG.  The plant was finally commissioned in 
January 1995, greatly relieving its foreign investors and creditors. 
 
Major laws affecting foreign investment are the Foreign Private 
Investment Act of 1980, the Industrial Policy of 1991, the Bangladesh 
Export Processing Zones Authority Act of 1980, and the Companies Act, 
1994.  In addition, foreign investors are also affected by regulations 
of the Bangladesh Bank (central bank), the National Board of Revenue 
(for taxation and customs matters), and others.  Although discrimination 
against foreign investors is not widespread, some discriminatory 
policies and regulations exist.  For example, manufacturing and import 
controls imposed by the national drug policy and the Drugs (Control) 
Ordinance of 1982 discriminate against foreign drug companies. 
 
BDG authority for dealing with foreign investment proposals is 
fragmented, and no BDG office has the clout to be a "one-stop shop."  
The Board of Investment (BOI), touted as a one-stop shop for all 
investors, is only set up to register investors in industrial projects 
outside the export processing zones (EPZs) and assist them with tax 
treatment, land acquisition, utility hook-ups, and incorporation.  The 
corresponding EPZ authority is the Bangladesh Export Processing Zones 
Authority.  Registration with BOI is necessary to obtain benefits such 
as importing machinery at concessionary duty rates or importing items on 
the "restricted list."  In 1994 BOI began using a greatly shortened form 
and providing registration automatically.  The BOI also administers the 
approval of foreign loans and technology remittances on behalf of the 
Bangladesh Bank.  Investments in power, mineral resources, and 
telecommunications must be approved by the corresponding BDG utilities 
and ministries, while garment makers must seek production allocations 
for quota exports to North America from the Export Promotion Bureau. 
 
Although privatization is a critical part of the BDG's stated economic 
reform policy, privatization has not seen sufficient progress to attract 
foreign investors.  Work permits for other than expatriate chief 
executives are frequently restricted, directly contrary to the 1991 
Industrial Policy, with re-entry visas limited to two-to-three entries.  
There are no distinctions between foreign and domestic private investors 
regarding investment incentives or export and import policies.  
Incentives for investors, which the BDG hails as the most liberal in 
Asia, include 100 percent ownership in most sectors; tax holidays; 
reduced import duties on capital machinery and spares; duty-free imports 
for 100 percent exporters; and tax exemptions on technology remittance 
fees, on interest on foreign loans, and on capital gains by portfolio 
investors.  There are few performance requirements, and these do not 
generally present a problem for foreign investors. 
 
Conversion and Transfer Policies 
 
The taka was recently made freely convertible for current account 
transactions, and the BDG's 1995/1996 budget includes plans to make the 
taka convertible on the capital account as well.  At mid-1995, the BDG's 
foreign exchange reserves stand at over $3.4  billion, representing ten 
months of import cover.  Foreign exchange is generally available for 
permissible private sector transactions.  The taka has been stable 
against the dollar over the past year.  Over the period 1991 to 1994, 
the taka depreciated less than ten percent against the dollar. 
 
The Foreign Investment Act guarantees the right of repatriation of 
invested capital, profits, capital gains, post-tax dividends, and 
approved royalties and fees.  Bangladesh Bank exchange control 
regulations and the United States-Bangladesh Bilateral Investment Treaty 
(entered into force July 23, 1989) provide similar investment transfer 
guarantees.  In practice, most foreign firms are able to repatriate 
these items without too much difficulty, provided the appropriate 
documentation is in order.  Foreign firms in joint ventures, which are 
only able to remit profits in the form of dividends, also report no 
difficulties in the process.  However, in some cases, foreign firms' 
profit remittances have been delayed for over one year pending tax 
clearance from the National Board of Revenue.  Where tax disputes are 
causing the delay, firms may have to choose between timely profit 
remittance and sacrificing legitimate positions on tax issues. 
 
Although the law provides in general for capital transfers, there are 
still some significant restrictions in practice.  For example, 
repatriating capital gains, other than from the sale of publicly listed 
shares, is limited to ten percent of the capital gain, and is difficult 
to accomplish.  BOI also issues passbooks limiting repatriation of 
royalties and other technology transfer fees.  However, no permission is 
required for remitting fees amounting to less than six percent of sales. 
 
Expropriation and Compensation 
 
In the years immediately following independence in 1971, widespread 
nationalization resulted in government ownership of over 90 percent of 
fixed assets in the modern manufacturing sector, as well as all banking 
and insurance interests, except those in foreign (but non-Pakistani) 
hands.  All domestically owned cotton textiles, jute, and sugar 
manufacturing units, none of which was owned by foreigners, were placed 
under government control.  Since then, the Foreign Investment Act of 
1980 has forbidden nationalization or expropriation without adequate 
compensation.  There have been no instances of expropriation of foreign 
property since the Foreign Investment Act was passed. 
 
Dispute Settlement 
 
Underlying other impediments to investment in Bangladesh is a weak legal 
system in which the enforceability of contracts is in doubt.  Over ten 
years can pass between bringing a court case and executing a judgment.  
With no interest charged on judgments, there is no penalty for delaying 
proceedings.  It is generally believed that in the lower courts where 
cases are first brought, private sector parties with the means to make 
"good connections" with the judge have an advantage, even in cases where 
the government is the opposing party.  Articles 115 and 116 of the 
Constitution allow the head of state to control and discipline judges, 
including Supreme Court justices.  Legislation to make the judiciary 
independent is pending.  Nevertheless, the Supreme Court has retained a 
reputation for fairness and competence.  This has meant that at least at 
the appellate level the outcome of commercial cases is determined by 
merit. 
 
There have not been any investment disputes over the past few years 
involving U.S. or other foreign investors or contractors in the 
Bangladeshi courts.  In the event of arbitration, although Bangladesh is 
a signatory of the International Convention for the Settlement of 
Disputes, it has not yet acceded to the U.N. Convention for the 
Enforcement of Foreign Arbitral Awards.  A provision in the United 
States-Bangladesh Bilateral Investment Treaty gives procedures for 
referring unresolvable investment disputes to ICSID for third-party 
settlement.  In any case, the ability of the Bangladeshi judicial system 
to enforce its own awards is weak, and there is no reason to think 
enforcement of foreign judgments would be any stronger. 
 
Most laws affecting investment in Bangladesh badly need overhauling.  
Among others, Bangladesh has a 1909 and a 1920 Insolvency Law, an 1861 
Admiralty Law, a 1911 Patents Law, a 1933 Patent and Design Rule, a 1940 
Trademark Act, and a 1962 Copyright Ordinance.  Some drafts of new 
legislation produced by ad hoc government committees are more than ten 
years old, but final reviews have not been conducted.  Resource 
constraints in the Law Ministry are a major problem.  The insolvency 
laws, which apply mainly to individual insolvency, are not being used 
because of a web of falsified assets and uncollectible cross-
indebtedness supporting insolvent banks and companies.  Although land, 
whether for purchase or lease, is often critical for investment and as 
security for loans, antiquated real property laws guarantee chaos.  Land 
registration records are untrustworthy and unreliable.  Parties avoid 
registering mortgages, liens and encumbrances because certain stamp 
duties and charges have been set at high levels.  Instruments take 
effect from the date of execution, not the date of registration, so a 
bona fide purchaser can never be certain of title. 
 
Dispute settlement is also hampered by shortcomings in accounting 
practices and the registration of real property.  With the possible 
exception of those conducted by a few internationally affiliated 
accounting firms, audits of balance sheets and profit and loss 
statements often follow clients' instructions and fail to conform to 
international standards.  Documents affecting title to real property are 
often not registered, complicating transfer of ownership and 
collateralization. 
 
Political Violence 
 
There have not been any incidents over the past few years involving 
politically motivated damage to projects or installations.  Although the 
environment in Bangladesh is growing increasingly politicized as 
national elections approach, which must take place not later than April 
1996, and civil disturbances may become more common, violence targeted 
against business concerns is unlikely.  "Hartals," or general strikes, 
which are occasionally called by opposition political parties and 
political movements, mostly affect businesses by keeping workers away 
with the threat of violence, resulting in significant productivity 
losses.  A general deterioration in law and order, due largely to 
corruption and politically sponsored thuggery, is a widespread matter of 
concern among Bangladeshis.  This concern has dampened domestic 
investment.  The law and order situation has not yet resulted in the 
cancellation of any foreign investments. 
 
Performance Requirements/Incentives 
 
The BDG prefers manufacturing which uses local inputs and has shifted 
its preference for high technology products to more labor-intensive 
industries.  Ready-made garment manufacturers are encouraged, but not 
required, to use a minimum of 15 percent locally produced fabric.  
However, nearly all manufacturers are unable to source local fabric of 
sufficient quality to do so.  Similarly, garment manufacturers are 
encouraged to achieve a total local value added content of their 
garments of 30 percent or higher.  The 1991 Industrial Policy states it 
is "mandatory to pack food materials, sugar, cement, fertilizer, etc. in 
jute bags."  However, this is also not being followed in practice 
because of inadequate supplies. 
 
In order to qualify for incentives available only to exporters, such as 
no duties or reduced duties on imported machinery and spare parts, a 
company must establish that it exports 60 percent or more of its output.  
Other incentives available to firms establishing themselves as exporters 
are bonded warehouse facilities and tax holidays of ten years or more. 
 
Right to Private Ownership and Establishment 
 
Officially, six sectors are reserved for government investment only.  
These are: 
 
A) Arms, ammunition, defense equipment, and machinery; 
B) Production of nuclear energy; 
C) Security printing and minting; 
D) Forestry in the reserved forest areas; 
E) Airways (except short take-off and landing services) 
   and railways; and 
F) Transmission and distribution of electricity. 
 
Industrial activity is still dominated by inefficient public sector 
enterprises, which stifles the potential for greater economic 
performance.  The BDG's privatization efforts have been watched closely 
as a barometer of the official attitude towards the private sector.  
Although on paper the BDG has sold off a significant number of companies 
and shares, including about 38 percent of the country's jute milling 
capacity, 70 percent in textiles, 12 percent in sugar and food, 10 
percent in chemicals, and 4 percent in steel and engineering, it has 
retained control of many.  Privatized firms in these sectors continue to 
behave as parastatals and to be heavily regulated; e.g., management has 
not been able to reduce employment rolls.  In at least three cases of 
foreign firms whose joint venture partners were nationalized at 
independence, the foreign firms have been unable to persuade the 
government to sell them its shares at fair market value.  Privatization 
has slowed to a virtual standstill.  In 1992, the BDG expressed a 
commitment to privatize 42 industrial units.  The Privatization Board 
has handed over 11 state-owned enterprises, with seven others at various 
stages in the process. 
 
Unofficially, many sectors are reserved at least in part for the 
government.  Although occasionally the BDG has given way to the private 
sector, such as for wheat and fertilizer imports and fertilizer 
distribution, parastatals have often stifled private sector initiatives 
and undermined legal and policy reforms.  Licenses required for 
businesses in which parastatals compete, such as banking and insurance, 
are not readily granted.  Following a BDG decision in mid-1993 to allow 
the private sector to import petroleum products, a private firm imported 
a shipment of diesel fuel.  A court injunction won by the monopolist 
Bangladesh Petroleum Corporation tied up the cargo in port for months.  
Although the private company eventually prevailed, the BDG simply 
reversed policy and reinstated its monopoly. 
 
Regulatory System:  Laws and Procedures  
 
Starting from a position of extreme over-regulation, the trend roughly 
since 1989 has been for governmental obstruction of private business 
gradually to decrease.  Many regulatory changes have not yet been 
politically possible to implement.  Although some civil servants and 
ministers display genuine commitment, reforms face broad-based 
resistance from nearly all groups of actors in the economy including 
influential members of the business community.  The official chambers of 
commerce include manufacturers with protected industries and well-
connected commission agents pursuing government contracts.  They call 
for a greater voice for the private sector in government decisions and 
for privatization, but they are also protectionist, subsidy-minded, and 
tamed by their official roles. 
 
Policy and regulations in Bangladesh are often not clear, consistent, or 
publicized.  Generally, the civil service, businesses, professionals, 
trade unions and political parties have vested interests in a system in 
which confidentiality is used as an excuse for lack of transparency and 
in which patron-client relationships are the norm.  Businesses must 
always return to civil servants to get action, and may not get it, even 
after receiving assurances at higher political levels.  Traditionally, 
the BDG's poorly paid civil servants regard businesspeople as 
exploitative and regard themselves as having a near monopoly on economic 
acumen and patriotism.  They also strongly recognize that, whether they 
are motivated by rent-seeking or rectitude, there is greater scrutiny of 
their acts and risk to their careers under a democratically elected, 
civilian government.  Even so, accounts from domestic and some foreign 
investors of solicitation of bribes continue to be too numerous to 
dismiss.  Donors have come to regard public administration reforms as 
central to overall economic reform. 
 
In practice, BDG laws and regulations and their enforcement do not 
reduce distortions or impediments to investment, but create them.  
Continued unhelpful treatment of businesses by BDG officials, coupled 
with other negatives in the investment climate, raise start-up and 
operational costs, add to risk, and counteract the BDG's investment 
incentives.  In this regard, business people agree that Customs and 
Excise deserves special mention.  Businesses spend a great deal of time 
and money dealing with Customs.  One common tangle concerns tariff 
schedules, which Customs uses to determine the value of goods unless 
pre-inspected, regardless of the invoiced amounts, to which it then 
applies published rates of duty.  The schedule is changed every three or 
so months, without advance notice.  Changes apply while goods are in 
transit. 
 
Efficient Capital Markets and Portfolio Investment 
 
Foreign investors have access to local credit markets, but most seek 
financing offshore.  If they finance locally, it is with a foreign bank 
branch.  The private sector can also receive financing from two leasing 
companies and by issuing shares or debentures on the Dhaka Stock 
Exchange (DSE).  A second stock exchange is due to open its doors during 
the Summer of 1995 in Chittagong, Bangladesh's major port city. 
 
One of the world's smallest share markets, the privately owned DSE lists 
183 companies.  On an average day shares of around 90 companies are 
traded.  Trading was dormant until 1993, when a boom began, believed by 
insiders to have been helped by local businesses bringing in offshore 
funds as foreign investment and a drop in the interest rate on bank 
savings accounts.  Between June 1993 and June 1995 as much as $200 
million in foreign funds may have followed and market capitalization of 
listed companies surpassed $1 billion.  Average daily trading jumped 
from $10,000 to over $450,000.  However, overall DSE growth is severely 
limited by the small number of available shares of the active issues.   
 
The BDG's Securities and Exchange Commission (SEC) was formed in 1993 to 
regulate the DSE and protect investors.  In February, 1995, the SEC 
imposed new restrictions on the involvement of foreign investors in the 
Bangladesh capital market.  The new guidelines stipulate that: 
 
-- foreign investors are limited to no more than one-third of the shares 
made available during an initial public offering, or the value of the 
foreign exchange requirement of the project under implementation, 
whichever is less; 
 
-- foreign investors cannot sell shares purchased during an initial 
public offering for one year from the date of purchase; 
 
-- foreign investors can apply for that part of share offerings reserved 
to local investors in the event reserved shares are not fully subscribed 
by local investors; 
 
-- foreign investors may underwrite up to one-third of the value of an 
initial public offering. 
 
Major foreign investors, such as United Bank of Switzerland, have 
protested these measures, especially the one year enforced holding of 
securities.  Foreign investors point out that this measure exacerbates 
the Bangladesh market's greatest drawback: the difficulty of buying or 
selling in volume over a reasonably short period. 
 
The SEC has not yet taken up the long overdue task of rigorously 
enforcing reporting and audit requirements and bringing those 
requirements up to international standards.  DSE's politically 
influential members have successfully resisted such enforcement in the 
past.  The DSE's articles limit it to 200 members.  With the family 
"sponsors" of most listed companies retaining majority ownership, there 
is no issue of hostile takeovers.  There are also no restrictions on 
foreign investment in private firms or practices which limit it. 
 
Bilateral Investment Agreements 
 
The Foreign Investment Act includes a guarantee of national treatment.  
National treatment is also provided in bilateral investment treaties for 
the promotion and protection of foreign investment which have been 
concluded with 11 countries: the United States, the United Kingdom, 
Germany, France, Belgium, the Netherlands, South Korea, Romania, Italy, 
Thailand, and Turkey.  The United States Bilateral Investment Treaty, 
signed on March 12, 1986, entered into force on July 23, 1989. 
 
Bangladesh has concluded tax treaties, assuring investors of fair 
treatment and the reduction or elimination of double taxation, with some 
countries, and generally adheres to the principal of national treatment 
with respect to tax policies.  Separate bilateral agreements for the 
avoidance of double taxation have been signed with 12 countries:  
Britain, Canada, Sweden, Singapore, South Korea, Sri Lanka, Pakistan, 
France, Malaysia, Japan, Germany, and Italy.  A bilateral tax treaty 
with the United States is under negotiation.   
 
OPIC And Other Insurance Programs 
 
The United States Overseas Private Investment Corporation provides 
insurance coverage for some U.S. firms currently doing business in 
Bangladesh.  In recent years, BDG authorities have been cooperative in 
approving requests for OPIC insurance.  Bangladesh is a member of the 
Multilateral Investment Guarantee Agency.  
 
Labor 
 
Bangladesh has a population of 120 million people.  The formal sector in 
Bangladesh has an estimated 4.8 million workers, with 1.4 million (30 
percent) employed in public enterprises.  Total underemployment and 
unemployment in Bangladesh is loosely estimated at 30 percent.  
Bangladesh's comparative advantage in cheap labor for manufacturing is 
partially offset by low productivity, due to low skills, poor 
management, and inefficient infrastructure and machinery.  Technically 
trained personnel often seek and find employment in the Middle East at 
substantially higher wages than they would receive in Bangladesh.  Over 
the past 17 years, more than 1.2 million Bangladeshis have worked 
overseas, officially bringing in over six billion dollars in foreign 
exchange.   
 
Foreign investors and managers report that Bangladeshi workers generally 
respond well to training.  All employers are expected to comply with the 
government's labor laws, which specify employment conditions, working 
hours, wage levels, leave policies, health and sanitary conditions, and 
compensation for injured workers.  Freedom of association and the right 
to join unions is guaranteed in the Bangladesh Constitution.  The right 
to form a union, subject to government approval, is also guaranteed.  
However, unions are not permitted to form yet in the export processing 
zones.  Approximately three and a half percent of Bangladesh's work 
force is unionized.  Labor unions remain strongest in the jute, textile, 
and transportation sectors. 
 
Bangladesh's labor unions, most of which are associated with the 
political parties, have a reputation for militancy.  In early 1995 
clashes between jute mill labor groups and the police resulted in 
numerous injuries and a few deaths.  Violence and the threat of violence 
by trade unions have produced wage increases in excess of productivity 
increases, raising unit labor costs.  Worker layoffs, or the mere threat 
of reductions-in-force, can be expected to cause some of the most 
serious and confrontational labor disputes.  Labor in private sector 
enterprises is mostly not unionized and comparatively more productive.  
Productivity in Bangladesh is affected by hartals (general strikes) 
called by political parties and movements, which take their toll in 
down-time by intimidating people from leaving their homes. 
 
On July 4, 1995, Bangladesh's garment exporters association signed a 
memorandum of understanding (MOU) with the United Nations Children's 
Fund and the International Labor Organization under which child labor in 
the ready-made garment industry is to be eliminated while providing for 
the education and welfare of the children removed from the factories.  
This initiative was strongly encouraged by the Bangladesh Government, 
the U.S. Embassy, and some U.S. consumer groups and garment buyers. 
  
Foreign Trade Zones 
 
Under the Bangladesh Export Processing Zones Authority Act of 1980, the 
BDG established an export processing zone (EPZ) in Chittagong in 1983.  
Another EPZ has been set up near Dhaka.  One hundred percent foreign-
owned investments, joint ventures and one hundred percent Bangladeshi-
owned companies are all permitted to operate in the EPZ and enjoy equal 
treatment. 
 
Sixty companies operated in the Chittagong EPZ as of June 1995, 
representing an investment of about $160 million and directly employing 
over 27,000 people.  Their combined exports in fiscal year 1994 were 
$160 million.  As of June 1995, 12 companies with a total investment of 
$15 million were operating in the Dhaka EPZ, employing over 7,000 
people.  The Dhaka EPZ contributed $36 million to Bangladesh's exports 
in fiscal year 1994.  Investors in the Dhaka and Chittagong EPZs are 
generally satisfied with their investments.  Five U.S. firms are 
currently operating in the Chittagong EPZ, including one garment factory 
and four specialized textile manufacturers.  Other foreign countries 
with investment in the EPZs include Japan, South Korea, Hong Kong, 
Singapore, the United Kingdom, Sweden, the Netherlands, Thailand, and 
Pakistan.  Industries represented in the EPZ include garments, textiles, 
terry towel manufacturers, electronics, sporting goods, steel chain, and 
services (including equipment leasing and container repairs and 
handling). 
 
Capital Outflow Policy 
 
Beginning in fiscal year 1992, the Bangladesh Bank introduced measures 
to relax existing controls on the use of foreign exchange, especially on 
the current account.  In his 1995/96 budget speech, the Finance Minister 
avowed that currency liberalization would be extended to capital account 
transactions over the course of the following fiscal year.  However, as 
of June 1995, the BDG continues to discourage capital outflow.  
Bangladeshi investments abroad require case-by-case approval by various 
government agencies and the Bangladesh Bank.  Cases are more likely to 
be favorably considered if it can be shown that the investment will 
contribute directly to the export of goods, services or labor from 
Bangladesh--areas with potential for generating additional foreign 
exchange earnings. 
 
Major Foreign Investors 
 
The following is a list of major foreign direct investments in 
Bangladesh: 
 
U.S. Companies: 
 
- American Express Bank, banking 
- American Life Insurance Company (American International Group), 
  life insurance 
- American President Lines, shipping 
- Booz Allen & Hamilton, Inc. consultant to Finance Ministry 
- BHP Minerals, coal, (Australian/U.S.) 
- Citibank, N.A., banking 
- IBM World Trade Corporation, computer hardware and 
  software 
- Louis Berger International, Inc., engineering and 
  construction consultant 
- Occidental Petroleum, oil & gas exploration and development 
- Nathan Associates, consultant to Finance Ministry 
- Rhone-Poulenc (Bangladesh) Ltd., pharmaceuticals (France/U.S.) 
  Other Nations' Companies  
- Karnaphuli Fertilizer Company Limited, manufacture of urea and 
  ammonia, 54 percent held collectively by Chiyoda, Marubeni and IPM 
  (Japan), Haldor Topsoe A/S (Denmark), Stamicarbon (Netherlands), 
  and Commonwealth Development Corporation (U.K.) 
- Olympic-MI Bangladesh Ltd., manufacture of electric tools, 
  fishing, and golf equipment (Japan) 
- Bangladesh Tobacco Ltd., manufacture of cigarettes and smoking 
  tobacco, BAT Ltd. (U.K.) 
- Azmat Bangladesh Ltd., manufacture of bed sheets (Netherlands) 
- Lever Brothers Bangladesh, manufacture of soaps, detergents, 
  toiletries, and glycerin, Unilever Group (U.K.) 
- Bata Shoe Co. Ltd., manufacture of footwear, Bata (Canada) 
- Youngones Co. Ltd., manufacture of sportswear and garment accessories 
  (South Korea) 
- Bangladesh Oxygen Ltd., manufacture of dry ice, welding electrodes, 
  industrial and medical gases, British Oxygen Ltd. (U.K.) 
- James Finlay & Co., tea estates, P & O Containers (U.K.) 
- Duncan Brothers (Bangladesh) Ltd., tea estates, Lawrie Group (U.K.) 
- Glaxo Bangladesh, manufacture of pharmaceuticals and related products, 
  Glaxo Group Ltd. (U.K.) 
- Reckitt & Colman, manufacture of pharmaceuticals and related products, 
  Reckitt & Colman (U.K.) 
- Berger Paints Bangladesh Ltd., manufacture of paint products, Berger 
  Group (U.K.) 
- Ciba-Geigy (Bangladesh) Ltd., manufacture of pharmaceuticals 
  and related products (Switzerland) 
- Siemens Bangladesh Ltd., manufacture of telecommunications equipment 
  (Germany) 
- AKZO-Nobel, chemicals (Netherlands) 
- Nestle Bangladesh Ltd., manufacture of food products (60 percent 
  Switzerland) 
- Standard Chartered Bank, commercial banking (U.K.) 
- ANZ Grindlays Bank, commercial banking (Australia/U.K.) 
- Banque Indosuez, commercial banking (France) 
- Islami Bank, Islamic banking (75 percent Saudi Arabia) 
- Al-Baraka Bangladesh Bank, Islamic banking (80 percent Saudi Arabia) 
- State Bank of India, commercial banking (India) 
- Habib Bank, commercial banking (Pakistan) 
- Industrial Promotion and Development Company of Bangladesh, holding 
  company (U.K. joint venture) 
- International Development Leasing Company of Bangladesh, leasing 
  (Korea/U.K. joint venture) 
- Singer Bangladesh Limited, manufacture of sewing machines, consumer 
  electronics, lighting products and appliances (Canada) 
- Saudi-Bangladesh Industrial Investment & Agriculture Investment 
  Company Ltd., holding company (Saudi Arabia joint venture) 
- Kader Synthetic Fibers Ltd., manufacture of synthetic yarn  
  (Saudi Arabia, Netherlands joint venture) 
- Tamijuddin Textile Mills Ltd., manufacture of textiles (Netherlands 
  joint venture) 
- The General Electric Company of Bangladesh, manufacture of fans,  
  GEC Ltd. (U.K.) 
- Advanced Chemical Industries Ltd., manufacture of chemicals, ICI Ltd. 
  (U.K.) 
- Burroughs Wellcome & Company (Bangladesh) Ltd., manufacture of 
  pharmaceuticals, Burroughs & Wellcome Ltd. (U.K.) 
- Hoechst Pharmaceutical, manufacture of pharmaceuticals, Hoechst 
  (Germany) 
- Bangal Fisheries Ltd., deep-sea fishing and processing, (Japan joint 
  venture) 
- Ahmed and Hakodate, deep-sea fishing (Japan joint venture) 
- Cosmo Food Ltd., seafood processing (Japan joint venture) 
- Cairns, oil exploration (U.K.) 
 
 
 
VIII.  TRADE AND PROJECT FINANCING 
 
Brief Description of Banking System 
 
The Bangladesh banking sector is made up of nine government-owned banks, 
14 domestic private banks (with four more authorized, but not yet 
operating), and seven foreign banks.  The government banks and many 
local private banks have a high percentage of classified or non-
performing loans.  At the government banks, this resulted from directed 
lending, mostly to money-losing parastatals, diverting credit from the 
private sector.  The banking system is impaired by a web of weak balance 
sheets, high liquidity, high real interest rates on loans, weak demand 
from creditworthy borrowers, and heavy reliance on liquid asset-based 
lending.  Despite market reforms, such as the liberalization of interest 
rates, the BDG continues to encourage its own banks to lend to "sick" 
industries, both parastatal and privatized, and all banks to increase 
term lending.  Donor institutions are assisting with financial sector 
reforms.  Part of the reform effort is to upgrade regulations and 
accounting standards to international standards as far as possible. 
 
The Bangladesh Bank regulates all banking institutions, including the 
nationalized commercial banks (NCBs), other government banks 
(development finance institutions and agricultural banks), domestic 
private banks and foreign banks.  Collectively, these banks make up the 
"scheduled" banking system.  As in many countries, the central bank is 
controlled by the Ministry of Finance; it is not independent.  The 
Bangladesh Bank is headed by a Governor, who reports to the Secretary, 
Finance Division of the Ministry of Finance.  Overall banking activity 
is dominated by the four NCBs--Sonali Bank, Janata Bank, Agrani Bank, 
and Rupali Bank.  Total scheduled bank deposits stand at about $9.0 
billion. 
 
Local private banks are noted for having to offer higher rates than 
private foreign banks and the NCBs in order to attract depositors, and 
for insider lending.  A major insider lending scandal involving some 
local private banks was uncovered by the Bangladesh Bank in 1994.  
Efforts by the central bank to encourage the involved bank directors to 
effect voluntary restitution--in lieu of criminal prosecution--had been 
only partially successful as of mid-1995.   
 
Local private banks include Pubali Bank, Uttara Bank, Arab Bangladesh 
Bank, Islami Bank, National Bank, The City Bank, IFIC Bank, United 
Commercial Bank,  
and Al-Baraka Bangladesh Bank.  The seven private foreign bank branches 
are American Express Bank, Citibank, ANZ Grindlays Bank, Banque 
Indosuez, Standard Chartered Bank, State Bank of India, and Habib Bank. 
 
Foreign Exchange Controls Affecting Trading 
 
Provided a local importer can obtain trade financing, which is widely 
available and competitive, from a local bank, foreign exchange 
availability is not an issue.  The taka is almost without exception 
freely convertible for current account transactions.  Currently, foreign 
exchange availability is also not an issue in terms of government 
reserves, which stand at $3.4 billion, the equivalent of 10 months of 
import cover.  
 
General Financing Availability 
 
Trade finance, working capital, and term loans are generally available 
from local banks, particularly to multinational companies.  Foreign 
companies involved in manufacturing commonly obtain trade financing and 
working capital loans from the foreign bank branches.  The foreign bank 
branches are also generally interested in project lending for foreign 
investments in Bangladesh and can arrange offshore syndicated loans.   
 
How to Finance Exports/Methods of Payment 
 
Unless the importer is either a multinational company operating in 
Bangladesh or a reliable, long-standing Bangladeshi customer, the 
Embassy strongly recommends all U.S. exporters to require irrevocable, 
confirmed letters of credit to secure payment, preferably from one of 
the U.S. banks listed below.  This is true whether the importer is 
private or part of the Bangladesh Government (BDG), and whether or not 
the importer is being financed by a multilateral institution or 
bilateral donor agency or government.  U.S. exporters should also be 
aware that it is a normal business practice for Bangladesh Government 
procurement agencies to require exporters to post performance bonds.  
Performance bonds can be arranged with any of the local banks, including 
the two U.S. banks, American Express Bank (fax 880-2-863808, tel. 880-2-
866705/6 or 866618/9) and Citibank (fax 880-2-833661, tel. 880-2-242355 
or 242359).   
 
Types of Available Export Financing and Insurance 
 
As indicated, trade financing for private sector importers is widely 
available.  There are no multilateral or local sources for directly 
financing U.S. exporters for sales to Bangladesh.   There are 
significant export sales opportunities in the government procurement 
market.  These opportunities can either be in the context of 
straightforward procurement of goods by BDG agencies and parastatals, 
increasingly financed by the BDG itself, or in the context of projects, 
which are usually donor financed.  Although BDG ministries and agencies 
from time to time encourage companies interested in promoting projects 
and making sales to approach donors directly, until the BDG has gone 
through its internal process of approving and making a request for 
assistance, such approaches are of minimal value.  Exim Bank facilities 
are available for U.S. exporters; initial inquiries should be made 
directly to Exim Bank.  
 
Project Financing Available 
 
As indicated, the BDG procurement market is large, and a great deal of 
procurement is in the context of a wide range of projects, which are 
usually financed by donors, although from time to time the BDG may 
finance its own projects or ask bidders to propose financing.  In the 
latter cases, donor financing is usually not available or not preferred 
for whatever reason.  The market for government procurement for which 
U.S. firms are eligible to compete is approximately $1.0 billion per 
year.  In FY95, the U.S. Government committed $62.7 million in 
development assistance to Bangladesh, of which $42.7 million was grant 
aid and $20 million was food aid.  The Japanese government's development 
aid program, the World Bank, and the Asian Development Bank are other 
important sources of development project financing in Bangladesh.    
 
List of Banks with Correspondent U.S. Banking Arrangements 
 
Of the government banks and local private banks, the following have 
correspondent U.S. banking arrangements: 
 
- Sonali Bank 
- Agrani Bank 
- Janata Bank 
- Rupali Bank Ltd. 
- Arab Bangladesh Bank 
- IFIC Bank Ltd. 
- National Bank Ltd. 
- City Bank Ltd. 
- Uttara Bank Ltd. 
- Islami Bank 
- Pubali Bank 
- United Commercial Bank 
 
The U.S. banks which maintain correspondent relationships in Bangladesh 
include: 
 
- American Express Bank (full service branches in Dhaka and Chittagong) 
- Citibank (full service branch in Dhaka) 
- Chase Manhattan Bank 
- Bank of America 
- Chemical Bank 
 
 
 
IX.    BUSINESS TRAVEL 
 
Business Customs 
 
Bangladeshi businessmen are usually very courteous.  Foreign visitors 
often find that hosting small meals for their Bangladeshi agents, 
representatives, or business contacts helps to smooth business 
negotiations.  Visitors may also be invited to share meals as guests of 
their Bangladeshi hosts.   
 
Travel Advisory and Visas 
 
All United States citizens are required to have visas for entry into 
Bangladesh.  Should a business traveler be unable to arrange for a visa, 
immigration officials at Zia International Airport in Dhaka are 
authorized to issue limited 15-day visas for a $21 fee. 
 
For further information concerning entry requirements for Bangladesh, 
travelers can contact the Embassy of the People's Republic of 
Bangladesh, 2201 Wisconsin Ave., N.W., Washington, DC 20007, TEL:  (202) 
342-8372, or the Consulate General of People's Republic of Bangladesh, 
821 United Nations Plaza, 8th Fl., New York, NY 10017, TEL:  (212) 867-
3434. 
 
The International Certificate of Vaccination is no longer required for 
travel to Bangladesh, but typhoid immunization and malaria suppressants 
are recommended, particularly for those traveling outside Dhaka. 
 
Travel Fees 
 
Business travelers departing on domestic and international flights must 
pay an Embarkation Fee/Departure Tax, currently TK 50 ($1.25) for 
domestic flights and TK 300 ($7.50) for international flights.  
Foreigners are not required to pay other local travel taxes. 
 
Currency and Exchange Regulations 
 
There is no limit on the amount of foreign or U.S. dollar instruments 
(travelers checks, money orders, etc.) that may be brought into 
Bangladesh, but all foreign exchange exceeding $5,000 must be declared 
upon entry, and visitors should be prepared to account for it upon 
departure.  Visitors should only make financial transactions through 
authorized channels.  Commercial exchange facilities are available 
through both domestic and foreign commercial banks or through local 
hotel cashiers.  The banking sector can carry out most international 
transactions, but efficient service varies greatly among banks and 
individual branches. 
 
Holidays 
 
The Bangladesh Government (BDG) announces holidays for 1996 in late 
December 1995.  Muslim religious holidays vary with appearance of the 
moon. 
 
A list of Bangladesh's national holidays for 1995 follows (religious 
holidays may move one or two days in either direction):  January 17 
(Shab-E-Barat); February 21 (Martyrs' Day); February 28 (Shab-E-Quadar); 
March 2-4 (Eid-ul-Fitr); March 26 (Independence Day); April 14 (Bangla 
New Year's Day); May 1 (May Day); May 10-12 (Eid-ul-Azha); June 20 
(Muharram (Ashura)); August 10 (Eid-E-Miadunnabi); August 29 
(Janmaausthami); October 3 (Durgapuja); November 7 (Solidarity Day); 
December 16 (Victory Day). 
 
Business Infrastructure 
 
Transportation:  Zia International airport is located at Kurmitola, 
about 12 Kilometer from Dhaka city.  The national air carrier, Biman 
Bangladesh Airlines, currently enjoys a monopoly on major domestic air 
destinations. 
 
Language:  Although Bangla (Bengali) is the official language of 
Bangladesh, English is widely spoken and used in official and business 
circles.  U.S. business people may greet their Bangladeshi counterparts 
with normal English salutations.  The usual greeting among Bangladeshis 
is the Arabic phrase "a-salaam-walaikum" (meaning "peace be with you").  
The cordial response is "walaikum-as-salaam" ("and also with you").  A 
polite parting phrase is "Khoda haafez" ("God bless"). 
 
Communications:  Telex, telephone, and airmail postal services are 
available for business correspondence.  Most international telephone 
calls must be booked through an operator, usually after some delay.  
Collect telephone calls or toll free calls cannot be made from 
Bangladesh.  International direct dialing telephones and fax machines 
are increasingly available in major cities and hotels in Bangladesh.  
Cellular phone service is available in Dhaka.  Bangladesh is six hours 
ahead of Greenwich Mean Time (GMT) (11 hours ahead of Eastern standard 
time or 10 hours during daylight time).  Airmail correspondence takes 
two weeks to arrive from the United States.  Registration of all letters 
sent by international mail is recommended.  Express Mail Service (EMS) 
is available to the major cities.  International courier services, 
including DHL, Federal Express, Airborne, and TNT Skypack, operate to 
and from Bangladesh.  United Parcel Service also operates to Bangladesh. 
 
Lodging:  Two high standard international hotels are located in Dhaka, 
the Dhaka Sheraton and the Sonargaon Pan Pacific Hotel.  A more 
moderately priced but older hotel, the Hotel Purbani, is also used by 
some business visitors to Dhaka.  In Chittagong, visitors usually stay 
at the Hotel Agrabad.  For longer and dual purpose, office-cum-residence 
stays, adequate rest/guest-house accommodations are available in 
exclusive neighborhoods in Dhaka and Chittagong. 
 
Health:  Medical facilities are inadequate in Bangladesh.  There is only 
one registered physician for every 5,700 persons.  Most of the diseases 
are water-borne.  Water must be boiled.  Appropriate vaccinations are 
essential for any visit to Bangladesh.  
 
Food:  Restaurants in Dhaka and Chittagong serve mainly local (Bengali) 
and Asian cuisine.  Continental food is available at Dhaka's 
internationally operated hotels.  Local food is spicy.  The main 
components of local food are boiled rice and fish or mutton, beef, or 
chicken curry.  Vegetables and dal (lentils) are also popular.  There is 
no effective system of health inspection of restaurants. 
 
 
 
                    Appendix A - Country Data 
 
-  Population:  120.5 million 
-  Population Growth Rate: 1.9% 
-  Religions:  Muslim (87%); Hindu (12%); Buddhist, Christian & 
   Other (1%) 
-  Government System: Parliamentary 
-  Languages:  Bangla (Bengali), English 
-  Work Week:  Saturday-Thursday 
 
 
 
            Appendix B - Domestic Economy (Millions USD) 
 
                            FY 1993     1994      1995 (est.)  
 
-  Current GDP                 24212    25884     28071 
-  Real GDP Growth Rate (%)    4.48     4.61      5.00 
-  GDP Per Capita              208.5    218.3     232.0 
-  Govt. Spending (%GDP)       17.6     18.00     20.40 
-  Inflation (%)               1.3      1.8       4.1 
-  Unemployment (%)b/          26       27        N/A 
-  Foreign Reserves c/         2125     2771      3469 
-  Avg Exchange Rate(TK/1US)   39.15    40.00     40.20 
-  Foreign Debt                13048    13859     14516 
-  Debt Service Ratio          12.1     11.5      N/A 
-  U.S. Economic Aid c/        73.5     105.9     62.7 
 
Notes: 
 
a)  Bangladesh fiscal year (July 1 to June 30) 
b)  Figure is a measure of unemployment and underemployment 
c)  As at end of fiscal year, 1995 figure is as at end of April 1995. 
 
 
 
                     Appendix C -   Trade (Millions USD) 
 
                              FY 1993      1994      1995 (est.) 
  
-  Total Bangladesh Exports a/   2138      2346      3050 
-  Total Bangladesh Imports a/   3983      4072      5251 
-  U.S. Exports b/               245       234            
-  U.S. Imports b/               886       1080           
 
Notes: 
 
a)  Bangladesh fiscal year (July 1 to June 30) 
b/  Calendar year (January-December) 
 
 
 
                   Appendix D -   Investment Statistics 
 
The Embassy estimates current foreign direct investment (FDI) to be 
about $540 million.  This means that current FDI stock as a percentage 
of GDP is about 3.5 percent.  This figure is expected to increase 
significantly as foreign firms recently authorized to explore and 
develop coal, and oil and gas deposits begin their work.  This figure 
will also rise when and if the BDG concludes agreements with 
international power generation companies for private investment in power 
plant construction. 
 
At present, the Embassy estimates the largest three foreign investors in 
Bangladesh by place of origin to be Hong Kong (including possible 
Chinese investment through Hong Kong), the United Kingdom, and Japan.  
The next tier of investors is the Netherlands, Canada, South Korea, 
Singapore, China, Italy, the United States, Saudi Arabia, and 
Switzerland.  The Embassy estimates U.S. investment in Bangladesh at $20 
million in book value, including five manufacturers in the Chittagong 
EPZ, the assets of one life insurance company, the banking operations of 
two U.S. commercial banks, and about 10 other U.S. service and marketing 
firms. 
 
 
 
               Appendix E - U.S. and Bangladesh Contacts 
 
 
Bangladesh Government Agencies 
 
Country Code:  (880) 
Area Codes:    Dhaka (2) 
               Chittagong (31) 
Organization         Contact Name/Title       Address       Phone/Fax 
 
Ministry of Commerce Mohammad Asafuddowlah    Bhaban No. 3  TEL 834886 
                     Secretary                Bangladesh    FAX 865741 
                                              Secretariat 
                                              Dhaka 1000 
 
Ministry of Finance  Nasimuddin Ahmed         Bhaban No. 7  TEL 404363 
                     Finance Secretary        Bangladesh    FAX 865581 
                                              Secretariat 
                                              Dhaka 1000 
 
Min. of Industries   Dr. A.M.M. Shawkat Ali   91 Motijheel  TEL 832143 
                     Secretary                Dhaka 1000    FAX 232019 
 
Ministry of Energy   M. Faizur Razzaque       Bhaban No. 6, TEL 832045 
& Mineral Resources  Secretary                1st Floor     FAX 414060 
                                              Bangladesh Secretariat 
                                              Dhaka 1000 
 
Ministry of          Syed Rezaul Hayat        Bhaban No. 7, TEL 832230 
Communications       Secretary,               8th Floor     FAX 866636 
                     Road Transport           Bangladesh Secretariat 
                                              Dhaka 1000 
 
                     Dr.AKM Mashiur Rahman    Railway Bhaban TEL 832223 
                     Secretary, Railways      Abdul Gani Rd  FAX 813496 
                                              Dhaka 1000 
 
Ministry of Posts    Dr. M. Hafizuddin Khan   Bhaban No. 7, TEL 832160 
&Telecommunications  Secretary                6th Floor     FAX 862800 
                                              Bangladesh Secretariat 
                                              Dhaka 1000 
 
Min. of Textiles     Dr. Md. Abdur Rashid     Bhaban No. 6, TEL 832091 
                     Secretary                11th Floor    FAX 249268 
                                              Bangladesh Secretariat 
                                              Dhaka 1000 
 
Min. of Shipping     Waliul Islam             Bhaban No. 6, TEL 832245 
                     Secretary                8th Floor     FAX 832355 
                                              Bangladesh Secretariat 
                                              Dhaka 1000 
 
Min. of Planning     Dr. Shah Md. Farid       Block No. 7,  TEL 815142 
                     Secretary                Room 7        FAX 817581 
                                              Sher-e-Bangla Nagar 
                                              Dhaka 
 
Ministry of Civil    Nooruddin A. Almasood    Bhaban No. 6, TEL 832089 
Aviation & Tourism   Secretary                19th Floor    FAX 869206 
                                              Bangladesh Secretariat 
                                              Dhaka 1000 
 
Privatization Board  Amin Ullah            Jiban Bima Tower  TEL 866707 
                     Chairman              10 Dilkusha C.A.  FAX 860683 
                                           Dhaka 1000 
 
Board of Investment  Dr. Syed Yusuf Farooq    Shilpa Bhaban   TEL 868740 
                     Executive Chairman       Motijheel C.A.  FAX 833626 
                                              Dhaka 1000 
 
PetroBangla          S. K. M. Abdullah        Petrocentre    TEL 814972 
                     Chairman                 3 Kawran Bazar FAX 811613 
                                              Dhaka 
 
Telephone and        M.H. Choudhury           Telejogajog   TEL 831500 
Telegraph Board      Chairman                 Bhaban,       FAX 832577 
                                              36/1 Mymensingh 
                                              Road, Dhaka 
 
Power Devlpmnt        Mr. Golam Rahman        WAPDA Building  TEL 864633 
                      Chairman                48 Motijheel    FAX 866956 
                                              Dhaka 1000 
 
 
Bangladesh Trade Associations/Chambers of Commerce 
 
Organization         Contact Name/Title       Address         Phone/Fax 
 
American Bangladesh  A. Gafur                 Dhaka Sheraton  TEL:863391 
Economic Forum       Executive Secretary      Room 319        FAX:832915 
                                              1 Minto Road 
                                              Dhaka 1000 
 
Federation of           Salman F. Rahman      60 Motijheel    TEL 864680 
Chambers of Commerce    President             Dhaka 1000      FAX 863213 
Industry of Bangladesh 
 
Dhaka Chamber of     Rashed Maksud Khan       65-66 Motijheel TEL 234383 
Commerce&Industry    President                Dhaka 1000      FAX 863608 
 
Metropolitan Chamber    Anis Ud Dowla       122-124 Motijheel TEL 231426 
of Commerce&Industry    President           Dhaka 1000        FAX 863975 
 
Chittagong Chamber of   S. J. Nizam         Chamber House     TEL 711356 
Commerce&Industry       President           Agrabad C.A.      FAX 710183 
                                            Chittagong 4000 
 
Bangladesh Employers    Laila Rahman Kabir  Chamber Building  TEL 861487 
  Association           President           122-124 Motijheel FAX 863975 
                                            Dhaka 1000 
 
 
Bangladesh Commercial Banks 
 
Organization            Contact Name/Title       Address      Phone/Fax 
 
American Express Bank   David T. Kaveny       18-20 Motijheel TEL 863210 
                        Sr. Director &        Dhaka 1000      FAX 863808 
                        General Manager 
 
Citibank               S. Sridhar           Chamber Building  TEL 833084 
                       Vice President &     122-124 Motijheel FAX 833661 
                       Corporate Officer    Dhaka 1000 
 
ANZ Grindlay's Bank    Frank J. Gamble      2 Dilkusha        TEL 833958 
                       General Manager      Dhaka 1000        FAX 833347 
 
Standard Chartered     Geoffrey I. Williams   Alico Building  TEL 863254 
                       Chief Executive        18-20 Motijheel FAX 866392 
                                              Dhaka 1000 
 
Banque Indosuez        J. P. Raynaud          47 Motijheel    TEL 867115 
                       Country Manager        Dhaka 1000      FAX 863137 
 
Sonali Bank            M. Ahsanul Haque       Head Office     TEL 864588 
                       Managing Director      Motijheel       FAX 863061 
                                              Dhaka 1000 
 
Agrani Bank            Mostafa Aminur Rashid  9/D Motijheel   TEL 862121 
                       Managing Director      Dhaka 1000      FAX 833587 
 
Janata Bank      Jalilur Rahman Chowdhury     110 Motijheel   TEL 863974 
                 Managing Director            Dhaka 1000      FAX 863097 
 
Rupali Bank Ltd. Rafiqul Karim Chowdhury      34 Dilkusha     TEL 869319 
                 Managing Director            Dhaka 1000      FAX 867536 
 
Arab Bangladesh Bank   A. Rahim Chowdhury     BCIC Bhaban,    TEL 868137 
                       President & Managing   8-9th Floor     FAX 861977 
                       Director               30-31 Dilkusha 
                                              Dhaka 1000 
 
IFIC Bank Ltd.         Shawkat Ali Chowdhury  BSB Building    TEL 867186 
                       Managing Director      17-19th Fl.     FAX 833198 
                                              8 Rajuk Avenue 
                                              Dhaka 1000 
 
Uttara Bank Ltd.       A. M. Anisuzzaman      90 Motijheel    TEL 230229 
                       Chairman               Dhaka 1000      FAX 863529 
 
Pubali Bank Ltd.       E.A. Choudhury         26 Dilkusha     TEL 863881 
                       Chairman               Dhaka 1000      FAX 863246 
 
National Bank Ltd.     Kazi Abdul Majid       18 Dilkusha     TEL 241201 
                       Managing Director      Dhaka 1000      FAX 863277 
 
City Bank Ltd.         Quazi Baharul Islam    10 Dilkusha     TEL 862518 
                       Managing Director      Dhaka 1000      FAX 833934 
 
Islami Bank         M. Kamaluddin Choudhury   75 Motijheel    TEL 864131 
                    Executive President       Dhaka 1000      FAX 863632 
 
 
U.S. Embassy Trade Personnel 
 
Contact Name               Address                    Phone/Fax 
Title 
 
David N. Merrill           Madani Avenue              TEL 884700 
Ambassador                 Baridhara, Dhaka 1212      FAX 883744 
 
Nancy J. Powell            Madani Avenue              TEL 884700 
Deputy Chief of Mission    Baridhara, Dhaka 1212                       
FAX 883744 
 
Cornelia Weierbach         Madani Avenue              TEL 884700 
Econ/Commercial            Baridhara, Dhaka 1212      FAX 883744 
Counselor 
 
Larry Andre                Madani Avenue              TEL 884700 
Econ/Commercial Officer    Baridhara, Dhaka 1212      FAX 883744 
                           e-mail: [email protected] 
 
Christian De Angelis       Madani Avenue              TEL 884700 
Econ/Commercial Officer    Baridhara, Dhaka 1212      FAX 883744 
 
Kamal Bhuiyan              Jiban Bima Bhaban, 5th Fl  TEL 862550 
Economic Specialist        10 Dilkusha C.A.,          FAX 833987 
                           Dhaka 1000 
 
Tasnimul Haque             Jiban Bima Bhaban, 5th Fl  TEL 862550 
Commercial Librarian       10 Dilkusha C.A.           FAX 833987 
                           Dhaka 1000 
 
 
Washington-Based USG Bangladesh Contacts 
 
Organization   Contact Name/Title     Address           Phone/Fax 
 
USDOC          Gary Bouch       ITA/ANE/OA  Rm. 2308  TEL(202)482-2954 
               Desk Officer     Herbert Hoover Bldg   FAX(202)482-5330 
                                14th & Constitution, N.W. 
                                Washington, DC 20230 
 
               John Crown       ITA/AP/OSAO Rm. 2308  TEL(202)482-2954 
               Desk Officer     Herbert Hoover Bldg   FAX(202)482-5330 
                                14th & Constitution, N.W. 
                                Washington, DC 20230 
 
STATE     Patricia Mahoney      SA/PAB, Rm 5247       TEL(202)647-7593 
          Desk Officer          State Department      FAX(202)647-3001 
                                Washington, DC 20520 
 
OPIC      Maurice A. Johnson    OPIC, 1615 M. St. NW  TEL(202)336-8799 
          Regional Manager      Washington, DC 20527  FAX(202)408-5145 
          (Insurance) 
 
OPIC      Peter H. Ballinger    OPIC, 1615 M. Street  TEL(202)336-8799 
          Director, Investor    Washington, DC 20527  FAX(202)408-5145 
          Services 
 
EXIM BANK   Terence J. Hulihan     EXIM Bank,           TEL(202)565-3946 
            Vice President         811 Vermont Ave.,NW  FAX(202)565-3210 
            Asia, International    Washington, DC 20571         565-3380 
            Lending 
 
TRADE AND       Daniel D. Stein        TDA              TEL(703)875-4357 
DEVELOPMENT     Regional Director      Room 309, SA-16  FAX(703)875-4009 
AGENCY (TDA)                           Washington, DC 20523-1602 
 
 
 
                    Appendix F - Market Research 
                
           
List of Available and Upcoming DOC/ISAs and IMIs 
 
               1.  Telecommunication Projects in Bangladesh 
               2.  Private Power in Bangladesh 
               3.  Oil & Gas Survey 
               4.  Transportation Sector 
           
List of USDA/FAS Commodity Reports and Market Briefs 
                
               1.  Grain Monthly Report 
               2.  Grain and Feed Annual Report - January 1995 
               3.  Oilseeds and Products Annual Report - April 1995 
               4.  Cotton Annual Report - June 1995 
               5.  Agricultural Situation Annual Report - September 1994 
               6.  Basic Country Program - January 1995 
               7.  Annual Work Plan - January 1995 
 
A complete list is available on the National Trade Data Bank (NTDB).  
The NTDB, on CD-ROM, is the U.S. Government's most comprehensive source 
of World trade data.  For more information on the NTDB, call 202-4821968 
or National Technical Information Service (NTIS) at 800-553-NTIS.  
 
 
 
                 Appendix G - Trade Event Schedule 
 
U.S. Trade Show '96, an established premier annual trade event, will be 
held at Dhaka Sheraton Hotel, January 11-13, 1996.  The show is 
organized by the American Bangladesh Economic Forum.
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