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BUSINESS CONFIDENCE SURVEY 2015 Nordic Business in Bangladesh


Bangladesh Business ConďŹ dence Survey Report 2015

Business ConďŹ dence Survey 2015

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Executive Summary

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Bangladesh’s economy has been on a rise over the past decade This survey shows that the respondents remain positive about the country’s prospects.

Socioeconomic and political challenges

02

Bangladesh’s economy has been on a rise over the past decade and this survey shows that the respondents remain positive about the country’s prospects. Bangladesh has the potential to achieve middle-income status by 2021 and attracting foreign investments will contribute significantly in the realization of this goal. Despite the optimism, the present findings also identify areas where business confidence is limited. The successful transition will largely depend on how ce r t a i n s ocioeconomic and political chal le n ge s a re addressed. The survey aimed to explore the impact such factors have had on Nordic operations and investment decisions, and also to uncover how Nordic businesses perceive the present business climate in Bangladesh. The survey indicates that improvements in infrastructure, proper regulatory framework, political stability and a better bu s i ne ss e nvironment will pave the way fo r a n inclusive and sustainable growth.

01

The Business Confidence Survey 2015 report is a testament of the strong Nordic presence and close cooperation that exists in Bangladesh. This edition is an outcome of a joint initiative between the Nordic Chamber of Commerce and Industry in Bangladesh (NCCI) and the Sweden Bangladesh Business Council (SBCC), and the continued support from the Swedish, Danish and Norwegian Embassies in Bangladesh. The present survey was conducted among the Nordic companies operating in Bangladesh. The results from the present survey closely mirror the findings from 2013.

The survey aimed to explore the impact such factors have had on Nordic operations and investment decisions and also to uncover how Nordic businesses perceive the present business climate in Bangladesh

Business Confidence Survey 2015


The report also seeks to identify opportunities and navigate challenges while also to serve as a tool for new Nordic investors interested in entering the Bangladeshi market. It also aims to serve as an important foundation for dialogue between the three Nordic embassies in Bangladesh and the national Government with the purpose to further enrich business conditions and trade relations.

Bottlenecks

Even though the survey captures the views of a qualified majority of the Nordic businesses in Bangladesh, one must be careful to draw firm conclusions from the responses. Instead the results should form a basis for discussing what areas are most promising as well as challenging for businesses and investors. The next survey will be conducted in 2017.

05

03

The Nordic companies in Bangladesh have made several commendable contributions in Bangladesh, including involvement in development cooperation to alleviate poverty and in promoting gender mainstreaming. Globally, Bangladesh is considered to have experienced some of the most impressive accomplishments towards achieving the Millennium Development Goals set forth by the UN, and this having taken place since international businesses have stepped up their activities in the country, serves as a great encouragement to organizations like us who are working to promote increased business across borders.

The readers can find this survey beneficial should they wish to engage with the Nordic Business Community in Bangladesh via NCCI or SBBC and to gain access to a vast network of some of the best know-hows on how to be successful as an international business in Bangladesh. The Nordic business community is thriving in Bangladesh in spite of the challenges and bottlenecks that come across in this survey. Almost all participants indicate that they plan to expand their operations in Bangladesh and over half of the Nordic businesses seem favourable on the prospects for the coming years.

Business environment

Business Confidence Survey 2015

Almost all participants indicate that they plan to expand their operations in Bangladesh and over half of the Nordic businesses seem favourable on the prospects for the coming years.

Opportunities & challenges The report also seeks to identify opportunities and navigate challenges while also to serve as a tool for new Nordic investors interested in entering the Bangladeshi market

06

04

The survey indicates that improvements in infrastructure, proper regulatory framework, political stability and a better business environment will pave the way for an inclusive and sustainable growth.

Next business confidence survey The next survey is planned to be conducted in 2017

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THE SURVEY WAS CONDUCTED FROM

NON MEMBERS, COMPRISING OF NORDIC COMPANIES NOT PART OF THE CHAMBER

RESPONDENTS

COMPLETED THE SURVEY

32

7 JUNE 2015 TILL 31 OCTOBER 2015

7.6

10

2015

NCCI MEMBERS WERE SURVEYED

52

62

COMPANIES WERE SURVEYED

THE RESPONDENTS RATED the survey with an average rating of 7.6 out of 10

A b o u t t h e S u r ve y The purpose of the Nordic Business Confidence Survey is to monitor the business confidence of Nordic companies in Bangladesh as well as to be able to better understand trends in the Bangladeshi business environment. The first survey was published in 2013 which served as a broad indicator for how Nordic companies judge the present and future business climate in Bangladesh. The survey was conducted from 7th June to 31st October 2015 and was sent to a total of 62 companies, of which, 52 are NCCI members and 10 non-members, comprising of Nordic companies who are not part of the Chamber.

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The distribution among countries of origin for the different companies were; Sweden: 24, Denmark: 17, Norway: 10, Finland: 4 Bangladesh: 2. With 32 respondents completing the survey, the 2015 Business Confidence Survey achieved a response rate of 58 percent. 29 NCCI Members participated in the survey, corresponding to a response rate of 56 percent. The survey was designed along the lines of 2013 Business Confidence Survey to gather similar data on key issues affecting Nordic companies to understand the development and changes in perception. The respondents rated the survey with an average rating of 7.6 out of 10.

Business Confidence Survey 2015


N o rd i c B u s i n e s s i n B a n g l a d e s h

Bottlenecks during Startup

Climate for Startup 47% of Nordic companies starting a business in Bangladesh have done so through own legal entities. Joint - Ventures (35%), Liaison Office (12%) as well as other forms of registration (6%) make up the remainder. Drawing comparison with 2013, companies prefer starting operations through a joint ventures rather than wholly owned enterprises. 6%

The climate for starting a business in Bangladesh has been rated just above 6 (6.28) by the respondents, almost similar to the ratings in 2013 (6.11). Similarly, half of the respondents (53%) reported facing undue bottlenecks during establishing their business in Bangladesh. Reported problems include difficulties in getting work permits, opening bank accounts, finding commercial office spaces and a general lack of transparency in bureaucracy.

2015

47%

2015

No answer

2013

52%

2013

6.3

6.1

35%

2015

5.3

2015

30%

No

5.3

6%

2013

8.0

2015

12%

2015

2013

6.3

12%

Yes

6.1

2015

Norway

2013

6.4

2013

2013

Total 6% 3%

5.7

2015

Finland

44% 44%

6.2

2013

Sweden

50% 53%

Denmark

The Headquarters of all the Nordic companies are located in Dhaka. The next pre fe r re d destination for a business hub is Chittagong, where 29% of the respondents have established their base in comparison to 2013 when 17% of the companies confirmed their presence in the port city. Regional diversification is also taking place where offices have been opened in Khulna, Sylhet, Rajshahi, Gazipur, Barisal and Narshinghdi. 81% of the respondents also confirmed that they do not have any plans of expanding operations to other areas in the country.

Business Start-up Process Liason Partner Joint Venture Own legal entity Business Confidence Survey 2015

2013 2015 2013 2015 2013 2015 2013 2015

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The most common reason for starting a business in Bangladesh is the market demand, as indicated by 30% of the respondent in 2015 compared to 40% in 2013. 16% of the respondents e nt e re d Bangladesh for cost efficient production and 12% of the respondents for efficient sourcing, a considerable drop from 2013. There has been an increase from 6% in 2013 to 14% in 2015 in respondents identifying consumer needs as a reason for entering Bangladesh. 14%

40%

Reasons for Doing Business in Bangladesh

30% 27%

19% 16% 14%

2015 2013

12% 7%

7%

6% 4%

Others

2%

2%

Skills available

State support

Contact by BD Partner

Pressure from Low cost existing customers sourcing

The survey suggests that IT/ITES is the biggest sector for Nordic companies in Bangladesh representing 25% of respondents while RMG/Textiles account for 14%. Of course in terms of volume/turnover, RMG is most likely the biggest sector. The respondents represent the full variety of companies that are active in Bangladesh and their average operational period in Bangladesh is 11.75 years.

Consumer demand

Market Low cost production demand/B2B

The most common reason for starting a business in Bangladesh is market demand , followed by cost efficient production and consumer demand

Engineering 5%

Others 19%

Telecom 3%

Dairy 3% Paints 3%

IT 25%

Shipping 8%

RMG 14% Infrastructure 8%

Pharmaceuticals 3%

Trading 6%

Agriculture 3%

Nature of Business Page 06

Business Confidence Survey 2015


Majority of the Nordic Companies based in Bangladesh have a strong presence in several countries across Asia. 11% of the respondents report Bangladesh as their only market in Asia whereas many are active in other major Asian economies.

25%

2015

2013

17% 16%

2015

23% 23%

2013

27%

Middle East

2015

2013

China

23%

25%

India 11%

2015

2013

2015

2013

9%

None

South East Asia

Investment and Employment 5889 6076

84

96

114

Nordic companies are slowing down their expansion plan for employment. A decrease in the number of local employees by 2.84% from 2012-2014 was revealed with an expected drop of 33.25% by 2016. 3881

Expatriates Local

2012

2014

2016

Total Number of Employees Business ConďŹ dence Survey 2015

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Nevertheless, at present approximately

750,000

Employment Generation by Nordic Companies

people are indirectly earning

their income through activities of Nordic companies in the country. Employment Opportunities

944,150

726,117 620,740 551,760 350,130

0

2013

300 2015

Bangladesh

1,000

41,260

500 2015

2013

Finland

2013

100,350 2,212 2015

Denmark

2013

2015

2013

Norway

2013

2015

Sweden

2015

Total

Country of Origin

There has been an increase in the number of expats by 14.29% from 2012-2014 and it is expected to go up by 18.75% by next year. Although the respondents plan to increase their expatriate workforce, it is important that Bangladesh focuses on skill and productivity

enhancement of its workforce to not only attract labour intensive but also hi-tech industries. 91% of the survey respondents are reportedly looking to expand their operations with an expected investment of â‚Ź240.64 Million in the next 3 years.

275.93 244.61

Million Euro

240.64 206.15

3.00

9.76

18.56 1.50

Finland Denmark Norway Sweden

2011-2014

Total

6.89

26.10

Finland Denmark Norway Sweden

Total

2015-2017

Value of Investments (EUR) Page 08

Business ConďŹ dence Survey 2015


Future Outlook A very positive outlook of doing business in the country was revealed in this survey from the perspective of Nordic companies based in Bangladesh. 91% of the respondents are looking to expand their operations over the coming 3 years.

94%

3% The reason behind increasing activities in Bangladesh could be due to 34% of the respondents experiencing higher profits compared to other markets they are active in, a rise from 25% in 2013.

69% 56% 34% 25% 9% 6% 2015

2013

Less profitable

2015

2013

Equally profitable

2015

2013

3%

0% 53%

41%

2013 Not favorable

56%

2015 Somewhat Favorable

Very Favorable

Per for mance in the next thr ee y ear s Business Confidence Survey 2015

2015

No Changes

3% 2013

0% 2015

2013

2015

Gradually reducing Increasing in Bangladesh activities

Plans for the Future Favourability of doing business: Since 2013, there has been a 9% rise in favourability of doing business in Bangladesh with 56% of Nordic businesses reporting a very favourable outlook in 2015. However, the Scenario is not a 100% optimistic as many companies have identified scope of improvements in certain areas which the national decision makers should look into in order for Bangladesh to remain an attractive business and investment destination.

More profitable

Profitability from Doing Business in Bangladesh

47%

2013

9%

91%

Business conditions and Factors: In terms of business conditions in Bangladesh, it was found that factors apart from air quality, water and waste management seem to have improved, if not deteriorated. 19% of the respondents in 2015 as opposed to only 6% in 2013 now report availability of workforce as a key issue to maintain favourable business condition in the country. However, in terms of power supply, 53% of the participants believe that the situation has im p rove d significantly over the last 2 years, a rise of almost 19%.

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0%

10%

English 2013 3% Knowledge 2015 3%

20%

25% 25% 33% 38%

33%

28%

47%

41% 39%

44%

13%

16% 53%

38%

13% 14%

44% 42%

39% 25%

25%

9% 47%

31%

Not favorable

3%

31% 44%

28%

3%

34%

33% 34%

Very unfavorable

36% 25%

33%

19%

13%

36% 41%

2015

6%

44%

41%

19%

6%

50%

36%

2013

6%

34%

34%

8%

13%

11%

53%

19% 42%

Water & Waste 2013 Management 2015

Travelling

19%

50%

2015 3%

Electricity & 2013 Power Supply 2015

19%

39%

13%

2015

Water Supply 2013

16%

53%

39%

2013

22%

39%

13%

6% 6%

13%

56%

28%

Availability 2013 of Workforce

19%

58%

11%

100%

90%

53%

28%

19%

6%

80%

50%

36%

Availability of 2013 Commercial Land 2015

70%

59%

25%

Availability of 2013 OfďŹ ce Space 2015

60%

53%

19%

11%

Availability of 2013 Housing 2015

Air Quality

50%

25%

Availability of 2013 International 3% schools 2015

2015

40%

25%

8% General 2013 Education 2015 3% Post graduate 2013 Education 2015

30%

3%

44%

9%

Somewhat favorable

Very favorable

Business Conditions in Bangladesh Page 10

Business ConďŹ dence Survey 2015


Business Factors All business factors that came up in this survey such as business culture, distribution system, executive and staff remuneration, work ethics, public security and safety and legal and regulatory system, except relationship to competitors and suppliers, have been identified as commendatory since 2013.

Rela�onship to compe�tors Rela�onship to suppliers

2015

22%

56%

2013 3% 11% 2015

61%

6% 6%

2013 3%3% 31%

2013

28%

Distribu�on system

2015 3%

Public security & safety Legal and regulatory system

6%

13%

50%

17% 9%

72%

11%

47%

6%

75% 28%

6% 14%

2015

16%

2013

19% 50%

25%

2013

2013

53%

42%

2013

2015

31%

16%

2013

Work ethics 2015

34%

64%

2015 3%

2015

25%

53%

Business Culture

Execu�ve and staff remunera�on

22%

56% 36%

19%

Very unfavorable

14%

44% 25% 38%

28%

13% 36%

28% 28%

22%

13%

33%

14%

28%

16%

39% Not favorable

31% Somewhat favorable

3%

Very favorable

Business Factors Cost factor and Quality: While the figure for white collar workforce remains same over the years, blue collar workforce affordability has gone up from 31% in 2013 to 53% in 2015. In terms of quality, most factors including office space, white collar

Business Confidence Survey 2015

workforce and housing have seen significant i m p rove me nt s. H oweve r, 1 9 % of t he respondents feel that availability of land at appropriate prices is a big concern. Nevertheless, majority are satisfied with the overall cost structure in place.

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Cost Factors 0% Housing

White collar workforce

Blue- collar workforce

Office space

Land for commercial use

Transportation of goods

Business travel

Hotels

2013 2015

10%

19% 19%

6%

47% 39%

44%

14%

38%

56% 47%

36%

34%

47%

0%

19%

25%

53%

22%

25%

66%

9%

2013

9%

63%

13%

16%

11%

56%

28%

6%

3%

28%

44%

17%

100%

28%

31%

6%

2013

90%

53%

25%

3%

80%

58%

16%

2015

2015

70%

47%

22%

2013

2015

60%

56%

6%

2015 2013

50%

22%

2015

2015

40%

50%

3%

2013

2013

30%

14%

3%

2013 2015

20%

42%

42%

17%

44%

50%

6%

Very unfavorable

Not favorable

Somewhat favorable

Very favorable

Quality Factors 0% Housing

White collar workforce

Blue- collar workforce Office space

Land for commercial use

Transportation of goods

Business travel

Hotels

2013

3%

2015

3%

10%

40%

50%

3%

25% 22% 25% 17%

61%

22%

2013

28%

47%

22%

22%

72%

2013

14%

61%

22%

2013

3%

2015

3% 3%

3% 6%

8%

22%

50%

25%

2013

11%

58%

28%

2015

13%

53%

19%

16%

3%

61%

36%

2015

13%

59%

9%

19%

100%

22%

50%

28% 6%

2015

90% 22%

56%

9%

2013

3%3%

80%

47%

25% 9%

2013

70%

66%

9%

2015

60%

47%

Very unfavorable

Page 12

30%

28%

2013 2015

2015

20%

31%

58%

31%

59%

Not favorable

Somewhat favorable

Very favorable

Bangladesh Business Confidence Survey Report 2015


S u st a i n a b i l i t y Globally, Nordic countries have been on the forefront in terms of sustainability. In order to maintain a sustainable supply chain, Nordic companies have incorporated a code of conduct that helps them translate their values into actions. They strongly believe in inclusive growth and majority of the respondents have put major emphasis on promoting sound business practices, decent working conditions, employee welfare, gender ma instreaming and su p p l i e r development among others. The survey reveals that 94% of the participants have a code of conduct in Bangladesh and 87% of them report that it is being followed by their suppliers diligently.

No code of conduct

Yes, and it is followed by suppliers

Yes, and it is somewhat followed by suppliers

Yes, but it is not followed by suppliers

6%

2015

11%

2013

59%

2015

64%

2013

28%

2015

25%

2013

6%

2015

0%

2013

No 22%

94%

6%

Moreover, 78% of the Nordic businesses have sustainability programs in Bangladesh. 59% of the companies have sustainability programs integrated in the supply chain, whereas the remaining 41% are conducting these programs independently.

No 41%

Ye s 7 8 % Sustainability Activities Business ConďŹ dence Survey 2015

Ye s 5 9 % Sustainability intergrated in Supply Chain Page 13


Priority areas: The top 5 areas of focus for the respondents were child labour, workplace health and safety, employee rights, women empowerment and fair wages. Environmental sustainability was also identified as a priority for several businesses.

Key Issues for Nordic Businesses 13% 6%

31%

25%

31%

50%

Child labor

44%

Workplace Health and Safety

31%

31%

34%

31%

38%

Employees’ rights Women empowerment

34%

Fair wages

28%

Environmental Impact

25%

38%

6%

31%

Education

25%

38%

6%

31%

Industrial relations

22%

Entrepreneurship

22%

Water quality and conservation

22%

41%

44% 41%

19%

47%

Climate Change and Energy efficiency

19%

44%

Waste disposal, recycling & reduction

13% 9% Most Relevant

Strategic sustainability decisions: 32% of the respondents identified long term business sustainability as a key reason behind engaging in strategic decisions on sustainability investment, followed by incorporation of CSR as part of corporate strategy (24%) and as part of global strategy (13%).

3% 6% 13%

34%

Air pollution Free Association of Labour

31%

47% 47% Relevant

3% 6%

31% 31% 31% 31% 31%

9%

31%

13%

31%

Least Relevant

No Response

Strategic Decision on Sustainability Investment

Long term sustainablity

32%

CSR is part of our Corporate strategy

24%

Part of Global strategy

13%

Donation/Charity

10%

Supply Chain requirement

7%

Regulatory requirement

4%

Short term immidiate impact

3%

Stakeholders’ pressure

1%

No Response

4%

Page 14

Business Confidence Survey 2015


Obstacles: The main obstacles to implement sustainability activities were identified as lack of government incentives (23%), lack of adequate funds (17%) and la c k of q ualified personnel (13%).

Obstacle to integrate Sustainability in Business

Lack of G overnment Incentives

23%

Lack of funds

17%

Lack of human resources

13%

Others

11%

Lack of employee motivation

9%

Lack of know-hows

8%

No benefits from CSR

6% 0%

No suppo rt from top -manageme nt No response

Motivation behind Sustainability Activities

13%

Motivation: Long term sustainability (18%), creating shared value for company and community (16%), concern for environment and as part of company strategy (13%) were the key motivations for incorporating sustainability programs into business practices.

Long term sustainability

18%

Creating shared value for the company and community

16%

Concern for the Environment

13%

Part of the Company strategy

12%

Promote Corporate Image and Brand

9%

Local Environment Impacts

8%

Employee Satisfaction

6%

Increase Shareholder Value

6%

Benefit in Relationship with Suppliers

2%

Cost reduction

2%

Regulatory Compliance

2%

Stakeholder Management

1%

No Response

5%

Business Confidence Survey 2015

Page 15


Percent % of female staff

GENDER DIVERSITY AND POLICIES 10

44%

20

25%

30

16%

40

6%

50

3%

60+

3%

Dont Know

3%

44% of the Nordic businesses responded that they have only 10% female representation in their organization followed by 25% who claim that they have 20% representation and finally, 16% who reported that they have 30% women staff representation. About 66% of the participants have gender diversity policies in their organization and 41% regard implementation of gender policies as a top priority while 47% consider this as a medium priority. The main barriers to gender diversity were identified as reluctance on the part of women to take more challenging roles (37%) followed by lack of awareness about the benefits of gender diversity (20%). However, 20% of the respondents also mentioned that they consider no real barrier to implementing gender policies in their companies. 20%

12%

Lack of Commitment from the Top Management

Page 16

Then again, factually, women representation in leadership roles, especially in corporate sectors, are still minimal. In terms of obstacles to female leadership, 28% identified work - fa m i ly l i fe b a l a nce a s a m a j o r d e t e r re nt . 14% consider a lack of support from family members and hesitance in relocating as key obstacles. The members were asked how they are a d d re ss i n g p ro b le ms e nco m p a ss i n g i m p le me nt a t i o n of gender policies of their organizations in Bangladesh. It was found that encouraging women to take lead in policy making helped create more women friendly office environments.

Barriers to Gender Diversity

37%

20%

12%

No Laws/regulations Lack of Awareness There are zero barriers Reluctance on the part on Gender Diversity about the benefits of to Gender Diversity of Women to take on more Gender Diversity demanding roles Business Confidence Survey 2015


Lack of support from Top Management

1%

Lack of Mentors

1%

Lack of Training Programme on Leadership Development

4%

None

5%

Perception of Male Colleagues

5%

Lack of opportunities for career advancement

7%

Limited network and connections

8%

Lack of Confidence

12%

Willingness to relocate

14%

Support from Family Members

14%

Work-Family Life Balance

28%

Obstacles to Women Leadership The UN’s HeforShe campaign ha s a ls o motivated some members to be increasingly committed to creating a higher malefemale employee ratio by 2016. Some are working to raise awareness to promote equal experience, hiring based on competencies regardless of gender, conducting anonymous satisfaction surveys as well as 1-on-1 feedback sessions with HR and hosting mandatory leadership trainings for all employees on gender diversity. However, due to a lack of initiative from top management, some businesses are still not addressing gender policy implementation.

On the other hand, few members have expressed optimism in the sense that they perceive no real problems in the implementation of gender policies in their organizations. During recruitment, majority of the Nordic companies “strongly encourage women to apply”. While trying to attract capable female employees to be part of their companies, many are also aiming to have at least one female colleague in their leadership teams by 2016. Moreover, many respondents are changing their course of action towards supporting strategic partnerships in promoting and advocating gender mainstreaming.

37%

44%

had 10 percent female staffs

Business Confidence Survey 2015

reported reluctance on the part of Women to take on more demanding roles

14%

28%

reported work-Family Life Balance as major obstacle

considered a lack of support from family members as another major obstacle

Page 17


B U S I N E S S C H A L L E N G E S A N D B OT T L E N E C KS 3%

Political Instability

81%

16%

3%

Corruption

81%

16%

3%

25%

72%

Business Licensing & Permits Transport Infrastructure

31%

66%

3% 3%

Tax Administration

59%

38%

3%

Finding Qualified Staff

59%

38%

3%

Retention of Staff

59%

38%

3%

Customs & Trade Regulations

56%

41%

3%

Skilled Labour

56%

41%

3%

Tax Rates

47%

50%

3%

Electricity Supply

44%

53%

3%

Increasing Labour Costs

44%

53%

3%

Domestic Protectionism

44%

53%

3%

Natural Gas Supply

34%

63%

3%

Access to Finance

34%

63%

3%

Labour Regulations Access to Land

28% 16%

69%

Although Nordic companies are quite positive about doing business in Bangladesh, there remain challenges that may pose significant risks for the existing companies as well as future investors. The biggest problems identified in this survey were bureaucracy and administrative hurdles (84%), political instability and corruption (81%), business licensing and permits (72%) and transport infrastructure (66%). However, majority of the respondents disregard access to land, labour regulations and access to finance as a business challenge. Several respondents have reported that a lack of coordinated regulations, anomalies and delays in procedure and approval set forth by the Regulatory Bodies such as licensing, registration, acquiring legal permissions to operate businesses, company incorporation and documentation processes continue to be time consuming and complex. As a solution to the lengthy processes in the licensing and approvals, Nordic businesses express the need for an improved Board of

3% 3%

81%

Major Problem/Problem

Page 18

13%

84%

Bureaucracy & Administrative Hurdles

No Problem

No Response

“one stop service” which can expedite crucial processes for fore i g n b u s i ne ss e s. The Nordic businesses also face difficulties during and throughout initial setup period, getting bank accounts, company registration, securing work permits and finding commercial office spaces. Few regard the lack of skilled human resource as a major constraint for sustained growth. Many companies also identify an urgent requirement to address corruption in t he ‘syst e m’ a nd t h a t t he r i g ht t o i nfo r m a t i o n should be more transparent and accessible.

LESSONS LEARNED Bangladesh is a country with immense o p po r t u n i t i e s a nd pot e nt i a l . I n s eve r a l sectors, Nordic Businesses in Bangladesh are market leaders, mainly owing to their operations. Business processes in Bangladesh are lengthy, as in many other developing countries. Consequently, things may take a

Business Confidence Survey 2015


while to materialise. In this case, consistent commitment, patience and continuous follow up have to be given a lot of importance. Respondents have emphasized t he i mportance of Nordic, local and ot he r b usinesses operating in Bangladesh to make it a practice to say no to unethical demands, at all times, at all costs. B a n g l a d e s h i s k n ow n t o h ave a v e r y dedicated, competent and fast learning workforce. It is important that businesses develop the right competencies, either through internal knowledge development, or through recruiting skilled personnel from the available workforce. The Nordic companies therefore, recognize t h i s a s crucial to enhance their ability to handle unforeseen circumstances. If the government i s a b le t o e st a b l i s h a n e ffe c t i v e EGovernance and also ensure an efficient one stop service for investors, Bangladesh would end up as an ideal destination for new Nordic investment. However, it is important for Nordic investors to interpret the market, local partners, politics, culture and tradition. Despite the fact that Bangladesh is considered as one of the most suitable countries for sourcing, continuous follow up on planned things are very important to achieve required goals. Despite the regulatory incompetence discussed, businesses working closely with regulatory authorities is going to remain a continuous process and a top priority for sustained operations of businesses. It is therefore, very important to be compliant with government regulations. Another key lesson learned is the importance of establishing brand name, company values and ethics in compliance with social, environmental, health and safety regulations set forth by the Government. While doing business, Nordic companies have found a lack of infrastructure development as a drawback and availability of inexpensive labor as a key advantage. One of the most important lessons learned is that it is always beneficial for the Nordic Businesses to maintain good Business Confidence Survey 2015

business relationship with partners and stakeholders and maintain customer satisfaction by upholding "no compromise on quality" policies.

ADVICE TO NEW COMPANIES Bangladesh has had an annual GDP growth of over 6% for a decade which demonstrates the country's potential and resilience against odds that it has faced. Existing Nordic companies advise newcomers to plan ahead of time, be patient, flexible and committed. Some existing Nordic businesses advise that whatever a business’s growth prospects may be, investment should be priority based and not comprehensive. Every process, business decision and operation may come across problems during execution phase, but the key should be to train staff to be able to independently deal with challenges. The survey emphasized the importance to engage in detailed market research before entering Bangladesh, or any other new market. Therefore, taking the right advice and assistance from experienced professionals, consultants, lawyers and audit firms from day one is key. If a Nordic company is looking to do business in Bangladesh, another i m po r t a nt a d v i ce wo u ld be t o neve r co m p ro m i s e on ethics, be it internally or externally. It would also be beneficial to take advice from NCCI and SBBC that are both major platforms for new investors. Conducting proper due diligence is also key. Despite rapid economic growth, there exist regulatory and tax administrative drawbacks which must be assessed before investment decisions are made. It is also key that the companies of Nordic origin be thoroughly familiar with local rules and regulations. A g r i c u lt u re, powe r, I C T, e le c t ro n i c s, pharmaceutical and leather are some of the most rapidly expanding sectors in Bangladesh but there should be adequate provision in investment plans for the insufficient power supply and infrastructural facilities in the country.

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Nordic Companies can also consider B2B business as it has huge potential to develop. It is highly advised to interact and learn from the experience of long established Nordic companies in Bangladesh. According to the participants, it can be wise to get into joint ventures with people who have as much at stake as you do. Moreover, reasonable time should be invested in finding a suitable partner and when investing on people because finding and cooperating with local companies may also prove beneficial as they often have strong local staffs to provide necessary assistance. It is also important to be aware of the diversities in organizational culture and structure. Focus should be on productivity rather than cost. While budgeting, time should be considered as a resource and consequently cost analysis and risk of delays must be incorporated. Businesses should consider the huge market potential, competitive production costs and technological advantages that Bangladesh has with its young population, both in terms of domestic market and as a production hub for exports. If public sector stake is high in your portfolio, it is highly advisable to select reliable local partners with recommendation from the embassy/chamber. The 3 Nordic Embassies in Bangladesh, together with their national authorities in the country are supporting businesses to secure connections and can also assist in opening doors when required.

Results

for Nordic businesses to enter Bangladesh. Although majority of the survey respondents have admitted to the present business climate being weaker compared to 2013, an increased proportion of Nordic companies are applying higher pricing strateg y a nd a s a consequence, they are making higher profits in Bangladesh compared to other markets in the region. Top priorities for the Nordic businesses have been identified as child labour, workplace health & safety, employee rights, women empowerment, fair wages and environmental protection, which are all preconditions for sustainability of business. However, there is scope for companies to be more engaged in long term sustainability programs, provided that effective government incentives are in place. As part of incorporating at least one of the Sustainable Development Goals within their business practices (now a key priority), the companies are putting emphasis on ensuring gender mainstreaming within their organizations. However, reluctance on the part of women to take on more demanding roles and balancing work-family life has been a major deterrent towards achieving the gender diversity goals. Bangladesh is working towards earning the status of a middle income country and should the challenges that have been pointed out in the survey be addressed, there is no reason for the country to not achieve a d o u b le digit-growth and its national goals set forth by the Government, including Digital Bangladesh 2021 and 50 Billion RMG Export Target.

The report shows that despite the constraints and risks that have remained since the last survey in 2013, Nordic companies do still appreciate investing and doing business in Bangladesh. Bangladesh being a land with immense potential with diligent workforce often overshadow the bottlenecks by providing businesses with above average profitability. Moreover, cost efficient production, great market and consumer demand have been identified as some of the most common reasons

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Business Confidence Survey 2015


Published By: Nordic Chamber of Commerce and Industry in Bangladesh c/o Maersk Bangladesh Ltd., Plot 76/A (4th Floor), Block M, Road 11 Banani, Dhaka 1213, Bangladesh Tel: +880 171 599 1907 Email: info@nccib.com www.nccib.com Joint initiative: Embassy of Sweden Royal Norwegian Embassy Royal Danish Embassy Sweden Bangladesh Business Council Nordic Chamber of Commerce and Industry Survey Design: Mizanur Khan Sweden Bangladesh Business Council Stockholm, Sweden Layout & Design: Aureolin Tech Ltd. 13/1, Pallabi, Mirpur-1216 Cell: +880 1688 831919 Email: info@aureolintech.com www.aureolintech.com

NCCI Business Confidence Survey 2015  
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