Ban gla desh
Table Of Contents
23.6850° N, 90.3563° E
Overview 3 History and Country Traits 4 Country Stability 7 STEEP Analysis 8 State of Industry 10 Trade Agreements 12 Lead Time of Production 14 Suppliers 16 Transportation 17 Business Practices 18 Risks and Benefits 21 References 22
Country Overview Location:
Southern Asia, bordering the Bay of Bengal, between Burma and India
Type of government:
Population: 163,541,198 as of Monday, October 31, 2016
in the list of countries by population.
Size of Country: 56,977 mi² Gender breakdown: 49.4% Female & 50.6% Male Median Age: 26.3 years
Life expectancy 64.94
Country religion: Most Bangladeshis, about 88% are
constitute other 11%. Language: Bangla (official), English
Currency: Bangladeshi Taka U.S. Exports to Bangladesh: agricultural products
(soybeans, cotton, wheat, dairy), aircraft, machinery, engines, and iron and steel products. U.S. Imports from Bangladesh: apparel, footwear, and textile products; toys, games and sporting goods; shrimp and prawns;and agricultural products.
The most recent events within Bangladesh have been those of high risk politically and violent actions. In July, The Islamic State group claims an attack on a cafe in Dhaka’s diplomatic quarter in which 20 hostages, including 18 foreigners, are killed but the government rejects the claim saying the militant group Jamaat-ul-Mujahideen was responsible. In September Business tycoon and senior leader of Bangladesh’s largest Islamist party Jamaat-e-Islami, Mir Quasem Ali, is executed for war crimes committed during the 1971 war of independence. Aside from the violent current events in the country, This large quantity of violence is not good for foreign investors and buyers when looking to end the Bangladeshi market. The State Minister for Health Zahid Maleque has said that tobacco is the cause of 14.6% of adult male deaths and 5.7% of the adult female deaths in Bangladesh. With this being said, the country is now putting efforts in a anti-tobacco campaign set to start November 2016 which hopefully can help to improve the lives of the many people living in Bangladesh. The Foreign Donations Regulation Act 2016 was enacted in parliament earlier this month without debate. This act essentially sets a tone of intimidation from the government and specifically threatens free expression of the citizens of the country especially within the use of social media and technologies. This type of act can intimidate the working class and populations from speaking out against the government.
Education level: Average literacy rate is 48 percent. 41.4 percent of the female population and 54 percent of the male population, age 15 and over, can read and .
History & Facts Labor force: Over 60 percent of the population employed in the agricultural sector
National Holidays: Independence Day Bangla New Yearâ€™s Day
Buddha Day Vijaya Dasami Victory Day
Main Industries: The garment industry is the backbone of manufacturing. There are
roughly 2 million workers in the garment industry and another 15 million depend indirectly on the industry.
Agricultural Farming accounts for 2/3 of the labor force and 1/3 of GDP. Budget Deficit to 4.70 percent of the country's Gross Domestic Product in 2015. Budget Revenue: 169045 BDT Billion in 2015 from 146732 BDT Billion in 2014.
98 % of whom are
ethnic Bengali and speak Bangla, are called
Urduspeaking, non-Bengali Muslims of Indian origin and various tribal groups, mostly in the Chittagong Hill Tracts, comprise the remainder.
Inflation Rate: 7.1 percent Currency Exchange Rate: $79.936 USD
Industrial Production Growth Rate:
9.4% (2015 est.)
English is spoken in urban areas and among the educated.
State of U.S. Relationship
The United States is Bangladeshâ€™s largest export market. Our countries have signed a bilateral investment treaty, as well as a bilateral treaty for the avoidance of double taxation. In 2014, U.S. direct investment in Bangladesh was $465 million, an increase of 12.6 percent from 2013. Our governments held the second annual Trade and Investment Cooperation Forum Agreement (TICFA) meeting in Washington on November 23, 2015, which highlighted the potential for greater cooperation with Bangladesh, particularly in areas of developing infrastructure and energy resources.
Future Government Plans
Better Work is a partnership between the International Labor Organization (ILO) and the International Finance Corporation (IFC) that combines expertise of the ILO in social dialogue, labor standards and the application of labor standards, with those of IFC in private-sector development. Operational since 2009, Better Work covers almost 1,000 factories and over 1 million workers in Haiti, Indonesia, Jordan, Lesotho, Nicaragua and Viet Nam, as well as through the Better Factories Cambodia program. A recently launched program in Bangladesh will greatly increase the number of factories and workers assisted.
STEEP Analysis Social
Extreme poverty, high birth and mortality rates, disease and natural disasters, and a generally poor quality of life characterize Bangladesh. In terms of health and welfare, 2.4 percent of GDP in this country is spent on education expenditures; 3.4 percent of GDP is spent on health expenditures. access to water in this country is good in urban areas and more problematic in certain rural areas. Access to sanitation is poor in certain areas. The country suffered due to colonial exploitation and currently faces huge problems relating to unemployment, health, education and poverty, but it is also on the receiving end of the nature with regular cyclones and floods that affect millions of Bangladeshis each year, causing damage worth billions of dollars. The low lying areas of Bangladesh are severely threatened by the Bay of Bengal, whose waters have been rising threateningly over the last few years possibly due to global warming. The groundwater in large parts of Bangladesh has a very high dosage of naturally occurring arsenic. A recent study by the World Health Organization pointed out that up to 77 million of the 125 million Bangladeshis are at severe risk of being poisoned by drinking water. In terms of quality of life, the Human Development Index placed Bangladesh in the low human development category, at 129th place out of 169 countries. An estimated 47 million people are living below the poverty line.
In Bangladesh there is a lack of physical infrastructure and limited access to existing facilities and technologies, and a digital divide compared with the developed world. In the developed world, digital and technology approaches and tools are used more, such as for electronic commerce and in education (such as with research in education). The Internet is not yet being used strategically for education and that there is low Internet literacy, particularly in rural areas.
The economy has been on the rise in recent years in terms of strengthening development overall and trade. In May 2015, Standard & Poor's reaffirmed Bangladesh's BB-/B foreign and local currency sovereign credit ratings, saying the stable outlook balanced healthy growth prospects and an improving external profile against fiscal weaknesses and development needs. There has also been loans to help further develop the railway system to help regional trade. In early July 2015, the Organization for Economic Cooperation and Development (OECD) upgraded its rating for Bangladesh, making it easier for local entrepreneurs and banks to secure credit. The upgrade placed Bangladesh on a higher rating than neighboring countries such as Pakistan, Sri Lanka, Nepal, Myanmar and Mongolia in the OECD country classification. It also meant that the OECD now categorized Bangladesh as a new frontier market, rather than a nation that is highly dependent on development aid. Also the country's central bank set up a 500 million dollar fund for manufacturing to stimulate economic growth, the money was split between manufacturing in general and textiles,including export-oriented ready-made garment factories.
Environmental According to UKTI (2014), ‘All industrial projects have to obtain environmental clearance from the Department of Environment, Bangladesh. The main criteria for achieving clearance are set out by the Environment Conservation Rules 1997 which may vary on the type of industry. Natural disaster like flood, cyclone and heavy rainfall are some common natural disaster for Bangladesh. Furthermore after Nepal Earthquake recently Bangladesh has identified as the most risky area for Earthquake by the Geo-scientists.
Political In the past couple of years, Bangladesh has experienced a multitude of political violence. General strikes (known locally as “hartals”) are common. In January 2012, the army put down a coup against the government. More recently, Bangladesh has experienced several deadly attacks by IS. In just 2014 and 2015 there has been multiple injuries and deaths as a result of rioting during elections between the political parties. This escalation of political conflict is from the ruling Awami Party of Prime Minister Sheikh Hasina and the opposition Bangladesh Nationalist Party (BNP) led by Khaleda Zia. With this being said, Bangladesh scores a 4 on the political stability index, on a scale of 1-10 with 10 being lowest political risk.
State of Industry Bangladesh through the years has developed a bad name as far as the garment and apparel industry because its lack of safety and regulations in factories leading to disasters. With government supports as well as foreign alliances, this sector of the Bangladesh market is seeing great growth in terms of amounts exported as well as safety and compliance within factories. Garment exports, the backbone of Bangladeshâ€™s industrial sector, accounted for more than 80% of total exports and surpassed $25 billion in 2015. The sector continues to grow, despite a series of factory accidents that have killed more than 1,000 workers, and crippling strikes, including a nationwide transportation blockade implemented by the political opposition during the first several months of 2015. Steady garment export growth combined with remittances from overseas Bangladeshis which totaled about $15 billion and 8% of GDP in 2015 are the largest contributors to Bangladeshâ€™s sustained economic growth. Since the collapse of the Rana Plaza apparel factory in 2013 and the Tazreen fire killing 112 workers in 2012, Bangladesh has made some well needed progress in transforming its garment sector. The United States remains actively engaged in efforts to strengthen respect for labor rights and improve workplace safety. With this being said there are multiple initiatives being implemented with the Bangladeshi government and other allied countries. The Vision 2021 and the associated Perspective Plan 2010-2021 have set solid development targets for Bangladesh by the end of 2021. If those goals are met it will transform the socio-economic environment of Bangladesh from a low income economy to the first stages of a middle income economy.
The Alliance for Bangladesh Worker Safety Made up of 29 mainly U.S. firms, including Wal-Mart Stores Inc., Target Corp., Gap Inc. and VF Corp. The industry-led initiative was formed in the aftermath of the Rana Plaza tragedy, which claimed the lives of 1,133 workers and injured more than 2,000, along with the separate Accord on Fire and Building Safety in Bangladesh, comprised of 200 mostly European companies with two global unions, IndustriALL and UNI Global Union. - The group also provides technical advice and access to low-cost loans to assist factories with remediation. It said it is on track to remediate all critical safety issues in its active factories by 2018. The US has helped developed this worker safety alliance that helps inspect and audit the factories within the country. The Alliance for Bangladesh Worker Safety said it has suspended operations with another seven factories, five of which were cited for failing to remove lockable exits in recent news. This alliance is being taken quite seriously and focuses on safety within the workplace.
Apparel Produced in the Country
Key Apparel and Top 5 Apparel & Textile Exports to Textile Categories the U.S. Woven Apparel
Shirts (2317.09) Trousers (6319.00) Jackets (3774.08) T-Shirt (6118.53) Sweater (3186.47) *Value in mil. USD **2015-16
Knit Apparel ($1.2 billion)
Textile Products ($185 million)
RMG Woven (4,233.65) RMG Knits (1,425.26)
Headgear ($110 million) *2013-14
*Value in mil. USD **2015-16
4,328 4 million Employees *2015-16
*The minimum wage before 2013 was around $38 USD, around the time of the Rhana plaza collapse many started suggesting that the wages be raised and more worker safety plans be implemented. Bangladesh still stands as one of the lowest minimum wages in the world, even with the increase of almost double in 2013. As fashion brands look to cut costs, and wages continue to rise in China, Bangladesh becomes an increasingly attractive place to make clothes at the cheapest cost.
Trade Agreements with the U.S. Bangladesh and the United States belong to a number of the same international organizations, including the ASEAN Regional Forum and World Trade Organization. Bangladesh and US have agreed to the Trade Facilitation Agreement (TFA) which contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. It further contains provisions for technical assistance and capacity building in this area. The Agreement will help improve transparency, increase possibilities to participate in global value chains, and reduce the scope for corruption. The TFA was the first Agreement concluded at the WTO by all of its Members. Trade and Investment Cooperation Forum Agreement (TICFA) provides a mechanism for both governments to discuss trade and investment issues and areas of cooperation. “With this agreement, the U.S. and Bangladesh will more regularly work together to address issues of concern in our trade and investment relationship,” Ambassador Froman said. “Importantly, we’ll also be able to track and discuss Bangladeshi efforts to improve worker safety and worker rights. This is an important priority for the United States as Bangladesh seeks to prevent more tragedies in its ready-made garment sector.” In June 2013, President Obama suspended the eligibility of Bangladesh for tariff benefits under the Generalized System of Preferences (GSP) program. GSP is a program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 5,000 products when imported from one of 126 designated beneficiary countries and territories. The suspension was based on insufficient progress by the Government of Bangladesh in affording Bangladeshi workers internationally recognized worker rights. The GSP is a trade scheme under which the US allows import of more than 5,000 goods from 122 least developed and developing countries with lower or zero-duty benefit. The US introduced the GSP in 1976 under the US Trade Act of 1974. However, the GSP scheme has remained suspended for all beneficiary countries since July 31, 2013. In fiscal 201314, Bangladesh exported goods worth more than $5.58 billion to the US, with 95 percent of them being garment products, which were subjected to 15.61 percent duty.
Lead time of Production
In Bangladesh, a multitude of factors should be noted when considering the lead time for your order. Conditions such as climate and weather, geographic landscape of Bangladesh, and its economic development all pose issues that could occur. Bangladesh has always been severely affected by the climate and weather since it became a country in the 1970â€™s. It is most susceptible to floods, cyclones, storm surge, river bank erosion and tsunamis due to its location of a tropical climate. There is no specific season for these disasters, specifically cyclones which have happened in April, May and November, leaving parts of the country in states of disaster and millions of dollars (USD) in debt.
Along with natural disasters in the tropical landscape come the disasters that can happen with the multitude of open waterways and rivers. There is always the possibility of flooding issues but also issues of robbery and piracy on the waterways. The International Maritime Bureau reports the territorial waters of Bangladesh remain a risk for armed robbery against ships; in 2014, attacks against commercial vessels increased to 21 over 12 such incidents in 2013.
With it being difficult to predict illegal troubles on the waterways, one can at least be informed about the economic development issues within Bangladesh that add to your lead time. There are many factors to consider such as productivity in comparison to other countries that export apparel. Garments and apparel are one of the country's largest imports but other countries such as China, India, and Pakistan yield a higher level of productivity due to the larger size of skilled workforce and better technology and working conditions.
Another factor is Bangladesh's weak infrastructure, the apparel industry is highly dependent on the highway route that connects Dhaka, the capital where most major factories are to Chittagong, the main sea port for the country. 280 kilometers of road from Dhaka to Chittagong sea port takes a day long for a cargo to reach with moderate traffic. A four lane highway is being built to further support this important route but currently traffic backups can affect timing of cargo to reach the port. Along with the weak infrastructure, the main port in Bangladesh is not one that supports deep sea harbor. The port has not grown or developed as the apparel industry rises in Bangladesh and was never meant for large freights and international deep sea routes. To send products by sea from Bangladesh you have to ship the products to the feeder vessel which then approaches to the mother vessel in Singapore. This process takes 7 to 10 days by feeder vessel to then reach mother vessel, unload and load again before it can come to the United States. There has been talk of creating or adapting a port in Bangladesh to meet the needs of deep sea harbor to eradicate the extra time for the sea freight but until those plans are set into action, the additional 7-10 days are unavoidable.
Lastly, Bangladesh is not one of the gold standards in terms of working conditions and efficiency in the garment industry. This has often led to strikes and protests of frustrated and overworked employees, whether it is the factory workers with low wages and unsafe working conditions or the port employees frustrated with trying to run a multitude of exports through an unequipped port. These interruptions in the work flow have sometimes lasted weeks and resulted in unforeseen factory closures.
Main Suppliers The Civil Engineers Ltd. Mens and boys clothing, Women’s, Misses’, and Juniors’ Outerwear Address: 401 B Tejgaon Industrial Area Tejgaon Dhaka Bangladesh 880 029665409 Tel Ex 880 0296 65 http://www.standard-group.com Customers: Gap, Old Navy, Banana Republic, The Children's Place
Ayesha Clothing Co., Ltd. Men, Boys Readymade apparel (cotton knits) Address: House # 2/B, Road # 29,Gulshan -1, Dhaka, Bangladesh, 1212 http://palmalgroup.zxq.net/ Customers: Bass Pro Shop, Old Navy, Kohl's
Refat Garments Ltd. Men, Women, children clothing, Furnishings and Accessories Address: Narashinghapur, Ashulia, Dhaka, Bangladesh http://www.hameemgroup.net Customers: V F Jeanswear, The Hongkong, Old Navy
Country Transportation Overview Transportation within Bangladesh is a developing subject in terms of growth. The country currently has 3 international airports, two of which are used for apparel exports. The principal airport is Hazrat Shahjalal International which is in the capital city of Dhaka which is also where the key apparel factories are located. Most international passengers use this airport and 90% of the aeronautical functions of the country derive from this location. The alternative airport is Shah Amanat International located in Chittagong which is also the city in which the main sea port is located. More than half of the country has accessibility to a hard surface road within 3 miles distance and there has been expansion of road network in the past couple of years including the ongoing expansion of the highway route from Dhaka, the nation's capital to Chittagong. The railway system is notable, not in terms of doing trade with the United States but knowing that around 32% of the total area of Bangladesh is covered by these railways. The system owned by the state operates a track of 2706 km which is a form of moving good throughout the country. The most important and relevant means of transportation for the apparel industry is the sea ports. $60 billion of trade currently runs through the country’s two existing seaports, Chittagong and Mongla. Chittagong, lying along the Karnaphuli River on the northeast bend of the Bay of Bengal, has always been the largest and by far most important seaport in Bangladesh even being a major hub on the ancient Maritime Silk Road. Unfortunately both of the ports face the challenge of being too shallow for large container ships to come into and require costly transfers to smaller vessels to get cargo in and out this additional step can cost up to $15,000 per day on top of regular costing and harshly impacts the ports’ global competitiveness.
Port of Chittagong
International Airports Hazrat Shahjalal Shah Amanat Osmani International
ZIA to JFK 6835.79 mi 18 hours
Global Freight Services
Cannot import from Bangladesh to the US by way of land.
Globe Center, 28/1 Indira Road, 2nd floor, Flat-B, Dhaka-1215, Bangladesh
Goodwill Ship Management Address: Konna Villa, South Halishahar, Chittagong-4100, Bangladesh.
Chittagong to Savannah 10171.59 mi Lead time: 32-43 days Time at Sea: 1 month USD$ 2299
Chittagong to Los Angeles 9160.92 mi Lead time: 20-40 days Time at Sea: 1 month USD$ 2272
How toConduct Business
In Bangladesh, there are multiple cultural differences to be considered when participating in business endeavors. For the most part, Business etiquette is quite formal. When meeting, the issues at hand are typically discussed and no decisions are made in the actual meeting. Most of the time, it will be help by the most senior executive that is in attendance, who will then mediate the meeting with the agenda but it is not strict to it, it merely serves as a guideline. If the meeting has an end time, it may extend past it which is normal due to the polite small talk of non-business subjects the meetings tend to commence with. It is good to remember not to become too casual, although you may be making small talk at the beginning of a meeting, the professionalism must remain intact, if not it can be seen as a lack of respect. It is common that business encounters often take longer in time than projected originally, this is for reasons of gaining each other's trust and developing a relationship. One of the most important aspects of doing business in Bangladesh and many other eastern Pacific companies is to maintain a strong respected â€œfaceâ€?. By losing your temper or showing unprofessional emotions can result in a loss of face which is translated to a loss of respect and dignity.
Meet and Greet When meeting and greeting in a business setting, there are a few practices to note. A formal handshake between men is commonly expected when you arrive and when you leave. It is important to have knowledge that those who practice Hinduism or Islamic ideals traditionally, will not shake the hand of someone of the opposite sex. With this being said, a man from a different country should nod to a Bangladeshi woman upon meeting unless she greets you with a handshake. Status and hierarchy are important when introducing oneself, if there are senior executives and people of high power one must wait for a third party participant to introduce you. With these formalities in place, one must also address another with one's sir name or last name and use the terms “Bahadur” meaning “Sir” or “Begum” meaning “Madam”.
Business Card Expectations Once the introductions have finished, it is time for the exchange of business cards. The value of a degree from college or university is of high regard in Bangladesh, it is an essential qualification to add on the card. Always use your right hand, not only when handing over your business card but in any act during the meeting. The use of the left hand is considered unclean. Opposite of American culture, Bangladeshis expect business cards to be treat with the utmost respect, do not disregard it right away. Take time to acknowledge and study it, it is better to put it into some type of business card holder once you are done with it rather than in a folder or pocket.
Saying “no” is a no no The notion of loss of face is carried over into the way of which Bangladeshis communicate during business meetings. They try to avoid overall the use of saying no because it devalues their face and they are worried that they will disappoint or one will not continue to do business with them. Instead of saying no, a more indirect way of communicating is used. A mixture of vague phrases such as “we will try”, "that may be difficult", or "we will have to give that some though" and use of long silences, pausing and body language is used instead of disappointing the business partner. One must be sensitive and address this behavior intellectually in order to fully understand the meaning of the intercultural business practices in place.
Risks & Benefits To find a strategic a way of productively sourcing from Bangladesh, one must remember to consider giving time for the possibilities of the unforgiving climate and/or theft when doing business. Also keeping in mind the extra days in which it will take to travel from the factories in Dhaka to the Port of Chittagong. Although Bangladesh has had its fair share of difficulties, devastation and setbacks within the apparel and textile industry, those implications have begun to be recognized within the past three years and with government help and intervention from other countries, solutions are beginning to take form. With the facts alone, Bangladesh is one of the top 5 exporters of Ready Made Garments in the world, with better working conditions on the rise as well as a higher minimum wage the country should only become more capable and better equipped to keep exporting in this sector. With the new highways being built and beginnings of plans to expand the ports, logistically the conditions of sourcing from this country and lead times will improve. With this being said and the previous knowledge of what apparel is being made in Bangladesh, the best apparel option for sourcing from this country woven and knit Ready Made Garments for Men, women, and children..
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Global Sourcing Fall 2016