Offline Mrittika Shil

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« on: February 27, 2017, 04:02:44 PM »
Bangladesh has been lauded by the World Bank's 2010 Report as being one of the top ten reformers, owing to substantive regulatory reforms and enhancing the investment climate in the country. With Gross Domestic Product (GDP) growing steadily by 6% per annum in the last decade, it has emerged as one of the promising countries to invest in South Asia. The Foreign Direct Investment (FDI) inflows and the country exports have grown progressively over the years. Agriculture is a key component of the Bangladesh economy with more than 47.5% of the population dependant on agriculture for livelihood. The country produces a wide range of crops, given its favourable climate and resources. Although, Bangladesh’s agriculture production and processing is gaining impetus,  the country is an importer of many essential agricultural commodities and  processed  food  products.  Progressive  agricultural  practices,  improved marketing technique and modern processing facilities would enable agriculture and the processing industry to improve the quality of food produced, expand production  levels  significantly  and  enhance  the  food  processing  sector. The Government of Bangladesh has identified agriculture as its thrust sector and provides wide range of unique incentives to encourage and protect investments and establish profitable agri-business in Bangladesh. It has been ranked by World Bank ahead of many South Asian countries for ‘starting a business’.

With   growing   GDP,   FDI   and   exports,   unique   policy   reforms,   favourable agro-climatic conditions, industrious workforce, competitive human resource and key geographic location near key markets like India and China, Bangladesh presents a profitable offering for setting up an agro-based business.



• No FDI Cap-100% foreign equity is allowed (Except for defence, nuclear energy, currency and forest plantations)
• Tax Incentives
   Tax holidays: For 5-7 years (Location and industry dependent)
   Tax exemption on royalties and technical know how fees
   Tax exemption on capital gains from the transfer of shares of public limited companies
• Cash Incentives
   Electricity consumption special rebate of 20% to agro-processing sector including poultry
   Cash Incentives and export subsidies are granted on the FOB  value of selected exports products ranging from 5% to 20%
• Tari -free access to the European Union (through EU’s Generalized System of Preferences, GSP), Canada, Australia and Japan
• Accelerated Depreciation Allowance at the rate 50%, 30% and 20% in the 1st, 2nd and
3rd year of commercial production on cost of plant and machinery (Applicable for
industrial undertakings not enjoying  tax holidays)
• Agricultural and Rural Credit Policy and Programme of Bangladesh Bank states that
   All private banks will have to disburse at least 2.5 per cent of their total loan disbursement to the agriculture and rural sector
   Loan disbursement target in agriculture for all the state owned and private banks is USD
2 billion
   Maximum interest rate for agricultural term-loan is 13%
• Concessionary duty on imported capital machinery at 5% ad valorem on capital machinery. No import duty for 100% export oriented companies.
• Foreign Technicians- Income tax exemption for 3 years
• Local bank’s full working loans are available to foreign investors
• Foreigners employed in Bangladesh entitled to remit up to 50% of their salary
Industries eligible for tax holidays include
agro-processing textiles, jute goods, agri-input industry, agriculture machinery.

Bangladesh is a signatory to
• Foreigners employed in Bangladesh enjoy full repartriation of their saving and retirement benefits
• Portfolio investments in Bangladesh stock exchanges allowed by non-resident institution / investor
• Facilities for repatriation of invested capital, profits and dividends
• Special facilities and venture capital support will be provided to export-oriented industries under "Thrust sectors". According to industrial policy order 2010 issued by Ministry of Industries,
‘Agriculture’ has been identified as the Thrust sector
• International Agreements: Bangladesh has concluded bilateral agreements for avoidance of double taxation and investment treaties for promotion and protection of investment

• The US$ 2.2 billion Food processing industry that is industry grew at an average 7.7 % per annum  between scal years 2004-05 and 2010-11.
• The beverage  industry more than doubled  during the same period to US $29 million, showing an average growth rate exceeding 8 % per annum.
• Opportunity for food processing
 The demand for processed foods and beverages is growing with growing middle class population of over 30 million.
 Government policies supporting agro and food processing industries.
 30-35% of wastage in agriculture produce, fruits and vegetables.
 Rice and Potato surplus production.

Opportunities of investment in Food processing
• Edible Oil
• Rice
• Wheat
• Sugarcane-Sugar and Confectionaries
• Potato- Chips, Flakes, Starch
• Fruits & Vegetables -Jams, Jellys, pickles, Canning, pulp, juices, Sauces and Ketchups
Spices- Processing and curing, Masala
Agri-input sector
• Seed
• Fertiliser
• Pesticide
• Irrigation
• Farm Machinery

Seed industry in Bangladesh is growing significantly due to crop diversification,Crops for Seed Industry realisation of better yields and incomes, better dealer and awareness. Also,  the  country  has  recently  ventured  into  GM  crops  and  has  tested  the performance of BT Brinjal. The scope for investments in seed sector with hybrid varieties having traits like higher yields, flood tolerance, drought tolerance etc is immense.
Crops for Seed Industry
Rice, Wheat, Maize ,Potato, Jute,Oilseeds, Vegetables ,Spice seeds.
Total Seed Requirement 1.25 million Tonnes,
Seed supply Government: 66% Private: 34%
Companies involved: 100
Registered Dealer: 18000
Seed industry Estimated to be more than US$ 500million
Growth in Seed demand since 2007
Maize- 77% Jute- 29% Vegetable- 67% Potato- 69%
Popular use of Farmer’s Seed & Open Pollinated Varieties

The National Agriculture Policy envisages promotion of organic manures, bio fertilisers and composts
• Awareness campaign to promote Balanced Plant Nutrition is being extensively undertaken
• The annual fertiliser consump- tion of Bangladesh is about 3.2 million   tonnes.
• The production and supply of traditional fertilisers is regulated by government.

Opportunities for investment
•  Micronutrients
•  Bio fertilisers
•  Organic fertilisers
•  Vermiculture
•  Compost
The area under irrigation has significantly expanding from
3.45 million hectares in 2001-02 to 5.1 million hectares in
• Government provides irrigation facilities to more than 0.5
million ha through deep tube wells, shallow tube wells floating pumps and low lift pumps as well as re-excavation of canals etc.
• Use of Mirco-irrigation techniques including drip & sprinkler irrigation are new and awareness is growing .

Opportunities for investment
•  Irrigation Pipes, Pumps
& Tubewells
•  Drip Irrigation
•  Sprinkler irrigation
Farm Machinery
Farm machinery is utilised mainly for tilling, ploughing, spraying threshing etc.
• The use of tractors, power tillers, threshers, weeders has increased rapidly.
• Mechanisation in Bangladesh has been a challenge with decreasing farm size from 0.81 ha during 1980’s to 0.61 ha. The energy available is 1.17 kW/ha.
• About 0.7 million power tillers, more than 35000 tractors and agri-machines like 14, 50,000 sprayers , 1,80,000 open drum threshers are available for use and hire testifies the huge market for farm machinery in Bangladesh (BARI).

Cold chains

•  The cold chain is a temperature controlled supply chain that includes pre-cooling, cold storage and refrigerated transport.
•  Bangladesh has about 393 cold storages across the country having average capacity of 2500 tonnes with a capacity of 4 million tonnes of potatoes and potato seeds.
•  The capacity of refrigerated warehouse in the country stands to about 8 million cubic meters (‘Global Cold Storage
Capacity Report’ by International Association of Refrigerated Warehouses)
•  Almost all the cold storages in Bangladesh are primarily used for storing potatoes and are inadequate for storing high value items like fruits and vegetables.

Food Parks

•  A Food Park is a large cluster based facility to provide modern infrastructure for the food processing sector along the value chain from the farm to the market.
•  Includes cold storages, creation of processing infrastructure near the farm, transportation, logistics and centralized processing centres.
•  Such facility will provide food processors with cheaper, assured and better quality services, in turn reducing the post-harvest losses and creation of efficient supply chain


Milk production is one of the important economic activities, providing 3.6 million households with supplementary income.
Bangladesh requires approx. 12.8 million metric tons of milk; about 1 million ton of this demand is ful lled domestically
• The demand for milk and dairy products is growing by 10% per annum whereas the local production is expected to grow little over 7%.
• The per-capita milk consumption is considerably lower than neighbouring countries. It is therefore a potential industry for development of value chain in local markets.
• For modern dairy industry to take shape, investments are needed in diary clusters, e cient cold chains, processing and use of high quality inputs.

•  Cold Chains
•  Milk and Milk Powder
•  Processed products
 Ghee, Butter
 Cheese
 Whey
 Flavoured Milk
 Ice Creams
•  Cattle feed

• Bangladesh has a 720 Km long coast line and total marine water area of 166,000 sq. km. Also, the country has more than
200 rivers.
• Brackish and freshwater aquaculture in Bangladesh is growing due to unique aqua-friendly landscape, climate and culture

Aqua sector is worth US$1.5bn
8% population directly engaged in  shing
Export earnings in 2009-10 were as much as US$ 437.40 million
190,000 registered shrimp farms mostly located in Khulna Division
Bangladesh exports shrimps to more than 40 countries all over the world


• Commercial poultry farming is patronised by private players by distributing commercial broilers and layer day old hybrid chicks.
• With about 130,000 farmers mainly small and medium farmers are engaged with flock size of 500 birds. Poultry clusters also exist in the country with Gazhipur and Savar districts being hubs of cluster poultry.
• It is estimated that poultry production is growing by 4% every year.
• The feed is major component of cost of production accounting for 65%. Special mills supply about half of the feed while farmers themselves mix the rest