About LightCastle Partners

About LightCastle Partners

At LightCastle, we create data-driven opportunities for growth and

lasting impact. Till date, we have consulted for 130+ corporations &

development partners, collaborated with 400+ SMEs & startups and

supported 30+ accelerator programs across Bangladesh.

Acknowledgements

We would like to thank the 59 CxO members across a range of

private industries in Bangladesh for partaking in our study by giving

their valuable time and responding to our data requests. This piece

of research could not have been possible without them graciously

sharing their views with us. For that and more, we are deeply

humbled and grateful.

We would like to thank Policy Exchange Bangladesh for being the

knowledge partner, The Business Standard for being the media

partner and Youth Policy Forum for being the outreach partner of

the BCI launching event. We are immensely grateful for the support

that our partners have provided.

Thanking the Partners

Knowledge PartnerMedia Partner Outreach Partner

AcronymsADR Advance to Deposit Ratio

API Active Pharmaceutical Ingredient

B2B Business to Business

B2Gov Business to Government

BB Bangladesh Bank

BCI Business Confidence Index

BDT Bangladesh Taka

BRTA Bangladesh Road Transport

Authority

CETP Common Effluent Treatment Plant

CRR Cash Reserve Ratio

DFS Digital Financial Services

FDI Foreign Direct Investment

FDR Fixed Deposit Receipt

FMCG Fast-Moving Consumer Goods

FY Fiscal Year

GCC Gulf Cooperation Council

GDP Gross Domestic Product

GSP Generalized System of Preferences

GoB Government of Bangladesh

HEI Harmonized Expectation Indicator

ICT Information and Communications

Technology

IMF International Monetary Fund

IsDB Islamic Development Bank

IT Information Technology

ITES Information Technology Enabled

Services

JICA Japan International Cooperation

Agency

LDC Least Developed Country

LNG Liquefied Natural Gas

MAC Middle and Affluent Consumers

MFS Mobile Financial Services

MW Megawatts

NBFI Non-Banking Financial Institution

NBR National Board of Revenue

NPL Non-Performing Loan

REHAB Real Estate and Housing

Association of Bangladesh

RMG Ready-Made Garments

TRIPS Trade-Related Aspects of

Intellectual Property Rights

UAE United Arab Emirates

USD US Dollars

Message from theDirectorsDear All,

The global economy is going through turbulent times and the Bangladesh economy is no exception: the

pandemic induced slowdown wreaking havoc on all economic and business performance indicators. The

World Bank’s revised economic growth projections for FY 2019-20 peg back GDP growth to 1.8%

compared to the pre-Covid assessment of 8.1% – a staggering blow. The economy had been in a

precarious state even before the Covid-19 started taking a toll – with stagnating export growth, rising

NPLs and slowing private sector investments all adversely impacting future outlook.

Amid these turbulent times, it’s imperative to collect a vibe on how our private sector leaders are

viewing the current quagmire from their unique vantage points. This edition of the ‘LightCastle Business

Confidence Index 2019-20’ aims to highlight the views and perspectives of business leaders across 20+ sectors for the fiscal year 2019-20. This year’s business confidence index nosedived to -19, in stark contrast to +43 in the previous BCI conducted in 2017-18.

The result was, sadly, inevitable. More so because Bangladesh’s twin growth engines – apparel and

remittances – have suffered from a multitude of demand- and supply-side shocks. The pandemic led lock-down has led to either a flurry of order cancellations or deferment from international buyers, while the prolonged global economic recession will surely inflict further blow to apparel’s demand for the upcoming year. Our apparel export declined to USD 27.9 billion for FY 2019-20, which is a USD 6.1 billion

reduction compared to the previous year. In fact, BGMEA, the apex body for apparel factory owners,

predicts a USD 10 billion loss in export for 2020. This decline would invariably result in further layoffs. Although remittances have risen to a record USD 18 billion in the current fiscal year, thanks to timely fiscal incentives, remittance inflow from migrant workers are expected to drop sharply in 2020-21 due to large scale redundancies and exodus of migrant workers from their host countries.

Sectors catering to the domestic economy have also suffered from declining sales and disruptions in the supply chain. Real Estate, Construction, Tourism & Hospitality have all witnessed steep fall in revenue,

which is unlikely to recover until the pandemic moves beyond the horizon. FMCG has experienced

marginal decline in demand but is expected to rebound quickly as the economy rebounds.

We are living through turbulent moments. Moments that might last for some time to come. Moments

that are characterized by rapidly changing contexts and a plethora of unknowns. It’s also a moment for

the business leaders and policy makers to reflect on what each of their fundamental roles are to the society. In this critical period, and with a sense of urgency, concerted attempts between the public and

the private are needed for tackling the country’s worst economic downturn. For them and us, the

moment, hence, also points to an opportunity – one that, if capitalized correctly, may potentially define a bright future for Bangladesh.

We sincerely appreciate the contributions of fifty nine industry leaders, who have shared their insights, in enriching the study. It is our hope that you will read the report and make effective decisions in the times to come.

We look forward to engaging with you for building a prosperous Bangladesh.

Ivdad Ahmed KhanMojlish

Managing Director

LightCastle Partners

Bijon IslamCEO


Zahedul AminDirector, Finance, Strategy and

Consulting Services


Snapshot

Population

163,046,161

New Forex Reserve

USD 32.67

165.572

Population density

people per square kilometer

(2019)

December 2019

December 2019

Total Exports

USD 40.53(2018-19)

(2019)

1,104.42

GDP

USD 302.57 bn

bn

mn

FDI

USD 3.88(2018-19)

bn

RMG Exports

USD 34.13(2018-19)

bn

bn

(2018-19)

GDP growth rate

8.15%(2018-19)

GDP per capita

USD 1,828(2018-19)

MobileSubscribersMobileSubscribers

99.428December 2019

mn

InternetSubscribersInternetSubscribers

93.681December 2019

mn

Mobile InternetSubscribersMobile InternetSubscribers

Source : Bangladesh Bank, Export Promotion Bureau (EPB), Bangladesh Telecommunication Regulatory Commission (BTRC), World Bank,

United Nations, Bangladesh Bureau of Statistics (BBS)

Table of Content

The Macroeconomy

Readymade Garments (RMG) 25

9 - 23

1

6

61-64

65-69

24-52

56-60

62

62

63

63

64

66

67

69

28

30

32

35

37

40

42

44

45

47

49

57

58

58

58

59

59Pharmaceuticals

Leather & Footwear

Agriculture and Agro-Processing


ICT and ITES

Logistics

Digital Financial Services

Fast Moving Consumer Goods (FMCG)

Financial Institutions

Industry

Employment

Curtailed Capacity

Pessimistic Perception

Inadequate Infrastructure

Restricted Resources (Financial)

Decrepit Policies

Power & Energy

Logistics


Real Estate & Construction

ICT & ITES

E-Business

51

52

54

Consumer Durables & Electronics

Automobiles

Tourism & Hospitality

Industry Insights

Diminishing Demand

Problem Areas

Pharmaceuticals

Future Prospects

Economy

Way Forward

Executive Summary

Methodology

Executive Summary

Bangladesh’s growth trajectory over the last decade has been exemplary

with consistent economic growth led by the private sector, facilitated by

sound policymaking. Despite experiencing consistent growth, the

economy had encountered some structural bottlenecks, which have

impacted performance in the first half of FY 2019-20. The apparel sector, contributing 84% to the country’s export earnings, faced stagnating

exports, mainly due to the evolving competitive landscape coupled with

sagging demand in international markets. The financial sector, plagued by NPLs, have not only affected the banks’ profitability but also have contributed to the liquidity crisis. Low private sector credit growth serves

as a testament to the liquidity crisis. While inadequate infrastructure and

red-tapism pose immediate challenges for attracting investments, it is to

be noted that Bangladesh had received record-high FDIs (USD 3.6 billion)

in 2018.

The second half of the FY 2019-20 had witnessed unprecedented

economic upheaval: Covid-19. During the first quarter of 2020, Bangladesh had started to confront supply chain disruption, since China,

the world’s largest raw materials supplier, received the first wave of Covid-19’s disastrous impact. However, as the epicenter of the virus

gradually shifted from China to Europe and then to the US, the crisis

started to take a turn for the worse. Apparel manufacturers have already

received order cancellations to the tune of USD 3.15 billion, if not more,

as per BGMEA, an association of apparel manufacturers in Bangladesh.

Additionally, a colossal drop in international oil prices have squeezed

remittance earnings, as Gulf Cooperation Council (GCC) economies, which

Overall Business Confidence Index

2016-17

0.002017-18

2019-20

Bangladesh started

facing supply chain

disruption, as China,

the world’s largest

raw material

supplier, got hit hard

by Covid-19. Large

drops in

international oil

prices have also

squeezed remittance

earnings from Gulf

Cooperation Council

(GCC) economies,

which contribute

65% of Bangladesh’s

remittances

earnings.

1

-19.27

+43+39

account for 65% of Bangladesh’s remittances earnings, began to witness

the painful economic recession. Figures have fallen from USD 1452.20

million in February 2020 to USD 1092.96 million in April 2020.

Sadly, our woes don’t end here. Economic slowdown has led to large-scale

unemployment, particularly in the informal sector, with a massive amount

of temporary or permanent closures of SMEs across the country. Having

no clarity as to when the pandemic will abate or when an effective vaccine will be invented, investors are unsurprisingly frigid about making fresh

investments either.

At a time when we, as a nation, are grappling to stay afloat against the surging tides of uncertainties and economic troubles, business leaders

have every reason to feel threatened and saddened. So, quite naturally,

our collective business optimism reflects a gloomy picture.

LightCastle Partners annually conducts ‘LightCastle Business Confidence Index’ – a study for gauging the business sentiments of private sector

leaders across myriad sectors, having a notable contribution to the

country’s economy. This year’s study was conducted based on in-depth

interviews with 59 business leaders from March 2020 to April 2020. In

2019-20, the confidence index saw a sharp decline to -19.27, largely influenced by pandemic induced uncertainties.

This year’s study was

conducted based on

interviews with

59

companies from

March 2020 to May

2020.

This year’s index

experienced a sharp

decline to

-19.27

2

Source: Business Confidence Survey conducted by LightCastle 2018-19 and 2019-20

2017-18 2019-20

Sector-wise Business Confidence Index

0.00

19.60

48.93 40.93

20.00

40.00

60.00

Primary Sector Secondary Sector Tertiary Sector

-30.58-6.97

-40.91

The index from our very first study (2016-17) reflected a low to moderate confidence, mainly driven by the growth in export of high-value products, political stability and an increase in purchasing power of consumers. The

index improved further in the following year (2017-18), mirroring a

cautiously optimistic outlook. Factors such as increasing investment in

power and ICT, rising disposable income and consumer spending, and

growing domestic and international investments played crucial roles for

moving the confidence needle upward.

This year, business leaders narrate an entirely different story. Covid-19 has wreaked havoc, aggravating the incumbent complications. Even prior

to the emergence of Covid-19, business sentiments were overshadowed

by concerns pertaining to the banking sector liquidity crunch and the dire

state of NPLs among commercial banks; declining competitiveness in RMG; and infrastructural bottlenecks. After the pandemic struck, not only did the prevailing challenges intensify, but also led to weaker domestic

demand, supply chain disruptions, limitations in forward linkage, and

scarcity of credit.

Confidence in the primary sector debilitated markedly due to the perceived disequilibrium of the economy, unfavorable price distribution,

and limited access to credit across the agriculture value chain. The

secondary sector experienced relatively better confidence than the primary; however, it has been encumbered by high import dependency for raw materials, unfavorable government policies and regulation, lack of

credit access, and inadequate infrastructure. The tertiary sector received

the highest confidence, driven primarily by technology-enabled services: e-commerce, for instance. Remarkable gains were made by the Digital

Financial Services and the e-business sectors, which appeared among the

most promising sectors in this year’s BCI for the first time, underscoring their intrinsic growth potential and buoyed, no doubt, by the emerging

importance of these sectors in light of a post-pandemic world. The sector,

however, has been unable to reach its potential because of unhealthy

competitive strategies, weak logistics and infrastructure, and

unavailability of funds and a skilled workforce.

According to the respondents, the top three industries to hold the most

promise were found to be Pharmaceuticals, Agriculture and

agro-processing and ICT and ITES. Reasons for this include structural and

competitive sectoral strengths and alignment with anticipated changes in

The Top 3 industries

to hold the most

promise were found

to be the

Pharmaceuticals

sector

Agriculture and

agro-processing

sector

ICT and ITES sectors

3

Primary Industries: Agricultural Inputs, Agriculture Commodities, Fisheries, Livestock, Energy

Secondary Industries: RMG & Textiles, Pharmaceuticals, Power, Cement, Steel, Electronics, Agro-Processing, Footwear, Automobiles, Ceramic,

Furniture Plastic

Tertiary Industries: Financial Institutions, Information Technology, Logistics, Construction, and Real Estate, Business Services, Advertising, Hotels and

Tourism, Print & Digital Media, Retail Chain, Digital Financial Services, e-Commerce, and E-services

consumer lifestyles. Interestingly, selection of these top three sectors

remains unchanged since the 2017-18 BCI.

In contrast, business confidence collectively turned out to be the lowest for RMG, Banking and Finance, and Tourism and Hospitality. Respondents

representing Real Estate & Construction, Power & Energy project a

critically low confidence as well. In addition, sectors – usually propelled by domestic demand like FMCG and Consumer Durables – have experienced

a steep drop in sales and confidence level, too. Owing to massive income losses, a turnaround in domestic demand is highly unlikely until the

contagion effect of the pandemic can be completely contained. The private sector credit growth had been falling even before the pandemic

hit the country, and may worsen now due to the shaky confidence of the investors. The growing NPLs needs to be dealt with while providing borrowers with competitive interest rates.

Covid-19 continues to disrupt the livelihood of millions in Bangladesh

through high unemployment. Moving forward, it is imperative to address

the unemployment hike; measures need to put into place to upskill and reskill as per the shifting national priorities. Layoffs in different industries accentuate the dire state that needs to be mitigated through proper

allocation and implementation of stimulus packages – especially for SMEs,

the backbone of the nation’s economy. The export basket of the country

also needs to diversification strategy, focusing particularly on industries driven by the growing adoption of technology. Nurturing the DFS sector to develop a cashless economy in order to facilitate transactions between

customers, businesses and the government is now more crucial than ever

before.

Bangladesh is poised to graduate from its LDC status in the coming years,

upon which the country is likely to lose the trade benefits it enjoys, thereby hampering the cost-competitiveness of the country’s products.

The low debt-to-GDP ratio and high foreign exchange reserve may just be

the few redeeming features for Bangladesh now to keep floating a resilient economy against the mighty tides of turbulence.

Nurturing the DFS

sector to develop a

cashless economy in

order to facilitate

transactions

between customers,

businesses and the

government is now

more crucial than

ever before.

4

Promising Industries for the Next Decadeas per Interviewed C Suite Members

Agriculture and Agro-processing

Changes in demographics, lifestyle habits and

increased urbanization have driven a sea change

in how people consume food, burgeoning the

demand for convenient, processed and

ready-to-eat foods.

PharmaceuticalsIncreased health consciousness among the mass

and ageing population is expected to drive

demand in the future. Bangladeshi pharmaceu-

tical products already meet local demand and

are now gaining traction globally.

ICT & ITESOutsourcing can gain traction locally with

increased adoption of IT and technology-based

solutions, further catalyzed by the advent of

coronavirus, and the subsequent trend towards

digitization of essential services and physical

channels/platforms.

LogisticsWith increasing demand for better logistic

support, the need for an integrated ecosystem

may finally be met, expanding the scope for the

sector in the future.

What are themost promising

industries for thedecade?

10%

32%

12%

32%

25%

Digital Financial ServicesAlthough Digital Financial Services are becoming

increasingly popular opportunities for financial

inclusion and greater scope of development for

the industry remain for Bangladesh.

Methodology

The business confidence index has adopted the Harmonized Expectation Indicator (HEI) methodology. This approach evaluates business

performance reviews for the foregone year in combination with both the

present and expectations for the upcoming year.

Developing Harmonized Business Confidence Index: The HEI indicator was later examined for differences between the percentages of favorable and unfavorable responses with respect to business confidence. The subsequent score can fluctuate between -100 (all respondents carrying negative expectations for the coming year) and +100 (all respondents

carrying positive expectations for the coming year). Built using a

conveniently standardized geometric average between Situation and

Expectations, the BCI score induced from the HEI method supplied an

accurate scenario of the prevailing business confidence. It is defined as the average between Situation and Expectations.

Sampling: The BCI was calculated by surveying 59 C-Suite level executives

–CEOs, CFOs, COOs, and MDs – spanning a wide range of industries.

Interviews had been carried out between the 1st of March and 16th of

May, 2020. Approximately 40% of the interviews were conducted in

person while the remaining 60% of interviews were conducted remotely

using virtual and telephonic means.

The industries to feature in this study were purposefully determined to

include industries that had the highest level of contribution to the

country’s GDP. The industries have been further segregated into three

broader categories – namely Primary, Secondary, and Tertiary. The

primary sector incorporates agriculture and commodities-related

industries. The secondary sector encompasses manufacturing and

processing industries, while the tertiary sector encompasses services.

30.5%

Secondary Sector

55.25%

Tertiary Sector

15.25%

Primary Sector

Respondents from Each Sector

6

Within industries, firm representation was carefully calculated to be reflective of the broader industry landscape. Overall, the intention was to capture the entire spectrum of enterprises by covering small-,

medium-, and large-sized firms, considering a blend of both local and foreign entities.

The timing of the data collection was such that 40% of the interviews were conducted in person, while

the remaining 60% of interviews were conducted remotely due to the Covid-19 induced lockdown. The

overall Index calculated had representation from all the interviews conducted and thus represents

industry sentiment both with and without the impacts of the pandemic.

AgriculturalInputs

AgriculturalCommodities

Livestock EnergyFisheries

RMG & Textiles Pharmaceuticals

Agro-Processing

Power

Footwear

Furniture Plastic

Automobile

Cement Steel

CeramicElectronics

Secondary Sector Representation

Tertiary Sector Representation

Primary Sector Representation


Business Services

Retail Chain

Information Technology

Advertising


Logistics

Hotel & Tourism

e-Commerce E-services

Construction, and Real Estate

Print & Digital Media

7

The MacroeconomyThe Macroeconomy

The Macroeconomy

In the Fiscal Year 2018-2019, the Bangladeshi economy had logged in a

staggering GDP growth of 8.13%, and the government, with greater

ambitions, projected economic growth of 8.2% for the following FY

2019-20, according to the Finance Minister, AHM Mustafa Kamal.1

Unfortunately, the first half of FY 19-20 witnessed shaken confidence of the investors, ongoing liquidity crunch in the banking sector due to the

crowding out effect, and high government expenditures which eventually led to the overall private sector growth failing to meet expectations

because of reduced investments.

And then Covid-19 struck.

Covid-19 began impacting Bangladesh since its emergence through

disruption of production in China, the major raw material supplier for

most industries of the country. In an attempt to contain its arrival in

Bangladesh, the government imposed nationwide lockdown, which in

turn, strangled the growing economy. Covid-19 has decreased overall

consumption in Bangladesh but the demand for essential products still

prevails. Due to the impact of Covid-19 the demand for luxury or

non-essential products has gone down significantly creating a revenue shortfall for the FMCG, consumer durables, and footwear industries.

Unsteady Footing Prior to Covid-19 Arising from a Distressed Financial Sector

The economy of Bangladesh was already going through a liquidity crisis

owing mainly to the erosion of public confidence, accumulation of NPLs in the banking system, and faltering private sector credit growth. A top

executive from a leading asset management company opined that the

high government FDR rates offer a comparatively riskless alternative to the already risk-averse investors of Bangladesh. The capped interest rates

announced just before the pandemic also reduced the growth of deposits

in the banking sector exacerbating the liquidity crisis further.

1. Bangladesh to clock highest growth in Asia this year, Finance Minister, AHM Mustafa Kamal

The economy of

Bangladesh was

already going

through a liquidity

crisis owing mainly

to the erosion of

public confidence, accumulation of

NPLs in the banking

system, and faltering

private sector credit

growth.

9

The Macroeconomy

This resulted in dampening private sector investments even more. The

private sector credit growth in 2018-19 had already slowed down to

11.32% and it fell even further to an alarmingly low sub-10% by the end of

2019. The investment market had been affected by the rising NPLs, which have become the biggest woe for the financial institutions; hampering its growth substantially and also increasing the cost of credit for the

compliant borrowers. By December 2019, the overall NPLs ratio according to the Bangladesh Bank (BB) stood at 9.3%, with the major impact made

by the State-Owned Banks (SOBs) alone with their NPL ratio at 23.9%.2

The increasing NPLs, mainly due to poor corporate governance, has now created structural challenges for the economy and has been aggravated

further by the Covid-19 pandemic.

It is believed that the NPL growth in the country will increase even further due to the new government loan rescheduling policy favoring the

defaulters, allowing them more time for repayment by providing a 2%

down payment at 9% interest rate. The following liquidity crisis and

downturn of the capital market worsened the scenario of the Bangladesh

banking industry further. The capital market of Bangladesh had already

been registering lower market capitalization-to-GDP ratios each year after

the peak of approximately 22% in 2017.3 The spread of coronavirus

weakened investor confidence further causing the DSEX to fall by 20.31% from mid-February to mid-March, even before the lockdown was

imposed. After the closure of 66 days, the stock market trading resumed

in Bangladesh still with a DSEX index below 4000 points, unable to revive from the impact of Covid-19.

Source: Bangladesh Bank

2. Bangladesh Economic and Financial Indicators, March 2020- International Monetary Fund

3. Market Capitalization to GDP -Dhaka Stock Exchange

Monthly Private Sector Credit Growth in 2019 (in %)

By December 2019,

the overall NPLs

ratio according to

the Bangladesh Bank

(BB) stood at

9.3%

with the major

impact made by the

State-Owned Banks

(SOBs) alone with

their ratio at

23.9%.

10

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

13.2

9.8

0.00

Pre-Covid Remittance Boost Compensates Faltering RMG Export/Export Earnings

Bangladesh is an export-oriented country with the RMG industry

contributing a lion’s share of about 84% of export earnings. The overall

exports from Bangladesh had been increasing over the years with a

monthly growth rate of 9.8%, in December 2019. However, export

earnings in the RMG sector fell by 19% from FY 2018-19 to FY 2019-20.4

The Bangladesh government had been persistent in its efforts to diversify the export basket, primarily through the introduction of preferential

policies for local producers, but as evidenced by the rising concentration

of RMG sector in total exports, this was not bearing immediate fruit.

The growing remittance inflow into Bangladesh from the Bangladeshi migrant workers worldwide amounted to USD 18.32 billion in 2019 and

was considered one of the positive component of the economy by many

of the interviewees. Due to government initiatives to provide 2%

incentives for inward remittances transferred through formal channels,

inbound remittances had seen a jump of 11% year-on-year in January to

June 2019.5 In 2018, the World Bank ranked Bangladesh as the

ninth-highest recipient of remittance in the world, set to grow even

further in the future.

However, remittance alone could not cheer gloomy spirits in the private

sector, and approximately 60% of the executives surveyed opined that the

economy had been performing worse in the 6 months before Covid-19

compared to the same 6-month period in the preceding year. Only about

25% believed that it had gotten better riding on a perception of better

performance among their respective industries. The bullish responses for

the economy originated mainly from the tertiary sector.

4. Bangladesh Garment Manufacturers and Exporters Association

5. Monthly data of Wage earner's remittance - Bangladesh Bank

Source: Business Confidence Survey conducted by LightCastle 2019-20 (N=59)

The Macroeconomy

Current performance of the economy incomparison to the previous years cycle

Moderately to Substantially

better


worse

Same/No change

25.42%25.42% 15.25%15.25%59.32%59.32%

Due to government

initiatives to provide

2% incentives

for inward

remittances

transferred through

formal channels,

inbound remittances

had seen a jump of

11%

year-on-year in

January to June 2019.

11

GDP Growth in FY 19-20 Stumbles despite Steady Growth in the First Half

Approximately 80% of the C-suite members surveyed believed that the

performance of the economy would deteriorate in the following 6

months, which would, in turn, negatively impact their industry and

businesses even further. However, only about 10% of the respondents

primarily from the tertiary sector, representing Financial Institutions and

e-platforms had bullish views for the economy in the coming six months.

For the fiscal year 2019-20, Bangladesh had projected a GDP growth rate of 8.2%, and although the performance of the first half of the year was headed in a positive direction, the target now is deemed unrealistic

following the impact of the global Covid-19 pandemic. Moody’s, the global

ratings agency, has projected that the growth rate would be 4.6% in 2020,

falling further to 4.2% in 2021. The average predicted GDP growth rate for

Bangladesh for FY 19-20 from government and multilateral agencies fell

from 7.7% to 3.25% due to the implications of Covid-19.


The Macroeconomy

Bangladesh Bureau of Statistics 8.2%

8.1%

7.4%

8.0%

5.2%

1.8%

2.0%

3.8%

World Bank

International Monetary Fund

Asian Development Bank


better

Institution Initial projectionfor FY 19-20

Revised projectionfor FY 19-20


worse

Same/No change

Expectations for the performance of the economy in the next six months

10.17%10.17% 79.66%79.66% 10.17%10.17%Approximately

80%

of the C-suite

members surveyed

believed that the

performance of the

economy would

deteriorate in the

following 6 months.

12

The sentiment was echoed by respondents, who cited prevailing liquidity

crunch, the dire state of the capital market, unfavorable policies, and

increasing cost of doing business. Alongside, the impact of Covid-19 is

also a key reason behind the anticipated drop in economic growth.

Bleak Outlook for Exports in the Coming Year

The total export of Bangladesh dropped by May 2020 in comparison to

May 2019, and the exporters do not expect the situation to improve in the

coming months.6 The decreased global demand and suspended

production have affected most export-oriented countries in the world but the effect on Bangladesh has been worse due to its undiversified export basket. The country remains over-dependent on the RMG sector which

was struck at a vulnerable moment by the pandemic. The exports of the

country also took a major hit due to the pandemic, recording an 82.85%

year-on-year fall in export earnings in April 2020, while RMG exports fell

along with canceled orders worth USD3.15 billion in April 2020, according

to the BGMEA.7 Almost two-thirds, 62.5%, of the representatives of

companies from export-oriented industries reckoned that in the next 6

months exports are likely to stay the same as now, if not worsen. The

World Bank, an international financial institution, has also forecasted that the overall exports are likely to fall by 19.8% in 2020.8

The total value of imports to Bangladesh had already plummeted by

11.8% compared to 2018, and the Covid-19 pandemic has exacerbated

matters further. Due to the Covid-19 outbreak in China, by mid-February,

the value of imports from China to Bangladesh alone dropped by 8.3%.

Imports form a crucial component for the local manufacturing sector, and

a disruption in global supply chains also restricted industrial output. The

state worsened even further as the pandemic continued causing a decline

of about 9% of imports in July-April 2019-20 in comparison to the

corresponding period of the previous year.9 As the global oil prices are

unlikely to increase due to dampened global demand, the total import

value for Bangladesh, may not increase significantly in the near future.Despite the export conundrum, the Economist, an international weekly

6. Monthly Summary Sheet 2019-2020 For The Month of July-May - Export Promotion Bureau

7. RMG export in April declines nearly 85 per cent - The Financial Express

8. South Asia Economic Focus, Spring 2020 : The Cursed Blessing of Public Banks - The World Bank

9. Commodity-wise import statistics recorded by customs[Monthly] - Bangladesh Bank

The Macroeconomy 13

Strong Reserves and Debt Position May Buffer theBalance of Payments Situation

Source: International Monetary Fund (IMF)

newpaper, has ranked Bangladesh the 9th strongest emerging economy

in the fight against Covid-19 for its financial strength backed by the low public debt to GDP ratio of 34% and sustainable foreign exchange

reserve.10 According to Bangladesh Bank, the foreign exchange reserve

reached USD 33 billion in April 2020 which could be used to support

import payments as well as ease any foreign exchange liquidity crisis.11

Covid-19 has worsened the prospects for the overall investment scenario

of Bangladesh even further, with risk-averse investors, both foreign and

domestic, either postponing or discarding their pipeline investment plans.

One of the global sports retailers with a presence in Bangladesh had

investment plans to expand their production capacity that have been

postponed to 2022 given the current circumstances.

In 2018-19, Bangladesh received the highest amount of FDI (USD 3.88

billion) registering a growth of about 50% from the previous fiscal year.


The Macroeconomy

10. Joint World Bank-IMF Debt Sustainability Analysis - The World Bank, International Monetary Fund, and International Development Association

11. Foreign Exchange Reserve- Bangladesh Bank

Expectations for Investment in the Next Six Months

Same / NoChange

Lower Higher Much Higher

22.41% 43.10% 25.86% 8.62%

34%Debt to GDP Ratio

Bangladesh

India Pakistan

Vietnam

68.1%Debt to GDP Ratio



14

However, the actual amount was still well below the value projected in the

Seventh Five-Year Plan by the government. Despite the inflow, the FDI in Bangladesh dropped by 20.45% in 2019 according to Bangladesh Bank,

which points at its slippery slope even before the pandemic initiated.

In light of the pandemic, expectations of investments for the future have

dimmed for the private sector to the degree that 42.37% of those

interviewed believe that investments in their respective industries are

likely to decrease in the coming 6 months. The percentage hopeful of

higher investments in the next six months constitutes only some

respondents from the various industries in the tertiary sector.

The pandemic and the subsequent lockdown have forced a larger portion

of the population into adopting technology-based services which

catalyzed the digital shift further. A co-founder of one of the emerging

companies in the E-service industry of Bangladesh has reasons to believe

that the promising rise of the technology sector may stagnate, even

before it has reached maturity and much faster than was anticipated, to

address the changing demands. However, Summit Group, which is one of

the largest conglomerates of Bangladesh received USD 140 million for

project financing from Clifford Capital. The investment was raised to finance Summit’s second Gazipur Power Plant. This news could be seen as

a sign that great opportunities still lie ahead for Bangladesh.12

Unemployment and Negative Remittance Growth May Ground Domestic Consumption

As per Bangladesh Bureau of Statistics’ Labor Force Survey 2016, 86.2% of

employees aged 15 or older belong to the informal sector while the

formal sector represents just 13.8%. The informal blue-collar workforce is

the most vulnerable to the aftermath of reduced business operations due

to Covid-19. According to a research by the Institute of Health Economics,

University of Dhaka, an estimate of 15 million workers from different sectors are likely to be unemployed because of the economic slowdown

caused by the coronavirus.

The Macroeconomy

12. Summit Gazipur II receives USD 140 Million in Project Financing from Clifford Capital and Japan’s SMBC – Summit Power International

42.37%

of those interviewed

believe that

investments in their

respective industries

are likely to decrease

in the coming 6

months.

15

Almost 40% of the respondents are in the process of laying-off employees, and the inclination is more prominent in manufacturing

sectors such as Leather & Footwear, and RMG & Textile. Employment,

however, is expected to increase in technology-driven industries such as

ICT & ITES, digital advertising, and E-platforms. Unemployment can spell

disaster for a country that is unable to fully utilize its demographic

dividend by offering full employment to the youth, but also because of the legion of low-income households who rely on day-to-day income for

sustenance. According to a report by SANEM, a local think tank, if the Covid-19 causes the family incomes to decrease by 25%, the poverty rate

in Bangladesh could reach as high as 40.9% which would in turn decrease

consumption level, a driver of the GDP of the country, even further.13 The

closure of factories and limited operations of businesses have already led

to employment and wage cuts in different industries, thus decreasing the average disposable income of the population. If the situation persists, a

vicious cycle of reduced domestic consumption and unemployment may

form, which might impede economic performance.

The World Bank predicted that the global remittance would lower by

around 20% in 2020 while that for the countries in South Asia would fall

by 22%.14 In line with this prediction, the steady remittance inflow of Bangladesh also fell prey to Covid-19, so much so that in April 2020 the

remittance plummeted by 25% in comparison to April 2019.

Bangladeshi migrants working in the EU and the US were victims of the

economic downturns in the host countries, while workers in countries like

Saudi Arabia and UAE were mainly affected by the plummeting global oil prices. 65% of the remittance inflow to Bangladesh can be attributed to the Gulf Cooperation Council (GCC) countries which are now facing

economic downturns as a result of global oil price reduction, thus


The Macroeconomy

13. SANEM researchers assess poverty impacts of COVID-19 - SANEM

14. World Bank Predicts Sharpest Decline of Remittances in Recent History - The World Bank

Expectations for Employment in the Next Six Months

Same / NoChange

Lower Higher Much Higher

33.90% 38.98% 22.03% 5.08%

Almost

40%of the respondents

stated that their

respective companies

are in the process of

laying-off employees.

16


Total Growth (%)Remittance in billion (USD)

creating pressure on the employment of blue-collar workers. This

situation is only expected to exacerbate as more and more countries

begin taking protectionist measures in the face of the pandemic

aftermath. Since most of the Bangladeshi migrant workforce are

employed as blue-collar workers in the informal economy of the

mentioned countries, the remittance inflow for Bangladesh was heavily impacted as these blue-collar migrant workers were the most vulnerable

to the impact of economic lockdown on the western countries and the

reduced construction projects in the GCC due to depressed oil prices.

The Macroeconomy

Contribution to Workers’ Remittances

FY15 - FY20 (Jul - Feb)

(in billion USD, unless

otherwise indicated)

0.00

0.0010.00

-10.00

10.00

20.00

30.00

-20.00

20.00

FY15 FY16 FY17 FY18 FY19 FY20 FY20

(Jul-Feb)(Jul-Jan)

17

A Slowdown in Economic Activity to Manifest in Reduced Government Revenues

The revenue collection of the National Board of Revenue (NBR), which had historically been weak compared to its annual targets, is expected to

worsen due to declining economic activities. Experts are suggesting that

the government should refocus its priorities from megaproject and

development initiatives towards allocation to social protection schemes

and the public healthcare system to mitigate the consequences of the

pandemic.

The Prime Minister Sheikh Hasina mentioned that the government has

already declared multiple stimulus packages for different industries with varied specifications worth a total of BDT 986.19 billion (approximately USD 11.61 billion), roughly 3.5% of the GDP of the country.15 In order to

mitigate the impending fund scarcity and budget deficit, the Government of Bangladesh (GoB) and Central bank have already resorted to

quantitative easing measures by printing additional money worth more

than BDT 700 billion (approximately USD 8.24 billion) and purchasing

securities, which are likely to put inflationary pressures on the economy. The government is now seeking foreign loans worth USD 4.5 billion from

lenders and institutions like JICA, IsDB.

Meanwhile, the International Monetary Fund has approved financial aid of USD 732 million in addition to the USD 100 million that Bangladesh has

already received from the World Bank. The UK government has also

pledged USD 22 million to help Bangladesh rebuild its economy.

Certain challenges accompany the stimulus packages announced mainly

in the form of complicated procedures and loan qualifications. Exclusion of some industries from the stimulus packages and the extensive role of

banks in the fund disbursement process create further concerns

regarding the implementation of the packages. A C-suite executive from

an agro-processing enterprise voiced his concerns for smallholder

farmers in Bangladesh not being able to enjoy the special benefits extended to the agricultural sector within the stimulus packages as they

are not a part of the formal commercial banking system. When all is said

and done, the financial institutions, mainly the banking sector is likely to

The Macroeconomy

15. SAARC nations’ emergency stimulus packages to tackle COVID-19 economic fallout - The Hindu

The government has

already declared

multiple stimulus

packages for different industries with varied

specifications worth a total of BDT

986.19 billion

(approximately USD

11.61 billion), roughly

3.5% of the GDP of the

country.

18

come out the most damaged from the crisis. The banks have been

burdened with a risk far beyond their capacities and responsibilities much

beyond their scope such as verification of RMG workers’ employment status. To add to this, the government plans to move ahead with its

proposed ceilings on deposits and loan interest, and the Bangladesh Bank

has also issued a circular postponing interest collection for April and May

2020. Considering the added responsibility that comes with significant risks, the commercial banks may shy away from providing concessional

loans to SMEs due to the high risk of non-payment or defaulting. The GoB

needs to partially cover default risks of disbursing financial assistance to SMEs to increase the risk appetite of the commercial banks towards

facilitating the affected enterprises.

In order to assist banks with the disbursements of the stimulus packages

and to ease the current pressure, the government has formed a

refinancing fund worth BDT 250 billion (approximately USD 2.94 billion) in order to assist the banks with disbursements from the two stimulus

packages concerned. The Central Bank of Bangladesh has also taken

initiatives such as revision of the cash reserve ratio to 4% to increase the

liquidity for the banks given the pressure of the stimulus packages and

reduction of the repo rate to 5.25% to further aid the funding for the

banks through lower cost of credit.16

The Macroeconomy

16. Government and institution measures in response to COVID-19 – KPMG

19

Overview of Stimulus Packages Introduced by GoB

The Macroeconomy

Financial stimulus

package for

export-oriented

industries

Targeted Beneficiary /Purpose

Payment of

workers’ wages

for 3 months

(max)Source of Fund

Fiscal Budget

Interest Rate / Service Chargefor Beneficiary

2% (Service Charge)

Interest Rate for Banks

—

Fund Duration

2 Years

Type ofFacility

Loan for

workers’

wage

Relevant Stakeholder

Bangladesh Bank - Accounts

and Budgeting Department

(A&BD)

Banks will apply for a stimulus to BB.

After availing the facility, they will

disburse loans to the industries

USD 0.6 bn

BDT 5,000 cr

Facility Duration

2 Years

Financial stimulus

package for

COVID-19 affected

industry and

service sector


Affected businesses

(Except CMSME) of

industry and service

sector for COVID-19Source of Fund

Own Source

of Bank


9%


4.5% interest subsidy from the government

Fund Duration

3 Years

Type ofFacility

Working

capital

finance


Bangladesh Bank - Accounts

and Budgeting Department

(A&BD)

Banks will finance based upon their

own due diligence and the BB policy.

Banks will be entitled to interest

subsidy on repaid loans

USD 3.5 bn

BDT 30,000 cr

Facility Duration

1 Year (max)

20

Financial stimulus

packages for

COVID-19 affected

CMSMEs


CMSMEs affected by

COVID19

Source of Fund

Own Source

of Bank


9%


5% interest subsidy from govt.Fund Duration

3 Years

Type ofFacility

Working

capital

finance


SME and Special Programs

Department A&BD

Banks will finance based upon their

own due diligence and the BB policy.

Banks will be entitled to interest

subsidy on repaid loans

USD 2.4 bn

BDT 20,000 cr

Facility Duration

1 Year (max)

Special Incentive

Refinance Scheme

for Agriculture

Sector


All working capital

based Agriculture

Sectors Except crop

and gainsSource of Fund

Bangladesh

Bank


4%


1%

Fund Duration

2 Years

Type ofFacility

Working

capital

finance


Agricultural Credit Department

Banks will get refinance against their

finance based upon own due

diligence and BB

USD 0.6 bn

BDT 5,000 cr

Facility Duration

18 Months

The Macroeconomy 21

Pre-Shipment

Credit Refinance

Scheme


Export-oriented

industries

Source of Fund

Bangladesh

Bank


6%


3%

Fund Duration

3 Years

Type ofFacility

Pre-

shipment

Credit


Sustainable Finance Department



diligence and BB

USD 0.6 bn

BDT 5,000 cr

Facility Duration

4 Months

Refinance

Scheme- 2020 for

Low-income people,

Farmers and

Micro/Marginal

Businesses


Low-income people,

Farmers and

Micro/Marginal

Businesses Ultra poor

and underprivileged

people

Source of Fund

Bangladesh

Bank


9%(max) [3.5% for intermediary MFIs]


1%

Fund Duration

3 Years

Type ofFacility

Micro

Finance


Financial Inclusion Department



diligence and BB policy through MFIs

USD 0.4 bn

BDT 3,000 cr

Facility Duration

1 Year (max) for microfinance, 2 Years (max) for micro business

The Macroeconomy 22

In many ways, Bangladesh finds itself in the same predicament that many of its developing peers are grappling with as the Covid-19 pandemic rages

on. The pandemic is a threat to global remittance and international trade

that had been driven by globalization. But the pandemic comes at an

especially vulnerable time for the private sector in Bangladesh, which was

already beset by structural issues within the financial sector. Ironically, it is the same financial sector that is expected to bear the burden of government stimulus to pull the economy back into its original growth

trajectory. Failure to do so threatens mass unemployment and a

subsequent drop in domestic consumption, which will diminish the

prospects of avoiding a recession. That will not bode well for the private

sector.

It is important for GoB to improve on the lower private sector credit

growth. As it portrays lower confidence in business among the investors. Also the crowding-out effect is drying out the already vulnerable private sector investment scenario in the country.

The Macroeconomy

Refinance Scheme

for Working

Capital Finance in

Large Industries

and Service Sector


Affected businesses

(Except CMSME) of

industry and service

sector for COVID-19Source of Fund

Bangladesh

Bank


9%


4%

Fund Duration

3 Years

Type ofFacility

Working

capital

finance


Department of Off-Site

Supervision

Banks will get refinance up to 50% of

their finances under the Financial

Stimulus Package in SL. 2 of this

table.

USD 1.8 bn

BDT 15,000 cr

Facility Duration

1 Year (max)

Total Amount of Stimulus Package and Refinance Schemes

$BDT

83,000crore

USD

9.8billion

23

Industry InsightsIndustry Insights

Industry Insights

Readymade Garments (RMG)

The readymade garments industry accounts for about 84% of the total

export earnings of Bangladesh making it one of the most important

sectors.4 However, the growth of the industry has recently begun to

crumble, registering a growth rate of 7.74% in the first half of the current fiscal year (FY 2019-20), a figure much lower than the preceding years and expected to exacerbate in the latter half of the fiscal year.

Bangladesh has not been able to build a sustainable competitive

advantage for itself despite being a top RMG manufacturer globally. The

country may soon lose its biggest advantage of cheap labor upon

graduation to the LDC status in 2024, while competitors such as Vietnam with its higher productivity and stronger backward linkage, and Ethiopia

with its lower-cost production continue to gradually expand their global

market share.

Bangladesh is currently the second-largest global garment exporter with a

market share of 6.5% followed by Vietnam with 6.2%.17 Vietnam may soon surpass Bangladesh backed by the increasing international investments,

the preferential trade agreements, and focus on product diversification. The RMG sector of Vietnam was not as affected as Bangladesh due to Covid-19 and continued its production partially, while the factories in

Bangladesh remained closed. Bangladesh’s focus on low-end products

has also limited the expertise of the workers in the industry. The lack of

transparency and bottlenecks in the infrastructure and customs

processes also increases the lead time and other inconveniences for all

the industries related to the final product.

Covid-19 has already forced multiple factories to shut down and may

cause more to do so in the future. Even though many manufacturers

reopened at the end of April 2020, the export in the month declined by

85% approximately from the corresponding period in 2019. Even a month

after factories began reopening, 419 units remain closed due to a lack of

17. World Trade Statistical Review 2019

25

Source: EPB

work orders. While the woven sector of Bangladesh is highly

import-dependent for raw materials, the knit sector, albeit in a better

position, still relies on China mainly for threads and accessories. As a

result of the disruption in the supply chain and closure of factories

caused by the lockdown, the supply from the industry has fallen

dramatically. Countries all over the world have faced the brunt of

over-dependence on China for their productions and the apparel sector

respondents believe that this might be an opportunity for Bangladesh to

capture a greater portion of the international market share as countries

seek to diversify away from China.

The lack of demand for RMG products has also put the industry in a

critical situation as orders worth USD 3.15 billion were already canceled

or postponed by April 2020, while other buyers continue to delay

payments and propose discounted prices. This, along with the pressure

of paying the salaries of the workers, has forced many factory owners to

declare employment cuts, threatening the livelihood of all dependent on

this major employment sector of the country.

Industry Insights

RMG Export Receipts Comparison between FY 19 and FY 20

July

Aug

Sept

Oct

Nov

Dec

Jan

Feb

Mar

0.0

FY 2018-19

FY 2019-20

0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0

3.58

3.883.21

2.843.14

2.913.71

3.073.42

3.053.42

3.523.68

3.623.72

3.323.34

2.73

Although it will take time,

we can gain China’s RMG

market share post-Covid

as long as we reduce our

dependence on them for

supplies.

– Financial Controller

of an Apparel

Manufacturer in

Bangladesh

26

In billion (USD)

The industry leaders, however, are hopeful that the demand for low-value

garments may be deemed as essential in the coming months in the

western markets, due to constrained disposable income of the mass

population. Hence, this would create a new market for the Bangladeshi

producers to cater to in accordance to their specialization and may help

reshape the overall competitive landscape.

Industry Insights

Opportunities Challenges Support

Decreasing global

dependence on China

Weak demand G2G discussions in order to

ensure payment of previous

orders (Already provided)

Capacity development in

accordance to fast fashion

Decreasing export volume

High import dependency for

raw materials

Increasing global

competition

Port congestion and lack of

modernization

Closure of some RMG

factories

Cost-effective labor

GSP Trade Facilities

Likely increase in demand

of low-end products in the

near future

Low-value garments which

are available at a

reasonable price

27

Pharmaceuticals

Covid-19 has changed the pattern of the overall demand in the

pharmaceutical industry of Bangladesh. Pharmaceutical demand was

traditionally derived from the doctors and pharmacist prescriptions but

has now pivoted towards demand from hospitals. While the demand for

general medicine plummeted, sales of medicines for fever as well as

chronic diseases surged temporarily as a result of panic purchase. While

sales to hospitals had compensated for this loss to an extent, the industry

registered an overall sales decline of 20-30% in April 2020, according to

some of the leading companies.

The two major bottlenecks for the industry lie in the sourcing of raw

materials for production and shortage of packaging components, both of

which are a result of excess demand and disrupted global supply chain

networks.

Most of the pharmaceutical companies in Bangladesh lacked access to

Active Pharmaceutical Ingredients (API) during the pandemic due to

excess demand globally and protectionist measures from the

manufacturing countries. Although the government of Bangladesh has

taken steps to construct a dedicated industrial park for the production of

Active Pharmaceutical Ingredients (API), pharmaceutical companies

realize that demand on a much larger scale is required to make the

production of APIs in Bangladesh feasible and internationally competitive.

The challenges of the pharmaceutical sector are also likely to be

compounded by a shortage of packaging materials (such as aluminum

foil) in the international market. Despite having international order

requests, local companies are unable to meet them because of their

mandates on meeting local demand first, and not having sufficient packaging materials to produce and export outbound medicines in order

to meet the global demand. Transportation has also become a barrier for

pharmaceutical exports as outward flights originating from Bangladesh are closed for the time being and the companies are unwilling to take on

the burden of delivery risk.

Industry Insights

Focus on the impending

shortage in raw materials

caused the companies to

overlook potential

shortage of packaging

materials, which is now a

reality for Bangladesh

- Senior Executive of a

leading pharmaceutical

company in Bangladesh

28

The pharmaceutical industry of Bangladesh has been put to the test by

Covid-19 and its performance has been exceeding expectations. Despite

the shortcomings, the industry has been able to meet the local demands,

while expanding its capabilities. Multiple local pharmaceutical companies

have begun manufacturing generic versions of early-level Covid-19 related

medicines, which underlines the agility of the industry of Bangladesh.

Industry Insights


Increasing health

consciousness amongst

consumers

Import dependency for raw

and packaging materials

Robust import network to

ensure timely delivery of

packaging and raw materials

Inadequate Research &

DevelopmentRising exports and global

market share of local

companies

TRIPS extension till 2033

29

Leather & Footwear

The footwear industry in Bangladesh had been growing in the recent past

mainly owing to increasing domestic demand. The executives from the

companies interviewed believe both local and global demand for the

products is on the rise driven by the increasing purchasing power and

growing orders from global companies like Wolverine and Timberland.

For most global buyers, the major reasons for sourcing from Bangladesh

are the GSP Trade Facilities that the country enjoys and the availability of

a low-cost workforce. However, the workers still trail other countries in

terms of productivity and the backward linkage is still nascent.

Furthermore, only a handful of existing suppliers meet the global

standards required by international clients.

According to the Leather goods and Footwear Manufacturers & Exporters

Association of Bangladesh, orders amounting to USD 316 million were

canceled by April due to Covid-19. However, the exporters interviewed

believe that the export volumes will pick up soon. The domestic retail

market may still take longer to recover as the local customers are likely to

be more conscious about their expenditures.

Even though prices of raw materials have not increased globally, they are

manipulated by the middle-men, affecting the companies importing through them. Due to the absence of certification from the Leather Working Group (LWG), Bangladesh fails to export products at profitable prices. Despite being of similar quality like its international competitors

such as Pakistan and Russia.

Despite the lower demand and canceled orders, the factories all over the

world are eager to produce regardless of the prices offered to keep operations running and sustain themselves during the Covid-19 crisis.

According to an interviewee representing the Leather and Footwear

industry, since Vietnam is planning on decreasing its prices by at least 3% in order to remain competitive, Bangladesh may have to do the same.

This cut-throat competition is going to impose more pressure on

small-scale footwear and accessory suppliers who have not been included

in the export-oriented stimulus package.

Industry Insights

Bangladesh may receive

the orders shifting away

from China, as Vietnam

is already working at full

capacity. Bangladesh is

likely to get precedence

over India because of the

lack of trust of the

buyers in, and

low-quality services of

India. However, the

dependency of the entire

supply chain on China at

one level or the other

has got the companies

concerned.

– Head of Supply Chain

Management of a

major leather and

footwear manufacturer

and exporter of

Bangladesh

30

Industry Insights


Increasing local and global

demand

Weak Demand due to the

pandemic

Inclusion of small-scale

suppliers in stimulus

packages

G2G agreements to promote

the industry in the global

market

Support with faster

completion of the CETP

Weak backward linkage and

technical know-how

Unavailability of skilled

personnel and certified suppliers

Lack of facilities and

certifications

Government incentives on

the production of synthetic

footwear

Cost-effective labor and GSP Trade Facilities

31


The agriculture sector of Bangladesh may contribute only 14% of the GDP

of Bangladesh, but it is the source of livelihood for about 41% of the

population of Bangladesh and remains crucially responsible for the

country’s food security.

Covid-19 has disrupted the industry in almost all aspects. According to a

study conducted by LightCastle Partners in April 2020, while the prices for

most of the crops had increased at the consumer-level, farmers were

forced to sell crops and vegetables at lower prices due to weak demand

and supply chain disruptions. The global prices for most commodities

apart from rice such as wheat, cotton, and maize have decreased from 4

to 25%, according to the World Bank. Since food accounts for a higher

percentage of household income in low-income countries, Bangladesh is

likely to be affected by the rising food production and security concerns in the future according to experts.18

Industry Insights

Changes in price of crops and farmed products

Paddy Potato Moshur

SpinachLaushak

Eggplant

Bottlegourd

Fish -pangash

Onions Egg Poultry

Fish -rui

Fish -katla

Fish -pabdaMilk

Fish -telapia

7%

20%

29%

-8%-12%

17%

-23%

-40% -38%

-25%-21%

-1%

-23%

7%

-22%

-45%

0.00

Source: LightCastle Partners primary data (N=160)

18. Deep Dive into the Challenges across the Agriculture Value Chains of Bangladesh - LightCastle Partners

32

According to the respondents, although the government has permitted

transportation of agricultural products, the lack of availability and the

rising cost of transportation have emerged as major challenges for the

farmers. Furthermore, the distribution and availability of labor have also

become a concern for the farmers as farmers from around 25 districts

depend on farm labor from other places for harvesting.

Farmers and intermediaries in the fisheries sector have also been impacted by the drop in market prices since the Covid-19 outbreak and

are fearful of difficulties in sourcing seed stocks for their next production cycle. The shrimp sector, which is one of the largest agro exports of the

country, has witnessed a massive decline in shipments since early 2020.

The effects from Covid-19 and Cyclone Amphan can leave long-term negative residual impacts on the shrimp sector. The dairy sector of

Bangladesh was already crippling with plummeting sales as tests finding antibiotics and heavy metals in popular brands had created a negative

perception among the mass consumers. The executives interviewed

expressed concern as the demand for impulse dairy products such as

ghee, sweets, butter, and cheese fell dramatically, an impact of Covid-19.

Demand for liquid milk was constant for the formal dairy sector, although

milk collection from informal dairy sector took a massive hit immediately

following lockdown due to logistical limitation and depletion of demand

in both B2B and B2C avenues.

Source: World Bank

Industry Insights

Percentage Change in Commodity Prices from Jan-April 2020

0.00

10.00

20.00

30.00

-10.00

-20.00

-30.00

NaturalRubber Cotton

SoybeanOil Maize Cocoa

CoffeeRobusta Soybean

CoffeeArabica Wheat

Rice

33

It is hoped that farmers and agriculture supply chain intermediaries can

benefit from the BDT 145 billion (approximately USD 1.71 billion) left under the ‘Agricultural and Rural Loan Policies’ for grains and crops, along

with the newly allocated BDT 50 billion (USD 588.58 million) stimulus

package, especially for the other agriculture sectors.

The silver lining in the agro-processing industry has been the frozen food

sector, which is no longer able to keep up with the demand for certain

products. The Frozen food industry, deemed as essential, could continue

its operations amidst the lockdown but was affected by the lack of sourcing options. Logistics has also been a major bottleneck for this

nascent industry; however, the promising demand shows that the industry will grow significantly once the situation turns to normalcy.

Industry Insights


Increasing demand Access to credit Improved logistics network

Policies to inject greater

workforce particularly

suburban youths

Unfair price distribution

Unavailability and high cost

of transportation

Undersupply of workforce

Increasing exports of

agro-processing products

Focus on mechanization

Change in consumer

lifestyle

Our forward linkage has

been hampered as we

are more dependent on

traditional outlets for

our sales and the

lockdown has made it

harder for us and the

customers to reach the

shops.

– AGM at one of the

leading dairy

companies in the

country

34

Fast-Moving Consumer Goods (FMCG)

FMCG includes a diverse selection of products ranging from cosmetics

and toiletries to packaged dry food and nutritional food items. The

industry leaders in the study believe that the demand for FMCG products

is a bellwether of the performance of the economy as a whole. The

pre-Covid FMCG industry in Bangladesh had been growing at only a

marginal rate, which belied expectations of rising disposable incomes and

accelerating economic growth. C-suite respondents believe that this

pointed to the overall negative performance of the economy prior to

Covid-19.

Multiple studies by LightCastle Partners Ltd. had documented the decline

of household incomes across urban and rural Bangladesh in a pandemic

impacted economy. In addition, Covid-19 has caused job losses and

uncertainty as well as salary payment delays for the vast majority of the

country. While the demand for packaged goods, cosmetics, and personal

grooming products have plummeted, the health, hygiene, and nutrition

products have seen a significant increase in demand, driven by concerns surrounding Covid-19. While the weakening demand has increased

inventory for some of the companies, others have been forced to reduce

their production.

Limited operations of the facilities such as the restrictions imposed on the

largest land-port, Benapole, have also constrained the import of both raw

materials and finished products for the companies, especially due to the perishable nature of the goods. The companies now are focusing on sales

by volume rather than profit in order to retain customer loyalty. To tackle the diminished domestic demand, some of the manufacturers of

toiletries, and other supermarket staples are working on producing new

brands or SKUs at lower prices or providing discounted offers. Due to the pandemic, the major brands in the industry are also partnering with

E-commerce companies to deliver their products to the customers, as a

result of shortcomings in resources in this regard. Most of the FMCG

companies in Bangladesh were not prepared for the repercussions of the

pandemic which declined their sales even further. An executive

interviewed thus expects the companies to make more investments to

prepare a strong framework and supply chain infrastructure for any such

future uncertainty.

Industry Insights

The overall demand for

the FMCG products has

plunged, but that for

health, hygiene, and

nutrition products surged

as people are now more

conscious about not only

protecting themselves

from coronavirus but also

increasing their immunity.

– Senior Brand Manager

at a multinational FMCG

company operating in

Bangladesh

35

Most companies in the FMCG sector are dependent on imports for the

raw materials and packaging materials for their products. The pandemic

has disrupted the global supply chain for these imports and the limited

operation of local ports and other infrastructures due to the lockdown

has further compounded the problem. Due to the limited production,

some of the few exporting FMCG companies of Bangladesh are now

focusing on local markets and thus not tending as much to exports

despite having global demand.

There has also been a shift in the medium of purchases. Since the

lockdown, due to decreasing disposable income and hesitation among

the customers to purchase products offline, the sales occurring through modern and online channels have increased, motivating companies to

shift emphasis to these emerging channels and some have even invested

in their online platforms.

Industry Insights


Changing consumer lifestyle Weak Demand Credit for working capital

management for smaller

companiesSupply chain disruption

Access to credit

Increasing exports from

local companies

36


A mix of internal factors and external circumstances have culminated in

problems that have plagued the financial sector from 2019 onwards. The financial sector in Bangladesh remains dominated by banks, even though newer forms of institutions and investment opportunities are arising. The

banking sector of Bangladesh was already under great stress due to the

liquidity crunch, mounting NPLs, and slowing private credit growth, which has only been made worse by the Covid-19 pandemic.

In terms of the internal factors that have contributed to the fragile nature

of the financial industry, bad corporate governance is a major issue. The banking system, and the state-owned commercial banks, in particular,

have suffered severely from a rising trend of NPLs which has arrested the profitability of the banks. As bad as it is, the reported NPL rate may be underreported , as suggested by a study of the IMF.19 The directives by

the Bangladesh Bank allowing the loans to be rescheduled repeatedly and

the recent policy of allowing the defaulters an even broader timeline to

repay the loans with a 2% down payment on a 9% interest rate, has raised

alarm bells among industry observers and experts. These measures have

allowed many inefficient banks to survive and creates a moral hazard for the overall system.

All of this has led to a loss of trust in the financial system which has been further eroded by the highly publicized liquidation of a local NBFI in 2019, which meant depositors no longer saw NBFIs as safe mediums of investments either. This is likely to make it difficult for NBFIs to attract deposits in the future. Many NBFIs are already suffering from challenges with Asset-Liability management and the recent trend is likely to

exacerbate the problem for them.

Externally, the high interests of savings certificates offered by the government have crowded away deposits from the banking sector. That,

along with the massive rise in government borrowing to fund

infrastructure projects and government expenditure, has created a

liquidity crisis in the financial industry. Even though the liquidity situation improved at the beginning of 2020, the private sector credit growth has

still not increased significantly as banks have invested the excess liquidity in risk-free government securities in order to manage risk. Taken together

with the government-mandated caps on the lending rates and deposit

Industry Insights

Some banks should be

allowed to fail in order to

improve the overall

health of the system. If

banks are let to fail, the

system will get rid of its

weakest links while the

ones surviving would be

forced to do better

– Senior Executive at a

leading NBFI of the

country

19. 2019 Article IV Consultation—Press Release; Staff Report; and Statement by the Executive Director for Bangladesh - International Monetary Fund

37

rates of 9% and 6% respectively, deposit growth has been very low in

banks, while credit growth has fallen as a combination of corporations

deleveraging and cutting back on expansion plans. On the other hand, the

reduced interest spread has also led banks to shy away from lending to

MSMEs, which are considered as the driving forces of an economy.

The stock market in the country has experienced a falling

market-capitalization to GDP ratio as it was only 13% in 2019, the lowest

among all emerging Asia-Pacific economies. The extremely low number of stock issues and the fall in stock prices of all the major companies have

led to the index falling to its lowest levels in 5 years. Covid-19 is likely to

further intensify these failings and make the market even more volatile

going forward. The government’s stop-gap measure to impose a floor on stock prices has led to an illiquid market with declining trade volume. The

market had been closed since the start of the general holidays (March

26th) and only reopened during the first week of June 2020. The stock prices are expected to go down further once the floor pricing mechanism is withdrawn.

Industry Insights

Non- Performing Loan (NPL) Ratio

0.00

5

10

15

20

25

30

35

De

c 2

01

6

De

c 2

01

7

De

c 2

01

8

Jun

20

19

Se

p 2

01

9

De

c 2

01

9

De

c 2

01

6

De

c 2

01

7

De

c 2

01

8

Jun

20

19

Se

p 2

01

9

De

c 2

01

9

De

c 2

01

6

De

c 2

01

7

De

c 2

01

8

Jun

20

19

Se

p 2

01

9

De

c 2

01

9

De

c 2

01

6

De

c 2

01

7

De

c 2

01

8

Jun

20

19

Se

p 2

01

9

De

c 2

01

9

Banking Sector

NPL

in %

of L

oa

ns

State OwnedBanks

PrivateCommercial

Banks

ForeignCommercial

Banks


38

According to the government proposals, a majority of the post-Covid

stimulus packages are going to be disbursed through the commercial

banking sector. This might compound the stress on the banking sector as

banks will bear the brunt from the potential wave of defaults due to the

inability of the borrowers to pay back outstanding loans. For improving

the liquidity scenario of commercial banks, the central bank has reduced

the CRR ratio by 1.5%, the repo rate by 0.75%, and has increased the ADR

ratio by 2%. The effectiveness of these policies, however, rests on how quickly the economy can bounce back from the Covid induced shock and

whether the government offers to cover the credit default risk. The World Bank has recently proposed a dedicated fund of USD 300 million for a

credit guarantee scheme for commercial banks.

Industry Insights


Fintech Liquidity crisis

Lack of financial literacy

Volatile capital market

Excessive competition

Corporate tax reduction

from 37.5% to 35%

Default risk coverage by the

government

Increasing Non-performingloans

Decreasing private sector

credit growth

Disbursement of the

stimulus package

Scope for agent banking

39

Power & Energy

The power sector in Bangladesh operates with an installed capacity of

19,633 MW and in 2018-19, recorded utilization rate of only 43%. The

high demand-supply gap has been very costly for Bangladesh because of

the provision for capacity payments for idle power plants that amounted

to USD1.1 billion in FY 2018-19. Despite the excess capacity, 1,000 MW is

also imported from India adding costs of up to BDT 37 billion (USD 435.5

million) per year for the country.20 In 2019, Bangladesh imported LNG worth 6 times as much as in 2018, reflecting its growing demand for and reliance on an expensive form of energy. The LNG transmission network capacity and port capacity also add to the challenges of the industry

which needs to be addressed going forward. The excess capacity of the

power sector of Bangladesh is challenged mainly by the inadequate

distribution network. Furthermore, due to the pandemic not only has the

effectiveness of the power distributors reduced, but their ability to collect payments has also been compromised. The Dhaka Power Distribution

Company Ltd. (DPDC) in April 2020 could only complete 15% of the

expected revenue collection. If these delayed payments continue to pile

up, the power producers and distributors are likely to have a cash flow crisis which will make matters even worse.

Covid-19 has further affected the power demand, which has declined from 12000-12500MW to 8500-9000MW daily. Consequently, capacity

utilization of the surveyed companies plunged to between 25% - 50% of

full capacity. Increased idleness of the power plants now not only costs

the government higher capacity charges but also deprives the power

producers of the variable service charge. In this surplus backdrop, new

power plants are coming into operation such as the Payra plant, which

has added capacity charges of BDT 1.6 billion (USD19 million) per month

despite being unutilized because of inadequate transmission capacity.

According to the Power System Master Plan (PSMP), the government had

targeted to generate 10% of its power from renewable sources by 2020,

but it currently produces only about 3% of the total. Utilizing wind power

is only viable in the coastal areas for Bangladesh while solar power

remains the most feasible source of renewable energy for the country,

despite the shortage of land available. However, the increasing efficiency of the solar panels and the decreasing costs due to increased demand

and competition in the sector raise hope for the renewable energy

generation of the country.

Industry Insights

Future projects in the

Power sector will slow

down not only because

of the existing excess

capacity but also

because the industrial

growth and demand

failed to meet

expectations. The

Covid-19 has dampened

the prospects even

further.

– Finance Director of a

private power

generation company

20. Govt pays for unnecessary power and LNG import, force majeure not applied - The Business Standard

40

The demand for natural gas has also dived by about 83%. However,

Bangladesh continues to not only import the usual volume but also pay

prices 4 times higher than the international market rate because of fixed contract pricing. While the Power Division estimates that the overall loss

due to the pandemic may cross BDT 350 billion (USD 4.12 billion), the

power producers are in trouble due to the delayed payments from the

government. The power producers surveyed unanimously agreed that

the industry performance is set to be even worse in the next 6 months.

Bangladesh was already struggling on its path to achieving the targets set

in the Master Plan, but the impacts of Covid-19 may now force the

government to revise the plan altogether.

Industry Insights


Excess unutilized capacity High capacity payment Increase infrastructure

investment

Improve access to

national-level power

Weak infrastructure

Weak Demand

Massive investments

41

Logistics

The overall logistics industry of Bangladesh has been severely affected by Covid-19. According to a World Bank report, the exports of Bangladesh

could be increased by 20% if the logistics of the country were improved.21

As a result, for countries dependent on exports like Bangladesh,

uninterrupted operations of the logistics industry is essential. However,

because of the lockdown imposed, both the exports and imports of the

country have plunged substantially which has now led to lower demand

for the logistics industry. The limited operation of the port and other

public transportation because of the lockdown imposed have restricted

the business of the inbound logistics companies. Furthermore, the

dependent industries have also been suffering as a result of reduced availability and higher cost of transportation for raw materials as well as

finished products. This, in turn, resulted in lower production of finished goods which reduced the outbound logistics business as well.

The simple idea of delivering products to the doorsteps of customers has

opened an industry that has not only grown multifold itself but also

facilitated the growth of E-commerce and F-commerce businesses. The

industry, which now operates with 300 companies, collects daily delivery

payments of approximately BDT 5 million (approximately USD 59.000),

more than half of which are generated from E-commerce and

F-commerce (Facebook SME stores). Despite the growth, the industry

leaders are still focused on the urban peripheries due to surging demand

while the national level logistics network is still at its nascent stage.

Established logistics companies in the sector had failed to jump early on

the online commerce bandwagon and are now playing catch-up with

more nimble and specialized E-commerce logistics providers. Capitalizing

on their vast distribution network would have been a great advantage if

they had moved earlier.

The demand and sophistication of the industry may increase because of

the newer opportunities opening because of the plans for the India

Bangladesh Transit Route, development of the Payra Port, and other

inter-city initiatives.

The logistics industry promises further employment opportunities in the

future mainly due to the lucrative remunerations offered in comparison to many of the leading industries of the country. The respondents believe

that investments are likely to increase going forward as there is an

apparent necessity of capital injection.

Industry Insights

The logistics industry of

Bangladesh is very

fragmented and lacks

coordination among the

different players, who need to be connected

and organized going

forward.

- Director of a leading

delivery solution

company of Bangladesh

21. Moving Forward: Connectivity and Logistics to Sustain Bangladesh’s Success - The World Bank

42

In order to pull in the firms shifting away from China, Bangladesh has to improve its logistics environment, according to the Japan Bangladesh

Chamber of Commerce and Industry. Foreign venture capital firms and other investors have already begun investing in local logistics companies

of Bangladesh amidst the pandemic. Alibaba, the Chinese E-commerce

giant also plans on investing BDT 5 billion in its subsidiary Daraz, to

develop the logistics infrastructure further. The necessity of strong

logistics has been seriously highlighted by the Covid-19 pandemic, and as

Bangladesh revives further planning and investments in technology and

innovation ought to be made to cater to the changing needs.

Industry Insights


Increasing demand Absence of an integrated

network

Collaboration among

logistics industry players for

a nationwide integrated

system

Policies to provide capacity

development via formal skill

attainment programs

Lack of skilled workforce

India Bangladesh transit

route

43

Digital Financial Services (DFS)

Digital Financial Services (including Mobile Financial Services) have only

recently gained greater traction in Bangladesh and are gradually

becoming an integral part of the drive towards complete financial inclusion. The adoption rate for these services has been growing rapidly,

registering growth in average daily transactions by 4.95% in the first two months of 2020, according to the Bangladesh Bank. However, more than

90% of the transactions constitute cash in-out and P2P transactions,

pointing at the industries’ weakness at creating an ecosystem

encouraging B2B to B2Gov transactions.22

The industry has seen higher growth in active users recently as Covid-19

has created a demand for greater adoption of DFS. Even though the

cash-in, cash-out, and P2P transactions have increased multifold, the

overall industry has not seen growth as the cash-in transactions through

agents, merchant payments, and B2B transactions plunged significantly due to the restrictions of the lockdown imposed. The merchant payment

transactions are expected to decrease even further owing to the

cautiousness regarding spending and social distancing that the pandemic

has instilled into the minds of the people. According to an industry insider

interviewed, the DFS transactions plummeted by almost 60% as most of

the banks and DFS agents remained closed in the lockdown. The banks

offering digital wallets have seen a significantly growing demand for the services, which will in turn motivate more banks to offer similar services in the future. Additionally, MFS-bank and MFS-MFS interoperability can

notably boost the industry going forward.

Industry Insights

22. Mobile Financial Services (MFS) comparative summary statement of February, 2020 and March, 2020- Bangladesh Bank


Growing technology

adoption

Expensive cash in-out model Policies to introduce B2Gov

MTN Platforms

Private associations to

collaborate for B2B

platforms

Lack of interoperability

Large untapped market and

services

We have failed to create

a cashless economy as

the cash in- cash out

model is still present,

which is an expensive

model, to begin with.

– Head of MFS at a

local commercial bank

44

Real Estate & ConstructionThe real-estate industry of Bangladesh had been under great stress ever

since the downturn in 2013, but only recently had the companies begun

to rekindle their hopes for the future. Exorbitant costs had deflated demand in the past few years, but the industry saw growth in the last 2

years, especially with the 20% growth in apartment sales in 2019,

according to REHAB.23 The growing MAC population, home loan facilities

for government employees at subsidized rates, simpler bank loan terms,

allowance of investments of undisclosed money, and reduction in

registration fees have revived the expectations from the industry. The

rising demand in Chittagong, one of the largest metro cities of the

country, with only 20% of its real estate capacity developed, have also

opened up newer opportunities for the industry.

Covid-19 has cast a shadow on all hopes the industry had for 2020.

Demand for real estate has reduced radically as the crunch in disposable

income forced consumers to defer making long term investments. The

exacerbating liquidity crunch of the banking sector is likely to decrease

the disbursement of home loans. The sagging demand has already forced

multiple real estate companies to initiate job cuts. Industry leaders have

also expressed concerns that the government stimulus has not given

specific attention to the sector and have expressed their doubts on whether banks would be willing to engage with real estate companies

during the downturn.

Ongoing construction projects have come to a halt, while only a few of the

steel rolling mills in the country continue to operate at a limited capacity

because of the shortage of raw materials. Majority of the raw materials

for steel are imported in Bangladesh and with the lockdown imposed, the

inflow of raw materials has been disrupted. Bangladesh’s import dependency for clinkers and finishing materials has also made the cement companies particularly vulnerable. According to the Bangladesh

Cement Manufacturers Association (BCMA), the sales of cement have

decreased to 0.5 million bags per day from an average of 2.5 million per

day. Although the cement industry of Bangladesh had been growing

rapidly, it was challenged by unhealthy competition, unfavorable tax

policies, and over-capacity. Now, because of the business disruptions caused by the pandemic, demand in the industry has fallen sharply. The

lockdown imposed has limited demand for cement for the government

Industry Insights

23. Realtors eye return to good days - The Business Standard

The people are going to

focus on meeting their

basic needs, like food and

shelter first. Real estate purchases and

investments are unlikely

to be a priority for the

people now. So, initially

because of COVID-19

there will be a high impact

on the overall business of

the industry.

- Managing Director of a

leading Real Estate

Developer in

Bangladesh

45

and corporate projects significantly. Despite the reduced international prices for raw materials of the cement industry, the industry insiders are

worried that demand may not increase in the near future. As the focus of

mass population is on meeting essential needs, while the government

may also prioritize healthcare above the infrastructural projects.

The steel industry of Bangladesh also witnessed a positive growth rate

before the impact of Covid-19, due to the focus on public infrastructure

development and industrialization. The pandemic together with the

lockdown imposed however has now not only constrained the supply

chain but also weakened demand. The Bangladesh Steel Manufacturers

Association (BSMA) estimated that the steel industry incurred a loss

amounting to about BDT 3 billion (USD 35.4 Million) between March and

April 2020, which may increase to BDT 15 billion (USD 177 Million) by the

end of the year if matters fail to improve.

Industry Insights


Demand and opportunities

in other metropolitan cities

outside Dhaka

Weak Demand Whitening of money by

investing in real estateHigh registration costs &

unavailability of financing

Unavailability of raw

materials

Government Mega Projects

46

ICT & ITES

Bangladesh’s ICT and ITES industry has grown remarkably over the past

few years and already the country boasts the second largest pool of

online workers in the world.24 Declared a thrust sector by the

government, the industry had targeted exports of USD 5 billion annually

by 2021. However, the industry has just begun its growth and still focuses

on less complex products with a wide range of scope left untapped.

Despite the potential, access to funds remains one of the major

challenges for the industry. Even though the government has provided

the companies with multiple benefits and incentives, securing credit for operations and expansions is still a challenge because of the banks’

requirement for collateral from these service-based companies. Weak ICT

infrastructure and high infrastructure costs have also emerged as

challenges for the industry. 28 IT parks have been planned across

Bangladesh, but so far only 3 of these have been operationalized. The

industry also suffers from the lack of a skilled workforce to compete at the international level. This is crucial to build the country’s brand value at

the international stage.

Covid-19 has indirectly affected the ICT & ITES industry, as its demand is derived from the performance of other industries. The companies are

also facing delayed payments which may complicate working capital

management further fueling job cuts in the future. Despite the rising role

the E-commerce segment is expected to play in the imminent future,

industry insiders forecast that the revenue for 2020 may fall by 20-25%.

Although companies catering to both domestic and foreign clients are

facing weaker demand than before due to the global impact of the

Covid-19 pandemic, companies interviewed are still able to utilize a

healthy minimum of 75% of their full capacity. Companies have been

forced to adopt a work-from-home model, which has made ensuring

facilities and resources such as high internet bandwidth or technical aid

to the employees, more difficult.

60% of the respondents, however, are hopeful that demand will pick up in

the next six months. The IT companies have similar expectations for

investments in that it will increase only in the long term. Even though

equity-based investments would be available, the companies are still

worried that their valuations might be lower due to the prevailing market

conditions.

In the next 6 months, the

companies are going to

focus on surviving, as the

demand is unlikely to

increase. But people are

going to understand the

importance of

digitalization so the

demand is going to rise

in the long term.

– Senior Executive at a

local Software

Outsourcing Company

Industry Insights

24. Where are online workers located? The international division of digital gig work - Oxford Internet Institute

47


Increasing demand Access to credit Credit schemes by banks

Tax incentive policies

Capacity development

resulting in workforce

development

Payment delays

Weak ICT infrastructure

Unavailability of skilled

workforce

Government initiatives

Higher investments

Industry Insights 48

E-Businesses

The shift towards digitization, preference for convenience and speed, and

increasing purchasing power of customers have encouraged the growth

of electronic platforms. The E-service companies in Bangladesh cater to a

diverse selection of needs such as online content creation, ride-sharing

services, and at-home customized services.

E-commerce platforms have seen an increase in demand due to the shift

away from traditional mediums during the pandemic for delivery of

essential products, as evidenced by the doubling of average ticket size for

grocery items, while that for the non-essentials fell significantly. The rise in demand has increased the need for delivery-men leading to higher

employment, even though the lack of skilled and adept personnel

remains the biggest challenge for the industry. Some of the companies

have even expedited investment plans in order to accommodate the

growing demand. The E-commerce companies however are facing prob-

lems in sourcing the operation of local suppliers and import channels

have been disrupted due to Covid-19. All the E-commerce company

representatives interviewed were hopeful of higher investment and sales

in the coming six months as the subscription growth during the pandemic

has been organic and should persist going forward with limited customer

attrition.

The ride-sharing and ticketing services garnered zero demand especially

after the general holidays were announced. E-service companies provid-

ing physical services have been hit the hardest by the pandemic as there

is only residual demand for cleaning and appliance repairing services due

to the lockdown and heightened hygiene consciousness of the people.

All of the representatives from E-service companies agreed that invest-

ments are likely to decrease in the next 6 months, but the overall industry

performance will improve in the long-term. The pandemic may have

lowered demand but they expect it to increase in the future because of

the adjustments in lifestyle and psychology among the population,

especially for touchpoints like the online ticketing services. The industry

may perform even better if the bandwidth and efficiency of government facilities (such as those of the BRTA) were increased to accommodate the

growing demand of the industry.

Industry Insights

The government policies

have been favorable for

the e-commerce

companies as the

government has been

trying to push online

purchases and has also

permitted the companies

to continue their

operations and delivery.

–Senior Executive of

one of the prominent

online retailers of the

country

49


Increasing demand Lack of skilled workforce Integrated logistics network

for nationwide servicesTransport restrictions due to

lockdown imposed

Weak ICT infrastructureIncreasing employment

opportunity

Increasing technology

adoption


Consumer Durables & Electronics

The consumer durables and electronics industry of Bangladesh had been

held back due to the absence of backward linkage, production capacity,

and technical expertise. With significant local investment and facilitated by government incentives, local brands like Walton and Symphony have

now begun acquiring local market share.25 Electronic products like air

conditioners and smartphones of local companies have also recently

commenced Original equipment manufacturer (OEM) export to the USA

and other nations. The growing MAC population and the increasing

purchasing power of the country are considered to be the leading factors

behind the growth of the domestic industry.

Bangladesh is still highly import-dependent as the global brands occupy

higher market shares in home appliances and other electronic products.

Local producers are also highly reliant on imports, with the main value

addition being limited to product assembly. This high import-dependency

increased the susceptibility of the industry to Covid-19, which took effect in the form of supply chain disruptions. The future is very uncertain for

the companies as consumers are forgoing the immediate purchase of

consumer durables in favor of basic necessities. Sales may decrease even

further if product inventories suffer from an import bottleneck and cannot cope with any potential surge from pent-up demand once

Covid-19 lockdown measures are lifted. As a result of the lockdown

imposed, the financing options used in the purchase of some appliances are now limited for the buyers which have affected overall demand as well. Due to the weak demand, prices for electronic products have already

started falling with several industry players relying on heavily subsidized

pricing and installment offers in order to generate organic demand amidst the economic scenario.

Industry Insights


Increasing purchasing

power

Weak Demand Monetary incentives like a

subsidy for consumers to

increase demand

Temporary Tax exemptions

High import dependency

Local production and export

of electronic products

The industry was

impacted before most

others as supply was

affected at first due to China’s lockdown. The

conditions in China

eased, but the industry

had a new problem,

local demand fell

drastically as the

lockdown restricted

movement and led to

income uncertainty for a

significant population group.

- Director of a leading

local home appliance

brand

25. Local Consumer Durables Market Dominated by Chinese Brands - DATABD.co

51

Automobiles

The industry has been hampered severely due to the impacts of Covid-19,

however, it is not to say that the industry was thriving before. Even before

the pandemic reached the country, the effective demand for four-wheeler automobiles (both new and reconditioned) had plunged, while prices for

reconditioned imports had increased owing to a rise in import duties. The

demand for light automobiles had started declining while that for the

heavy automobiles was hit even worse as many businesses were unable

to purchase due to unfavorable liquidity scenario. The overall demand in

the industry was mainly driven by government purchases (much of it

driven by implementation of various projects) as the private and commer-

cial purchases were essentially at a standstill.

Covid-19 hit the already struggling industry by dampening demand even

further and disrupting the supply chain for local producers and assem-

blers. Bangladesh is heavily dependent on China for raw materials for

both automobiles and its accessories which was seriously hampered

when the outbreak started in China. Because of the bottleneck in the

supply chain, companies surveyed had to operate at less than 25% of

their capacity. The company owners are now facing increased uncertainty

as the sales are mostly credit-based, and the companies operate on a hire

purchase model. The imminent liquidity crisis in the banking sector (see

Financial Institutions section) also does not bode well for the future of the

automobiles sector.

While the four-wheeler market has shrunk, the motorbike industry has

flourished due to the facilitative import policies and rise of ride-sharing platforms mainly. Unlike the 4-wheeler industry though, initiatives have

been taken to develop the growing market and presently around 80% of

motorcycles operating in Bangladesh have been assembled or even

manufactured locally. Owners of renowned motorcycle producers were

confident that in the coming years, vehicles of Bangladesh would be exported to Nepal, Africa, and the northern states of India. However, that has all been colored uncertain due to the pandemic as the factories have

been operating under capacity and the distribution and sales channels

have been put on hold during the pandemic lockdown.

Industry Insights

The automobile industry

is highly debt-leveraged.

Therefore, this industry

has been suffering greatly due to the

liquidity crisis in the

economy and will

deteriorate further if the

situation worsens.

- CMO of one of the

largest conglomerates

of Bangladesh

52


Introduction of

reconditioned cars in

agro-industry for transport

Weak Demand Assembly and production of

local vehiclesHigh prices

High Tax Rate on imported

automobiles


Tourism & Hospitality

In 2018 the tourism and hospitality sector of Bangladesh contributed

4.4% to the GDP of the country, but it still has not received the attention it

deserves.26 The tourism sector had been thriving in 2019 backed by the

increased domestic tourism, which makes up about 98% of the demand,

while the number of foreign visitors rose gradually. Buoyed by the multi-

ple ongoing government megaprojects, the study respondents believe

that the hospitality sector had enjoyed one of the most profitable seasons in late 2019 and early 2020 before the coronavirus struck.

Tourism in Bangladesh still depends on natural attractions and suffers from a failure to create a tourism-friendly environment ensuring the right

facilities and entertainment for the tourists. Transportation facilities and

infrastructure of the country are underdeveloped, especially in rural

areas, standing as a major challenge for both the leisure and business

tourists. While the focus on Islamic tourism may be beneficial for the country, the business insiders are worried about the government losing

focus on the greater picture.

Since early 2020, the coronavirus outbreak has not only dimmed expecta-

tions of immediate growth of the sector but has also forced the hotels to

operate at minimal capacity. Hotels based in Dhaka and Cox’s Bazar have

been able to take advantage of organizational contracts for hosting

foreigners who had been engaged in various projects and international

development efforts. These expatriate workers were left stranded after international flights were grounded, but with the operation of special flights by several countries, this source of revenue is also dwindling for hotels. Hotels are also getting a brief respite from some companies

operating through the outbreak who have decided to locate their staff away from their families, and the government’s decision to quarantine

healthcare workers at hotels.

Hotels outside Dhaka, especially those which are reliant on domestic

tourists have suffered exceptionally due to the coronavirus lockdown, with many hotels shutting down and furloughing non-core staff until operations resume at scale. When it comes to events and exhibitions, the

hotels have had all bookings canceled with no new reservations recorded

for the near future.

Industry Insights

The Tourism Industry of

Bangladesh lacks proper

branding, and

tourist-friendly policies

and facilities. Developing

specialized tourism

areas may be beneficial in the long run.

- Head of Operations at

a local boutique hotel

26. Tourism: A possible new driver for the economy of Bangladesh - DATABD.co

54

Industry insiders believe that a full recovery is unlikely in the medium

term. According to the Tour Operator Association of Bangladesh (TOAB),

the tour operators in the country alone may incur a loss of BDT 60 billion

(approximately USD 706.3 million) in 2020 as a result of the pandemic.

While the business tourism segment is expected to bounce back the

fastest as projects in the country will be the quickest to resume post-lock-

down, this is contingent on the resumption of international flights and whether Bangladesh is designated as safe for travel by other govern-

ments and international observers.

Industry Insights


Increasing domestic tourism Lack of facilities and

resources

Inclusion in the stimulus

packages

Policies to promote safe

tourism and developed

infrastructure

Proper promotional

campaigns targeted towards

nature enthusiastic

globetrotters

Unfavorable government

policies

Weak Demand

Attracting international

tourists

Higher purchasing power of

the masses

55

Problem AreasProblem Areas

Problem AreasOn a macro level, the biggest challenge due to Covid-19 is the impact on

livelihood. This is chiefly due to significant blue-collar workforce layoffs in the secondary sector alongside reduced economic opportunities of the

mass population. The pandemic might result in permanent job losses as

many SMEs might fail to survive the onslaught of the economic slow-

down.

Large scale supply chain disruption has affected both the forward and backward linkage of several service value chains and this, in turn, has

affected the agriculture sector significantly resulting in differences in price point for the same commodities sold in urban and rural peripheries.

Export earnings derive strength from the two core pillars: receipts from

RMG and remittances from GCC. While global declining orders have

significantly exposed the blue-collar workforce of the nation to economic vulnerability, reduced remittances from GCC will push the lower-income

population further towards the poverty line.

The overall absence of business confidence among investors and C-suite members of the private sector will also lead to disruption in demand-sup-

ply dynamics that will eventually slow down the economic wheel.

Salient problem areas mentioned by the C-suite respondents are

described below:

Diminishing Demand

39% of the total C-suite members cited weak demand as a major problem

they have to face in their operations. While only about 17% of the

companies interviewed pre-Covid faced weak demand, the number rose

to 54% after the pandemic struck. While RMG indicates lower demand

due to the global recession, consumer durables and real estate suffered significantly as neither of them falls under the category of essentials. Demand for over-the-counter medicines like vitamin-based supplements,

have increased; however, there has been a decrease in the demand for

39%

of the total C-suite

members cited weak

demand as a major

problem.

57

prescribed medicines, which, in turn, reduced the overall demand for the

pharmaceutical industry.

Curtailed Capacity

44% of the executives referred to their constrained ability in relation to

operations. Impact of Covid-19 completely halted operations in late

March and April 2020 while disrupting both the backward and forward

linkage for several industries. The shortage of raw materials and

packaging materials and trade restrictions both home and abroad

hampered the supply chain across industries – especially for the RMG,

pharmaceuticals, real estate, and construction sectors. The lockdown,

imposed because of the pandemic, further limited the reach of

distribution as well as the availability and cost of finished products transportation. A major reason behind value chain disruption is the lack

of coordinated logistics services, which hampers supply chain

management of major industries across the country.

Pessimistic Perception

A quarter of C-suite respondents mentioned consumer perception to be

one of the major challenges. For the poultry or dairy industries, the

challenge arose due to mass negative perception about the quality of the

products, which eventually culminated in weaker demands.

However, for others such as the ICT & ITES, and Tourism and Hospitality

industries, the need for global brand identity has constrained the growth

and demand in the industry. For the few companies venturing out with

non-traditional textile products, recognition stands as an obstacle as well.

Lack of financial literacy and awareness among the mass population gives rise to an unwelcoming perception and skepticism for companies like

venture capital firms and asset management companies, offering newer forms of investment.

Inadequate Infrastructure

27% of the participants in the study mentioned the weak infrastructure

and facilities present in the country to be restrictive to their operations.

The limited infrastructural capacity of the ports as well as the inefficiency

Problem Areas

27%

of the participants in

the study mentioned

the weak

infrastructure and

facilities present in

the country to be

restrictive to their

operations.

58

and paucity of modernization of customs create hassles for both

export-oriented businesses and those dependent on imports. This causes

high lead time, which, in turn, increases financial and opportunity costs for the companies. Shortcomings in facilities and resources needed for

the growth of the ICT and Tourism are also major concerns. Importantly,

the government’s mega infrastructure projects will be delayed due to two

major reasons:

Disruption in the logistics network and resulting lag in sourcing

The government is also considering reallocating budgets to other

impending issues like the healthcare in the upcoming budget

Restricted (Financial) Resources

Financial constraints surfaced as the major challenge common to most

(64%) of industries. 14 of the 59 companies complained about the high

cost of credit in the market that ultimately increased the cost of capital,

rendering most projects unsuitable. Some of the respondents, however,

feel that given the new fixed single-digit interest rate policy, the problem may be mitigated once the impacts of Covid-19 subside. Moreover,

companies considered access to credit a problem because of the lack of

trust of local investors, and slowing FDI inflow into the country. A common obstacle for the ICT and ITES industries was the collateral

demanded by the financial institutions for loans, the absence of which hindered their access to funding. Of late, companies are also facing

delayed payments due to disruption in the daily operations from both

B2B and B2Gov projects. Finally, high NPLs, liquidity crisis, and unfavorable currency exchange rate add to the financial constraints. While the stimulus package creates a pathway for a temporary solution to

the liquidity crisis in the financial sector, the biggest challenge lies ahead for the SMEs as commercial banks may not be eager to conduct business

with SMEs due to unfavorable financial spread.

Frail Policies

37% of the decision-makers found the policies and regulations of the

country to be unfavorable for their businesses. Companies across several

industries expressed their discontent with the policies and regulations

imposed by the government and Bangladesh Bank. The arbitrarily high

Problem Areas

14

of the 59 companies

complained about the

high cost of credit in

the market which

ultimately increased

the cost of capital

making most projects

unsuitable.

59

taxes and other costs imposed on the different aspects of the business as well as the high import duties continue to challenge the ease of doing

business for some industries. Political instability, corruption, and tradition

of “speed money” were also criticized by some.

Problem Areas 60

Future ProspectsFuture Prospects

Future Prospects

Prospective Industries

Pharmaceuticals

Pharmaceutical industry already supplies to nearly the entire domestic

market and exports to different continents around the world. It exported USD 46.85 million worth of products across the globe as per the Export

Promotion Bureau, Bangladesh.

As a Least Developed Country (LDC), Bangladesh enjoys special

waivers exempting the pharmaceutical country from the TRIPS

agreement, effectively allowing the country to produce, sell and export patented drugs. Despite the sector’s reliance on imported APIs, cheaper

labor costs, and the TRIPS exemption are expected to drive investments

into this sector in the medium-to-long term.

The coronavirus has resulted in consumers placing even greater

emphasis on health and hygiene. Even after the effects of any panic buying have dissipated, pharmaceutical companies anticipate greater

engagement in the process of bringing vaccines and curative medicines to

the market.


With dramatic improvements in productivity, Bangladesh has now

achieved food security. The emphasis among middle and affluent class consumers now has shifted to safe, healthy, and organic products, which

is likely to drive the demand for high-quality and value-added food

products going forward.

The agro-processing industry has the ingredients to thrive as a key

local sector since the majority of raw materials can be sourced locally due

to favorable climate conditions and enables and end-to-end supply chain,

unlike other manufacturing sectors that rely on global supply chains.

1

2 notches since 2017-18

2

the same rank as in 2017-18

62

The agriculture system in Bangladesh is highly reliant on smallholder

farmers, but increased mechanization (supported by government

subsidies) and ag-digitalization are gradually tilting the landscape towards

commercial farming, which is expected to have a positive impact in terms

of economies of scale, quality improvements, and traceability. Eyeing this

potential for improvement, some big conglomerates have stepped up

their investments into the sector.

ICT and ITES

The government had projected the size of the ICT and ITES sector to

grow to USD 5 billion annually by 2021 which resulted in the industry

players to benefit from the government’s Digital Bangladesh and Vision 2021 frameworks. The sector may enjoy tax breaks, subsidies and

opening up of IT parks across the country is likely to spur further

investments into this space.

Since investment requirements and entry barriers are low, new ICT &

ITES sector entrants can still carve a space for themselves in the local and

international markets.

Advancement in technology is broadening the scope of the industry,

especially with the emergence of 4IR (encompassing technologies such as

robotics, artificial intelligence, nanotechnology, quantum computing, biotechnology, the Internet of Things, 3D printing, autonomous vehicles).

Bangladesh may be well-positioned to take advantage of these

developments if the emphasis is placed on R&D and innovation rather

than just focusing on low-end software development for external

markets.

Logistics

The explosion of E-commerce and online sales has aided in the growth

and structural transformation of the logistics industry of Bangladesh. This

has accompanied greater investments into digitization, enhancing the

sector’s productivity.

As the country’s manufacturing industry expands rapidly, the logistics

sector will be called upon to meet the growing collection, transportation,

and storage requirements from different industries. The sector is also

Future Prospects

4

3

First time in the top 5 list

2 notches since 2017-18

63

well-placed to take advantage of the government’s multi-billion-dollar

investments into improving the state of transport infrastructure.

The contagious nature of Covid-19 has led to consumers demanding

contactless services, which will, in turn, have a positive knock-on effect on the logistics sector, at least for the short term.


The economy predominantly remains cash-based with opportunities

of greater financial inclusion, signaling heightened scope of development of the industry in the future.

The sector has enjoyed growth with the advent of E-commerce and

online sales in recent years. Coupled with the recent introduction of

e-KYC (electronic Know-Your-Client) and impacts of Covid-19, consumer

demand for contactless financial services has increased significantly, serving to permanently expand the user base for DFS providers.

The government’s plans to introduce interoperability for the MFS

providers can usher in increased competition in this space. If the

government decides to issue social security payments via DFS, this can

drive massive expansion in the multitudinous BoP consumer segment.

Future Prospects

5

First time in the top 5 list

64

Way ForwardWay Forward

Way ForwardApproximately 80% of the C-suite members surveyed believe that the

performance of the economy is going to be even worse in the following

six months, in turn negatively impacting their businesses further.

Growing NPLs in the banking system and decreased private sector credit growth were already the major determinants involved in the liquidity

crisis and with an impending global recession ahead, there needs to be

concrete and effective measures in order to revive the faltering economic wheel and elevate the country back to normalcy.

Economy

Low public debt to GDP ratio and foreign exchange reserves will help direct the economy back to normalcy

Low public debt to GDP ratio and sustainable foreign exchange reserves

will be the key artillery when fighting to revive the economy. The foreign exchange reserve may be utilized to support import payments and seek

foreign loans in order to rally the nation forward. The government also

has the option to proceed with sovereign bonds, approach a budget

deficit leading to a multiplier effect or focus on loans from multilateral agencies or private banks as a measure to revive the economy.

Redirect private investors from risk aversion to investment optimism via safety net policies

Savings certificate rates provided by the government ensure high returns while being comparatively riskless, dampening the prospects of private

sector investment. With less than 10% credit growth by the end of 2019,

the private sector investment prospects will diminish further due to the

Covid-19 scenario. By ensuring safety net against NPLs for financial institutes and markets, reducing the cost of credit for compliant

borrowers and making FDRs less attractive in comparison to private

investments, the investors’ confidence in the private sector can be improved.

Low public debt to

GDP ratio and

sustainable foreign

exchange reserves will

be the key artillery

when fighting to revive the economy.

66

Establish a cashless economy via the introduction of B2B and B2G transaction ecosystem

The digital financial services industry has seen higher growth in active users as Covid-19 has ushered the population towards digital adoption.

Even though the cash-in, cash-out, and P2P transactions have increased

multifold, the overall industry has not seen growth as the cash-in

transactions through agents, merchant payments, and B2B transactions

plunged significantly due to the restrictions imposed through lockdown. The merchant payment transactions are expected to decrease even

further owing to the discretion in terms of spending and social distancing

that the pandemic has instilled into the minds of the people. In order to

ensure a future cashless economy, it is important to introduce B2B

transactions by private companies through the network and create an

ecosystem that will strengthen the money transfer network further. The

government should also try and direct a portion of its offline cash-based transactions in the short term and slowly move towards a cashless

disbursement mechanism in the long run in accordance with its

digitization plans.

Consider deferment of LDC graduation

Bangladesh met all the criteria to begin its journey out of the group of

Least Developed Countries (LDC) in 2018 and had charted a path for full

graduation from the LDC group by 2024. The advent of Covid-19 is

expected to have an impact on rolling back much of the gains the country

has made in recent years in terms of economic growth and fighting poverty. Storming ahead without a long-term understanding of the

implications of Covid, Bangladesh may lead to a premature graduation

scenario, in which case the country might not be able to recover its

footing and, consequently, has to give up on coveted LDC benefits such as preferential trade treatment, concessional finance, and various other exemptions.

Industry

Diversify export revenue streams to reduce high dependency on RMG and promote high-value service industries globally

The RMG industry represents 84% of the country’s total export receipts

Way Forward

It is important to

introduce B2B

transactions by

private companies

through the network

and create an

ecosystem that will

strengthen the MT

network further.

67

and while measures have been taken to diversify the export basket via

promotion of electronic products, agro-processing, and the ICT & ITES

sectors, the dependency on RMG is still prevalent and thus makes the

nation vulnerable to any such crises again in the future.

Exports took a major hit due to the pandemic, recording an 82.85%

year-on-year fall in export earnings in April 2020 while RMG exports fell

with canceled orders worth USD 3.15 billion in April 2020 (Source:

BGMEA). As major retail brands across the world move towards reduced

work orders due to weakened demand, the necessity of diversification has never been of more significance for Bangladesh.

Many developed nations are already in talks of shifting their businesses

from China to other developing nations and Bangladesh has the potential

to be a front runner as an alternative destination. Effective G2G agreements with countries like Japan and the USA may open doors to

exporting existing high-value services at lucrative prices abroad, thus

reducing heavy dependency on RMG. The establishment of SEZs based on

such priorities will also help facilitate the process.

Effectively implement stimulus packages and ensure proper support to MSMEs

Support for SMEs would mean support for a robust economy.

Considering the commercial banks are already burdened with the

mammoth task of reviving the economy via financial disbursement through government-initiated stimulus packages, it is important that the

support for SMEs remains a priority for GoB. Introduction of credit

guarantee schemes for MSMEs while the government partially bears the

default risk would enable a system that will facilitate the survival of many

SMEs in the country while simultaneously reducing the risk for

commercial banks.

Support the ICT & ITES industry via strong policies and capitalize on the future of automation

The impact of Covid-19 will leave a mark on the concept of production

and workforce management across the globe. The Covid scenario has

catalyzed the process of automation and digitization for many

manufacturing and service companies around the world and this would,

Way Forward

Introduction of credit

guarantee schemes

for MSMEs while the

government partially

bears the default risk

would enable a

system that will

facilitate the survival

of many SMEs in the

country while

simultaneously

reducing the risk for

commercial banks.

68

in return, create unprecedented opportunities to capitalize on the

support functions of the next industrial revolution. While Germany, Japan,

and China are leading the race to automation, GoB needs to introduce

strong policies to help the ICT & ITES industry survive the existing

economic crisis while simultaneously enabling the industry players to

create low value IT support products that will complement the digital

transformation of the major countries altogether.

Employment

Develop the capacity of the laid-off workforce and redirect them towards new employment opportunities in high prospect sectors

Almost 40% of the executives surveyed believe that the rate of

employment is likely to decrease, more significantly in industries like Leather & Footwear, and RMG & Textiles. According to a report by South

Asian Network on Economic Modeling (SANEM), a local think tank, if the Covid-19 causes the family incomes to decrease by 25%, the poverty rate

in Bangladesh could reach as high as 40.9%.

Employment, however, is expected to increase in technology-driven

industries such as ICT & ITES, digital advertising, and E-platforms. Hence it

is important that the government take measures to redirect the nation’s

workforce towards these high prospect industries in the future. Capacity

development in the form of updated curriculum in polytechnical

institutes, which concentrate on the technical skill requirements of these

upcoming sectors, can be a way forward to promote such workforce

migration. Industries like the e-commerce logistics sector provide similar

to or better remuneration packages in comparison to RMG & Textiles,

albeit the size of the industry being significantly smaller than the former two industries. As a consequence, workforce demand in the new potential

sectors needs to be evaluated and addressed duly to tackle the layoffs, expected to occur in the established sectors.

Way Forward 69

Zahedul Amin is an entrepreneur, sustainable business consultant and a researcher with 12+ years of experience in

private & development sector consulting, market research and banking. Zahed has expertise in consulting and

research, and has led 140+ projects with private and development sector clients. He believes in the power of data in

driving strategic imperatives for clients. Based on his diverse experiences, he’s adept at cross-migrating sector best

practices for designing sustainable business models and engaging the private sector in solving development

challenges. He has significant expertise in market and consumer research, value chain analysis, business model

development, private sector engagement, financial modeling and impact assessment.

Before co-founding LightCastle Partners, Zahed worked for HSBC’s corporate banking department, specializing in

relationship management and risk analytics. As part of the relationship management team, he helped manage a

portfolio of USD 120 million.

He can be reached at [email protected]

Business consultant bringing 4 years of project management experience, having managed multidisciplinary projects

across Bangladesh, Vietnam, Cambodia and Uzbekistan, with a portfolio total of approx. $6 million. Currently working

in projects on nutrition, WaSH and investment climate. Completed BBA from Institute of Business Administration,

University of Dhaka.

Management consultant and PMP® with 5 years of experience, having worked across a number of projects spanning

multiple domains including ICT, education, health & nutrition, public financial management, agriculture and livestock,

economic empowerment and WASH. He is currently engaged in projects related to strategy consulting, market

research, financial management and MSME development. Completed BA in Business and Management from the

University of Hull, UK.

Mashiath Khurshid is a recent graduate with a finance major from the Institute of Business Administration, University

of Dhaka. She has experience in strategy development and data analysis, and is insistent on planning everything to

the last detail. She is always looking for opportunities to learn new things, and travel.

Specialized in visualization, UI/UX design, content generation and A/V for branding with an experience of 2 years

encompassing a portfolio consisting of both local & multinational clients. Completed Bachelor's in Computer Science

from American International University-Bangladesh (AIUB).

Contributors

Zahedul AminDirector, Finance, Strategy and Consulting Services

Sanjir AliSenior Business Consultant & Project Manager

Saif NazrulSenior Business Consultant & Project Manager

Mashiath KhurshidTrainee Consultant

Md. Tanjim MorshedCreative Design Associate

70

Disclaimer:

All information contained herein is obtained by LightCastle from sources believed by it to be accurate

and reliable. Because of the possibility of human or mechanical error as well as other factors,

however, all information contained herein “As IS” without warranty of any kind.

LightCastle adopts all necessary measures so that the information it uses is of sufficient quality and from sources LightCastle considers to be reliable including, when appropriate, independent third-party

sources. However, LightCastle is not an auditor and cannot in every instance independently verify or

validate information received in preparing publications.


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Gulshan 1, Dhaka 1212, Bangladesh.

Email: [email protected]

Mobile: +88 01711 385988, +88 01747 353438

Web: www.lightcastlebd.com

Data on Demand Platform: databd.co

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