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BUSINESS
CONFIDENCE
SURVEY
2015Nordic Business in Bangladesh
Business Confidence Survey 2015 Page 01
Bangladesh Business Confidence SurveyReport 2015
Bangladesh’s economy has been on a rise over the past decade and this survey shows that the respondents remain positive about the country’s prospects. Bangladesh has the potential to achieve middle-income status by 2021 and attracting foreign investments will contribute significantly in the realization of this goal. Despite the optimism, the present findings also identify areas where business confidence is limited. The successful transition wil l largely depend on how certain socioeconomic and pol it ical challenges are addressed. The survey aimed to explore the impact such factors have had on Nordic operations and investment decisions, and also to uncover how Nordic businesses perceive the present business climate in Bangladesh. The survey indicates that improvements in infrastructure, proper regulatory framework, pol it ical stabi l i ty and a better business environment wil l pave the way for an inclusive and sustainable growth.
The Business Confidence Survey 2015 report is a testament of the strong Nordic presence and close cooperation that exists in Bangladesh. This edition is an outcome of a joint initiative between the Nordic Chamber of Commerce and Industry in Bangladesh (NCCI) and the Sweden Bangladesh Business Council (SBCC), and the continued support from the Swedish, Danish and Norwegian Embassies in Bangladesh. The present survey was conducted among the Nordic companies operating in Bangladesh. The results from the present survey closely mirror the findings from 2013.
01
This survey shows that the respondentsremain positive about the country’s prospects.
02
Bangladesh’s economy has beenon a rise over the past decade
Socioeconomic and political challenges
The survey aimed to explore the impact such factorshave had on Nordic operations and investment decisionsand also to uncover how Nordic businesses perceive thepresent business climate in Bangladesh
Executive Summary
Page 02 Business Confidence Survey 2015
The readers can find this survey beneficial should they wish to engage with the Nordic Business Community in Bangladesh via NCCI or SBBC and to gain access to a vast network of some of the best know-hows on how to be successful as an international business in Bangladesh. The Nordic business community is thriving in Bangladesh in spite of the challenges and bottlenecks that come across in this survey. Almost all participants indicate that they plan to expand their operations in Bangladesh and over half of the Nordic businesses seem favourable on the prospects for the coming years.
Even though the survey captures the views of a qualified majority of the Nordic businesses in Bangladesh, one must be careful to draw firm conclusions from the responses. Instead the results should form a basis for discussing what areas are most promising as well as challenging for businesses and investors. The next survey will be conducted in 2017.
The report also seeks to identify opportunities and navigate challenges while also to serve as a tool for new Nordic investors interested in entering the Bangladeshi market. It also aims to serve as an important foundation for dialogue between the three Nordic embassies in Bangladesh and the national Government with the purpose to further enrich business conditions and trade relations.
The Nordic companies in Bangladesh have made several commendable contributions in Bangladesh, including involvement in development cooperation to alleviate poverty and in promoting gender mainstreaming. Globally, Bangladesh is considered to have experienced some of the most impressive accomplishments towards achieving the Millennium Development Goals set forth by the UN, and this having taken place since international businesses have stepped up their activities in the country, serves as a great encouragement to organizations like us who are working to promote increased business across borders.
Opportunities & challenges
Bottlenecks
The survey indicates that improvements in infrastructure, proper regulatory framework, political stability and a better business environment will pave the way for an inclusive and sustainable growth.
The report also seeks to identify opportunities andnavigate challenges while also to serve as a tool for newNordic investors interested in entering theBangladeshi market
Business environment
Almost all participants indicate that they plan to expand their operations in Bangladesh and over half of the Nordic businesses seem favourable on the prospects for the coming years.
06 Next business confidence survey
The next survey is planned to be conducted in 2017
05
04
03
Business Confidence Survey 2015 Page 03
The purpose of the Nordic Business Confidence Survey is to monitor the business confidence of Nordic companies in Bangladesh as well as to be able to better understand trends in the Bangladeshi business environment. The first survey was published in 2013 which served as a broad indicator for how Nordic companies judge the present and future business climate in Bangladesh.
The survey was conducted from 7th June to 31st October 2015 and was sent to a total of 62 companies, of which, 52 are NCCI members and 10 non-members, comprising of Nordic companies who are not part of the Chamber.
The distribution among countries of origin for the different companies were; Sweden: 24, Denmark: 17, Norway: 10, Finland: 4 Bangladesh: 2. With 32 respondents completing the survey, the 2015 Business Confidence Survey achieved a response rate of 58 percent. 29 NCCI Members participated in the survey, corresponding to a response rate of 56 percent. The survey was designed along the lines of 2013 Business Confidence Survey to gather similar data on key issues affecting Nordic companies to understand the develop-ment and changes in perception. The respon-dents rated the survey with an average rating of 7.6 out of 10.
62
COMPANIES WERE SURVEYED
52NCCI MEMBERS WERE SURVEYED
2015 THE SURVEY WAS CONDUCTED FROM
7 JUNE 2015 TILL 31 OCTOBER 2015
32
RESPONDENTS COMPLETED THE SURVEY 10 NON MEMBERS, COMPRISING OF
NORDIC COMPANIES NOT PART OF THE CHAMBER
7.6
the survey with an average rating of 7.6 out of 10THE RESPONDENTS RATED
Page 04 Business Confidence Survey 2015
About the Survey
The climate for starting a business in Bangladesh has been rated just above 6 (6.28) by the respondents, almost similar to the ratings in 2013 (6.11). Similarly, half of the respondents (53%) reported facing undue bottlenecks during establishing their business in Bangladesh. Reported problems include difficulties in getting work permits, opening bank accounts, finding commercial office spaces and a general lack of transparency in bureaucracy.
47% of Nordic companies starting a business in Bangladesh have done so through own legal entities. Joint - Ventures (35%), Liaison Office (12%) as well as other forms of regis-tration (6%) make up the remainder. Drawing comparison with 2013, companies prefer starting operations through a joint ventures rat-her than whollyowned enter-prises.
The Headquarters of all the Nordic companies are located in Dhaka. The next preferred destination for a business hub is Chittagong, where 29% of the respondents have established their base in comparison to 2013 when 17% of the companies confirmed their presence in the port city. Regional diversification is also taking place where offices have been opened in Khulna, Sylhet, Rajshahi, Gazipur, Barisal and Narshinghdi. 81% of the respondents also confirmed that they do not have any plans of expanding operations to other areas in the country.
Business Start-up Process
Liason
Partner
Joint Venture
Own legal entity
6%12
%
6%12
%
30% 35
%
52%
47%
201320152013201520132015
20152013
Business Confidence Survey 2015 Page 05
Bottlenecks during Startup
2013 2015
53%50%
Yes2013 2015
44%
No2013
6%2015
3%
No answer
44%
Finland 20158.0
20136.3
Sweden
20156.1
20136.4
Denmark 2015
5.72013
6.2
TotalClimate for Startup
20136.1 6.3
2015
Norw
ay 2015
20135.3
5.3
Nord ic Bus iness in Bangladesh
The most common reason for starting a business in Bangladesh is the market demand, as indicated by 30% of the respondent in 2015 compared to 40% in 2013. 16% of the respondents entered Bangladesh for cost efficient production and 12% of the respondents for efficient sourcing, a considerable drop from 2013. There has been an increase from 6% in 2013 to 14% in 2015 in respondents identifying consumer needs as a reason for entering Bangladesh.
Reasons forDoing Businessin Bangladesh
40%
27%
6%
19%
4%2%2%
30%
16%14%
12%
7%7%
14%
Market demand/B2B
Low cost production
Consumer demand
Low cost sourcing
Pressure from existing customers
Contact by BD Partner
State support
Skills available
Others
20152013
Page 06 Business Confidence Survey 2015
Nature of Business
Engineering 5%
Telecom 3%
IT 25%
RMG 14%
Infrastructure 8%
Trading 6%Agriculture 3%
Pharmaceuticals 3%
Shipping 8%
Paints 3%
Dairy 3%
Others 19%
The survey suggests that IT/ITES is the biggest sector for Nordic companies in Bangladesh representing 25% of respondents while RMG/Textiles account for 14%. Of course in terms of volume/turnover, RMG is most likely the biggest sector. The respondents represent the full variety of companies that are active in Bangladesh and their average operational period in Bangladesh is 11.75 years.
The most common reason forstarting a business in Bangladesh
is market demand,followed by cost efficient
production and consumer demand
Total Number of Employees
Expatriates
Local
Business Confidence Survey 2015 Page 07
23% 23%
India
2013
2015
27%25%
China
2013
2015
23% 25%
South East Asia
2013
2015
17% 16%
Middle East
2013
2015
9% 11%
None
2013
2015
Majority of the Nordic Companies based in Bangladesh have a strong presence in several countries across Asia. 11% of the respondents report Bangladesh as their only market in Asia whereas many are active in other major Asian economies.
Investment and Employment
2012
84
11496
2014 2016
5889
3881
6076 Nordic companies are slowing down their expansion plan for employment. A decrease in the number of local employees by 2.84% from 2012-2014 was revealed with an expected drop of 33.25% by 2016.
Nevertheless, at present approximately
750,000 people are indirectly earning
their income through activities of Nordic
companies in the country.
EmploymentGeneration by
Nordic Companies
Country of Origin
0300
1,000500
Bangladesh Finland
E
mpl
oym
ent
Opp
ortu
niti
es
Total
944,150
726,117
20152013
350,130
100,350
Norway
20152013
41,2602,212
Denmark
201520132015201320152013
Sweden
20152013
551,760
620,740
2011-2014 2015-2017
3.00 1.509.76 6.89
18.56 26.10
244.61
206.15
275.93
240.64
Mill
ion
Euro
Finland Denmark Norway Sweden TotalFinland Denmark Norway Sweden Total
enhancement of its workforce to not only attract labour intensive but also hi-tech industries. 91% of the survey respondents are reportedly looking to expand their operations with an expected investment of €240.64 Million in the next 3 years.
There has been an increase in the number of expats by 14.29% from 2012-2014 and it is expected to go up by 18.75% by next year. Although the respondents plan to increase their expatriate workforce, it is important that Bangladesh focuses on skill and productivity
Value of Investments (EUR)
Page 08 Business Confidence Survey 2015
A very positive outlook of doing business in the country was revealed in this survey from the perspective of Nordic companies based in Bangladesh. 91% of the respondents are looking to expand their operations over the coming 3 years.
The reason behind increasing activities in Bangladesh could be due to 34% of the respondents experiencing higher profits compared to other markets they are active in, a rise from 25% in 2013. Plans for the Future
Gradually reducing in Bangladesh
Increasing activities
2015
91%94%
2013No
Changes
2015
9%
2013
3%
2013 2015
0%3%
Favourability of doing business: Since 2013, there has been a 9% rise in favourability of doing business in Bangladesh with 56% of Nordic businesses reporting a very favourable outlook in 2015. However, the Scenario is not a 100% optimistic as many companies have identified scope of improvements in certain areas which the national decision makers should look into in order for Bangladesh to remain an attractive business and investment destination.
Business Confidence Survey 2015 Page 09
Profitability from DoingBusiness in Bangladesh
Less profitable
2013
6%
2015
9%
Equally profitable
2013
69%
2015
56%
More profitable
2015
25%
34%
2013
Performance in thenext three years
Not favorable Somewhat Favorable Very Favorable
2013 2015
3%
56%41%
0%
53%47%
Business conditions and Factors: In terms of business conditions in Bangladesh, it was found that factors apart from air quality, water and waste management seem to have improved, if not deteriorated. 19% of the respondents in 2015 as opposed to only 6% in 2013 now report availability of workforce as a key issue to maintain favourable business condition in the country. However, in terms of power supply, 53% of the participants believe that the s ituat ion has improved significantly over the last 2 years, a rise of almost 19%.
Future Outlook
Business Conditions in Bangladesh
33% 33% 31% 3%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
3% 25% 53% 19%2013
3% 25% 59% 13%2015
8% 19% 50% 22%2013
3% 28% 53% 16%2015
11% 11% 58% 19%2013
25% 56% 19%2015
36% 39% 25%2013
3% 19% 53% 25%2015
28% 39% 33%2013
13% 50% 38%2015
39% 33% 28%2013
13% 47% 41%2015
6% 44% 39% 11%2013
13% 19% 53% 16%2015
6% 42% 53%2013
6% 13% 38% 44%2015
14% 39% 42% 6%2013
25% 34% 34% 6%2015
8% 36% 50% 6%2013
3% 41% 44% 13%2015
25% 36% 36% 3%2013
41% 25% 34%2015
2013
13% 34% 44% 9%2015
19% 31% 47% 3%2013
19% 28% 9%2015
Availability ofOffice Space
Availability ofHousing
Availability ofInternational
schools
Post graduateEducation
GeneralEducation
EnglishKnowledge
Availability ofCommercial Land
Availabilityof Workforce
Air Quality
Water Supply
Water & Waste Management
Travelling
Electricity &Power Supply
Very unfavorable Not favorable Somewhat favorable Very favorable
44%
Page 10 Business Confidence Survey 2015
Business Confidence Survey 2015 Page 11
All business factors that came up in this survey such as business culture, distribution system, executive and staff remuneration, work ethics, public security and safety and legal and regulatory system, except relation-ship to competitors and suppliers, have been identified as commendatory since 2013.
Business Factors
Business FactorsVery unfavorable Not favorable Somewhat favorable Very favorable
Legal and regulatory system2013
2015
28% 39% 3%31%
19% 38% 16%28%
Public security & safety28% 25% 14%2013 33%
16% 28% 13%2015 44%
Execu�ve and staff remunera�on28% 22%2013 50%
6% 19%2015 75%
Business Culture6% 28% 17%2013 50%
3% 31% 13%2015 53%
Rela�onship to compe�tors3% 11% 25%2013 61%
22% 22%2015 56%
Work ethics 6% 25% 13%2015 56%
14% 36% 14%2013 36%
Distribu�on system 3% 16% 9%2015 72%
42% 11%2013 47%
Rela�onship to suppliers3%3% 31%2013 64%
6% 34%2015 53%6%
Cost factor and Quality: While the figure for white collar workforce remains same over the years, blue collar workforce affordability has gone up from 31% in 2013 to 53% in 2015. In terms of quality, most factors including office space, white collar
workforce and housing have seen significant improvements. However, 19% of the respondents feel that availability of land at appropriate prices is a big concern. Nevertheless, majority are satisfied with the overall cost structure in place.
Page 12Bangladesh Business Confidence Survey Report 2015
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
3% 14% 56% 28%2013
3% 50% 47%2015
22% 58% 19%2013
6% 22% 53% 19%2015
25% 44% 28% 3%2013
16% 31% 47% 6%2015
3% 14% 44% 39%2013
6% 56% 38%2015
17% 36% 47%2013
19% 0% 47% 34%2015
6% 28% 56% 11%2013
16% 13% 63% 9%2015
22% 53% 25%2013
9% 66% 25%2015
17% 42% 42%2013
6% 50% 44%2015
Housing
White collar workforce
Blue- collar workforce
Office space
Land for commercial use
Transportation of goods
Business travel
Hotels
Very unfavorable Not favorable Somewhat favorable Very favorable
Cost Factors
Quality Factors
Very unfavorable Not favorable Somewhat favorable Very favorable
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
28% 22%2013
3% 9% 22%2015
25% 28%2013
9% 9% 25%2015
28% 22%2013
6% 22% 25%2015
22% 17%2013
3%3% 22%2015
22% 14%2013
19% 9% 13%2015
36% 3%2013
16% 19% 13%2015
28% 11%2013
3% 25% 22%2015
8% 31%2013
3% 6%
47%
66%
47%
56%
50%
47%
61%
72%
61%
59%
61%
53%
58%
50%
58%59% 31%2015
Housing
White collar workforce
Blue- collar workforce
Office space
Land for commercial use
Transportation of goods
Business travel
Hotels3%
3%
3%
3%
Globally, Nordic countries have been on the forefront in terms of sustainability. In order to maintain a sustainable supply chain, Nordic companies have incorporated a code of conduct that helps them translate their values into actions. They strongly believe in inclusive growth and majority of the respondents have put major emphasis on promoting sound business practices, decent working conditions, employee welfare, gender mainstreaming and suppl ier development among others. The survey reveals that 94% of the participants have a code of conduct in Bangladesh and 87% of them report that it is being followed by their suppliers diligently.
Moreover, 78% of the Nordic businesses have sustainability programs in Bangladesh. 59% of the companies have sustainability programs integrated in the supply chain, whereas the remaining 41% are conducting these programs independently.
Business Confidence Survey 2015 Page 13
Susta inab i l i ty
94% 6%
2015 6%
25%
28%
0% 2013
2015
2013
2015
2013
2015
2013
64%
59%
11%
6%No code
of conduct
Yes, and it isfollowed by suppliers
Yes, and it is somewhatfollowed by suppliers
Yes, but it is notfollowed by suppliers
Yes 78%
No 22%
Sustainability Activities
No 41%
Yes 59%
Sustainability intergrated in Supply Chain
Strategic sustainability decisions: 32% of the respondents identified long term business sustainability as a key reason behind engag-ing in strategic decisions on sustainability investment, followed by incorporation of CSR as part of corporate strategy (24%) and as part of global strategy (13%).
32%
24%
13%
10%
7%
4%
3%
1%
4%
Long term sustainablity
CSR is part of our Corporate strategy
Part of Global strategy
Donation/Charity
Supply Chain requirement
Regulatory requirement
No Response
Short term immidiate impact
Stakeholders’ pressure
Strategic Decisionon Sustainability
Investment
Page 14 Business Confidence Survey 2015
Most Relevant Relevant Least Relevant No Response
Child labor
Workplace Health and Safety
Employees’ rights
Women empowerment
Fair wages
Environmental Impact
Education
Industrial relations
Entrepreneurship
Water quality and conservation
Air pollution
Climate Change and Energy efficiency
Free Association of Labour
Waste disposal, recycling & reduction
6%
6%
6%
6%
6%
13%
3%
3%
13%
9%
50%
19%
19%
22%
22%
22%
34%
25%
25%
28%
38%
44%
9%
13%
13%
47%
34%
34%
31%
25%
41%
41%
44%
38%
38%
44%
47%
47%
31%
31%
31%
31%
31%
31%
31%
31%
31%
31%
31%
31%
31%
31%
Key Issues forNordic Businesses
Priority areas: The top 5 areas of focus for the respondents were child labour, workplace health and safety, employee rights, women empowerment and fair wages. Environmental sustainability was also identified as a priority for several businesses.
Obstacles: The main obstacles to implement sustainability activities were identified as lack of government incentives (23%), lack of adequate funds (17%) and lack of qual ified personnel (13%).
Motivation: Long term sustainability (18%), creating shared value for company and community (16%), concern for environment and as part of company strategy (13%) were the key motivations for incorporating sustainability programs into business practices.
Lack of Government Incent ives
Lack of funds
Lack of human resources
Others
Lack of employee motivat ion
No response
No benefits from CSR
23%
17%
13%
11%
8%
9%
13%
6%
0%No support from top-management
Obstacle to integrateSustainability
in Business
Motivation behindSustainabilityActivities
18%
16%
13%
12%
9%
8%
6%
6%
2%
2%
2%
1%
5%
Long term sustainability
Creating shared value for the company and community
Concern for the Environment
Part of the Company strategy
Promote Corporate Image and Brand
Local Environment Impacts
Benefit in Relationship with Suppliers
Employee Satisfaction
Cost reduction
Regulatory Compliance
Stakeholder Management
No Response
Increase Shareholder Value
Business Confidence Survey 2015 Page 15
Lack of know-hows
Then again, factually, women representation in leadership roles, especially in corporate sectors, are still minimal. In terms of obstacles to female leadership, 28% identified work-family l ife balance as a major deterrent. 14% consider a lack of support from family members and hesitance in relocating as key obstacles.
The members were asked how they are addressing problems encompassing implementat ion of gender policies of their organizations in Bangladesh. It was found that encouraging women to take lead in policy making helped create more women friendly office environments.
Barriers toGender Diversity
Per
cent
% o
f fe
mal
e st
aff 44%
25%
16%
6%
3%
3%
3%
10
20
30
40
50
60+
Dont Know
44% of the Nordic businesses responded that they have only 10% female representation in their organization followed by 25% who claim that they have 20% representation and finally, 16% who reported that they have 30% women staff representation. About 66% of the participants have gender diversity policies in their organization and 41% regard implementation of gender policies as a top priority while 47% consider this as a medium priority.
The main barriers to gender diversity were identified as reluctance on the part of women to take more challenging roles (37%) followed by lack of awareness about the benefits of gender diversity (20%). However, 20% of the respondents also mentioned that they consider no real barrier to implementing gender policies in their companies.
GENDER DIVERSITY AND POLICIES
37%
20%20%
12%12%
Lack of Commitmentfrom the TopManagement
No Laws/regulationson Gender Diversity
Lack of Awarenessabout the benefits of
Gender Diversity
There are zero barriersto Gender Diversity
Reluctance on the partof Women to take on more
demanding roles
Page 16 Business Confidence Survey 2015
The UN’s HeforShe campaign has also motivated some members to be increasingly committed to creating a higher male-female employee ratio by 2016. Some are working to raise awareness to promote equal experience, hiring based on competencies regardless of gender, conducting anonymous satisfaction surveys as well as 1-on-1 feedback sessions with HR and hosting mandatory leadership trainings for all employees on gender diversity. However, due to a lack of initiative from top management, some businesses are still not addressing gender policy implementation.
On the other hand, few members have expressed optimism in the sense that they perceive no real problems in the implementation of gender policies in their organizations.During recruitment, majority of the Nordic companies “strongly encourage women to apply”. While trying to attract capable female employees to be part of their companies, many are also aiming to have at least one female colleague in their leadership teams by 2016. Moreover, many respondents are changing their course of action towards supporting strategic partnerships in promoting and advocating gender mainstreaming.
Lack of Mentors 1%
Lack of Training Programme on Leadership Development 4%
None 5%
Perception of Male Colleagues 5%
Lack of opportunities for career advancement 7%
Limited network and connections 8%
Lack of Confidence 12%
Willingness to relocate 14%
Support from Family Members 14%
Work-Family Life Balance 28%
1%Lack of support from Top Management
Obstacles to Women Leadership
Business Confidence Survey 2015 Page 17
37%reported reluctance
on the partof Women to take on
more demanding roles
44%had 10 percent female staffs
28%reported work-Family Life Balance as major
obstacle
14% considered a lack of support from family members as another
major obstacle
Page 18 Business Confidence Survey 2015
Although Nordic companies are quite positive about doing business in Bangladesh, there remain challenges that may pose significant risks for the existing companies as well as future investors. The biggest problems identified in this survey were bureaucracy and administrative hurdles (84%), political instability and corruption (81%), business licensing and permits (72%) and transport infrastructure (66%). However, majority of the respondents disregard access to land, labour regulations and access to finance as a business challenge. Several respondents have reported that a lack of coordinated regulations, anomalies and delays in procedure and approval set forth by the Regulatory Bodies such as licensing, registration, acquiring legal permissions to operate businesses, company incorporation and documentation processes continue to be time consuming and complex. As a solution to the lengthy processes in the licensing and approvals, Nordic businesses express the need for an improved Board of
“one stop service” which can expedite crucial processes for foreign businesses. The Nordic businesses also face difficulties during and throughout initial setup period, getting bank accounts, company registration, securing work permits and finding commercial office spaces. Few regard the lack of skilled human resource as a major constraint for sustained growth. Many companies also identify an urgent requirement to address corruption in the ‘system’ and that the r ight to information should be more transparent and accessible.
Bangladesh is a country with immense opportunit ies and potent ial . In several sectors, Nordic Businesses in Bangladesh are market leaders, mainly owing to their operations. Business processes in Bangladesh are lengthy, as in many other developing countries. Consequently, things may take a
Major Problem/Problem No Problem No Response
28% 69% 3%
34% 63% 3%
34% 63% 3%
44% 53% 3%
16% 81% 3%
Bureaucracy & Administrative Hurdles
Political Instability
Corruption
Business Licensing & Permits
Transport Infrastructure
Tax Administration
Finding Qualified Staff
Retention of Staff
Customs & Trade Regulations
Skilled Labour
Tax Rates
Electricity Supply
Increasing Labour Costs
Domestic Protectionism
Natural Gas Supply
Access to Finance
Labour Regulations
Access to Land
44% 53% 3%
50% 47% 3%
56% 41% 3%
56% 41% 3%
3%38%59%
44% 53% 3%
3%38%59%
3%38%59%
3%81% 16%
3%13%84%
3%81% 16%
3%72% 25%
3%66% 31%
BUSINESS CHALLENGES AND BOTTLENECKS
LESSONS LEARNED
Business Confidence Survey 2015 Page 19
while to materialise. In this case, consistent commitment, patience and continuous follow up have to be given a lot of importance. Respondents have emphasized the importance of Nordic, local and other businesses operating in Bangladesh to make it a practice to say no to unethical demands, at all times, at all costs.
Bangladesh i s known to have a very dedicated, competent and fast learning workforce. It is important that businesses develop the right competencies, either through internal knowledge development, or through recruiting skilled personnel from the available workforce. The Nordic companies therefore, recognize th is as crucial to enhance their ability to handle unforeseen circumstances. If the government i s ab le to establ ish an effect ive E-Governance and also ensure an efficient one stop service for investors, Bangladesh would end up as an ideal destination for new Nordic investment. However, it is important for Nordic investors to interpret the market, local partners, politics, culture and tradition. Despite the fact that Bangladesh is considered as one of the most suitable countries for sourcing, continuous follow up on planned things are very important to achieve required goals.
Despite the regulatory incompetence discussed, businesses working closely with regulatory authorities is going to remain a continuous process and a top priority for sustained operations of businesses. It is therefore, very important to be compliant with government regulations. Another key lesson learned is the importance of establishing brand name, company values and ethics in compliance with social, environmental, health and safety regulations set forth by the Government. While doing business, Nordic companies have found a lack of infrastructure development as a drawback and availability of inexpensive labor as a key advantage. One of the most important lessons learned is that it is always beneficial for the Nordic Businesses to maintain good
business relationship with partners and stakeholders and maintain customer satis-faction by upholding "no compromise on qual-ity" policies.
ADVICE TO NEW COMPANIES
Bangladesh has had an annual GDP growth of over 6% for a decade which demonstrates the country's potential and resilience against odds that it has faced. Existing Nordic companies advise newcomers to plan ahead of time, be patient, flexible and committed. Some existing Nordic businesses advise that whatever a business’s growth prospects may be, investment should be priority based and not comprehensive. Every process, business decision and operation may come across problems during execution phase, but the key should be to train staff to be able to independently deal with challenges.
The survey emphasized the importance to engage in detailed market research before entering Bangladesh, or any other new market. Therefore, taking the right advice and assistance from experienced professionals, consultants, lawyers and audit firms from day one is key. If a Nordic company is looking to do business in Bangladesh, another important advice would be to never compromise on ethics, be it internally or externally. It would also be beneficial to take advice from NCCI and SBBC that are both major platforms for new investors. Conducting proper due diligence is also key.
Despite rapid economic growth, there exist regulatory and tax administrative drawbacks which must be assessed before investment decisions are made. It is also key that the companies of Nordic origin be thoroughly familiar with local rules and regulations. Agriculture, power, ICT, electronics, pharmaceutical and leather are some of the most rapidly expanding sectors in Bangladesh but there should be adequate provision in investment plans for the insufficient power supply and infrastructural facilities in the country.
Nordic Companies can also consider B2B business as it has huge potential to develop. It is highly advised to interact and learn from the experience of long established Nordic companies in Bangladesh.
According to the participants, it can be wise to get into joint ventures with people who have as much at stake as you do. Moreover, reasonable time should be invested in finding a suitable partner and when investing on people because finding and cooperating with local companies may also prove beneficial as they often have strong local staffs to provide necessary assistance. It is also important to be aware of the diversities in organizational culture and structure. Focus should be on productivity rather than cost. While budgeting, time should be considered as a resource and consequently cost analysis and risk of delays must be incorporated.
Businesses should consider the huge market potential, competitive production costs and technological advantages that Bangladesh has with its young population, both in terms of domestic market and as a production hub for exports. If public sector stake is high in your portfolio, it is highly advisable to select reliable local partners with recom-mendation from the embassy/chamber. The 3 Nordic Embassies in Bangladesh, together with their national authorities in the country are supporting businesses to secure con-nections and can also assist in opening doors when required.
Page 20 Business Confidence Survey 2015
The report shows that despite the constraints and risks that have remained since the last survey in 2013, Nordic companies do still appreciate investing and doing business in Bangladesh. Bangladesh being a land with immense potential with diligent workforce often overshadow the bottlenecks by providing businesses with above average profitability. Moreover, cost efficient production, great market and consumer demand have been identified as some of the most common reasons
for Nordic businesses to enter Bangladesh. Although majority of the survey respondents have admitted to the present business climate being weaker compared to 2013, an increased proportion of Nordic companies are applying h igher pr ic ing strategy and as a consequence, they are making higher profits in Bangladesh compared to other markets in the region.
Top priorities for the Nordic businesses have been identified as child labour, workplace health & safety, employee rights, women empowerment, fair wages and environmental protection, which are all preconditions for sustainability of business.
However, there is scope for companies to be more engaged in long term sustainability pro-grams, provided that effective government incentives are in place. As part of incorporating at least one of the Sustainable Development Goals within their business practices (now a key priority), the companies are putting emphasis on ensuring gender mainstreaming within their organizations. However, reluctance on the part of women to take on more demanding roles and balancing work-family life has been a major deterrent towards achieving the gender diversity goals.
Bangladesh is working towards earning the status of a middle income country and should the challenges that have been pointed out in the survey be addressed, there is no reason for the country to not achieve a double d ig it-growth and its national goals set forth by the Government, including Digital Bangladesh 2021 and 50 Billion RMG Export Target.
Results
Published By:Published By:Nordic Chamber of Commerce and Industry in Bangladeshc/o Maersk Bangladesh Ltd., c/o Maersk Bangladesh Ltd., Plot 76/A (4th Floor), Block M, Road 11Plot 76/A (4th Floor), Block M, Road 11Banani, Dhaka 1213, Bangladesh Banani, Dhaka 1213, Bangladesh Tel: +880 171 599 1907Tel: +880 171 599 1907Email: [email protected]: [email protected]
Joint initiative:Embassy of SwedenEmbassy of SwedenRoyal Norwegian EmbassyRoyal Norwegian EmbassyRoyal Danish Embassy Royal Danish Embassy Sweden Bangladesh Business Council Sweden Bangladesh Business Council Nordic Chamber of Commerce and IndustryNordic Chamber of Commerce and Industry
Survey Design:Survey Design:Mizanur KhanSweden Bangladesh Business CouncilSweden Bangladesh Business CouncilStockholm, SwedenStockholm, Sweden
Layout & Design:Layout & Design:Aureolin Tech Ltd.13/1, Pallabi, Mirpur-121613/1, Pallabi, Mirpur-1216Cell: +880 1688 831919Cell: +880 1688 831919Email: [email protected]: [email protected]