Ninety four percent of the Nordic companies operating in Bangladesh are contemplating expanding their business here in next three years, despite political instability and infrastructure constraints, says a new survey .
The main reason for expansion plans could be higher return on investment compared to other markets they have presence, said a report on the survey.
It found other reasons included the growing demand from the middle class as well as increasing costs in other markets like China.
The Nordic Chamber of Commerce and Industry in Bangladesh (NCCI), Sweden Bangladesh Business Council (SBBC) and three Nordic Embassies – Embassy of Sweden, Royal Norwegian Embassy and Royal Danish Embassy – conducted the business climate survey during 1 December 2012 to 15 January 2013.
The survey was conducted between the period of December 2012 and January 2013 among the Nordic companies in Bangladesh. The Nordic countries make up a region in Northern Europe and the North Atlantic, consisting of Denmark, Finland, Iceland, Norway and Sweden and their associated territories.
The survey report was unveiled at a panel discussion titled “Opportunities & Challenges in Bangladesh: Perspective of Nordic Businesses” in Dhaka.
Bangladesh Bank Governor Atiur Rahman, Swedish Ambassador Anneli Lindahl Kenny, head of South Asia Enterprise Development Facility of the International Finance Corporation John McKenzie and NCCI President Shamim Ul Huq were present during a discussion over the prospects of greater trade cooperation between Norway and Bangladesh.
According to the survey, about 67% respondents considered the business climate in Bangladesh favorable, despite political instability, erratic power supply, poor transport infrastructure, legal barriers and bureaucratic norms.
Almost half (47%) of the respondents have a very favorable outlook whereas not a single respondent reported an unfavorable business outlook for the coming three-year period.
The picture that Nordic companies portray when doing business in Bangladesh is not solely positive. They reported certain areas needed to be looked into by decision makers for Bangladesh in order to remain an attractive business destination.
Telecommunication and information technology or Information and technology-essential standards is the biggest sector for Nordic companies in Bangladesh (32% of the respondents) while RMG/textiles accounted for 25%, according to the survey.
Of course in terms of volume/turnover, RMG is most likely the biggest sector but the large number of relatively young IT companies show that the Bangladesh economy is evolving towards more high-tech industries. About one million jobs are created as a result of Nordic businesses in Bangladesh, the survey said.
Lack of adequate infrastructure is one of the major problems in Bangladesh. Some 66% of the respondents identified lack of power supply as a major deterrent while 61% of the respondents identified clean water and proper waste management as one area that needs huge improvement.
The survey also revealed the dissatisfaction among the companies due to scarcity of land and offices for commercial purposes.
NCCI said the main objectives of the survey were to monitor the business confidence of Nordic companies in Bangladesh, to assess Bangladesh’s future role among the emerging Asian economies, to gather the joint experience and knowledge of Nordic companies in order to facilitate for future establishment of Nordic companies in Bangladesh and to be able to better understand trends in the Bangladeshi business environment. The survey will be repeated yearly.
The survey was sent to a total of 55 companies, of which 46 are Norwegian Chamber of Commerce and Industry (NCCI Bangladesh) members and 9 non-members. Out of the 55 invited companies, 37 responded corresponding to a response rate of 74% among members of the NCCI and 33% from non-members.