Bangladesh Economy: SWOT Analysis

Bangladesh Economy: A SWOT Analysis

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SWOTAnalysis:

A SWOT analysis is a strategic balance sheet of an organization; that is the strengths of the

organization, the weaknesses of the organization, the opportunities facing the organization,

and the threats facing the organization. It is one of the cornerstone analytical tools to help an

organization develop a preferred future. It is one of the time-tested tools that have the

capacity to enable an organization to understand itself, to respond effectively to changes in

the environment. The purpose of the SWOT analysis is to provide information on strengths

and weaknesses in relation to the opportunities and threats.

The benefits of a SWOT analysis are that it provides learning and knowledge vital to the

organization’s survival and prosperity. And other outcome of the SWOT analysis which is

becoming extremely important is an understanding of company’s boundaries and the

development of boundary spanning skills and insight to help navigate the changing

environment.

Purpose:

This paper aims to examine Bangladesh's overall economy with special focus on strengths,

weaknesses, opportunities, threats (SWOT) analysis.

Objectives:

Bangladesh needs to identify the opportunities and the key weaknesses that the country faces

and adopt appropriate measures. There are many ways of doing this analysis. One popular

method is to list the Strengths, Weaknesses, Opportunities, and Threats (SWOT) facing the

economy and society at large. Although the SWOT analysis is more often applied to evaluate

the competitive position of a company, this can also be applied to a country. In particular,

SWOT analysis is forward looking; it is less for the past than for the future. The exercise

identifies areas that need attention or might emerge as problem areas in future.

Limitations of the Study:

The study is based on secondary data. It doesn’t deal with primary sources and prepare questionnaire

for survey purpose to assess the impact from the grass root level. Other limitations are as follows

when preparing the report.

1. Lack of experience and limited knowledge about the topic.

2. Time constraints.


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Bangladesh Economy- Overview:

The economy has grown 5-6% per year since 1996 despite political instability, poor

infrastructure, corruption, insufficient power supplies, and slow implementation of economic

reforms. Bangladesh remains a poor, overpopulated, and inefficiently-governed nation.

Although more than half of GDP is generated through the service sector, about 45% of

Bangladeshis are employed in the agriculture sector, with rice as the single-most-important

product. Bangladesh's growth was resilient during the 2008-09 global financial crisis and

recession. Garment exports, totaling $12.3 billion in FY09 and remittances from overseas

Bangladeshis totaling $9.7 billion in FY09 accounted for almost 25% of GDP.

GDP (purchasing power parity):

$241.1 billion (2009 EST.)

Country comparison to the world: 49

$228.3 billion (2008 EST.)

$215.4 billion (2007 EST.)

Note: data are in 2009 US dollars

GDP (official exchange rate):

$94.51 billion (2009 est.)

GDP - real growth rate:

5.6% (2009 est.)


6% (2008 est.)

6.2% (2007 est.)

GDP - per capita (PPP):

$1,500 (2009 est.)


$1,500 (2008 est.)

$1,400 (2007 est.)

Note: data are in 2009 US dollars

GDP - composition by sector:

Agriculture: 18.6%

Industry: 28.6%

Services: 52.8% (2009 est.)

Labor force:

72.35 million


Note: extensive export of labor to Saudi

Arabia, Kuwait, UAE, Oman, Qatar, and

Malaysia; workers' remittances estimated

at $4.8 billion in 2005-06. (2009 est.)

Labor force - by occupation:

Agriculture: 45%

Industry: 30%

Services: 25% (2008)

Unemployment rate:

5.1% (2009 EST.)


4% (2008 EST.)

Note: about 40% of the population is

underemployed; many participants in the

labor force work only a few hours a week,

at low wages

Population below poverty line:

36.3% (2008 est.)

Household income or consumption by

percentage share:

Lowest 10%: 8.8%

Highest 10%: 26.6% (2008 est.)

Distribution of family income - Gini

index:

33.2 (2005)

https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?countryName=Bangladesh&countryCode=bg&regionCode=sas#2001

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html?countryName=Bangladesh&countryCode=bg&regionCode=sas&rank=49#bg


















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33.6 (1996)

Investment (gross fixed):

24.2% of GDP (2009 est.)


Budget:

Revenues: $11.4 billion

Expenditures: $16.3 billion (2010 est.)

Public debt:

38.8% of GDP (2009 est.)


39.4% of GDP (2008 est.)

Inflation rate (consumer prices):

5.4% (2009 est.)


8.9% (2008 est.)

Central bank discount rate:

5% (31 December 2009)


5% (31 December 2008)

Commercial bank prime lending rate:

14.6% (31 December 2009 )


16.38% (31 December 2008 )

Stock of money:

$10.35 billion (30 September 2009)


$8.444 billion (31 December 2007)

Stock of quasi money:

$45.23 billion (30 September 2009)



Stock of domestic credit:




Market value of publicly traded shares:





Agriculture - products:

Rice, jute, tea, wheat, sugarcane, potatoes,

tobacco, pulses, oilseeds, spices, fruit;

beef, milk, poultry

Industries:

Cotton textiles, jute, garments, tea

processing, paper newsprint, cement,

chemical fertilizer, light engineering, and

sugar.

Industrial production growth rate:

5.9% (2009 est.)


Electricity - production:

22.99 billion KWh (2007 est.)


Electricity - consumption:

21.38 billion KWh (2007 est.)


Electricity - exports:

0 kWh (2008 EST.)

Electricity - imports:

0 kWh (2008 EST.)

Oil - production:

5,733 bbl/day (2009 est.)


Oil - consumption:

98,000 bbl/day (2009 est.)


Oil - exports:

2,612 bbl/day (2007 est.)


Oil - imports:

87,660 bbl/day (2007 est.)


Oil - proved reserves:

28 million bbl (1 January 2009 est.)


Natural gas - production:











































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17.9 billion cu m (2008 est.)

Country comparison to the world: 32.

Natural gas - consumption:

17.9 billion cu m (2008 est.)


Natural gas - exports:

0 cu m (2008 est.)


Natural gas - imports:

0 cu m (2008 est.)


Natural gas - proved reserves:

141.6 billion cu m (1 January 2009 est.)


Current account balance:

$2.808 billion (2009 est.)


$1.032 billion (2008 est.)

Exports:

$15.91 billion (2009 est.)


$15.44 billion (2008 est.)

Exports - commodities:

Garments, frozen fish and seafood, jute

and jute goods, leather

Exports - partners:

US 20.24%, Germany 12.75%, UK 8.64%,

France 6.48%, Netherlands 5.9% (2009).

Imports:

$20.22 billion (2009 est.)


$21.51 billion (2008 est.)

Imports - commodities:

Machinery and equipment, chemicals, iron

and steel, textiles, foodstuffs, petroleum

products, cement.

Imports - Partners:

China 16.16%, India 12.61%, Singapore

7.55%, Japan 4.63%, Malaysia 4.46%

(2009)

Reserves of foreign exchange and gold:

$10.32 billion (31 December 2009 EST.)



Debt - external:




Stock of direct foreign investment - at

home:

$5.617 billion (31 December 2009 est.)


$4.817 billion (31 December 2008 est.)

Stock of direct foreign investment -

abroad:

$82 million (31 December 2009 est.)


$81 million (31 December 2008 est.)

Exchange rates:

Taka (BDT) per US dollar - 69.047 (2009),

68.554 (2008), 69.893 (2007), 69.031

(2006), 64.328 (2005).































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Strengths:

Strengths of Bangladesh economy are as below-

Agriculture

Agriculture is regarded as the most important sector of Bangladesh economy. The

contribution of this sector to GDP was 20.83% in FY07-08. The overall contribution of the

board agriculture sector at constant price is projected at 20.60% of GDP in FY 08-09.

Through the direct contribution of the agriculture sector has decreased slightly, it has indirect

contribution to the overall growth of GDP. The growth of the board service sector,

particularly the growth of wholesale and retail trade, hotel and restaurants, transport and

communication sector is strongly supported by the agriculture sector. Besides, about 48.1

percent of the total labor forces of the country are engaged in agriculture (BBS Labor Force

Survey, 05-06). In FY 08-09, Bangladesh earned 870.11 million US$ by exporting

agricultural products which is 5.59 percent of total export earnings. Further, the export of

main agricultural comedies such as, raw jute, jute goods, tea, frozen foods, the government

has taken initiatives to increase exports of non-traditional agricultural comedies. Within the

board agriculture sector in FY 08-09, the contribution of the agriculture and forestry and

fisheries are estimated at 16.03% and 4.57 percent respectively. In FY 07-08, the contribution

of these two sectors stood at 16.18% and 4.65% respectively. According to the provisional

estimate of GDP for FY 08-09, the contribution of the three sub-sectors i.e. crops and

vegetables, livestock and forestry are 11.55%, 2.73% and 1.75% respectively.

Industry:

The contribution of the industry sector to the economy of Bangladesh has been increasing day

by day. In FY80-81, the contribution of the board industry sector to real GDP was 17.31%

which has increased to 29.73% in FY 08-09. For the purpose of national income accounting,

Bangladesh Bureau of Statistics (BBS) divided the economy into fifteen sectors. The board

industry sector includes four sub-sectors- mining & quarrying, manufacturing, construction

and electricity, gas & water supply. Among these sub-sectors, the contribution of the

manufacturing sector is the highest. According to the provisional estimate of national income,

in FY 08-09, the contribution of the manufacturing sector to GDP is 17.78%, which is

marginally higher than that of the previous year. However, being affected by the global

economic crisis, the growth rate of the manufacturing sector declined to 5.92 %( Estimated)

in FY08-09, this is 1.29% lower than that of the previous fiscal year.

Foreign Remittance:

The remittances from overseas workers have already become a great source of strength.

In 2008-09 FY Bangladesh has earned 9689.16 million US$ or 66674.87 core Tk. and 2009-

10 (till April) 9191.28 million US$ or 63561.18 core Tk. by foreign remittance.


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According to World Bank report 2008 Bangladesh placed 12th

position on the basis of highest

remittance gainer. In 2009 of estimated basis Bangladesh took placed in 8th

position which is

2.55% of whole world remittance. This time Bangladesh take 2nd

position on SAARC

country, which is 14.89% on total South Asian remittance.

Others:

Rapid advance made by the nongovernmental organizations (NGOs) and other grassroots

bodies, creating alternative delivery mechanisms and acting as vocal civic institutions

especially for the poor. This is an important source of 'social entrepreneurialism' and a

channel of vibrant development of many elements in society. The ongoing process of

mainstreaming women into development is a strategic strength to bring wider and deeper

social and economic changes. Gains in increasing political and electoral participation of

women, enhancing press freedom, and creating a vibrant civil society are important for

strengthening democratic institutions and consolidating human rights.

Although increasing number of foreign investment in industrial sector and establishing EPZ

in various places of Bangladesh played a great role in our economy.

Domestic communication, Energy sector, Tourism Sector, Capital market, Specialist

professionals (like; Doctor, Engineer, CA and ICMA Holder) also a strength of our economy.

Some financial looks:


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Graph Source: Bangladesh bureau of statistics and ministry of finance


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Weakness:

One uncomfortable feature is that Bangladesh is one of the few countries where income

poverty is falling slowly even though economic growth has picked up. Even after three

decades, most of the economic sectors (especially agriculture) are still weak; health and

education indicators are low. Infrastructure, while improving, is still poor especially in

electricity, having a per capita (In FY 2009-10 per capita incomes is 51821Tk. Or 750

US$) use which is among the lowest in the world. Corruption is certainly high (7th in the

world). The economic and administrative cost of securing business is high as well. This is

socially destabilizing as underemployed urban masses and a swelling rural landless people

are much more volatile than a well-rooted community of employed non-farm workers and

landed farmers.

The absolute size of the population (Now population of Bangladesh is 14Core 61Lakh),

despite success in lowering the growth rate, is increasing fast that creates tremendous

pressure on resources as well as on provision of essential services.

In short the weakness of Bangladeshi economy’s are –

Widespread political and bureaucratic corruption

Economic competition relative to the world


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Serious overpopulation ( In2010 population growth rate is 1.292% est. 104th

country comparison to the world)

Widespread poverty

Frequent cyclones and floods

Political instability

Poor infrastructure

Insufficient power supplies

Slow implementation of economic reforms

Gas-power and energy sector are not business environment friendly

Leadership crisis in organization’s management level.

High illiteracy rate ( 52.1% )

Opportunities:

Bangladesh economy can have positive impact if production cost may be lowered

accompanied with decrease of transportation cost.

Volume of diversified exportable commodities can be raised as low price elasticity of

products of Bangladesh.

New labor market can be found and manpower can be migrated provided they have been

trained as per the requirement of the foreign market.

Bangladesh can be stronger so that less amount may be paid against US$ to import

foreign product.

Inflation due to external sector may be declined.

Capital market of the country may be restructure so that supply side deficiency can be

driven out and foreign direct investment in the share market can be raised.

Coordination between import substitute industrialization process and export lead growth

strategy may help overcome the problem chronic deficit in balance of trade position.



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Bangladesh has lots of historical and scenic place which is already a world famous. So

it’s a real great opportunity to build up a good tourism sector all over the country.

Threats:

Political instability may occur any time.

Balance of payment position may b worsening of. Still depends of foreign aids and loons.

Foreign direct investment may b declined.

Currently foreign exchange reserve very high which may cause negative impact on the

domestic economy.

Lack of corporate governance and corporate social responsibility may further aggravate

the situation of the domestic economy and business environment may be weakened.

Development strategy doesn’t include bottom up approach. As a result coordination in

between top down approach doesn’t occur. Upzilla are still neglected to become

development centre and grass root level is depriving form getting benefits.

Lack of diversified exportable commodities.

Uncontrollable load shedding creates lots of negative impact on whole economy.

The failure to enhance the supply of quality education and good health to the rural people.

Significant number of unemployed people (about 40% of the population is

underemployed).

Recommendation:

Some recommendation are given below-

Political wisdom and farsightedness is required. The task force may be more active for

strengthening the economic process of the society. Under political leadership, it should

integrate economist, social worker, and members of all the political parties, civil society,

media personalities and bankers to ensure safety in the face of economical turmoil.

Minimizing the corruption and eradication of rent seeking is urgently needed.

Planning should be made in three phases: short term, midterm and long term. For short

term and midterm, those who are unemployed must get financial help through creation of

social security or employment for 100days or less for food program. However for long

run strategy should be build up for creation of permanent income opportunity. Transitory

income may give temporary consumption pattern. For long term development, people

need permanent income, which will lead to create permanent consumption habits.

Empowerment of women is very much needed so that they can effectively play vital role

in the decision making process. Female workers who will lose their job especially from

the garments sector due to global finance crisis may be able to get the job. As much

creative of alternative job facilities are very much needed. Proper training facilities and

creations of alternatives job facilities are required.


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Import substitutions industries and export oriented industry should be set up. There

should be vertical and horizontal coordination between these two strategies. The proposed

budget tries to provide special facilities in this regard.

Competitive efficiency and effectiveness should be encouraged in the business

environment of Bangladesh. It should create a benchmarking of international standard

through production of high quality of product at low cost. Moreover, transportation cost

should be decreased. Opportunities, which have been created through global financial

crisis, can be earned after using competitiveness in the production process as well as

creation of new exportable market.

Main attention of the budget has been giving to create employment opportunities so that

redistribution of income effect can be done with the broader aspect of poverty

elimination.

Monetary policy should be more effective so that investment rises but inflation can be

reduced. Inflation should be reduced 4 percent so that the real rate of return becomes

positive. Readjustment of exchange rate should be made without any short of any favor

towards US$. Calculation of the real effective exchange rate should be done properly.

Fiscal policy should be redesigned to reduce indirect tax and to raise direct tax. Tax

management system should be improved so that Tax- GDP ratio can be raised. Motivation

of giving taxes should be increased. Debt/GDP ratio should be declined. Implementation

of fiscal policy should be done properly.

Labor management for sending labor to abroad should be properly developed as per need

of foreign nations. New markets for Bangladeshi nations in abroad should be created.

However, before sending labors abroad, it should be investigated whether they have any

previous criminal records and places where they are going to do their jobs are okay.

Negotiations skills of Bangladeshi diplomats should be increased so that they can use

economic diplomacy and create market access in the global arena. More diplomats should

be appointed in the top post of the embassy. Economic diplomacy to expand trading

system should be arranged.

Regional cooperation among SAFTA, BIMSTEC etc may be strengthened. True sense of

regional cooperation may provide the stimulus for the economic development of the

country. They should take initiatives like ASEAN to eradicate the problem of global

crisis.

Capital market should be utilized long term industrial financing. Moreover, transparency,

accountability should be established so that global fund managers get interested in

investing in the security market of Bangladesh. More company should be enlisted to the

capital market.

More focus should be given to food security. Development of agricultural should be boost

up. Private and public organization should be work together to developed competitiveness

of distribution of fertilizer, pesticide, seeds, agriculture machines etc.

Special focus should be given to jute, leather, pharmaceuticals, handicraft, frozen foods

and tea industries. There must be some effective policies, which can be properly utilized

for economic development. Gov. must take initiatives so that country can export finished

product rather than raw product.


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Young generation needs special attention. Ensuring vast job facilities for young

generation should be emphasized.

Take so many initiatives to prevent huge population growth in Bangladesh.

Tourism sector should be developed as soon as possible. Bangladesh has so much scenic

place. If it is utilized properly, Gov. has tremendous opportunity to earn huge foreign

currency and create so much job facilities.

Conclusion:

Bangladesh is a developing country which in the recent past has been experiencing

better development growth with can be attributed to improved political stability that the

country is currently witnessing. The macro economy policies which has been formulated by

the government and has seen foreign investors trooping in the country and building up more

industries, the net effect has been increased exports and a shift from agricultural products

based economy to industry based economy. Neo-liberation and globalization has also

increased the much required development as it has opened up new markets and improved the

technology and infrastructure in the country. It is very hard to improve the quality of

education and skills within a short time, just as it is hard to provide good health services. The

failure to enhance the supply of quality education and good health is likely to create another

threat. For the majority with poor education, the prospects for earning a decent income to

move and stay out of poverty are not good. For them, indeed jobs will remain insecure and

low paying. To help the growing number of young workers find decent jobs, to increase

competitiveness, and to improve poverty situation, finding a way to improve critical services,

including quality education and health services, is necessary. Perhaps, at this stage, we can

put these general points together into a comprehensive format as in Table 1 and Table II

various elements; but it is a beginning to visualizing the overall situation.

Policy implications and interactions: As we have done, it is useful to list all

elements but like a good recipe a well-functioning economy or society requires the proper

mixture and sequencing of policies to be just right. Furthermore, the outcomes (e.g. high

poverty) are distinct from and rely upon the causes (e.g. lack of decent employment, poor

health and education, high corruption) that contribute to them. Of course, poor health and

education and rising corruption create many other ills in society. Thus getting the causality

clear, which can and often does flow in both directions, helps to understand the importance of

combination of different policies. Rather than trying to do everything equally all at once, it

helps to have a sense of priority. Putting the prioritized elements together in a mutually

supportive and logical package creates a strategy. The desirable outcome of a SWOT should

be a strategic plan to address the challenges.

Moreover, there is also the question of feasibility and timing. Lowering

corruption is an excellent idea, but this requires a complicated set of policies and building

institutions that take effect only over time. Raising educational quality (as opposed to

coverage) requires training of teachers, developing curricula that fit current circumstances,


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providing better incentives, improving supervision and management, and other measures that

can take several years.

A further element concerns the urgency or pace of change of negative or positive

developments. Is income inequality rising very fast? That would suggest moving aggressively

to deal with it. Is the garment industry in need of sizeable cost reductions in transport and

port charges? This too could be dealt quickly through increasing efficiency and improving

management, so that more of the existing base can be preserved and expanded in future.

Thus, by identifying the key issues and establishing their relation with each other, a degree of

clarity is possible that helps to make one clear about priorities and the time a policy will take

to bring the outcomes.

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