Selling to the Government
The Government of Bangladesh is the country’s largest importer. Most government agencies, autonomous organizations, and public sector corporations import directly through public tenders, which are publicly announced or issued to registered suppliers. The principal government organizations issuing public tenders include:
Bangladesh Chemical Industries Corporation (BCIC)
Bangladesh Oil, Gas and Mineral Corporation (Petrobangla)
Bangladesh Power Development Board (BPDB)
Bangladesh Steel and Engineering Corporation (BSEC)
Bangladesh Sugar and Food Industries Corporation (BSFIC)
Bangladesh Telecommunications Regulatory Commission (BTRC)
Civil Aviation Authority of Bangladesh (CAAB)
Dhaka Electric Supply Company Limited (DESCO)
Directorate General of Defense Purchase (DGDP)
Rural Electrification Board (REB)
Trading Corporation of Bangladesh (TCB)
Water and Sewage Authority (WASA)
Bangladesh Petroleum Exploration and Production Company Limited (BAPEX)
Information and Communication Technology (ICT) Division
Local Government Engineering Department (LGED)
The Directorate General of Drug Administration (DGDA)
A large number of public tenders are published in the local media and posted on the Central Procurement Technical Unit (CPTU) website.
The U.S. Embassy’s Trade Section also monitors procurement notices and reports significant business opportunities and trade leads through the U.S. Department of State’s Business Information Database System (BIDS).
Notwithstanding efforts to increase transparency, the public procurement process is often highly contentious and widely perceived as subject to manipulation. Delays, reversals and retendering are quite common as competing firms often trade allegations of technical deficiencies and corruption in the tender process. While local agents can sometimes help to navigate the challenging procurement process, it is important for firms to be particularly proactive with local partners and vigilant to ensure compliance with the Foreign Corrupt Practices Act (FCPA).
Many governments finance public works projects through borrowing from the Multilateral Development Banks. Please refer to “Project Financing” Section in “Trade and Project Financing” for more information.
Financing or Project
A 2015 Asian Development Bank (ADB) report noted that capital market intermediaries and insurance companies face significant challenges, both in terms of financial health and technical capacity. Access to finance in Bangladesh is tight and a study of firms nationwide suggested that more than 40 percent of firms found access to finance to be a major or severe obstacle to business, a higher percentage than the average for low and lower-income countries, and the highest in the region after Pakistan.
In addition, 69 percent of lending has a maturity of less than three years. A little less than half of the loans have maturity dates of one year. As a result, long-term financing is typically procured through accumulated earnings, and firms tend to under-invest. Companies often resort to financing long-term asset purchases with short-term financing causing asset-liability mismatches and sub-optimal capital structures increasing financial risk. Some companies rollover existing loans, which can be destabilizing to the financial system.
According to the ADB, the Private Equity industry (including venture capital) in Bangladesh is still largely at a nascent stage with only about $150 to $200 million committed capital from Bangladesh focused private equity and venture capital funds. Prior to 2008, the majority of private equity activity had originated in a much more limited way from the three major developmental finance agencies, namely, the International Finance Corporation (IFC) (part of World Bank Group), the UK’s CDC Group (formerly the Commonwealth Development Corporation) and the German Investment and Development Corporation (DEG). There were direct investments in the power and infrastructure sector, the financial sector, and selectively in the textile sector.
More recent examples of project finance include:
Bangladesh signed $22.5 billion deals with China for 27 projects during President Xi Jinping’s visit to Dhaka in 2016. Bangladesh already received $4.5 billion from China for five projects. The remaining 22 projects have been in different stages of planning, preparation, negotiation and approval. Bangladesh has asked China to expedite the processing of loan agreements for eight projects involving $5.2 billion, These eight projects include converting the Akhaura-Sylhet rail track from meter to dual gauge ($1,272.93 million), construction of a Joydevpur-Ishwardi double-line rail track ($1,045.59 million), construction of a Dhaka-Ashulia elevated expressway ($1,155.18 million), a Chinese economic and industrial zone ($221.18 million), six full-fledged Bangladesh Television stations ($125.12 million), Rajshahi WASA surface water treatment plant ($350 million), rehabilitation and expansion of public sector jute mills of Bangladesh Jute Mills Corporation ($238 million), and establishing digital connectivity ($837 million).
$1.8 billion in concessional loans and $3.9 billion in preferential buyer’s credit from China for 11 projects under the Belt and Road program in Bangladesh.
The $2.5 billion 40th Official Development Assistance (ODA) from Japan to facilitate implementation of five large ongoing projects: Matarbari Port Development Project, Matarbari Ultra Super Critical Coal-Fired Power Project, Dhaka Mass Rapid Transit Development Project Line-1, Foreign Direct Investment (FDI) Promotion Project, and Energy Efficiency and Conservation Promotion Financing Project.
$4.5 billion in loans from the Export-Import (EXIM) Bank of India for financing 17 social and infrastructure projects, which include electricity, railroads, roads, shipping and ports. A $2.67 billion agreement with EXIM Bank of China for the Padma rail link project.
$1,831 million under the Japanese government’s 39th Official Development Assistance (ODA) loan package for implementing six mega projects, including Matarbari Port Development Project, Jamuna Railway Bridge Construction Project, Dhaka Mass Rapid Transit Development Project (Line 5), Dhaka Mass Rapid Transit Development Project (III), Matarbari Ultra Super Critical Coal-Fired Power Project (IV), and Health Services Strengthening Project.
$801.5 million loan for developing the Rupsha 800-Megawatt Combined Cycle Power Plant Project in Khulna. The loan was extended by the ADB, the Islamic Development Bank, and Japan Fund for Poverty Reduction.
The Asian Development Bank (ADB) approved $360 million as loans to Bangladesh so the country can support its ongoing reform in the railway sector.
The Asian Infrastructure Investment Bank (AIIB) approved a loan of up to $60 million for developing a greenfield 220-megawatt combined cycle power plant in Bhola, Barisal.
The World Bank approved $55 million in financing to expand the use of renewable energy in rural areas of Bangladesh. The funds will be used to finance the Second Rural Electrification and Renewable Energy Development (RERED II) Project.
The ADB study goes on to explain that, given the relatively new status of private equity investment in Bangladesh, corporations still largely view private equity as simply an alternative source to debt financing rather than as a true partnership providing broader benefits such as improved corporate governance, strategic direction, access to broader ranges of financing, optimization of capital structure, market access and improved valuation of businesses.
Multilateral Development Banks
The Commercial Service maintains Commercial Liaison Offices in each of the main Multilateral Development Banks, including the Asian Development Bank and the World Bank. These institutions lend billions of dollars in developing countries on projects aimed at accelerating economic growth and social development by reducing poverty and inequality, improving health and education, and advancing infrastructure development. The Commercial Liaison Offices help American businesses learn how to get involved in bank-funded projects, and advocate on behalf of American bidders. Learn more by contacting the Commercial Liaison Offices to the Asian Development Bank and the World Bank.
Financing Web Resources
Trade Finance Guide: A Quick Reference for U.S. Exporters, published by the International Trade Administration’s Industry and Analysis team
Export-Import Bank of the United States (EXIM)
EXIM Country Limitation Schedule
Overseas Private Investment Corporation (OPIC) – OPIC is currently excluded from working Bangladesh
Small Business Administration’s (SBA) Office of International Trade
U.S. Department of Agriculture Commodity Credit Corporation
U.S. Agency for International Development (USAID)
Commercial Liaison Office to the Asian Development Bank
Commercial Liaison Office to the World Bank