Bangladesh - Country Commercial Guide
Selling to the Public Sector

Describes how major projects are secured and financed. Explains activities of the multilateral development banks in and other aid-funded projects.

Last published date: 2021-09-17

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 Oil, Gas and Mineral Corporation (Petrobangla)
  • Bangladesh Petroleum Corporation (BPC)
  • Bangladesh Power Development Board (BPDB)
  • Directorate General of Defense Purchase (DGDP)
  • Trading Corporation of Bangladesh (TCB)

A large number of public tenders are published in the local media and posted on the Central Procurement Technical Unit (CPTU) website (https://cptu.gov.bd/).

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: https://bids.state.gov/).

Notwithstanding efforts to increase transparency, the public procurement process is often highly contentious and widely perceived as subject to manipulation.  Delays, reversals, and re-tendering are quite common as competing firms often trade allegations of technical deficiencies and corruption in the tender process.  While local agents can sometimes help 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 Multilateral Development Banks.  Please refer to the “Project Financing” Section in “Trade and Project Financing” for more information.

U.S. companies bidding on government tenders may also qualify for U.S. Government advocacy.  A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center, coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies.  The Advocacy Center works closely with our the U.S. Commercial Service network worldwide and interagency partners to ensure exporters of U.S. products and services have the best possible chance of winning government contracts.  Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government.  Consult Advocacy for Foreign Government Contracts for additional information.

Financing of Projects

A 2015 Asian Development Bank (ADB) report noted 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 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.

The private equity industry (including venture capital) in Bangladesh is still nascent with approximately $300 million in 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 major developmental finance agencies, including the International Finance Corporation (IFC), the UK’s CDC Group (formerly the Commonwealth Development Corporation), the Netherlands’ Development Finance Company (FMO), 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:

  • Japan has been the largest bilateral donor for Bangladesh over the last decade.  The two countries signed their 41st Official Development Assistance (ODA) deal amounting $3.2 billion in August 2020 to facilitate implementation of seven projects:  the Jamuna railway bridge construction project, Hazrat Shahjalal International Airport expansion project, Dhaka mass rapid transit development project (line 5 northern route), Chattogram – Cox’s Bazar highway improvement project, food value chain improvement project, and urban development and city governance project.  The $2.5 billion 40th ODA facilitated implementation of five projects:  the Matarbari Port Development Project; the Matarbari Ultra Super Critical Coal-Fired Power Project; the Dhaka Mass Rapid Transit Development Project Line-1; the Foreign Direct Investment (FDI) Promotion Project; and the Energy Efficiency and Conservation Promotion Financing Project.  The 39th ODA amounting to $1.8 billion supported the implementation of six mega projects, including the Matarbari Port Development Project; the Jamuna Railway Bridge Construction Project; the Dhaka Mass Rapid Transit Development Project (Line 5); the Dhaka Mass Rapid Transit Development Project (Line 6); the Matarbari Ultra Super Critical Coal-Fired Power Project; and the Health Services Strengthening Project.
  • Bangladesh and the People’s Republic of China (PRC) signed agreements to implement 27 projects in Bangladesh worth approximately $20.0 billion during President Xi Jinping’s visit to Dhaka in 2016.  According to press reports, the Government of Bangladesh was implementing nine development projects funded by the PRC as of January 2021.  The projects currently underway are the Padma Bridge rail link; Karnaphuli river tunnel; phase III of the Info-Sarkar project; installation of a single-point mooring with double pipeline in Maheshkhali; modernization of telecommunication networks for digital connectivity; expansion and strengthening of the Dhaka Power Distribution Company’s power system networks, and a tier IV national data center; Dasherkandi sewerage treatment plant, and the power grid network strengthening project under the Power Grid Company of Bangladesh.  Some of the remaining projects have been dropped while the rest are in various stages of planning, preparation, negotiation, and approval.  In 2019, a Bangladesh-China joint working group was formed in Dhaka to address GoB concerns about the slow progress on implementing the development projects.
  • The EXIM Bank of India has extended three Lines of Credit (LoC) to Bangladesh:  $862 million LoC-I signed in 2010, $2.5 billion LoC-II in 2016, and $4.5 billion LoC-III in 2017.  The LoCs are extended to finance 46 projects; notable ventures include:  construction of power evacuation facilities at the Rooppur nuclear power plant (Note: the Rooppur nuclear power plant itself is being built with cooperation from Russia. End note.); the upgrade of Saidpur airport; development of economic zones for Indian investors; and construction of a dual-gauge rail line between Bogra and Sirajganj.  According to media reports, approximately $700 million of the $7.36 billion LoCs have been disbursed up through 2020.  In addition to the three LoCs, the EXIM Bank of India extended a $1.6 billion loan to the Bangladesh-India Friendship Power Company in 2017 to construct the 1,320-megawatt Rampal coal-fired power plant in the Bagerhat district of Bangladesh.
  • In May 2021, the World Bank (WB) approved $600 million for two projects in Bangladesh to increase employability and livelihood opportunities for more than 1.75 million poor and vulnerable people and build their resilience to future shocks such as the COVID-19 pandemic.  In February 2021, the WB and the government of Bangladesh signed a $500 million financing agreement to upgrade the Jashore-Jhenaidah highway and improve the connecting rural roads and markets, which will benefit over 20 million people living in the western region.  In June 2020, the World Bank approved over $1 billion to fund three projects to create jobs and respond to the outbreak of the COVID-19 pandemic, including a $500 million Private Investment and Digital Entrepreneurship (PRIDE) Project; a $295 million Enhancing Digital Government and Economy (EDGE) Project; and a $250 million Second Programmatic Jobs Development Policy Credit.  The WB approved $55 million in financing to expand the use of renewable energy in Bangladesh’s rural areas in 2018.  With $2.27 billion additional borrowing in the 2020 fiscal year, Bangladesh was the year’s second largest borrower of the World Bank group’s International Development Association after Nigeria.
  • The Asian Development Bank (ADB) approved a $200 million loan in December 2020 as additional financing to the ongoing Bangladesh Power System Enhancement and Efficiency Improvement Project to further improve the electricity distribution network in rural areas in the Khulna division.  In September 2020 the ADB approved a $160 million loan to establish a sustainable and inclusive sewerage system in Khulna.  In November 2019 the ADB approved a $300 million loan to expand electricity transmission lines in greater Dhaka and western areas.
  • The ADB, Islamic Development Bank, and Japan Fund for Poverty Reduction extended an $801.5 million loan in October 2019 to develop the Rupsha 800-Megawatt Combined Cycle Power Plant Project in Khulna.  
  • The Asian Infrastructure Investment Bank (AIIB) approved a loan of up to $60 million in February 2018 to develop a greenfield 220-megawatt combined cycle power plant in Bhola, Barisal.

According to the ADB study, because of the relatively new status of private equity investment in Bangladesh, corporations still largely view private equity as 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 structures, market access, and improved valuation of businesses.

The U.S. International Development Finance Corporation is prohibited from working in Bangladesh because the United States suspended Generalized System of Preferences benefits in 2013 due to Bangladesh’s lack of adherence to international standards for worker rights in the garment sector.