Pharmaceutical Industry in Bangladesh

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  • Topic: Investment, Capital requirement, Tier 1 capital
  • Pages : 61 (18842 words )
  • Download(s) : 194
  • Published : March 20, 2009
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Objective of the report:

The Bangladesh paradox has been one of surprising economic resilience in the face of natural disasters, poor governance and political volatility.
However, a key challenge is whether Bangladesh can move away from an economy that is an impressive underdog, to one that can truly join the ranks of the fastest growing economies in the region.
Bangladesh has three key attractions for global investors and multinationals: a large base of low-cost labour, a large domestic market of 150mn people, and nearly 3bn people in the Asian region that it has market access to.

The aim of this paper is to provide global investors with an outline on the challenges and prospects for the Bangladesh economy as well as investment opportunities.

The fact that Bangladesh is lagging in the economic development chain is a potential advantage for policymakers in terms of the ability to learn from the experience of other countries.

Vietnam saw its FDI increase from USD 2bn in 2000 to an estimated USD 20bn in 2007. It is important that Bangladesh can attract similar long term investment flows that will help build the infrastructure and productive capacity of the economy.

We believe it is realistic for Bangladesh to achieve a similar tenfold increase over a seven year period, increasing FDI from a projected USD 700mn in 2008 to USD 7bn by 2015. The growth of private equity firms (those that invest in non-listed securities) can positively impact Bangladesh’s ability, not only to attract FDI, but also to improve manufacturing productivity.

A dynamic private sector and a substantial increase in FDI flow is likely to fail to deliver the kinds of economic growth gains Bangladesh need’s to become a Middle Income Country (MIC) unless the government and the regulatory authorities can provide a supportive enabling environment in terms of infrastructure, corporate governance, capital markets, law and order, education, fiscal policies among other factors.

We hope this report, the first of a series of more detailed sector analyses we intend to publish, will reduce some of the informational asymmetries that have constrained FDI flows. We remain optimistic that the next phase of Bangladesh’s economic development and will provide many profitable opportunities for global investors.

Introduction:

The Bangladesh paradox has been one of the surprising economic resilience in the face of natural disasters, poor governance and political volatility. Even if growth has lagged a number of other economies in Asia, most notably China, India and Vietnam, the volatility of Bangladesh’s growth has been lower. In effect, an entrepreneurial private sector base has compensated for a less supportive macro political environment.

However, a key challenge is whether Bangladesh can move away from an economy that is an impressive underdog, to one that can truly join the ranks of the fastest growing economies in the region. Is it realistic to assume that Bangladesh can follow in the footsteps of Vietnam and become the next Asian Tiger?

We believe optimism that Bangladesh can move into the ranks of Middle Income countries (defined as a per capita income of USD 875) by 2021, the 50th anniversary of its Independence, is justified. But this will require Bangladesh moving from a 5-6% growth trajectory to around 7.5%. This is not impossible given the experience of other countries in the region. But it is not inevitable. Much will depend on the ability of Bangladesh to achieve the acceleration in FDI (Foreign Direct Investment) flows seen in the rest of Asia and parts of Latin America. Vietnam, for example, FDI increase from USD 2bn in 2000 to an estimated USD 20bn in 2007. It is important that Bangladesh can attract similar long term investment flows that will help build the infrastructure and productive capacity of the economy. We believe it is realistic for Bangladesh to achieve a similar tenfold increase over a seven year...
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