AGRIBUSINESSDOING

BANGLADESHin Flourishing Agriculture for Blossoming Bangladesh!

ForewordBangladesh has maintained an impressive track record of growth and development. In the past decade, the economy has grown at an average of 6% per year. The countrys economy is largely agrarian as it comprises of 18.6% of the GDP and 47.5% of the total labour force. In recent years, Bangladesh has transformed from a country of food shortages to one of food self-sufficiency. Strong demand for imported processed foods suggests that food consumption patterns in Bangladesh will continue to shift from subsistence agriculture towards consumption of processed foods, leading to strong growth in domestic demand over the next decade.

On the other hand, the country is modestly exploring different avenues for agricultural commodity export. Fish and fish products, including shrimps, account for the major share in Bangladeshs agri-food products exports. Other export items include vegetables, fruits, spices etc. Board of Investment (BOI), the apex investment promotion and facilitation agency of Bangladesh under the Prime Ministers Office (PMO), was established in 1989 to encourage and facilitate investment in private sector in Bangladesh. Services provided by BOI include investment promotion and facilitation covering policy advocacy and aftercare support to the investors. BOI promotes domestic and foreign investment to enhance competitiveness and contribute to socio-economic development of Bangladesh.

The Government of Bangladesh has identified agribusiness as a thrust sector. This publication aims to provide some of the basic information required for investors when considering an agribusiness investment. We hope the information presented proves to be useful guidance to the investors in exploiting investment opportunities highlighted. Our goal is to collaborate with agri-investors in creating more value in the agribusiness sector, generating more exports and ensuring job and food security for the country. For any further assistance, please contact us so together we can ensure a business-friendly, open and thriving agribusiness industry in Bangladesh.

Dhaka, BangladeshSeptember 2014

Syed A Samad, Ph.D.Executive ChairmanBoard of InvestmentPrime Minister's Office

Bangladesh has been lauded by the World Bank's 2010 Report as being one of the top ten reformers, owing to substantive regulatory reforms and enhancing the investment climate in the country. With Gross Domestic Product (GDP) growing steadily by 6% per annum in the last decade, it has emerged as one of the promising countries to invest in South Asia. The Foreign Direct Investment (FDI) inflows and the country exports have grown progressively over the years. Agriculture is a key component of the Bangladesh economy with more than 47.5% of the population dependant on agriculture for livelihood. The country produces a wide range of crops, given its favourable climate and resources. Although, Bangladeshs agriculture production and processing is gaining impetus, the country is an importer of many essential agricultural commodities and processed food products. Progressive agricultural practices, improved

DOING AGRIBUSINESSIN BANGLADESH

Bangladesh has been lauded by the World Bank's 2010 Report as being one of the top ten reformers, owing to substantive regulatory reforms and enhancing the investment climate in the country. With Gross Domestic Product (GDP) growing steadily by 6% per annum in the last decade, it has emerged as one of the promising countries to invest in South Asia. The Foreign Direct Investment (FDI) inflows and the country exports have grown progressively over the years. Agriculture is a key component of the Bangladesh economy with more than 47.5% of the population dependant on agriculture for livelihood. The country produces a wide range of crops, given its favourable climate and resources. Although, Bangladeshs agriculture production and processing is gaining impetus, the country is an importer of many essential agricultural commodities and processed food products. Progressive agricultural practices, improved

marketing technique and modern processing facilities would enable agriculture and the processing industry to improve the quality of food produced, expand production levels significantly and enhance the food processing sector. The Government of Bangladesh has identified agriculture as its thrust sector and provides wide range of unique incentives to encourage and protect investments and establish profitable agri-business in Bangladesh. It has been ranked by World Bank ahead of many South Asian countries for starting a business.

With growing GDP, FDI and exports, unique policy reforms, favourable agro-climatic conditions, industrious workforce, competitive human resource and key geographic location near key markets like India and China, Bangladesh presents a profitable offering for setting up an agro-based business.

BANGLADESHTHE COUNTRY TO INVEST

BANGLADESH HAS EMERGED AS A FAST GROWINGECONOMY OVER THE LAST DECADE

With annual GDP growth rate of 6.2%, Bangladesh is one of the most promising economies in South Asia1

GDPgrowthrate of

Investmentcontribution toGDP

6.2%

19.5% 16.3%

Lowerination

rate6.8%Agriculture

share inGDP

GDP at current prices includingsectoral contributions (Billion US $)

Agriculture Industry Services

94

2009-10 2010-11

106

2011-12

114

2012-13

122

Per capita GDP (US $)

2009-10 2010-11 2011-12 2012-13

780

860 880

976

Bangladesh has been ranked 16th out of 74 FDI recipient countries (World Bank). FDI stands at US $1.6 bn2

FDI Inows (in Billion US $)

2009-10 2010-11 2011-12 2012-13 2013-14

0.96 0.91 0.781.19

1.6

% Country-wise Shareof Total FDI (2013-14)

% Sectoral Share of FDI(2013-14)

Agriculture

Services

Power Gas and Petroleum

Trade and Commerce

Telecommunication

Manufacturing

2

4

5

17

30

41

Singapore

South Korea

Eqypt

UK

Malaysia

6.0

7.2

8.0

9.2

19.5

Bangladesh has been ranked one of

the best countries in South Asia to start a

business (Starting a Business as per the

Doing Business Survey 2014-World Bank

report)

Strategically Located, Conducive Climate and Favourable Socio-economic Conditions4

Exports have risen by 11% while imports have declined by 2% during 2011-12 and 2012-133

2009-10 2010-11 2011-12 2012-13

Top 5 Export products byValue (2012-13)

Top 5 imported items byvalue (2012-13)

In US$ bn

*POL- Petroleum Oiland Lubricants

Export- Import Scenario (US$ bn)Import Export

Road: Extensive and remote connectivity. Rail: 32% of area covered. Air: 13 operational airports including 3 international airports. Water: 2 major ports Chittagong and Mongla.

The mobile network penetration is about 32% of the population with almost all the cities having wide mobile network coverage

It is a Democratic countryand English is the second preferred language after Bengali

Situatednear mega markets-China and India

Motivated, hard working and industrious workforce

Climate Mild winter (October to March); Hot, Humid summer (March to June); Humid, Warm Rainy Monsoon (June to October) Rains: 1100 mm to 3400mm (June - August). Agriculture mainly dependent on monsoon

Transportation Network Mobile Network

0.8

Frozen Foods

Agri-Products

Jute Goods

Knitwear

WovenGarments

0.5

0.6

10.5

11

In US$ bn

Capitalmachinery

RawCotton

Iron, steel andother base metal

Textiles

POL*

1.8

2.0

2.3

3.3

3.6

0

20

40

INVESTMENT INCENTIVESBANGLADESH OFFERS COMPETITIVE FISCAL ANDNONFISCAL INCENTIVES

Local banks full working loans are available to foreign investors Foreigners employed in Bangladesh entitled to remit up to 50% of their salary Foreigners employed in Bangladesh enjoy full repartriation of their saving and

retirement benefits

Portfolio investments in Bangladesh stock exchanges allowed by non-resident institution / investor

Facilities for repatriation of invested capital, profits and dividends Special facilities and venture capital support will be provided to export-oriented industries

under "Thrust sectors". According to industrial policy order 2010 issued by Ministry of Industries, Agriculture has been identified as the Thrust sector

International Agreements: Bangladesh has concluded bilateral agreements for avoidance of double taxation and investment treaties for promotion and protection of investment

Industries eligible for tax holidays include agro-processing textiles, jute goods, agri-input industry, agriculture machinery.

Bangladesh is a signatory to

MIGA OPIC ICSID WIPO

Comparitive monthly averageminimum wages (US $)

BangladeshSri LankaPakistanVietnam

IndonesiaIndia

MalaysiaJordan

PhillipinesThailand

China

70728796

142163191211212

294432

Other incentives oered

No FDI Cap-100% foreign equity is allowed (Except for defence, nuclear energy, currency and forest plantations)

Tax Incentives Tax holidays: For 5-7 years (Location and industry dependent) Tax exemption on royalties and technical know how fees Tax exemption on capital gains from the transfer of shares of public limited companies

Cash Incentives Electricity consumption special rebate of 20% to agro-processing sector including

poultry Cash Incentives and export subsidies are granted on the FOB value of selected exports

products ranging from 5% to 20%

Tari-free access to the European Union (through EUs Generalized System of Preferences, GSP), Canada, Australia and Japan

Accelerated Depreciation Allowance at the rate 50%, 30% and 20% in the 1st, 2nd and 3rd year of commercial production on cost of plant and machinery (Applicable for industrial undertakings not enjoying tax holidays)

Agricultural and Rural Credit Policy and Programme of Bangladesh Bank states that All private banks will have to disburse at least 2.5 per cent of their total loan

disbursement to the agriculture and rural sector Loan disbursement target in agriculture for all the state owned and private banks is USD

2 billion Maximum interest rate for agricultural term-loan is 13%

Concessionary duty on imported capital machinery at 5% ad valorem on capital machinery. No import duty for 100% export oriented companies.

Foreign Technicians- Income tax exemption for 3 years

BANGLADESH AGRICULTURE AT A GLANCEBANGLADESH, WITH VARIED AGROCLIMATIC ZONESHAS IMMENSE ADVANTAGE IN AGRICULTURE PRODUCTION

47.5%labour

employed

Cultivableland:

8.52 mnha

50% Doublecropped

area60%

Cropland tototal land

Croppingintensity:

191%

Totalcropped

area14.93 mn

haAGRICULTURE

Crops

Aus Paddy

Transplanted Aman

Local Boro Paddy

High Yielding Boro Paddy

Wheat

Potato

Maize

Tomato

Brinjal

Mango

Litchi

Crop Cycle for Main Cereals

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Now Dec

2012-13 saw the largest crop production in 10 years-1.26 mn tonnes Government support prices raised by 4% in 2012-13 Cultivation of high yielding varieties is growing rapidly

Rice production is vital to economy in Bangladesh Current production is at 51 million tonnes; 2% growth during 2012-13 Number of Rice Mills have increased three fold to 600+ in 2013

Bangladesh accounts for 41% of Jute production in the World Jute production is 1.4 million tonnes in 2012 Export by value Raw jute: US$ 230 million & Jute products: US$ 800 million

Production 108,000 bales in 2012, a growth of 25% yearly Cotton development plan is major growth driver in cotton production Production meets 3% of demand of raw cotton used for textiles

Mango, Litchi, Pineapple Banana and Jackfruit are the major fruits Total fruit production is 34 million metric tonnes (2011-12) Tomato, Brinjal and Cabbage are main vegetables grown Vegetable production is growing rapidly; usually undertaken in winter.

Bangladesh ranks 8th in world for potato production Annual production exceeds 8 million tonnes due to favourable climate and soil Per Capita Potato consumption is 23kg (China: 35kg; India: 15kg)

Annual milk production is 3.46 million tonnes Milk production grew by 6.2% between 2005 and 2012 95% of milk yield is accounted by Cows

Presence of up to 112,000 poultry firms and 30+ poultry feed mills Poultry output is estimated to rise by 1% in 2013 to 212000 tonnes Employs 5 million people

Aquaculture sector worth more than US$1.5bn Growth rate of 5.5 % in 2012-13 Accounted for US$ 437 million worth of exports

Gra

ins

Fibr

eH

ortic

ultu

rePo

tato

Agr

i-alli

ed s

ecto

rs

Production has doubled during 2012-13 to 2.24 million tonnes Strong growth driven by the expansion of the poultry industry It is grown predominantly in the northern areas of the country

Fruits &Vegetables

Wheat

Rice

Maize

Jute

Cotton

Potato

Dairy

Poultry

Fisheries

Sowing PeriodHarvesting Period

OPPORTUNITIES FOR INVESTMENT IN AGRIBUSINESS

Agriculture Sub-Sectors Agri-allied Sectors

AGRIINPUT SECTORSeed Industry

Seed industry in Bangladesh is growing significantly due to crop diversification, realisation of better yields and incomes, better dealer and awareness.

Also, the country has recently ventured into GM crops and has tested the performance of BT Brinjal. The scope for investments in seed sector with hybrid varieties having traits like higher yields, flood tolerance, drought tolerance etc. is immense.

RiceWheatMaizePotatoJute

OilseedsVegetablesSpice seeds

Crops for Seed Industry

Seed Industry

Total Seed Requirement

1.25 million Tonnes

Seed supplyGovernment: 66%

Private: 34%

Seed supplyCompanies involved: 100Registered Dealer: 18000

Seed industryEstimated to be more than US$ 500million

Growth in Seed demandsince 2007Maize- 77%Jute- 29%Vegetable- 67%Potato- 69%

Popular use of Farmers Seed &Open Pollinated Varieties

DairyProcessing

Aqua Poultry

Agri-input sector

Foodprocessing

Post-harvestinfrastructure

Edible Oil

Rice

Wheat

Sugarcane-Sugar and Confectionaries

Potato- Chips, Flakes, Starch

Fruits & Vegetables -Jams, Jellys, pickles, Canning, pulp, juices, Sauces and Ketchups

Spices- Processing and curing, Masala

Cold Chains

Food Parks

Seed

Fertiliser

Pesticide

Irrigation

Farm Machinery

POSTHARVEST INFRASTRUCTURECold chains

Food Parks

The cold chain is a temperature controlled supply chain that includes pre-cooling, cold storage and refrigerated transport.

Bangladesh has about 393 cold storages across the country having average capacity of 2500 tonnes with a capacity of 4 million tonnes of potatoes and potato seeds.

The capacity of refrigerated warehouse in the country stands to about 8 million cubic meters (Global Cold Storage Capacity Report by International Association of Refrigerated Warehouses)

Almost all the cold storages in Bangladesh are primarily used for storing potatoes and are inadequate for storing high value items like fruits and vegetables.

A Food Park is a large cluster based facility to provide modern infrastructure for the food processing sector along the value chain from the farm to the market.

Includes cold storages, creation of processing infrastructure near the farm, transportation, logistics and centralized processing centres.

Such facility will provide food processors with cheaper, assured and better quality services, in turn reducing the post-harvest losses and creation of efficient supply chain

Investments in up gradation of technology, establishment of new exi-cold storages and building multi-facility food parks is key to provide

impetus to food processing industry.

The National Agriculture Policy envisages promotion of organic manures, bio fertilisers and composts

Awareness campaign to promote Balanced Plant Nutrition is being extensively undertaken

The annual fertiliser consump-tion of Bangladesh is about 3.2 million tonnes.

The production and supply of traditional fertilisers is regulated by government

Fertiliser

Opportunities for investment

Irrigation Farm Machinery

Micronutrients Bio fertilisers Organic fertilisers Vermiculture Compost

The area under irrigation has significantly expanding from 3.45 million hectares in 2001-02 to 5.1 million hectares in 2012-13

Government provides irrigation facilities to more than 0.5 million ha through deep tube wells, shallow tube wells floating pumps and low lift pumps as well as re-excavation of canals etc.

Use of Mirco-irrigation techniques including drip & sprinkler irrigation are new and awareness is growing .

Farm machinery is utilised mainly for tilling, ploughing, spraying threshing etc.

The use of tractors, power tillers, threshers, weeders has increased rapidly.

Mechanisation in Bangladesh has been a challenge with decreasing farm size from 0.81 ha during 1980s to 0.61 ha. The energy available is 1.17 kW/ha.

About 0.7 million power tillers, more than 35000 tractors and agri-machines like 14, 50,000 sprayers , 1,80,000 open drum threshers are available for use and hire testifies the huge market for farm machinery in Bangladesh (BARI).

Opportunities for investment Irrigation Pipes, Pumps & Tubewells Drip Irrigation Sprinkler irrigation

OPPORTUNITIES FOR INVESTMENTS IN FOOD PROCESSING

FOOD PROCESSING

DAIRY PROCESSING

The US$ 2.2 billion Food processing industry that is industry grew at an average 7.7 % per annum between scal years 2004-05 and 2010-11.

The beverage industry more than doubled during the same period to US $29 million, showing an average growth rate exceeding 8 % per annum.

Opportunity for food processing The demand for processed foods and beverages is growing with growing middle class population of over 30 million. Government policies supporting agro and food processing industries. 30-35% of wastage in agriculture produce, fruits and vegetables. Rice and Potato surplus production.

Foodprocessing

Edible Oil Sugar Rice Wheat Fruits &Vegetables

Potato Tea Cured Spices

Rice Bran Confectionary Flakes Bread Pulp/ Can/Juice

Chips

Palm Oil Molases Snacks Cookies Jam/ Jelly Flakes

Mustard Bread Noodles/Pasta

Sauces/Ketchup

Starch

Milk production is one of the important economic activities, providing3.6 million households with supplementary income.

Bangladesh requires approx. 12.8 million metric tons of milk; about 1 million ton of this demand is fullled domestically

The demand for milk and dairy products is growing by 10% per annum whereas the local production is expected to grow little over 7%.

The per-capita milk consumption is considerably lower than neighbouring countries. It is therefore a potential industry for development of value chain in local markets.

For modern dairy industry to take shape, investments are needed in diary clusters, ecient cold chains, processing and use of high quality inputs.

Livestock

Crossbred: 2016Indigenous: 280 793 10.5

23.2 1.4 25.1

95 3 2Share of milk yield by species (%)

Yield (kg/lactation)

Total no. (million)

COW BUFFALO GOAT

INVESTMENT OPPORTUNITIES IN DAIRY

AQUA

POULTRY

Cold Chains Milk and Milk Powder Processed products Ghee, Butter Cheese Whey Flavoured Milk Ice Creams Cattle feed

Bangladesh has a 720 Km long coast line and total marine water area of 166,000 sq. km. Also, the country has more than 200 rivers.

Brackish and freshwater aquaculture in Bangladesh is growing due to unique aqua-friendly landscape, climate and culture

Commercial poultry farming is patronised by private players by distributing commercial broilers and layer day old hybrid chicks.

With about 130,000 farmers mainly small and medium farmers are engaged with flock size of 500 birds. Poultry clusters also exist in the country with Gazhipur and Savar districts being hubs of cluster poultry.

It is estimated that poultry production is growing by 4% every year. The feed is major component of cost of production accounting for 65%. Special mills supply about half of the feed while

farmers themselves mix the rest.

Aqua sector is worth

US$1.5bnExport earnings in 2009-10 were as much as

US$ 437.40million

Bangladeshexports shrimps to more than

40 countries all overthe world

190,000registered shrimp

farms mostly located in Khulna Division

8%population directly engaged in shing

INTERESTED? LETS START!

BDT 600 1 day

1 day

1 day

None 1 dayBDT 30-50

* Documents to be submitted for company registration Name clearance certicate Memorandum and Articles of association Forms I, VI, IX X, XII Proof of payment for Treasury Stamps

** Documents to be submitted for obtaining trade license Certied copy of Memorandum and Articles of associa-

tion A copy of certicate of incorporation TIN no. certicate A copy of lease agreement of registered oce

3 dayBDT 5000

4 dayNo Charge

No Charge 3 day

Agencies involved Description andCosts involved

Whether an onlineprocedure

Number of daysrequired

THE PROCEDURES, TIME AND COST INVOLVED IN LAUNCHING A COMMERCIAL ORINDUSTRIAL FIRM, WITH UP TO 50 EMPLOYEES, IS GIVEN BELOW

Registrar of Joint Stock Companies and Firms (RJSC)

Account of Treasury at Sonali bank (challan) orany bank (pay order)

For authorised share capital of BDT1,000,000 the total stamp

duty fee is BDT 2500.

Registrar of Joint Stock Companies and Firms (RJSC)website

Registration fees : BDT 3645Registration filing fee: BDT 1200

Deputy Commission of Taxes of Company Circle,Zonal Taxation Department of the region

Register with Customs, Excise and VAT commissionof the region

City Corporation

Steps for incorporating a company

Decide the company structure and verify the uniqueness of proposed company name with RJSC

Finalise authorised share capital. Pay stamp duty accordingly

Register company*

Make a company seal

Obtain Tax Identication Number (TIN)

Register for VAT

Obtain trade license**

SIM

ULT

AN

EOU

S PR

OCE

DU

RE

COSTS INVOLVED IN DOING BUSINESS IN BANGLADESH

Particulars (In US $)

Destinations 40 FCL (US$)

Sea Frieght Charges

Industrial estate rent (monthly) (per sq mt)

Office rent (monthly) (per sq mt)

Gas Tariff (per cubic meter)

Power Tariff (per kw/h)

Labour Force (per month depending on skill)

Mid-level Management salaries

Top level management salaries

Land: 0.083-0.183Factory: 1.25- 2.75

6.24- 23.38

0.04-0.14

0.02-0.08

70

400-500

1000-2500

Jebel Ali, UAE 1420

Rotterdam, Netherlands 2970

Sydney, Australia 2100

New York, USA 3750

20 FCL (US$)

850

Hong Kong, China 870550

1625

1250

3050

LIST OF AGRICULTURE SUPPORT AGENCIES IN BANGLADESH

Extension Services

Department of Agricultural Extension (DAE)

DAEs objective is to provide efficient and effective needs based extension services to all categories of farmer, to enable them to optimize their use of resources, in order to promote sustainable agricultural and socio-economic development.

Agri-Input Bangladesh Agricultural Development Corporation (BADC)

BADC works in production, procurement, transport, storage and distribution of essential agricultural inputs.

Research Institutes

Regulatory Standards

Exporting Entities

RelevantAssociations

Bangladesh Agricultural Research Institute (BARI)

BARI is the countrys largest multi-crop research institute

Bangladesh Rice Research Institute (BRRI)

BRRI is an autonomous research organization for conducting research towards development of rice varieties their manage-ment technologies

Rural Development Academy (RDA)

RDA works as a specialized Rural Development Institution for training, research and action research.

Bangladesh Standards & Testing Institution (BSTI)

BSTI develops standards and maintains quality control of products

FinancialInstitutions

Bangladesh Krishi Bank (BKB) The state owned bank provides credit facilities to farmers and agri-business owners.

Seed Certification Agency (SCA) SCA is the only Government authorized body for quality control of all kinds of seeds in Bangladesh

Bangladesh Export Processing Zones Authority (BEPZA)

BEPZA is the official wing of the government to promote, attract and facilitate foreign investment in the Export Process-ing Zones.

Bangladesh Rice Exporters Association (BREA)

An association of rice exporters working to develop and promote policies in the export of rice

Bangladesh Fruits, Vegetables & Allied Products Exporters Association (BFVAPEA)

An association of exporters working to develop and promote policies in the export of fruits, vegetables and allied products

Bangladesh Agro-Processors Association (BAPA)

BAPA works to develop and apply policy in the manufacture and trade of value added agro products

Bangladesh Cold Storage Association (BCSA)

BCSA protects and promotes the trade rights of cold storage owners and other stakeholders

Bangladesh Seed Association (BSA)

An association for seed manufacturers, importers and dealers to protect and promote seed business in Bangladesh

Bangladesh Fertilizer Associa-tion (BFA)

An association for fertilizer manufacturers, importers and dealers to protect and promote all measures towards free competitive marketing, trade and manufacture of fertilizer in Bangladesh

Bangladesh Crop Protection Association (BCPA)

BCPA is the apex body of pesticide companies in Bangladesh and works to protect and promote the trade of crop protec-tion technologies in Bangladesh

Category Name Function

For further information and support, kindly visit www.boi.gov.bd

Board of Investment (BOI), the apex investment promotion and facilitation agency of Bangladesh under the Prime Ministers Office (PMO), was established in 1989 to encourage and facilitate investment in private sector in Bangladesh. Services provided by BOI include investment promotion and facilitation covering policy advocacy and aftercare support to the investors. BOI promotes domestic and foreign investment to enhance competitiveness and contribute to socio-economic development of Bangladesh.

International Finance Corporation (IFC) is providing technical supports to BOI to strengthen investment promotion and facilitation services including agribusiness.

Ernst & Young (EY) is providing research support to promote agribusiness sector.