PEST Analysis of Bangladesh

PEST Analysis of Bangladesh

Political

•   Environmental issues

Environmental dreadful conditions and depletion of natural resources are often observed in  Bangladesh due to poverty, over-population and lack of awareness on the subject. It is manifested by deforestation, destruction of wetlands, depletion  of soil nutrients,  etc. Natural calamities  like floods,  cyclones  and tidal-bores also result in severe socio-economic and environmental damage.

•   Legislation

The existing Bangladeshi legislation in this area, however, dates mostly from the period of British rule. The legislation in force are as follows:
•  Patent and Design Act of 1911
•  Patent and Design Rule of 1933
•  Trademark Act of 1940
•  Copyright Act of 1999

•   Government policies for Foreign Investments   

The stated policy of the government of Bangladesh (BDG) is to pursue foreign investment actively, and it has enacted a number of policies to this end. There are no distinctions between foreign and domestic private investors regarding investment incentives or export and import policies. Incentives for investors include: 100% ownership in most sectors; tax holidays; reduced import duties on capital machinery and spares; duty-free imports for 100% exporters; and tax exemptions.

 

Economic

•   Economy situation

The    economy    of Bangladesh is    constituted    by    that    of    a developing country. Its per    capita  income in   2009    was    est.    US$1,500    (adjusted by purchasing  power  parity)  significantly  lower than India, Pakistan,  both which  are also  lower  than  the  world  average  of  $10,497.According  to the gradation by the International Monetary Fund, Bangladesh ranked as the 48th largest  economy in  the world  in  2009,  with  a  gross  domestic  product  of US$224.889 billion. The economy has grown at the rate of 6 -7% p.a. over the past few years. More than half of the GDP belongs to the service sector; nearly half of Bangladeshis are employed in the agriculture sector, with RMG, fish, vegetables,  leather  and leather  goods,  ceramics,  rice  as  other  important produce.

 

•   Bangladesh Corporate Tax Rates

The standard rate of corporate tax in Bangladesh is 27.5% in 2008 - 2009 tax years. This is the standard corporate tax rate applicable to publicly traded  companies in Bangladesh, a list including tax rates for other corporations are as follows:

•  Publicly Traded Company                                      27.5%
•  Non-publicly Traded Company                               37.5%
•  Bank, Insurance & Financial Company                   45%
•  Mobile Phone Operator Company                           45%

If any publicly traded company declares more than 20% dividend, 10% rebate on total tax is allowed.

• Seasonality/Weather Issues

Bangladesh is a country crisscrossed with rivers, and thus uses a wide network of water-based public transportation.  Ferries and other boats compete with the railroads as a major means of public transport.  Typically overloaded and top- heavy, ferries do capsize, particularly during the monsoon season from May to October or during unexpected thunderstorms or windstorms.  Every year there are dozens of fatalities resulting from ferry accidents.

 

Social

Companies are facing the challenges of adapting effectively to the changing environment  in the context  of  globalization  and in particular  in the  export sector in Bangladesh. Although Consumer Rights Movement, enforcement of government   regulations and a structured view regarding the economic importance of Social responsibility  are not yet so widespread in the corporate world in Bangladesh, companies have gradually attaching more importance to Social responsibility in the local market as well. They are increasingly aware that Social responsibility can be of direct economic value.  Companies can contribute to social and environmental  objectives, through integrating Social responsibility as a strategic investment into their core business strategy, management  instruments  and operations.   This is an investment,  not a cost, much like quality management.  So, business organizations  can thereby have an inclusive financial, commercial and social approach, leading to a long ter m strategy minimizing risks linked to uncertainty.

Technological

The   need   for   faster   technological   development   is   increasingly   felt   in Bangladesh. Development plans of Bangladesh have emphasized science and technological research to develop technologies through adoption of imported technology as well as development of indigenous technologies. As the country is heavily dependent  on imported technologies, proper planning is required for its   effective   transfer through  acquisition,   assimilation   and   adoption. A National Science and Technology Policy has been formulated and adopted by the Government. It has laid down the directions for S and T activities  and research, institutional   and   manpower   development.   Dissemination   and documentation  facilities.  The National Council for Science and Technology (NCST)  determines  S  and  T  policies,  reviews  the  activities  of different institutions and provides direction towards S and T research and activities.