ICT has a good growth potential in Bangladesh as the domestic demand for ICT services slowly increases and Bangladesh has a competitive advantage with its neighbors when it comes to labor costs.

Telecommunications is already growing fast. The share in GDP is 1% and expected to increase. Bangladesh is among the top-10 mobile growth markets in the Asia-Pacific region. In 2005, Telecommunication was the sector that received most Foreign Direct Investment (FDI); 33% of total FDI – USD 278.8 million. FDI is highly skewed to the cell phone market (i.e. Telenor owns over 60% of Grameen Phone). Currently, there are 16 companies (15 private) that provide landline phone services and 6 companies (5 private) that provide cell phone services.

The IT sector, however, is still in its infancy. Bangladesh is counting on the trend to outsource and expects to benefit from its low wages to develop this market. Data processing and software development might have future potential.

Market opportunities

• Although the telephone penetration rate in Bangladesh is still low [llandline 0.6% (840,000 people) and cell phone 12% (approximately 16 million people)]1 and internet density even lower, the potential market size is huge given the population of 140 million.
• In addition, an estimated 8 million Bangladeshi already have an annual income of USD 10,000 and more, representing a sizeable market for a wide range of ITC services (and goods).
• Supply of ICT products (including gadgets) and services.
• Assembly of cell phones.
• Information Technology opportunities mainly lay in information processing and software development.
• Bangladesh has a cheap and growing, and English-speaking, ICT workforce (30.000 new ICT workers a year).
• Innovative projects with sustainable development impact could qualify for PSOM.

Market challenges

• The ICT sector, except telecoms, lacks the required infrastructure and highly-skilled workforce.
• Modern and effective legislation on copyrights is lacking.

Market entry strategy

Personal relations are important. Many companies license dealers or distributors, or hire local agents to represent their products. For foreign direct investments, often joint ventures with Bangladeshi companies are being established.