Please note! This essay has been submitted by a student.
Bangladesh and Sri Lanka, both these countries are composed with similar traditional, religious and cultural values. On top of that, both countries have great geographical advantages and have been elevating towards success dramatically within the recent years. In comparison to Sri Lanka, the Bangladesh economy seems to be at a much better position. The economy in the country has shown tremendous growth within the recent years recording a 7.11% GDP growth in 2015-2016 from a growth of 6.6% in 2015 (GDP per capital indicated a total of $686.598 billion in 2016). The economy grew by 6% per year since 1996 despite of the political unrest and other conflicts. Based on statistics generated by IMF, the country became the second fastest growing economy in 2016. The same year Sri Lanka indicated a GDP of 81. 322 Billion From a GDP rate of 80.612 in the year of 2015. The country showed a growth rate of 4.5%. In terms of foreign investments, Bangladesh FDI stands at an all-time high at US$2003.53 million in 2016 representing a 9.25% increase compared to the year of 2014-2015. Over the same course of time, Sri Lankan FDI dropped to a 45.6% reaching slightly over US$300 million in 2016 from $658 million in 2015.
Sri Lanka’s current standing as a middle-income emerging market, along with the prevalent business optimism and recent policy changes to revitalize foreign investment inflows compared to other South Asian countries, It offers a relatively open financial system, moderately stable monetary policy, improving infrastructure, and world class local companies. It is the only country in the world to have Free Trade Agreements with both India and Pakistan; the government plans to set up 45 high Economic Development Zones and 11 Industrial and Technical Zones to attract investors; The World Bank ranks the country 109th out of 189 countries on its “Ease of Doing Business” index. However, Sri Lanka has seen the emergence of more startups within the past decade. The government has made efforts to encourage trade and entrepreneurship. Education level is much higher than many countries. Population is more than 21 million and capital is Colombo.
Economic growth: Sri Lanka’s economy is one of the fastest growing in the region with 7.4% growth in 2014. The economy is expected to grow by 6.9% in 2015. However, government debt has been increasing and debt reduction is proving difficult to achieve due to low revenue. In 2014 the deficit stood at 6% of GDP. Sri Lanka’s short term debt is equivalent to over half of its foreign reserves.
Free Trade Agreements: Sri Lanka has Free Trade Agreements (FTA) with India, Bangladesh and Pakistan which can reduce import tariffs into those countries. It does not apply to all goods and services.
Infrastructure: Much of Sri Lanka’s infrastructure needs to be modernized following destruction in the civil war as well as to drive further economic growth. Government policy is to increase tourism related earnings to reach over $3 billion by 2016.
roads and bridges
water distribution and wastewater management
port and airport development
tourism infrastructure, including hotel expansion
There are three official languages in Sri Lanka: Sinhala, Tamil, and English. Sinhala, the language of the majority, and Tamil, spoken by Muslims as well as ethnic Tamils are the primary languages of the island. The island’s history of immigration, trade, and colonial invasion has led to the formation of a variety of ethnic groups, each with its own language and religious traditions. Besides the majority Sinhala Buddhists, the nation also includes Sri Lankan Tamils, Tamils of recent Indian origin, Muslims, etc. Although the members of these groups share many cultural practices, beliefs, and values, ethnic differences have become especially marked since the nation’s independence in 1948. These differences and the exclusive policies of the Sinhala-dominated central government have led to escalating ethnic conflicts.
Strengths of the market
High performing economy [Over past five years, GDP averages 5%]
Logistical hub for South Asian region
Highest ranking in World Bank’s “ease of doing business” ratings in South Asia
Gateway country to vast Indian market via South Asian trade agreements
Highly skilled and educated workforce
English spoken everywhere
Commercial Law based on British law
The demand for food in Sri Lanka is much more than the supply by local farms. This has necessitated the importation of foodstuff from neighboring countries. In fact, foodstuff is one of the most largely imported commodities and there are huge opportunities for investors who import food from neighboring countries and sell them locally in Sri Lanka. This business is easy to start, as it usually requires little capital. Asian Food and Spices has ensured global quality standards in processing, packaging and manufacturing.
Export procedure of Sri Lanka
The exporter is required to register with following institutions. i. Sri Lanka Export Development Board ii. Inland Revenue Department “ Tax Identification Number iii. Sri Lanka customs. To register with the above institutions the exporter is required to produce the original Business Registration Certificate or Certificate of Incorporation and other related documents along with duly completed application forms. The seller (exporter) should prepare a pro-forma Invoice and send it to the buyer. In the pro-forma invoice following details should be mentioned: Product Description, Quality, Price , Terms of Payments ,Terms of Delivery , Packing & Marking details. To succeed in today’s global marketplace and win sales against foreign competitors, exporters must offer their customers attractive sales terms supported by appropriate payment methods. Because getting paid in full and on time is the ultimate goal for each export sale, an appropriate payment method must be chosen carefully to minimize the payment risk while also accommodating the needs of the buyer. There are four primary methods of payment for international transactions: Open account, documentary collections, letters of credit and cash in advance.
Sri Lanka prohibits the importation of chicken meat in order to protect local producers. Regulations restrict entry of genetically-modified products. Authorities apply ad hoc standards for testing of meat shipments upon arrival, which are disadvantageous to importers who comply with health protocol stipulated in import permits. These measures are believed to be applied in order to pressure importers to purchase locally produced items at higher cost.
A variety of taxes have effectively increased Sri Lanka’s tax rates on a range of imported items to between 60 and 100 percent of the cost, insurance, and freight (CIF) value of the product.
Sri Lanka lacks anti-competition laws.
Long-term financing (more than ten years) is not available.
Bureaucracy, corruption, nepotism and a lack of transparency are all prominent in the Sri Lankan business environment. Sri Lanka was ranked 85th in Transparency International’s CorruptionPerceptions Indexfor 2014.
The laws and the court system in Sri Lanka are based on English Law. Standards and technical regulations: The Sri Lanka Standards Institution (SLSI) is the national standards body of Sri Lanka. It is a member of the International Organization for Standardization (ISO). Consumer goods exported to Sri Lanka must indicate the Maximum Retail Price (MRP).Food items must be labeled in English, Sinhala and Tamil.
Sri Lanka IP law recognizes the following forms of intellectual property:
layout designs of integrated circuits
It is recommended that companies register IP with the National Intellectual Property Office to protect against infringement.
Tax and customs considerations
Sri Lanka’s tax structure for businesses can be complex so accountancy advice is essential. Once you’ve completed a company registration contact the Department of Inland Revenue for:
Value Added Tax (VAT) number
Tax Identification Number (TIN)
information on other taxes and rates
Food industry is a rapidly growing sector in Bangladesh, employing a significant portion of the laborforce in the country. Between 2004 and 2010, the food processing industry in Bangladesh grew at an average 7.7 percent per annum. Bangladesh Bureau of Statistics, in its 25006 Economic Census, reported that there were approximately 246 medium-sized food processing industries employing 19 percent of the industrial manufacturing workforce in Bangladesh or 8 percent of the total manufacturing labor force. The food industry employs 2.45 percent of the country’s total labor force and its share in the GDP was 2.01 percent in 2010. There are also numerous small scale factories and domestic units engaged in food processing throughout the country. According to some industry analysts, the food processing sector in Bangladesh is a 4.5 billion US Dollar industry. In 2010, Bangladesh exported over $700 million worth of processed food and beverages, over 60 percent of them were shrimp and fish products.
Bangladesh has a well-established food processing sector, which heavily relies on agricultural production the sector accounts for 22% of total manufactured products, 20% of total labor force and 5% of total GDP “ equal to around 4.48 bills USD Focus is on domestic demand. Excluding scrimps export of processed food products is limited and mainly targeted ethnic products, not the mainstream international markets Besides scrimps main products are agriculturally based as oils and bakeries, but also fishery plays an important role.
Every sort of food production in Bangladesh is cheap compared to other countries, low labor cost also supports us to process and manufacture food in Bangladesh. The main ingredients for our products are Atta, Vegetables, Chicken and other spices which is cheaper than our neighbor countries.
What will we supply?
Frozen Parathas, Chicken Cutlet, Meat Balls, Vegetable Samosa’s, Spring Rolls, Chicken and other spices. As a Starter we will export these products to Sri Lanka. When we will be ready to up sell we will start various other products at a low custom rate
Target Market and facilities:
Our main target market is South East Asia. Bangladesh as a developing country is enjoying duty free market access or reduced tariff rate facilities to export to various developed and developing countries in the world. This facility is enhanced and privileged by the membership of World Trade Organization (WTO). Besides, Bangladesh is the member of different regional trade blocs. Thus the country enjoys duty free or reduced tariff rate access to other member countries.
Also Bangladesh has a free trade agreement with Sri Lanka which is called as SAFTA. The South Asia Free Trade Agreement (SAFTA) was signed in 2004, but came into force on 01 January, 2006. Original member countries were Bangladesh, Bhutan, India, Pakistan, Maldives, Nepal and Sri-Lanka. Later, Afghanistan acceded to the Agreement through approval at the Fifteenth SAARC Summit held in Colombo on 2-3 August 2008.