Business confidence in Bangladesh is significantly higher than the global and Asian average, according to a new global report of HSBC.
As high as 97 percent of business enterprises in Bangladesh said they would expand their operations next year, buoyed by a strong economy and positive international trade prospects, according to the HSBC’s flagship Navigator report.
The Hongkong and Shangahi Banking Corporation’s ‘Navigator: Now, next and how’ captured business sentiment from 9,131 companies globally, including 193 Bangladeshi companies, shedding light on their investment priorities, decision-making drivers, and plans to implement change and growth expectations.
“Bangladeshi businesses are brimming with confidence,” said the report, which was launched globally recently. The percentage is much higher than the global average of 79 percent and the Asian average of 77 percent.
“Nearly all Bangladeshi firms surveyed have an optimistic outlook,” the survey report said.
Moreover, 50 percent of Bangladeshi businesses are expecting growth of 15 percent or more, which would be about twice the rate of the expected GDP growth in the country.
The Navigator survey, which is the largest of its kind, is conducted on behalf of HSBC by Kantar.
The study gauges sentiment and expectations of businesses in the near to mid-term future on topics, including business outlook, international trade, geopolitics, sustainability, technology and wellbeing. The survey was conducted between August and September 2019.
Business confidence in Bangladesh is significantly higher than the global and Asian averages, the report said. Business confidence in Bangladesh is also on the rise: 74 percent are optimistic about their prospects than a year ago, compared to the Asian average of 43 percent.
“Bangladesh is at the heart of Asia’s emerging growth, so it’s only fitting that its businesses are among the most bullish globally,” said Francois de Maricourt, chief executive officer of HSBC Bangladesh.
“What we are seeing is Bangladeshi businesses proactively adapting to the pace of global change, with expansion into new markets, investments in innovation, and upskilling their workforce as key ways to boost growth.”
Bolstered by fast–growing industries, nine in 10 Bangladeshi businesses believe international trade is a force for good that will drive innovation and improve efficiency.
“With a strong focus on manufacturing and industries like garments that continue to grow, Bangladesh remains well-poised to make gains from international trade in the years to come,” Maricourt said.
Asia remains the main arena where Bangladeshi firms trade, with more than four in five (83 percent) companies citing its importance. The largest trading partners for Bangladeshi firms are mainland China (43 percent), Japan (36 percent), and India (27 percent).
Over the past year Bangladeshi firms have continued to strengthen key business corridors, with China continuing to be a top trading partner.
Firms are also eyeing fresh pathways to growth, with Japan more than tripling in importance to replace Malaysia as Bangladesh’s second most important trading partner, the report also said.
Meanwhile, trade with most major European economies, such as Germany, France and Italy has more than halved in the last 12 months. However, the slack has been picked up by the US, which has doubled in importance over the last year.
The report also suggested some measures to be taken by the country to harness the potentials of the global trade.
Despite their sky-high confidence, Bangladeshi businesses are not immune from the impacts of protectionist policies in their key markets although the threat is felt substantially less than what was last year. Only 42 percent of Bangladeshi businesses believe that their key trading markets are becoming more protectionist, down from 93 percent the previous year.
Even so, Bangladeshi firms are proactively taking countermeasures through joint ventures with local companies, selling more online, using more local suppliers, and adapting their product and service offerings.
The proactivity of firms is encouraging with three quarters of Bangladeshi firms expecting their business to change substantially in the next five years compared to just half of their global peers.
“Where there is fast growth, there is also fierce competition. Nowhere is that more apparent than Asia. The future is bright for Bangladeshi businesses if they remain positive and proactive, raising their game to match their potential,” Maricourt said.
Some 77 percent of Bangladeshi companies think a favourable political climate is a key driver for growth, compared with just 20 percent of firms surveyed globally.
More than two-thirds of Bangladeshi businesses believe that introducing sustainable business practices will increase sales, while nearly half think it will help them meet buyer expectations.
Bangladeshi companies are well ahead of the global average in considering these factors (both factors cited by 23 percent of firms globally). Companies are also feeling external pressure to adopt sustainable practices in the next five years, the report said.
The report suggested Bangladeshi firms invest more in technology, innovation and infrastructure to improve sustainable production.
“Half of Bangladeshi companies plan to do so in the next five years,” it said.
It also recommended exploring ways to raise funding to support sustainability. Fifty-seven percent of companies view working capital as a challenge when it comes to implementing environmental, social and governance policies over the next five years.
Bangladeshi firms combat protectionism with positivity and proactively, the report said. Only 42 per cent of Bangladeshi firms feel protectionism is on the rise in 2019, compared to 93 per cent in 2018, the report added.