Firms venturing overseas due to economic instability
Several firms, both new and more established are gearing to venture into more lucrative markets overseas due to the dicey macroeconomic situation in the country.
The currency depreciation and the result of rising fuel prices have increased inflation. While exports recovered on regaining GSP+ to the European Union, the steadily growing fuel bill and large imports of vehicles widened the trade deficit in Sri Lanka. Already many firms are venturing into South Asian nations such as Bangladesh and East Asian countries such as Myanmar. These two countries were in the local companies’ radar for the past decade, but the tough situation in Sri Lanka is now making it easier for many businesses to set up operations there, according to business analysts.
Bangladesh’s trade openness has considerably enlarged over the years with a reduction in tariff peaks, tariff bands, and para-tariffs. Research shows that its rising FinTech industry will bode well for broad opportunities for a largely under-served population in Bangladesh. Analysts say that Bangladesh’s emerging financial system, considerable unbanked population, and rising smartphone penetration rate added to the development of new digital finance solutions there.
Bangladesh also has an extremely low banking penetration rate with over 70 per cent of its population having no bank account, a senior banker vying to set up in Bangladesh told the Business Times. The usual banking sector needs the adequate technology to get to these people and only serves less than 40 per cent of adults, he said noting that this statistic puts them on a sweet spot to start business in Dhaka, Bangladeshi capitol.
A high net worth investor who is trying to start a company in the country noted that Bangladesh is the world’s eighth densely populated country and one of the top performing economies in Asia. Its growth rate is averaging an annual growth of more than 6 per cent.
Last August, an investor forum organised by NDB Investment Bank, titled ‘Ayubowan Bangladesh’, at Shangri-La Hotel in Colombo saw Bangladesh Investment Development Authority (BIDA) Executive Chairman Kazi M. Aminul Islam inviting Sri Lankan firms to venture into Bangladesh’s growth sectors by taking advantage of its liberalised investor regime, combined with low production costs and attractive incentive schemes.
With the creation of the Sri Lanka Myanmar Economic Cooperation Council (SLMECC) formed by several prominent members of Sri Lankan and Burmese business community in 2014, setting up operations there has been easy, many owners of firms now in Myanmar noted.
Foreign investments have continued to flow in steadily since Myanmar opened up end 2011 – early 2012. Consumers are increasingly seeking goods and services that are of high quality, an analyst noted adding that potential in manufacturing as Myanmar moves towards industrialisation is huge.