Last updated on March 3rd, 2019 at 12:23 am
Bangladesh rarely comes to mind when thinking about startups but with a population of some 160 million (which makes it the world’s eighth most populous country) over 46% of which belong to the generation of tech-savvy youngsters aged 24 and below (over 50% of the country’s citizens have internet access and 90% of them use the internet through their smartphones), and a stellar economic growth which has propelled Bangladesh to number one position in a number of indicators (such as the five year growth of UHNW people and per capita economic growth), could this rising South Asian nation emerge as a dark horse in the startup landscape?
Unlike its giant neighbor India, which is one of the most attractive countries for startup entrepreneurs and investors, Bangladesh doesn’t stand out as a startup nation and its startup ecosystem is at a relatively infant stage of development. However, with the frontier market having a number of ingredients that could potentially cook up a potentially vibrant startup economy, Bangladesh has potential to quietly emerge as an unexpected startup success story in the coming years.
Once one of the poorest countries in Asia, Bangladesh’s economy has been booming over the past few years so much that the South Asian nation has shot up to be the world’s fastest growing Ultra High Net Worth (UHNW) country according to studies by New York-based global UHNW market intelligence and research firm Wealth-X which measured the compound annual growth rate of UHNW populations across countries worldwide since 2012.
Meanwhile studies from British weekly magazine revealed that Bangladesh registered a 45% increase in per capita income in terms of Purchasing Power Parity over the last five years, propelling the country to number one position along with China and India to emerge as the countries with the highest per capita economic growth globally during the period.
Bangladesh’s economic transformation has been helped in part by a thriving industrial sector (notably its garment sector which accounts for about 80% of the country’s export revenue and about 20% of GDP) as well as overseas remittances from Bangladeshis working overseas. The country’s economy grew 7.86% during FY 2018, up from 7.28% in 2017. The momentum is likely to continue with the country forecast to be the third fastest growing economy in the world in 2019 with a projected GDP growth rate of 7.4%, according to a report by the United Nations titled World Economic Situation and Prospects. Meanwhile, the country’s middle and affluent class (MAC) is growing at a rate of around 10%-11% per annum and if this pace of expansion continues, the MAC population is expected to nearly triple to about 34 million by 2025 (equal to about 12% of the population) from about 12 million 2015 (equal to about 7% of the population) according to Boston Consulting Group.
Apart from an exciting economic growth story, Bangladesh also boasts attractive demographics with a population of some 160 million (making it the eighth most populous nation in the world) over 46% of which are aged 24 years and younger. The median age is 27.1, making it the fourth youngest population in South Asia behind Afghanistan which has a median age of 19, Pakistan (24.1), and Nepal (24.5) according to figures from the CIA. The total number of internet users in Bangladesh reached 91 million at the end of December 2018 over 93% of which are mobile internet users according to figures from the Bangladesh Telecommunication Regulatory Commission. Yet, with internet penetration at less than 60%, there is still ample potential for growth in internet users. This tech-savvy, youthful generation presents a potentially major driving force for the country’s digital economy and as they climb up the income ladder and their buying power grows, they could potentially drive Bangladesh’s consumer market as well opening tremendous opportunities. This suggests Bangladesh, which has so far been off the radar of international startup entrepreneurs and investors, could become an increasingly important market going forward.
Founded by a company that has been an active player in Bangladesh’s travel industry for over two decades, homegrown Online Travel Agency (OTA) startup Flight Expert which helps travelers find, compare and book flights and accommodation, leveraged its advantage of being backed by a company with years of experience and knowledge about the local travel industry, as well as an established reputation in the country’s travel agency industry to successfully position itself as one of the most popular OTAs in Bangladesh.
Like most other emerging and frontier markets, Bangladesh’s travel market is on the rise and with Bangladeshis becoming increasingly digitized, the country’s nascent online travel market is taking off as well, propelled by a growing appetite for travel thanks to rising incomes and rising internet penetration among its young and increasingly tech-savvy workforce.
There is reason to be optimistic about the sector’s prospects going forward. With a direct contribution of just 2.2% to the country’s GDP as of 2017 (lower than neighboring South Asian countries such as Nepal (4%), Sri Lanka (5.3%), Pakistan (2.9%), India (3.7%), and Maldives (39.6%)), Bangladesh’s travel and tourism sector was valued at BDT 427.5 billion in 2017 (about US$ 5.3 billion) according to data from the World Travel and Tourism Council (WTTC) – suggesting ample potential for growth in the long run. The WTTC forecasts Bangladesh’s travel & tourism sector to expand by 6.2% between 2018 and 2028 to reach a value of BDT 824 billion (about US$ 10.2 billion), making it the fifth fastest growing travel and tourism market in the world during the 2018-2028 period, and the second fastest in South Asia behind India.
This bodes well for OTAs and Flight Expert, as one of the pioneering OTAs in Bangladesh is poised to benefit. A report by ResearchAndMarkets expects Bangladesh’s mobile travel booking industry (which includes offline and online bookings) to witness a CAGR of 21.4% to reach US$ 9.65 billion by 2025. Meanwhile Flight Expert CEO Salman Bin Rashid estimates OTAs will account for about 45% of Bangladesh’s travel market by 2025, up from an estimated 3%-4% currently.