The
government
of Bangladesh established the Board of
Investment (BOI) in 1989 for accelerating private
investment in Bangladesh. The Board, headed by the
Prime Minister of the Republic and represented by
Ministers and Secretaries of the concerned ministries,
is vested with necessary powers to take decisions
for the speedy implementations of the new industrial
projects and provide operational support services
to the existing ones.
Foreign Investment Protection Act
The Foreign Private Investment (Promotion
and Protection) Act 1980 provides for lair and equable
treatment to foreign private investment. It ensures
legal protection to foreign investment
in Bangladesh against nationalization and
expropriation. It also guarantees repatriation of
capital and returns from it and equitable treatment
with local investors with regard to indemnification,
compensation etc., in the event of loss due lo civil
commotion etc. Similarly, adequate protection is available
for intellectual property rights, such as patents,
designs, trade marks and copyrights.
Guarantees
Through Multilateral Agencies
Bangladesh is signatory of MIGA (Multilateral
Investment Guarantee Agency), OPIC
(Overseas Private Investment Corporation) of America
and ICSID International Centre for Settlement of Investment
Disputes). MIGA is the Multilateral Investment Guarantee
Agency of the World Bank group to encourage the flow
of foreign direct investment (FDI) to, and among,
developing member countries by providing guarantees
to foreign investors against loss caused by noncommercial
risks. MIGA's guarantee protect investors against
losses arising from the risks of currency transfer,
expropriation and war and civil disturbances. MIGA
may only ensure new investment, privatization and
financial restructuring.
OPIC
is the most important US government agency which is
in a position to promote greater investment interest
in countries including Bangladesh by providing loan
financing and investment insurance to America investors.
OPIC
also support efforts by Bangladesh to attract increased
foreign private investment. In order to secure its
investment in Bangladesh any organization may seek
OPIC insurance coverage.
The ICSID is an international organization
established for the settlement of investment disputes
between states and nationals of the different states.
ICSID seeks to encourage greater flows of international
investment by providing facilities for the conciliation
and arbitration of disputes between governments and
foreign investors.
Abolition
of Restrictions on Equity
Private
investment from foreign sources is welcome in all
areas expect five reserved for public sector investments.
There is, however no restriction on the amount of
investment or equity shares. 100 percent foreign investment
and joint ventures with local private partners or
with the public sector are freely allowed.
Securities
and Exchange Commission
To supervise the smooth functioning
of securities and capital, the Securities and Exchange
Commission (SEC) was established in 1993 through an
Act of Parliament. It has the important responsibility
to ensure proper issuance of securities. Protection
of due interest of the investors in the capital market
is also a major objectives of SEC. The Commission's
main functions include the following :-
1.)regulating
the business of stock exchange and the securities
market.
2.)registering and regulating the
business of stock-brokers, sub-brokers, share transfer
agents, bankers and managers of an issue trustees
of trust deeds, registrars to an issue, underwriters,
portfolio managers, investment advisers and other
intermediaries in the securities market.
3.)registering, regulating and monitoring
of collective investment schemes including all forms
of mutual funds.
prohibiting fraudulent and unfair trading practices
related to securities or any securities market.
4.)promoting investment education
and training of all intermediaries of securities market.
5.)prohibiting insider trading in
securities.
6.)regulating substantial acquisition
of shares or stocks and take-overs of companies,
7.)compiling, analysing and publishing
indices on the financial 8.)performance
of any issuer of securities.
conducting research for the above purposes.
COMPARATIVE ADVANTAGES FOR
INVESTMENT IN BANGLADESH
Bangladesh has the following comparative advantages
for foreign investment over other Asian countries.
1.)Low
cost and easily trainable labour is abundantly available
in Bangladesh. Out of the total population of 127
million, the labour force comprises more than 50 million.
2.)Bangladesh is one of the three
Asian countries (the other wo being Sri
Lanka and China)
who offers unconditional 100 percent foreign equity
or ownership in industrial investments.
Inflation rate is the lowest (1.3 percent) among the
Asian countries.
3.)There is no restriction on issuing
work permit to a foreign national.
4.)Bangladesh is most liberal in
granting permanent resident ship and citizenship lo
foreigners. None reportable investment of only U.S.$
75.000 in an industrial project is the only condition
of granting permanent resident ship and a minimum
investment of U.S.$ 500,000 or transferring U.S.$
1,000,000to any recognised financing institution which
should be nonrepatriable, is the condition for panting
Bangladesh citizenship.
5.)Tax holiday allowed for new investment
in Bangladesh is the minimum, 5 to 9 years in most
of the areas on some conditions, and 12 years in special
economic zones (in the Chittagong Hill Tracts).
6.)Bangladesh enjoys Most Favoured
Nation (MFN) status from a number of countries including
the U.S.A.,
with whom bilateral treaty of trade and investment
has been signed. The countries with which Bangladesh
so far signed bilateral investment treaties are U.S.A.,
U.K
, Germany.
Romania,
Belgium,
Republic
of Korea. Thailand,
Turkey,
France
and Italy.
7.)As one of the least developed
countries, Bangladesh enjoys Generalised System of
Preference (G.S.P.) facilities for favourable export
to the U.S.A.
8.)Avoidance of double taxation agreements
have been signed with Japan, U.K., Italy, Canada.
Sweden. Malaysia, Singapore and the Republic of Korea.
8.)Legal protection to all foreign
investments in Bangladesh is provided by an Act of
Parliament passed in 1980 against nationalisation
and expropriation. Noncommercial risks of investment
in Bangladesh are also insured by the Multilateral
Investment Guarantee Agency (MIGA).
9.)Foreign Exchange regulations have
been relaxed lo the maximum limit by the recent introduction
of free convertibility of Taka, the Bangladesh currency.
This has accelerated the free flow of international
business transactions.
10.)Repatriation of foreign capital
investment along with profits/dividends has been made
easy and simplified. Now no prior permission of any
authority is required for their repatriation.
11.)Cost of land and energy prices
are one of the lowest in, the region. There is a huge
proven and recoverable deposit (about 11 trillion
cubic feet) of natural gas in Bangladesh. A potential
reserve of 50-70 trillion cubic feet is known.
Bangladesh has two seaports with modern facilities,
Internal transport and communication system has vastly
improved over the years.
12.)Most important, Bangladesh) people
are hospitable, friendly and resilient and greatly
value the role of foreign investment in their country.
FOREIGN INVESTMENT : BANGLADESH
Private investment from overseas sources is welcome
in all areas of the economy with the exception of
only five industrial sectors (reserved for public
sector) as mentioned earlier. Such investments can
be made either independently or through joint venture
on mutually beneficial terms and conditions. In other
words, 100% foreign direct investment as well as joint
venture both with local private sponsor or with public
sector is allowed.
Foriegn
investment, however, is specially desired in the following
categories:
1.)Export
oriented industries.
2.)Industries in the Export Processing
Zones.
High technology products that will be either import
substitute or export oriented.
3.)Undertaking in which more diversified
use of indigenous natural resources is possible.
4.)Basis inudstries based mainly
on local raw materials.
5.)investment towards improvement
of quality and marketing of goods manufactured and/
or increase of production capacities of existing industries
labour intensive/technology intensive/capital intensive
industries.
An indicative list of private sector investment opportunities
in Bangladesh Private investment is welcome in all
areas of the economy except five reserve sectors.
An indicative list of private sector investment
opportunities is given below:
1.)Food
and Allied Products:
2.)Dairy farming and dairy products.
3.)poultry farming & poultry
products.
4.)shrimp, crab and other fish culture,
processing and 5.)preservation of
other species of fish.
6.)fishmeal production.
7.)fruits and vegetables processing
& canning and other agro based industries.
Textile Industry:
1.)composite textile mills.
2.)specialized textile mills.
3.)sericulture, reeling and filature.
4.)Leather and Rubber Products.
5.)Leather finishing.
6.)footwear including shoe upper,
sole etc.
7.)tyres and tubes.
8.)leather goods, such as gloves,
bags, jackets etc.
Chemicals and Allied Industries.
1.)Soda ash.
2.) paper and pulp (based on jute
wastes and cuttings).
3.) Paper
coverting including artificial flowers and toys.
4.)jute goods.
5.)dyes, pigments and colour(basic
manufacture).
6.)pharmaceutical chemicals (basic
manufacture).
7.)plastics products including acrylic
pipes and toys.
special chemicals such as extraction of amino,organic
and other acids from agricultural wastes. chemicals
for tanneries. manufacture of basic pesticides.
Glass and Ceramic
Cement including portland and white cement Sheet and
plate glass Fluoresent tubes and electronic ballasts
parts and components of power hydrants, water supply
and sewerage equipment.
Engineering Industries ship building
and machinery and equipment. sponge iron. railway
engine and ancillary equipment. agricultural machinery
and equipment. gas distribution machinery, meters
and fittings. air conditioners, air coolers and refrigerators
including compressors. electrical appliances and accessories.
electric motors including fan motor,
DC fan motors and their parts. mechanically
propelled vehicles and components. electronic goods.
elevision, radio and their components. scientific
and precision instruments including laboratory equipment
optical lenses, prisms, microsopes etc.. disposable
needles and syringes.
Office equipment such as typewriter,photocopier,calculator,
fax and telex machine.component of fishing reel, fishing
foods and equipment. telecommunication equipment and
their parts. electronic watch and clock.
Construction
machinery and equipment. Others: computer software
and software applications. gems cuttings and polishing.
sports goods. tourism, hotel & resort facilities.
photographic and video camera,lens.oil gas, mineral
explorations. power and electric generator. export
oriented flower and orchid farming as well as artifical
flower. mechanical toys. imitation jewelery. exportable
gift items. computer data entry, data processing.
other high tech and export oriented industries.
| Gross
Domestic Product (GDP), Savings and Investment |
| (billion
Taka) |
| Particulars |
FY02 |
%
change |
FY03 |
%
change |
1.
GDP (at FY96 constant producer prices)
2. GDP (at FY96 constant market prices)
3. GDP (at current market prices)
4. Gross investment
a) Private
b) Public
5. Gross domestic savings
a) Private
b) Public |
2,168.87
2,252.61
2,732.01
632.39
458.38
174.01
496.05
465.8
30.3 |
4.4
4.4
7.8
8.0
23.1*
16.8
6.4
8.7
18.2**
17.0
1.1 |
2,289.83
2,372.59
3,004.85
697.46
495.46
201.97
547.92
514.5
33.4 |
5.6
5.3
10.0
10.3
23.2*
16.5
6.7
10.4
18.2**
17.1
1.1 |
| 6.
Sectoral share of GDP |
Share
in GDP
Amount |
In
% |
Share
in GDP
Amount |
In
% |
i.
Agriculture
a) Agriculture and forestry
1. Crops and horticulture
2. Animal farming
3. Forest and related services
b. Fishing |
520.13
403.00
298.19
64.12
40.70
110.24 |
24.0
(0.0)
18.6
(-0.6)
13.7
(-2.4)
3.0
(4.7)
1.9
(4.9)
5.4
(2.2) |
537.34
417.48
307.75
67.01
42.72
119.86 |
23.5
(3.3)
18.2
(3.6)
13.4
(3.2)
2.9
(4.5)
1.9
(5.0)
5.2
(2.3) |
ii.
Industry
a) Mining and quarrying
b) Manufacturing
i) Large and medium scale
ii) Small scale
c) Power, gas and water supply
d) Construction |
580.10
23.26
341.74
241.94
99.80
32.67
182.43 |
26.7
(6.5)
1.1
(4.5)
15.8
(5.5)
11.2
(4.6)
4.6
(7.7)
1.5
(7.6)
8.4
(8.6)
|
622.20
24.73
364.36
256.56
107.80
35.56
197.55 |
27.2
(7.3)
1.1
(6.3)
15.9
(6.6)
11.2
(6.0)
4.7
(8.0)
1.6
(8.9)
8.6
(8.3) |
iii)
Services
a) Wholesale and retail trade
b) Hotel and restaurants
c) Transport, storage and communication
d) Financial intermediations
I) Monetary intermediation (banks)
ii) Insurance
iii) Other financial Intermediations
e) Real estate, renting and other business activities
f) Public administration and defence
g) Education
h) Health and social work
i) Community, social and personal services |
1,068.65
298.68
14.27
208.63
34.89
26.36
7.14
1.39
187.15
56.37
50.04
47.89
170.73 |
49.3
(5.4)
13.8
(6.6)
0.7
(6.9)
9.6
(6.6)
1.6
(6.7)
1.2
(5.5)
0.3
(12.3)
0.1
(2.1)
8.6
(3.4)
2.6
(5.9)
2.3
(7.6)
2.2
(5.3)
7.9
(3.2) |
1,130.29
318.56
15.27
223.93
37.32
27.90
8.02
1.40
193.70
60.27
53.98
50.68
176.59 |
49.4
(5.8)
13.9
(6.7)
0.7
(7.0)
9.8
(7.3)
1.6
(7.0)
1.2
(5.8)
0.4
(12.3)
0.1
(1.0)
8.5
(3.5)
2.6
(6.9)
2.4
(7.9)
2.2
(5.8)
7.7
(3.4) |
GDP
(at FY96 constant producer prices)
Import duty
GDP (at FY96 constant market prices) |
2,168.87
83.74
2,252.61 |
100.0
5.8
4.4 |
2,289.83
82.76
2,372.59 |
100.0
-1.2
5.3 |
Bangladesh
offers generous opportunities for investment under
its liberalised Industrial Policy and export-oriented,
private sector-led growth strategy. All but four sectors
(i.e. (1) arms and ammunition and other defence equipment
and machinery, (2) forest plantation and mechanised
extraction within the bounds of reserved forests,
(3) production of nuclear energy, and (4) security
printing and mining) are open for private investment
in Bangladesh. The government's role is that of a
facilitator which helps create an enabling environment
for expanding private investment, both domestic and
foreign. The Board of Investment (BOI), established
by the government for accelerating private investment,
provides institutional support services to intending
investors.
GENERAL
FACILITIES/ INCENTIVES :
Tax
holiday :
Tax holiday facilities will be available for 5 or
7 years depending on the location of the industrial
enterprise. For industrial enterprises located in
Dhaka and Chittagong Divisions ( excluding Hill Tract
districts of Chittagong Division) the tax holiday
facility is for 5 years while it is 7 years for locations
in Khulna, Sylhet, Barisal, and Rajshahi, Divisions
and the 3 Chittagong hill districts.
Tax
holiday facilities are provided in accordance with
existing laws. The period of tax holiday will be calculated
from the month of commencement of commercial production.
Tax holiday certificate will be issued by NBR ( National
Board of Revenue) for the total period within 90 days
of submission of application.
Tax
exemption :
Tax
exemptions are allowed in the following cases:
*
Tax exemption on royalties, technical know-how fees
received by any foreign collaborator, firm, company
and expert.
* Exemption of income tax up to 3 years for foreign
technicians employed in industries specified in the
relevant schedule of the income tax ordinance.
*
Tax exemption on income of the private sector power
generation company for 15 years from the date of commercial
production.
*
Tax exemption on capital gains from the transfer of
shares of public limited companies listed with a stock
exchange.
Accelerated
depreciation :
Industrial
undertakings not enjoying tax holiday will enjoy accelerated
depreciation allowance. Such allowance is available
at the rate of 100 per cent of the cost of the machinery
or plant if the industrial undertaking is set up in
the areas falling within the cities of Dhaka, Narayangonj,
Chittagong and Khulna and areas within a radius of
10 miles from the municipal limits of those cities.
If the industrial undertaking is set up elsewhere
in the country, accelerated depreciation is allowed
at the rate of 80 per cent in the first year and 20
per cent in the second year.
Concessionary
duty on imported capital machinery :
Import
duty, at the rate of 5% ad valorem, is payable on
capital machinery and spares imported for initial
installation or BMR/BMRE of the existing industries
. The value of spare parts should not, however, exceed
10% of the total C & F value of the machinery.
For 100% export oriented industries, no import duty
is charged in case of capital machinery and spares.
However, import duty @ 5% is secured in the form of
bank guarantee or an indemnity bond will be returned
after installation of the machinery. Value added Tax
( Vat) is not payable for imported capital machinery
and spares.
Foreign
Investment :
Private investment from overseas sources is welcome
in all areas of the economy with the exception of
the four reserved sectors (mentioned earlier). Such
investments can be made either independently or through
venture on mutually beneficial terms and conditions.
Foreign investment is, however, especially desired
in the following major categories of industries:
·
Export oriented industries;
·
Industries in the Export Processing Zones ( EPZs)
·
High technology products that will be either import
substitute or export oriented.
Facilities
/ incentives :
(a) For foreign direct investment, there is no limitation
pertaining to foreign equity participation, i.e. 100
percent foreign equity is allowed. Non-resident institutional
or individual investors can make portfolio investments
in stock exchanges in Bangladesh. Foreign investors
or companies may obtain full working loans from local
banks. The terms of such loans will be determined
on the basis of bank-client relationship.
(b) A foreign technician employed in foreign companies
will not be subjected to personal tax up to 3 (three)
years , and beyond that period his/ her personal income
tax payment will be governed by the existence or non-existence
of agreement on avoidance of double taxation with
country of citizenship.
(c) Full repatriation of capital invested from foreign
sources will be allowed. Similarly, profits and dividend
accruing to foreign investment may be transferred
in full. If foreign investors reinvest their repatriable
dividends and or retained earnings, those will be
treated as new investment. Foreigners employed in
Bangladesh are entitled to remit up to 50 percent
of their salary and will enjoy facilities for full
repatriation of their savings and retirement benefits.
(d)
Foreign entrepreneurs are, therefore, entitled to
the same facilities as domestic entrepreneurs with
respect to tax holiday, payment of royalty, technical
know-how fees etc.
(e)
The process of issuing work permits to foreign experts
on the recommendation of investing foreign companies
or joint ventures will operate without any hindrance
or restriction. Multiple entry visa" will be
issued to prospective foreign investors for 3 years.
In the case of experts," multiple entry visa"
will be issued for the whole tenure of their assignments.
Other
Incentives :
·
Citizenship by investing a minimum of US $ 500,000
or by transferring US$ 1,000,000 to any recognised
financial institution ( Non-repatriable ).
·
Permanent residentship by investing a minimum of US$
75,000 ( non-repatriable).
*
Special facilities and venture capital support will
be provided to export-oriented industries under "Thrust
sectors" . Thrust Sectors include Agro-based
industries, Artificial flower-making, Computer software
and information technology, Electronics, Frozen food,
Floriculture, Gift items, Infrastructure, Jute goods,
Jewellery and diamond cutting and polishing, leather,
Oil and gas, Sericulture and silk industry, Stuffed
toys, Textiles, Tourism.
Investment
Protections / International Agreements :
Legal Protection: The policy framework for foreign
investment in Bangladesh is based on 'The Foreign
Private Investment (Promotion & Protection ) Act.
1980,' which ensures legal protection to foreign investment
in Bangladesh against nationalisation and expropriation.
It also guarantees non-discriminatory treatment between
foreign and local investment, and repatriation of
proceeds from sales of shares and profit.
International
Agreements: Bangladesh has concluded bilateral agreements
for avoidance of double taxation and investment treaties
for promotion and protection of investment with the
following countries:
Bilateral
agreements: Belgium,
Canada,
China,
Denmark,
France, Germany,
India, Italy,
Japan, Poland,
Romania, Singapore,
South Korea, Sri
Lanka, Sweden,
Thailand,
The
Netherlands, United
Kingdom ( including Northern Ireland ).
Negotiations are ongoing with U.S.A,
Iran, Philippines,
Qatar,
Australia,
Nepal,
Turkey, Indonesia,
Cyprus,
Norway,
Finland
and
Spain.
Investment
treaty: Belgium, Canada, France, Germany, Iran, Italy,
Japan, Malaysia, Pakistan, Philippines, Poland, Republic
of Korea, Romania, Switzerland, Thailand, The Netherlands,
Turkey, United Kingdom, USA, Indonesia. Negotiations
are ongoing with India, Hungary, Oman, Maldova, DPRK,
Egypt, Austria, Mauritius, Uzbekistan.
In
addition, Bangladesh is a signatory to MIGA ( Multilateral
Investment Guarantee Agency), OPIC
( Overseas Private Investment Corporation ) of USA,
ICSID (International Centre for Settlement of Investment
Disputes) and a member of the WIPO
(World Intellectual Property Organization) permanent
committee on development co-operation related to industrial
property.
Incentives
to Non-Resident Bangladeshis ( NRBs) :
Investment
of NRBs will be treated on par with FDI. Special incentives
are provided to encourage NRBs to invest in the country.
NRBs will enjoy facilities similar to those of foreign
investors. Moreover, they can buy newly issued shares/debentures
of Bangladeshi companies . A quota of 10% has been
fixed for NRBs in primary public shares. Furthermore,
they can maintain foreign currency deposits in the
Non-resident Foreign Currency Deposit (NFCD) account.
RELAXATION
/ LIBERALISATION OF EXCHANGE CONTROL REGULATIONS :
Bangladesh
'Taka' is convertible for current external transactions.
Individuals/firms resident in Bangladesh may conduct
all current external transactions, including trade
and investment related transaction, through banks
in Bangladesh authorised to deal in foreign exchange
( Authorised Dealers ) without prior approval of the
Bangladesh Bank. Non- resident direct investment in
industrial enterprise in Bangladesh and non-resident
portfolio investment through stock exchanges in Bangladesh
also do not require prior approval of the Bangladesh
Bank. Remittance of post-tax dividend/profit on non
resident direct or portfolio investment do not require
prior approval. Sale proceeds, including capital gains
on non-resident portfolio investment may also be remitted
abroad without prior approval. Repatriation of sale
proceeds of non-resident investment in unlisted companies
is allowed by Bangladesh Bank on the basis of the
net asset value of the shares of the company. Investors
may obtain relevant procedural details by contacting
any Authorised Dealer bank in Bangladesh .
To
facilitate investment, prior approval of the Bangladesh
Bank is no longer required for :
·
remittance of profits to their head offices by foreign
firms and companies operating in Bangladesh
·
issuance of shares to non-residents against
investment for setting up industries in Bangladesh.
·
remittance of dividends on such shares to the non-resident
investors.
·
portfolio investment by non-residents including foreign
individuals/enterprises in shares and securities through
stock exchanges in Bangladesh .
·
remittance of dividends on portfolio investment by
non-residents through stock exchanges in Bangladesh
.
·
remittance of sale proceeds, including capital gains
of portfolio investments of non-residents through
stock exchanges in Bangladesh
·
remittance of principal and interest instalments on
loans/suppliers credits obtained by industrial units
from foreign lenders with approval of the BOI. 100%
foreign owned ( Type A) industrial units in the EPZs
(Export Processing Zone) do not require prior permission
of BOI for such foreign borrowing.
·
remittance in repayment of principal and
payment of interest of such loans.
·
remittance of technical fees and royalties against
technical assistance/royalty agreements in conformity
with BOI guidelines.
·
remittance of savings of expatriate personnel at the
time of their leaving Bangladesh, out of the salaries
and benefits stated in their employment contracts
as approved by BOI.
·
extension of term loans by banks on normal banking
considerations to foreign firms operating in Bangladesh
·
extension of working capital loans to all
foreign owned/controlled industrial and trading firms/companies
by banks on the basis of bank customer relationship
and normal banking practice.
·
obtaining of interest-free repatriable short-term
foreign currency loans by foreign firms investing
in Bangladesh from their head offices or any other
sources through any authorised dealer.
