Bangladesh is a largely homogenous society
with no major internal or external tensions and
a population with great resilience in the face
of adversity (e.g. natural calamities). Bangladesh
is a liberal democracy and mostly a one race and
one religion country. The population of this country
irrespective of race or religion have been living
in total harmony and understanding for thousands
Broad non-partisan political support for
market oriented reform and the most investor-friendly
regulatory regime in south Asia.
Trainable, enthusiastic, hardworking and
low-cost (even by regional standards) labor force
suitable for any labor-intensive industry.
Geographic location of the country is ideal
for global trades with very convenient access
to international sea and air route.
Bangladesh is endowed with abundant supply
of natural gas, water and its soil is very fertile.
Although Bengali is the official language,
but English is generally used as second language.
Majority of even moderately educated population
can read, write and speak in English.
result of low per capita GDP of only US$ 386,
present domestic consumption is not significant.
However, it should always be considered that there
exists a middle class with some purchasing power.
As economic growth picks up, the purchasing power
will also grow substantially. And in a country
of more than 130 million people, even a small
middle class may constitute a significant market.
Furthermore, Bangladesh products enjoy duty free
and quota free access to almost all the developed
countries. This access to the global market is
further helped by the fact that policy regime
of Bangladesh for foreign direct investment by
far the best in South Asia.
Bangladeshi products enjoy complete duty and quota
free access to EU, Japan, USA, Australia and most
of the developed countries. However, for apparel
export to USA, we have certain quota regime which
is generally favorable to Bangladesh.
Legal Framework for Foreign Investment
Investment in Bangladesh is well protected
by law and by practice. Major laws affecting foreign
investment are the Foreign Private Investment Act
of 1980, TheIndustrial Policy of 1991, the Bangladesh
Export Processing Zones Authority Act of 1980, the
Companies Act 1994. In addition foreign investors
are also required to follow the regulations of the
Bangladesh Bank (central Bank), the National Board
of Revenue (for taxation and customs matters).
Bilateral Investment Agreements
Investment Act includes a guarantee of national treatment.
National treatment is also provided in bilateral investment
treaties for the promotion and protection of foreign
investment which have been concluded with 14 countries:
the USA, Belgium, China, France, Germany, Italy, Malaysia,
the Netherlands, Pakistan, Romania, South Korea, Thailand,
Turkey and the UK.
Separate bilateral agreements for avoidance
of double taxation have already been signed with 20
countries which include: Belgium, Canada, China, Denmark,
France, Germany, India, Italy, Japan, Malaysia, Pakistan,
Poland, Romania, Singapore, South Korea, Sri Lanka,
Sweden, Thailand, the Netherlands and the UK. Double
taxation avoidance negotiations are also being held
with USA, Iran, the Philippines, Qatar, Australia,
Nepal, Turkey, Indonesia, Cyprus, Norway, Finland
is keen to stimulate the economy and transform a poverty-stricken
economy to NIE within short time. Government has liberalized
the industrial and investment policies in recent years
by reducing bureaucratic control over private investment
and opening up many areas. Major incentives are as
|1. Tax Exemptions :
||Generally 5 to 7 years. However, for power
generation exemption is allowed for 15 years.
|2. Duty :
||No import duty for export oriented industry.
For other industry it is @ 5% ad valorem.
|3. Tax Law :
||i. Double taxation can be avoided in case
of foreign investors on the basis of bilateral
ii. Exemption of income tax upto 3 years for
the expatriate employees in industries specified
in the relevant schedule of Income Tax ordinance.
|4. Remittance :
||Facilities for full repatriation of invested
capital, profit and divided.
|5. Exit :
investor can wind up on investment either
through a decision of the AGM or EGM. Once
a foreign investor completes the formalities
to exit the country, he or she can repatriate
the sales proceeds after securing proper authorization
from the Central Bank.
|6. Ownership :
Foreign investor can set up ventures either
wholly owned on in joint collaboration with
facilities will be available for 5 or 7 years depending
on location of the industrial enterprise.
|Dhaka and Chittagong Divisions (excluding
3 hill tract districts of Chittagong Division)
Sylhet, Barisal and Rajshahi Divisions And 3
Chittagong hill tract districts
facilities will be provided in accordance with the
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 for
the total period within 90 days of submission of application.
This facility can be availed of by industries set
up within June 30, 2000 ADb.
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 setup 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.c.
Concessionary Duty on Imported Capital
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
Rationalization of Import Duty
Duties and taxes on import of goods which
are produced locally will be higher than those applicable
to import of raw materials for producing such goods.
Incentives to Non-Resident
Investment of NRBs will be treated at par
with FDI. Special incentives are provided to encourage.
NRBs for investment 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.
exemption on royalties, technical know-how fees
received by any foreign collaborator, firm, company
exemption on the interest on foreign loans under
Avoidance of double taxation in case of
foreign investors on the basis of bilateral agreements.
- Exemption of income tax
up to 3 years for the foreign technicians employed
in industries specified in the relevant schedule
of income tax ordinance.
exemption on income of the private sector power
generation company for 15 years from the date
of commercial production.
Facilities for full repatriation of invested
capital, profit & dividend.
- 6 months multiple entry
visa for the prospective new investors.
- Re-investment of repatriable
dividend treated as new investment.
Citizenship by investing a minimum of US$
5,00,000 or by transferring US$ 10,00,000 to any
recognized financial institution (non-repatriable).
Permanent residentship by investing a minimum
of US$ 75,000 (non-repatriable).
exemption on capital gains from the transfer of
shares of public limited companies listed with
a stock exchange.
Special facilities and venture capital
support will be provided to export-oriented industries
under "Thrust sectors"
There will be no discrimination in case
of duties and taxes for the same type of industries
set up by foreign and local investors and in the public
and private sectors.
Incentives to Export-Oriented
and Export-Linkage Industries
Export-oriented industrialization is one
of the major objectives of the Industrial Policy 1999.
Export-oriented industries will be given priority
and public policy support will be ensured in this
respect. An industry exporting at least 80% of its
manufactured goods or an industry contributing at
least 80% of its products as an input to finished
exportables, and similarly, a business entity exporting
at least 80% of services including information technology
related products will be considered as an export-oriented
industry. To make investment in 100 percent export-oriented
industries attractive, the following incentives and
facilities will be provided :
free import of capital machinery and spare parts
up to 10 percent of the value of such capital
machinery will continue.
Existing facilities for Bonded Warehouse
and back-to-back Letter of Credit will continue.
system for duty drawback will be further simplified
and to this end, duty drawback will be fixed at
a flat rate on exportable and potentially exportable
goods. Exporter will receive duty drawback at
a flat rate directly from the relevant commercial
arrangement for providing loans up to 90 percent
of the value against irrevocable and confirmed
Letter of Credit/Sales Agreement will continue.
backward linkage, incentives will be extended
to the "deemed exporters" supplying indigenous
raw materials to export-oriented industries. Export-oriented
industries including export-oriented RMG industries,
using indigenous raw materials will be given facilities
and benefits at prescribed rates.
export-oriented industr4ies, further to the provisions
of Bangladesh Bank foreign exchange regulations,
will be entitled to receive additional foreign
exchange, on case to case basis, for publicity
campaign, opening overseas offices and participating
in international trade fairs.
entire export earning from handicrafts and cottage
industries will be exempted from income tax. For
all other industries, income tax rebate on export
earning will be given at 50 percent.
facility for importing raw materials, which are
included in the banned/restricted list, but required
in the manufacture of exportable commodities,
import of specified quantities of duty-free samples
for manufacturing exportable products will be
allowed consistent with the prevailing relevant
local products supplied to local industries or
projects against foreign exchange L/C will be
treated as indirect exports and be entitled to
all export facilities.
Export Credit Guarantee Scheme will be further
expanded and strengthened.
products of the enterprises, located in both public
and private EPZs will be allowed to be exported
to domestic tariff area against foreign currency
L/C on payment of applicable duties and taxes.
percent export-oriented industry outside EPZ will
be allowed to sell 20% percent of their products
in the domestic market on payment of applicable
duties and taxes.
- The Export-oriented industries
which are identified by the government as "Thrust
Sector" will be provided special facilities and
venture capital support.
Apart from the above-mentioned
facilities, other facilities announced and provided
in the Export Policy will be applicable to export-oriented
and export-linkage industries.
Source of Country