With improving education, health, technology and economic growth as well as the resulting increase of purchasing power of a large population of 160 million people, Bangladesh has a growing domestic market. Apart from that, Bangladesh also has substantial access to regional and international markets in terms of physical proximity as well as duty free status in EU, Japan, Canada, Australia and most other developed countries. Bangladesh builds a bridge between South Asia and South East Asia. Bangladesh looks forwarding to an expanded market in other developing countries in view of its active participation in organizations having economic orientation such as SAARC, BIMSTEC, BIMC Economic Corridor, Developing-8, Indian Ocean Rim Association and so on. The existing and potentially large market of Bangladesh is making her increasingly attractive to investors.
The Foreign Private Investment (Promotion & Protection) Act 1980 provides protection for investments made in Bangladesh. Bangladesh is also a signatory to the Multilateral Investment Guarantee Agency (MIGA); Overseas Private Investment Corporation (OPIC), USA; International Center for Settlement of Investment Disputes (ICSID); and World Intellectual Property Organization (WIPO). Bangladesh has bilateral agreements to avoid double taxation with 28 countries including Sri Lanka. These legal bases make Bangladesh a safe destination of investment.
Bangladesh inherits a largely homogeneous and harmonious society. People belonging to different religions live peacefully. Bangladesh is a democratic country with broad political consensus on pursuing market economy. This speaks volumes for socio-political environment conducive to private sector investment.
Unlike older industrialized societies with growing legions of ageing dependents, Bangladesh has a very youthful demography. About 59.3 % of the population are economically active (15 years and over). Although national language is Bengali or ‘Bangla’, yet English is widely spoken, understood and written. Indeed, more than 90% of staff at management level is fluent in English.
The cost of doing business in Bangladesh has significantly and visibly decreased in recent years. According to a recent comparative study by Japan External Trade Organization (JETRO) of 29 major cities and regions in Asia, Bangladesh offers a truly low competitive cost base. Wages and salaries are still lowest in the region. Besides, rent for industrial estate, office and housing is less expensive than other cities in the region.
The government of Bangladesh promotes foreign direct investment through various fiscal and non-fiscal incentives which may be summarized as below:
- Remittance of royalty, technical know-how and technical assistance fees.
- Repatriation facilities of dividend and capital at exit.
- Permanent resident permits on investing US$ 75,000 and citizenship on investing US$ 500,000.
- Tax holidays:
For industrial undertakings:
- In Dhaka & Chittagong Divisions: 100% in first two years: 60% in the third year, 40% in the fourth year and 20% in the fifth year.
- In Rajshahi, Khulna, Sylhet, Barisal Divisions and three Chittagong Hill Districts: 100% for first and second, 70% for the third year, 55% for the 4th year, 40% for the 5th year, 25% for the sixth year and 10% for the seventh year of income shall be entitled for exemption from tax.
Industrial undertakings for this purpose would mean:
(a) active pharmaceuticals ingredient industry and radio pharmaceuticals industry; (b) barrier contraceptive and rubber latex; (c) basic chemicals or dyes and chemicals; (d) basic ingredients of electronic industry (e.g. resistance, capacitor, transistor, integrator circuit); (e) bio-fertilizer; (f) biotechnology; (g) boilers; (h) compressors; (i) computer hardware; (j) energy efficient appliances; (k) insecticide or pesticide; (l) petro-chemicals; (m) pharmaceuticals; (n) processing of locally produced fruits and vegetables; (o) radio-active (diffusion) application industry (e.g. developing quality or decaying polymer or preservation of food or disinfecting medicinal equipment); (p) textile machinery; (q) tissue grafting; or (r) any other category of industrial undertaking as the government may, by notification in the official gazette, specify.
For physical infra-structural undertakings:
For the first and second year: 100%; for the third year: 80%; for the fourth year: 70%; for the fifth year: 60%; for the sixth year; 50%; for the seventh year: 40%; for the 8th year: 30% of income; for the ninth year: 20%; for the tenth year: 10% of income shall be entitled for exemption from tax.
Physical infrastructural undertakings for this purpose would mean:
(a) deep sea port; (b) elevated expressway; (c) export processing zone; (d) fly-over; (e) gas pipe line; (f) Hi-tech park; (g) Information and Communication Technology (ICT) village or software technology zone; (h) Information Technology (IT) park; (i) large water treatment plant and supply through pipe line; (j) Liquefied Natural Gas (LNG) terminal and transmission line; (k) mono-rail; (l) rapid transit; (m) renewable energy (e.g. energy saving bulb, solar energy plant, windmill); (n) sea or river port; (o) toll road or bridge; (p) underground rail; (q) waste treatment plant; or (r) any other category of physical infrastructure facility as the government may, by notification in the official Gazette, specify.
- Depreciation allowances
- Accelerated depreciation for new industries is available at the rate of 50%, 30% and 20% for the first, second and third years respectively, on the cost of plant and machinery.
- Cash and added incentives to exporting industries
- Businesses exporting 80% or more of goods or services qualify for duty free import of machinery and spares, bonded warehousing.
- 90% loans against letters of credit and funds for export promotion.
- Export credit guarantee scheme.
- Domestic market sales of up to 20% is allowed to export oriented business located outside an EPZ* on payment of relevant duties.
- Cash incentives and export subsidies are granted on the FOB** value of selected exports ranging from 5% to 20% on selected products.
The investment flow between Bangladesh and Sri Lanka has been gradually increasing. According to recent statistics, there are about 45 Sri Lankan companies operating in Bangladesh with investment close to about USD 300. Most of the Sri Lankan investments are in the sectors of apparel, banking, paper, consumer goods, etc.
The government of Bangladesh facilitates local and foreign investment in Bangladesh through two main state agencies, namely Board of Investment (BOI) and Bangladesh Export Processing Zones Authority (BEPZA).
Board of Investment
The Board of Investment (BOI) provides wide range of services including investment promotion and facilitation covering support, suggestion and aftercare support to the investors. The prime vision of BOI is to promote domestic and foreign investment as well to enhance international competitiveness of Bangladesh and contribute to overall social and economic development of Bangladesh. Please visit the web site of Board of Investment or get in touch with the High Commission for any further information.
Bangladesh Export Processing Zones Authority
The Bangladesh Export Processing Zones Authority (BEPZA) is the official organ of the government to promote, attract and facilitate foreign investment in the Export Processing Zones (EPZs). The primary objective of an EPZ is to provide special areas where potential investors would find a congenial investment climate free from cumbersome procedures. Besides, BEPZA as the competent authority performs inspection & supervision of the compliance of the enterprises related to social & environmental issues, safety & security at work place in order to maintain harmonious labour-management & industrial relations in EPZs. Please visit the web site of Bangladesh Export Processing Zones Authority or get in touch with the High Commission for any further information.