Opportunities of Foreign Direct Investment in Bangladesh in 2024
Guide to Foreign Investment in Bangladesh: Opportunities, Benefits and Legal Environment and Incentives Foreign investment in Bangladesh has indeed become a trending topic nowadays and the country is now among the favorite destinations of overseas investment. This is because Bangladesh has a strategic location complemented by massive investment incentives and a sound legal environment that has influenced the country to become a preferred destination for international investors. If you want to know more about Private sector investment in the country or want to know more about Start up investment in Bangladesh, then you should know the laws and policies of this country.
Why Invest in Bangladesh?
Bangladesh’s environment for investors gives a promise of growth, availability of youthful human capital, and strategic geographical location within South Asia. The country’s government supports Foreign Direct Investment in Bangladesh more specifically focusing on apparel, power, oil & gas industries, and infrastructure development. These sectors are regarded as strategic or priority sectors for Bangladesh’s development and these sectors are subsidized under the country’s industrial policy and export-led growth model.
Investment opportunity in Bangladesh
The investing opportunity for Bangladesh for foreign investors is therefore immense, this is so because the government of Bangladesh provides incentives like tax exemption, importer of capital machinery without duties, and free exit policies. This favorable business environment enables both foreign and domestic private persons to invest, acquire, operate, and divest interests in most types of companies.
Major Fields of Activity and Government Preserve Fields
While Bangladesh is open to foreign investment in most sectors, there are four key areas reserved exclusively for government investment: While Bangladesh is open to foreign investment in most sectors, there are four key areas reserved exclusively for government investment:
- gear
- Firearms
- ammunition
- weapons
- equipment
- the machinery of any description
- Production of nuclear energy.
- Security printing and many more
However, the following are some of the restrictions that have been placed on the FDI The good news is that foreign investors have the freedom to invest in almost every sector. To this end, the Bangladesh Investment Development Authority (BIDA) is the chief investment promotion agency of the country. However, BIDA, BEPZA, and BEZA the major authorities involved in the development of EPZs, EZs, and SPZs has great responsibilities to ensure the investment-friendly environment in their respective zones.
Investment Regulations and Incentives
Among the major benefits that come with foreign investment in Bangladesh, the major one is that all sectors are permitted to be invested with a 100% degree of foreign equity. This flexibility along with no necessity of obtaining prior permission from the Bangladesh Bank for the investments made with the investor’s own money makes it easier for the investment. However, it is also pertinent to note that if the shares are to be issued to non-residents, no prior permission of the Bangladesh Bank is required if it is made in foreign exchange convertible on the basis of free market, through the banking channel or by the import of capital machinery.
Bangladesh also offers different tax incentives to foreign investors which include the allowable investment for tax rebate.
While determining the allowable investment for tax rebates in Bangladesh, foreign investors can also enjoy the following benefits: Some of these are tax credits for up to seven years – 15 years for the power sector – and corporate income tax holidays on expatriate employees for up to three years. Some of such incentives include the following, which actually make the investment for tax rebates in Bangladesh a rewarding venture for those who seeks high returns on their investment.
Under the ‘Share Issuance, Transfer, and Repatriation’ section it is essential to establish a progressive approach.
An added advantage that is provided to share issuance and transfer is that the regulatory environment vis-a-vis new foreign investors is relatively friendly. Bangladesh Bank does not approve any transfer of shares or securities among shareholders whether the shareholders are Bangladeshi or foreign or domiciled in Bangladesh or other countries. In the case of private or public (not listed) firms and companies, general intimation has to be made to the Bangladesh Bank within 14 days of such transactions.
Legal Resistance and Disputes Settlement
Bangladesh can be regarded as a country with well-developed legal frameworks to protect foreign investors, especially through FPIA 1980. This legislation affords the safeguards against nationalization and expropriation, as well as allowing foreign investors to transfer their capital and dividends without substantial difficulties. The country also has also developed a sound legal framework of intellectual property rights that enhances the operating environment for foreign investors.
Some of the people that may be interested in knowing why to invest in Bangladesh would want to know why to invest in Bangladesh – legal infrastructure and particularly, the structure of the legal systems in relation to the nature of disputes. In case of any dispute, the legal framework of Bangladesh offers the following modes of ADR under the Arbitration Act of 2001. Also, Bangladesh is a party to the New York Convention on Recognition and Enforcement of Foreign-Arbitral Awards and belongs to the International Center for the Settlement of Investment Disputes. It is through these affiliations that foreign investors can be guaranteed of appropriate and enforceable mechanisms of resolving disputes.
Immigration Services Include: Visa, Work Permits, and Citizenship
Bangladesh also ensures that it provides easy processes for acquiring visas and work permits to enhance the FDI. They are renewable up to the demand and the type of visa one is applying for which can last up to one month, one year, two years, three years or five years depending on the investment. Expatriates referred for work in the country are expected to secure work permits from BIDA, BEZA, or BEPZA as the case may be. For industrial enterprises, the use of expatriate employees is limited to one local employee with a ratio of 1:20 while for commercial purposes it is 1:5. This regulation is useful as it helps in creating employment for the locals while at the same time allowing firms to source for foreigners expertise when the need arises.
Also, Bangladesh offers citizenship to foreigners on certain considerations such as large-scale investments. CITIZENSHIP can be obtained through an investment of one million USD or a fixed deposit in any scheduled bank of two million USD. For instance, for those investors who are willing to invest more than USD 10 million, they are allowed to get a No Visa Required (NVR) status which has added the charm for foreign investment in Bangladesh.
Double taxation Agreements and bilateral Investment Protection treaties
A number of Avoidance of Double Taxation Agreements (DTAs) have been negotiated between Bangladesh and other countries including China. These treaties eliminate income double taxation, which is very advantageous since they organize huge tax disregards on foreign investors. In such arrangements, income earned in Bangladesh can be offset against the home country’s tax, under certain conditions. Moreover, Bangladesh has signed different BITs and TAs with different countries including China. These conventions generally contain provisions concerning the softer concepts of stability, openness, transparency, freedom from discrimination, national treatment and most importantly the minimum standard of treatment on junior treaties. BITs also contain provisions on the means of dispute resolution between the investor and the host State which can either be through the International Centre for Settlement Investment Disputes ‛(ICSID), the United Nations Commission on International Trade Law (UNCITRAL) or the International Chamber of Commerce (ICC). These agreements and treaties are part of the investment opportunity in the country as it assure investors that they are safe and can operate in the country without interfering the legal structure of the country.
Overview
This paper presents a strong argument for FDI in Bangladesh, enhanced by sound legislation, policies on investment, variety of investment Opportunities Bangladesh is geographically located in South Asia. Whether you are looking for the top investment opportunity in Bangladesh or are interested in startup investment opportunity in Bangladesh, the country has the right conditions that would help business investment to take root and prosper. In the context of international investment the legal systems, policies, and opportunities that exist within Bangladesh are crucial for an investor. Bangladesh nowadays enjoys a very propitious investment environment, unambiguous legal rights, and broad solutions of the disputes, and therefore the country might be said to be one of the most relevant places for investment in the world.