Why Invest in Bangladesh?
Bangladesh has emerged as one of South Asia’s most promising investment destinations, offering strategic location, competitive labor costs, growing consumer market, and government incentives for foreign investors.
Key Advantages:
– Strategic location between India and Southeast Asia
– Large skilled workforce (170+ million population)
– Competitive operational costs
– Steady GDP growth (6-7% annually)
– Growing manufacturing sector
– Market access to regional and global markets
– 100% foreign ownership allowed in most sectors
– Liberal repatriation policies
Legal Framework and Investment Climate
Key Regulatory Authorities
1. Bangladesh Investment Development Authority (BIDA)
The key regulatory authority overseeing investment promotion is BIDA. Investors intending to establish industrial or service-oriented businesses outside the Export Processing Zones (EPZs) are required to register with BIDA.
Role:
– One-stop service for investors
– Registration of foreign companies
– Issue work permits and visas
– Facilitate business operations
– Investment promotion and facilitation
Website: www.bida.gov.bd
2. Bangladesh Export Processing Zones Authority (BEPZA)
For businesses operating within EPZs, registration is handled by BEPZA, which offers additional fiscal and regulatory incentives.
8 EPZs in Bangladesh:
– Dhaka EPZ (Savar)
– Chittagong EPZ
– Mongla EPZ
– Ishwardi EPZ
– Comilla EPZ
– Adamjee EPZ (Narayanganj)
– Karnaphuli EPZ (Chittagong)
– Uttara EPZ (Nilphamari)
Website: www.bepza.gov.bd
3. Registrar of Joint Stock Companies and Firms (RJSC)
Company incorporation is carried out through the RJSC. The process includes name clearance, drafting constitutional documents, registration, and obtaining necessary licenses.
Website: www.rjsc.gov.bd
Primary Investment Laws:
– Foreign Private Investment (Promotion and Protection) Act, 1980
– Bangladesh Economic Zones Act, 2010
– Companies Act, 1994
– Foreign Exchange Regulation Act, 1947
– Industrial Policy
Modes of Investment
A foreigner may invest in Bangladesh through several structures:
1. Private Limited Company (Most Common Structure)
Recommended for most foreign investors
Features:
– Minimum 2, maximum 50 shareholders
– Limited liability protection
– Separate legal entity
– 100% foreign ownership allowed
– Cannot offer shares to public
– Suitable for SMEs and startups
Requirements:
– Minimum capital: No legal minimum, but USD 50,000 recommended for FDI
– Directors: Minimum 2 (can be foreign nationals)
– Registered office in Bangladesh
2. Public Limited Company
For large-scale operations
Features:
– Minimum 7 shareholders
– Can raise capital from public
– Listed on stock exchange
– Higher compliance requirements
– Suitable for large enterprises
3. Branch Office
Extension of foreign parent company
Features:
– Not a separate legal entity
– Parent company liable for all obligations
– Prior approval from Bangladesh Bank required
– Suitable for liaison, marketing, coordination
– Cannot engage in manufacturing or trading
Permitted Activities:
– Export-import business
– Consultancy services
– Professional services
– Technical services
4. Liaison/Representative Office
Non-commercial presence
Features:
– Cannot engage in commercial activities
– No income generation allowed
– Only liaison and market research
– Fully funded by parent company
– All expenses borne by head office
Purpose:
– Market research
– Promotion of parent company
– Coordination activities
5. Joint Venture with Local Partner
Partnership with Bangladeshi entity
Features:
– Shared ownership and risk
– Combines foreign capital with local knowledge
– Flexible ownership ratio
– Mutual benefit structure
Advantages:
– Local partner’s market knowledge
– Easier regulatory navigation
– Shared investment burden
6. 100% Foreign-Owned Company
Wholly owned subsidiary
Features:
– Complete foreign ownership
– Full control over operations
– Allowed in most sectors
– Some sectors require local partnership
Restricted Sectors (require local partnership):
– Arms and ammunition
– Forest plantation
– Atomic energy
– Security printing
– Certain railway operations
Step-by-Step Investment Process
Step 1: Sector Selection and Feasibility
Research:
– Identify investment sector
– Conduct market research
– Assess competition
– Understand regulatory requirements
– Calculate investment costs
Consult: Advocacy Legal for sector-specific guidance
Step 2: Registration with BIDA
For Non-EPZ Investments:
Process:
– Apply online through BIDA portal
– Submit business plan
– Provide proof of financial capacity
– Submit passport copies of foreign investors
Documents Required:
– Application form
– Business plan
– Passport copies of investors
– Bank solvency certificate
– Parent company documents (if applicable)
Timeline: 7-15 working days
Step 3: Company Name Clearance
Through RJSC:
– Search available names
– Apply for name clearance
– Receive name approval
– Valid for 180 days
Cost: BDT 600-1,000
Step 4: Draft Constitutional Documents
Required Documents:
– Memorandum of Association
– Articles of Association
– List of directors and shareholders
– Registered office address
Professional drafting recommended for compliance.
Step 5: Company Incorporation
Submit to RJSC:
– Name clearance certificate
– Memorandum and Articles
– Consent of directors
– Registered office proof
– Declaration of compliance
Timeline: 5-7 working days
Fee: Based on authorized capital
Step 6: Post-Incorporation Registrations
Obtain:
– Tax Identification Number (TIN) – National Board of Revenue
– Business Identification Number (BIN) – For VAT
– Trade License – City Corporation/Municipality
– Import Registration Certificate (IRC) – If importing
– Export Registration Certificate (ERC) – If exporting
Step 7: Open Bank Account
Corporate Bank Account:
– Submit incorporation documents
– Board resolution
– Passport copies of directors
– Utility bill of registered office
Major Banks: Standard Chartered, HSBC, City Bank, Dutch-Bangla Bank, BRAC Bank
Step 8: Bring Foreign Capital
Process:
– Transfer funds from abroad through banking channel
– In convertible foreign currency
– Bank reports inward remittance to Bangladesh Bank
– Receive Foreign Exchange Transaction Report
Step 9: Issue Shares
Against Capital:
– Board meeting to allot shares
– Issue share certificates
– Update RJSC records
– Notify BIDA
Step 10: Commence Operations
Final Steps:
– Hire employees
– Set up office
– Obtain sector-specific licenses
– Begin business operations
– Maintain compliance
Capital Requirements and Banking Compliance
Minimum Capital Investment
Legal Position:
– No fixed minimum under law
– Practical minimum: USD 50,000 for FDI recognition
– Sector-specific requirements may apply
– Higher capital demonstrates serious commitment
Inward Remittance Process
Foreign capital must be brought into Bangladesh through proper banking channels in convertible foreign currency.
Steps:
1. Open corporate bank account in Bangladesh
2. Instruct foreign bank to transfer funds
3. Funds credited to Bangladesh bank account
4. Receiving bank reports to Bangladesh Bank
5. Obtain Foreign Exchange Transaction Report
Acceptable Currencies:
– US Dollar (USD)
– Euro (EUR)
– British Pound (GBP)
– Japanese Yen (JPY)
– Other major convertible currencies
After incorporation, shares are issued against the inward remittance, and relevant post-investment formalities are completed with the authorities.
Bank Reporting:
– All foreign exchange transactions reported
– Bangladesh Bank maintains FDI registry
– Ensures repatriation rights documented
Investment Incentives and Benefits
Bangladesh offers various incentives to foreign investors:
1. Tax Holidays
Sector-specific:
– Up to 10 years for infrastructure
– 5-7 years for priority industries
– 3-5 years for manufacturing
Location-based:
– Extended holidays for investments in less developed areas
– Additional benefits in hill districts
2. Duty-Free Import
Benefits:
– Duty-free import of capital machinery in certain industries
– Reduced import duties on raw materials
– Bonded warehouse facilities
3. Profit and Capital Repatriation
Full repatriation rights:
– Repatriation of profit and capital
– Dividends freely remittable
– Capital gains repatriable
– No prior approval required
4. Special Benefits in EPZs and Economic Zones
EPZ Benefits:
– 10-year tax holiday
– Duty-free import of capital machinery
– Duty-free import of raw materials
– Simplified customs procedures
– One-stop service
– Faster approvals
5. Ownership Rights
Liberal policy:
– 100% foreign ownership in most sectors
– No mandatory local partnership
– Full management control
– Technology transfer allowed
6. Protection of Investment
Legal protection:
– Protection against nationalization
– Fair compensation if expropriation
– Legal recourse available
– International arbitration allowed
Restricted Sectors
However, a few sectors remain restricted or require prior approval:
Prohibited for Foreign Investment:
– Arms and ammunition manufacturing
– Forest plantation
– Atomic energy
Conditional/Restricted:
– Banking (requires Bangladesh Bank approval)
– Insurance (requires prior approval)
– Telecommunications (license required)
– Print and electronic media
– Land development
Profit Repatriation
Foreign investors are permitted to repatriate dividends, capital gains, disinvestment proceeds, and approved technical fees through authorized banks, subject to compliance with foreign exchange regulations.
Repatriable Items:
1. Dividends and Profits
– Declared dividends on shares
– After tax payment
– Through authorized dealer bank
– No percentage restriction
2. Capital on Disinvestment
– Sale proceeds of shares
– After tax on capital gains
– Original investment plus appreciation
3. Approved Royalty and Technical Fees
– Technical know-how fees
– Royalty payments
– Management fees
– As per agreement terms
4. Sale Proceeds of Assets
– Liquidation proceeds
– Asset sale proceeds
– After settling liabilities
Repatriation Process:
Step 1: Board Resolution
– Declare dividend/approve repatriation
– Document in board minutes
Step 2: Tax Clearance
– Pay applicable withholding tax
– Obtain tax certificate
Step 3: Bank Application
– Apply to authorized dealer bank
– Submit supporting documents
– Reference original investment documents
Step 4: Bangladesh Bank Approval
– Bank processes application
– Bangladesh Bank approval (automatic for legitimate transactions)
– Funds remitted abroad
Required Documents:
– Board resolution
– Tax payment proof
– Certificate of incorporation
– Original investment proof
– Audited financial statements
Timeline: 2-4 weeks
Visa and Work Permits
Foreign investors and foreign employees must obtain appropriate visas and work permits.
Types of Visas
1. Investment Visa (E Visa)
For foreign investors
Features:
– Multiple entry
– Valid for 1 year (renewable)
– Spouse and dependents eligible
– Issued by BIDA
Eligibility:
– Foreign investor in registered company
– Minimum investment threshold met
– Company operational
2. Employment Visa
For foreign employees
Features:
– Issued for specific employment
– Valid for contract duration
– Requires work permit
– Single or multiple entry
3. Business Visa
For short-term business visits
Features:
– Valid for 3-6 months
– Multiple entry
– For business meetings, negotiations
– Cannot work or reside permanently
Work Permit Process
Work permits are generally processed through BIDA or BEPZA, depending on the business location.
Through BIDA (for non-EPZ):
Requirements:
– Employment contract
– Educational certificates
– Experience certificates
– Police clearance from home country
– Medical fitness certificate
– Passport copy
– Company registration documents
Process:
1. Company applies to BIDA
2. Submit required documents
3. Pay processing fee
4. Work permit issued
5. Valid for 1-2 years (renewable)
Timeline: 2-4 weeks
Through BEPZA (for EPZ-based):
Similar requirements
Processed through BEPZA
Generally faster processing
Quota System
Position-based quota:
– Directors/Investors: No restriction
– Senior management: Liberal
– Middle management: Moderate restrictions
– General staff: Preference for locals
Compliance:
– Must employ qualified Bangladeshi nationals where available
– Justify need for foreign employees
– Train local staff for eventual replacement
Get Expert Legal Assistance
Practical Considerations
In practical terms, successful investment in Bangladesh requires careful planning, regulatory compliance, and structured documentation. While the legal framework is investor-friendly, professional guidance is essential to navigate incorporation, licensing, taxation, and sector-specific approvals.
With the right structure and compliance, Bangladesh offers a promising and commercially viable destination for foreign direct investment.
Why Choose Advocacy Legal
Our Foreign Investment Services:
Company Formation:
– Name clearance and RJSC filing
– Constitutional document drafting
– Post-incorporation compliance
Regulatory Compliance:
– BIDA registration
– Sector-specific licenses
– Tax registration (TIN, BIN, VAT)
– Trade license procurement
Investment Structuring:
– Legal structure advice
– Joint venture agreements
– Shareholder agreements
– Foreign collaboration agreements
Banking and Capital:
– Bank account opening assistance
– Inward remittance facilitation
– Foreign exchange compliance
– Repatriation procedures
Intellectual Property:
– Copyright protection
– Technology transfer agreements
Immigration:
– Visa applications
– Work permit processing
– Investor visa facilitation
Ongoing Legal Support:
– Corporate compliance
– Contract drafting and review
Why Foreign Investors Choose Us:
Experience: foreign investment projects handled
International exposure: Understanding of cross-border transactions
One-stop service: Complete legal solutions
Transparent fees: Clear pricing structure
English communication: Fluent English-speaking team
Efficiency: Quick turnaround time
Network: Connections with government agencies
Contact Advocacy Legal
For legal assistance or further information, please feel free to contact us:
Phone: +88 02 41090957 | +88 01795762000
WhatsApp: +88 01795762000
Email: info@advocacylegalbd.com
Website: www.advocacylegalbd.com
Office: 3rd Floor, House-37, Road-7, Sector-3, Uttara, Dhaka-1230, Bangladesh
Business Hours: Saturday – Thursday, 11:00 AM – 8:00 PM
Free Initial Consultation Available
## Frequently Asked Questions
1. What is the minimum investment required for foreign investors?
No legal minimum, but practical minimum is USD 50,000 for FDI recognition. Some sectors may have specific requirements.
2. Can foreigners own 100% of a company in Bangladesh?
Yes, 100% foreign ownership allowed in most sectors except restricted areas like arms, atomic energy, and forest plantation.
3. How long does company registration take?
Approximately 3-4 weeks for complete process including BIDA registration, name clearance, and incorporation.
4. Are profits freely repatriable?
Yes, foreign investors can repatriate dividends, capital gains, and sale proceeds after payment of applicable taxes.
5. Do I need a local partner?
Not required for most sectors. 100% foreign ownership permitted except in restricted sectors.
6. What are the tax benefits?
Tax holidays of 5-10 years available for certain sectors and locations, duty-free import of machinery, and various EPZ benefits.
7. Can I bring foreign employees?
Yes, work permits available for foreign investors and necessary foreign employees, subject to quota and justification.
8. Which business structure is best?
Private Limited Company is most common and recommended for foreign investors offering liability protection and flexibility.
Conclusion
Bangladesh presents a compelling investment opportunity for foreign investors seeking growth in South Asia. With a liberal FDI policy, growing economy, competitive costs, and strategic location, the country offers significant potential across multiple sectors.
Key Points to Remember:
Register with BIDA for non-EPZ investments
Choose appropriate business structure
Bring capital through proper banking channels
Utilize available tax incentives and benefits
Ensure regulatory compliance throughout
Seek professional legal guidance
Official Resources:
– Bangladesh Investment Development Authority: www.bida.gov.bd
– RJSC: www.rjsc.gov.bd
– Bangladesh Bank: www.bb.org.bd
– National Board of Revenue: www.nbr.gov.bd