Doing Business in Bangladesh

Doing Business in Bangladesh

Incorporating a Company in Bangladesh: Business in Bangladesh may be carried on by a company formed and incorporated locally or by a company incorporated abroad but registered in Bangladesh. The incorporation or registration is done by the Registrar of Joint Stock Companies and Firms (RJSC & F) under the provisions of the Company’s Act 1994. Companies could be classified in following categories:

  • Limited Companies:

    1. Company Limited by Shares

      • Public Limited Company and
      • Private Limited Company
    2. Company Limited by Guarantees
  • Unlimited Companies
    Unlimited companies and companies limited by guarantees may or may not have share capital.

Incorporation Options for Foreign Investor:

Incorporation options to a foreign investor include:

  1. Setting up a 100% foreign-owned company in Bangladesh; Setting up a Joint Venture with Bangladeshi company / investor; Establishing the Company’s Place of Business in Bangladesh; Setting up a branch or a subsidiary of a foreign company in Bangladesh;
  2. Setting up a Bangladeshi Company or participate in a Bangladeshi Company already formed.

Company Formation Procedure: To register a company with the Registrar of Joint Stock Companies and Firms (RJSCF), promoter have to undertake activities in following steps:
Step     1: Selection of the Company Name;
Step     2: Memorandum of Association (MOA);
Step     3: Articles of Association (AOA);
Step     4: Registration Application, Prescribed Application Form for registration has to be filled in, signed and submitted to the Registrar of the Joint Stock Companies and Firms. Establishing Place of Business: In establishing a place of business of a foreign company, the company has to be registered with the Registrar of Joint Stock Companies as the place of business. Such registration is required in respect of capital issue and obtaining clearance from the central bank i.e. Bangladesh Bank. Opening of Liaison / Branch / Representative Office: To open or seek extension of Liaison/Branch/Representative Office of a foreign company, the company has to submit in prescribe application form to Board of Investment.

Joint venture and 100% foreign investment proposals in the private sector:

  • Entrepreneur/investors are advised to apply for registration to BOI in order to avail of facilities and the institutional support services provided by the Government;
  • Prescribed application form has to be collected from BOI Office or downloaded from BOI website www.boibd.org.

Permission for setting up joint venture industrial units with the public sector corporations: Any individual entrepreneur either local or foreign can set up an industry with public sector corporation. Such joint venture is required to be registered with the BOI if the private sectors contribution is more than 50% of the project cost and in such case it is treated as private sector project. For any public sector which makes contribution out of their own fund needs approval of the concerned ministry. If the contribution of the corporation is 50% or above, it is treated as a public sector project. The public sector project is processed by the concerned Ministry for approval of the Planning Commission.

  • Government promotes rapid privatization of the state-owned enterprises (SOEs).
  • Infrastructure and high involvement projects like power have been encouraged for public-private joint venture.

Obtaining Industrial Plot: Entrepreneurs requiring industrial plot for setting up of industry in any industrial areas / estates apart form BEPZA and BSCIC, may apply to BOI.INVESTMENT CLIMATE: Bangladesh offers an unparalleled investment climate compared to the other South Asian economies.

  • 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 of years. 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. There exists a middle class with purchasing power. As economic growth picks up, the purchasing power is growing substantially. And in a country of more than 140 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.
  • Most Bangladesh products enjoy complete duty and quota free access to EU, Japan, USA, Australia and most of the developed countries.

Investment Opportunities in Bangladesh: The Government follows the policy of a free market economy in Bangladesh. The private sector has been identified as the main vehicle for the development of the economy. Poverty reeducation through rapid economic growth is the core development strategy. In accordance with that, the Government’s policy on investment offers a lucrative package to attract foreign investment. Some salient features of the package are:

  • Tax holiday for industries within and outside the Export Processing Zones (EPZ).Duty-free import of machinery and raw materials for export-oriented industries.100% foreign equity allowed. Full repatriation of dividend and capital allowed upon exit. Bonded Warehouse and back-to-back Letter of Credit facility allowed for export-oriented industries. Avoidance of double taxation based on bilateral agreements.
  • Foreign investment in Bangladesh is guaranteed by an Act of Parliament against forfeiture and nationalization.