Foreign Investment
Subject: Finance | Topics:

Private investment from overseas sources is welcome in all areas of the economy with the exception of the four reserved sectors (mentioned earlier). Such investments can be made either independently or through venture on mutually beneficial terms and conditions. Foreign investment is, however, especially desired in the following major categories of industries:

  • Export oriented industries;
  • Industries in the Export Processing Zones (EPZs)
  • High technology products that will be either import substitute or export oriented.

Facilities / incentives:

For foreign direct investment, there is no limitation pertaining to foreign equity participation, i.e. 100 percent foreign equity is allowed. Non-resident institutional or individual investors can make portfolio investments in stock exchanges in Bangladesh. Foreign investors or companies may obtain full working loans from local banks. The terms of such loans will be determined on the basis of bank-client relationship.

 A foreign technician employed in foreign companies will  not be subjected to personal tax up to 3 (three) years , and beyond that period his/ her personal income tax payment will be governed by the existence or non-existence of agreement on avoidance of double taxation with country of citizenship.

Full repatriation of capital invested from foreign sources will be allowed. Similarly, profits and dividend accruing to foreign investment may be transferred in full. If foreign investors reinvest their repatriable dividends and or retained earnings, those will be treated as new investment. Foreigners employed in Bangladesh are entitled to remit up to 50 percent of their salary and will enjoy facilities for full repatriation of their savings and retirement benefits.

Foreign entrepreneurs are, therefore, entitled to the same facilities as domestic entrepreneurs with respect to tax holiday, payment of royalty, technical know-how fees etc.

The process of issuing work permits to foreign experts on the recommendation of investing foreign companies or joint ventures will operate without any hindrance or restriction.  Multiple entry visa” will be issued to prospective foreign investors for 3 years. In the case of experts,” multiple entry visa” will be issued for the whole tenure of their assignments.

Other Incentives:

  • Citizenship by investing a minimum of US $ 500,000 or by transferring US$ 1,000,000 to any recognized financial institution (Non-repatriable).
  • Permanent residentship by investing a minimum of US$ 75,000 (non-repatriable)
  • Special facilities and venture capital support will be provided to export-oriented industries under “Thrust sectors”. Thrust Sectors include Agro-based industries, Artificial flower-making, Computer software and information technology, Electronics, Frozen food, Floriculture, Gift items, Infrastructure, Jute goods, Jewellery and diamond cutting and polishing, leather, Oil and gas, Sericulture and silk industry, Stuffed toys, Textiles, Tourism.

Investment Protections / International Agreements:

Legal Protection

The policy framework for foreign investment in Bangladesh is based on ‘The Foreign Private Investment (Promotion & Protection) Act 1980 which ensures legal protection to foreign investment in Bangladesh against nationalization and expropriation. It also guarantees non-discriminatory treatment between foreign and local investment, and repatriation of proceeds from sales of shares and profit.

 International Agreements

Bangladesh has concluded bilateral agreements for avoidance of double taxation and investment treaties for promotion and protection of investment with the following countries:

Bilateral agreements

Belgium, Canada, China, Denmark, France, Germany, India, Italy, Japan, Poland, Romania, Singapore, South Korea, Sri Lanka, Sweden, Thailand, The Netherlands, United Kingdom ( including  Northern Ireland ). Negotiations are ongoing with U.S.A, Iran, Philippines, Qatar, Australia, Nepal, Turkey, Indonesia, Cyprus, Norway, Finland and Spain.

Investment treaty

Belgium, Canada, France, Germany, Iran, Italy, Japan, Malaysia, Pakistan, Philippines, Poland, Republic of Korea, Romania, Switzerland, Thailand, The Netherlands, Turkey, United Kingdom, USA, Indonesia. Negotiations are ongoing with India, Hungary, Oman, Moldova, DPRK, Egypt, Austria, Mauritius, and Uzbekistan.

In addition, Bangladesh is a signatory to MIGA (Multilateral Investment Guarantee Agency), OPIC (Overseas Private Investment Corporation) of USA, ICSID (International Centre for Settlement of Investment Disputes) and a member of the WIPO (World Intellectual Property Organization) permanent committee on development co-operation related to industrial property.

Incentives to Non-Resident Bangladeshis (NRB’s):

Investment of NRBs will be treated on par with FDI. Special incentives are provided to encourage NRBs to invest 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.

Relaxation / Liberalization of Exchange Control   Regulations:

Bangladesh ‘Taka’ is convertible for current external transactions. Individuals/firms resident in Bangladesh may conduct all current external transactions, including trade and investment related transaction, through banks in Bangladesh authorized to deal in foreign exchange (Authorized Dealers) without prior approval of the Bangladesh Bank. Non- resident direct investment in industrial enterprise in Bangladesh and non-resident portfolio investment through stock exchanges in Bangladesh also do not require prior approval of the Bangladesh Bank. Remittance of post-tax dividend/profit on non resident direct or portfolio investment does not require prior approval. Sale proceeds, including capital gains on non-resident portfolio investment may also be remitted abroad without prior approval. Repatriation of sale proceeds of non-resident investment in unlisted companies is allowed by Bangladesh Bank on the basis of the net asset value of the shares of the company.  Investors may obtain relevant procedural details by contacting any authorized Dealer bank in Bangladesh.

To facilitate investment, prior approval of the Bangladesh Bank is no longer required for-

  • Remittance of profits to their head offices by foreign firms and companies operating in Bangladesh
  • Issuance of shares to non-residents against investment for setting up industries in Bangladesh.
  • Remittance of dividends on such shares to the non-resident investors.
  • Portfolio investment by non-residents including foreign individuals/enterprises in shares and securities through stock exchanges in Bangladesh.
  • Remittance of dividends on portfolio investment by non-residents through stock exchanges in Bangladesh.
  • Remittance of sale proceeds, including capital gains of portfolio investments of non-residents  through stock exchanges in Bangladesh
  • Remittance of principal and interest installments on loans/suppliers credits obtained by industrial units from foreign lenders with approval of the BOI. 100% foreign owned (Type A) industrial units in the EPZs (Export Processing Zone) do not require prior permission of BOI for such foreign borrowing.
  • Remittance in repayment of principal and payment of interest of such loans.
  • Remittance of technical fees and royalties against technical assistance/royalty agreements in conformity with BOI guidelines.
  • Remittance of savings of expatriate personnel at the time of their leaving Bangladesh, out of the salaries and benefits stated in their employment contracts as approved by BOI.
  • Extension of term loans by banks on normal banking considerations to foreign firms operating in Bangladesh
  • Extension of working capital loans to all foreign owned/controlled industrial and trading firms/companies by banks on the basis of bank customer relationship and normal banking practice.
  • Obtaining of interest-free repatriable short-term foreign currency loans by foreign firms investing in Bangladesh from their head offices or any other sources through any authorized dealer.

Investment in shares/securities by non-residents:

 Non-residents are free to invest in shares / securities quoted in the stock exchanges, with   foreign exchange sent or brought into Bangladesh.

They may also invest in new, yet-to-be-listed public issues of Bangladeshi shares/securities. In such cases investors are not required to transact through any registered broker/member of stock exchange.

5% shares of Initial Public Offering (IPO) of a company is reserved for Non-Resident Bangladeshi (NRB). Non-Resident Bangladeshi (NRB) can purchase/subscribe securities in foreign currency through “Foreign Currency Account for IPO” opened for the purpose only by the issuing company. Over subscription can be repatriated after completion of formalities.

iii.  Permission of Bangladesh Bank is not required for issue and transfer of shares in favor of non-residents against their investments in joint ventures in Bangladesh.

iv.  Non-resident share holders can freely transfer their shares to other non residents.

Remittance of profits:

Branches of foreign firms/companies including foreign banks, insurance companies and financial institutions are free to remit their post-tax profits to their head offices through banks authorized to deal in foreign exchange (Authorized Dealers) without prior approval of Bangladesh Bank.

Remittance of dividend/capital gain:

Prior permission of Bangladesh Bank is not required for- 

Remittance of dividend income to non-residents in respect to their  investments in Bangladesh;

 Remittance of dividend declared out of previous year’s accumulated reserves; and

Dividend and sale proceeds (including capital gains) of shares of companies listed in a Stock Exchange in Bangladesh. Such remittance may be affected prior to actual payment of taxes provided that the amount payable to the tax authorities at the applicable tax rate is withheld by the company. Remittance of sale proceeds of shares of companies not listed in Stock Exchange requires prior Bangladesh Bank permission, which is accorded for amounts not exceeding the net asset values of the shares.

Foreign Investment

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