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v If the investor is to locate in an export processing zone then BOI will introduce the company to the Bangladesh Export Processing Zones Authority (BEPZA), who will facilitate the early start up processes.
v This section also contains information on the procedures required to establish a company in Bangladesh and the time that registering and establishing a company will typically take.
v Information is also provided on the types of companies that can be formed, also the general costs of doing business in Bangladesh, how to obtain the necessary work permits for the investors and their staff, remitting funds to Bangladesh and so on.
v Once the investors decide that they want to set up a company in Bangladesh their registration with BOI can be managed electronically, through the BOI Online Registration process.
The interested investors should take a look at the related topics in this section. The BOI will welcome the prospective investors, if they contact BOI via the enquiry form, or direct to one of the BOI's representative offices in Dhaka or around Bangladesh, or through a Bangladesh embassy or consulate in the respective country of the investor.
Roadmap to Investment
The Board of Investment (BOI) is the government agency responsible for promoting business opportunities in Bangladesh to investors, everywhere. The BOI is here to facilitate the process from first enquiry through registration to implementation and beyond. The BOI can do the following for the investors:
Information searches
A fact finding visit
Getting started
Business/ plant set-up
Commercial operation
ü Help with information tailor made to the investor’s business area.
ü Advise the investor about the best place to locate their business.
ü Introduce the investor to the most relevant organizations, government agencies and BEPZA, the agency responsible for the export processing zones (EPZ).
ü Help the investors register their investment intentions with the BOI (unless their investments qualifies to be best located in an EPZ), so that the investors are eligible for all the various incentives on offer they need.
The chart shows the five basic steps the investors will probably want to go through to start their business in Bangladesh.
BOI
Assistance Available
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Ø There are many information sources. These days the investors will probably start with the internet. BOI can also help and suggest other government agencies, chambers of commerce, and professional associations, international organisations such as the World Bank, Asian Development Bank, UNCTAD and IFC. There are independent consultants too.
Ø Register the investors’ intentions. Investors are advised to apply to the BOI for registration as early as possible in order to benefit from the many incentives and tax concessions available. The application form can be found online at this website or from http://www.boi.gov.bd directly.
Step 2. A fact-finding visit
v To make a physical verification of the investors’ researches by visiting Bangladesh. To make their own travel arrangements or let BOI to arrange things for them and benefit from BOI’s Welcoming Service.
v Business travelers may request a visa for limited or multiple entries which can vary from one month to five years. Given certain conditions there is also the possibility of a landing permit and visa on arrival. BOI or the Bangladesh diplomatic mission in the investor’s country can advise them on this.
v Counseling. On arrival investors can take advantage of in-depth BOI counseling. Professional investment and business counselors can offer advice and practical assistance over the phone, via email or fax or, best of all, at a personal meeting in the BOI offices here in Dhaka, Chittagong, Sylhet, Rajshahi, Khulna and Barisal.
Step 3. Getting started
Ø The investor will need to set up an appropriate company structure. By this stage they would know if they are going to operate as a branch/liaison representative office (or Buying House) or if they will be establishing an industrial project. This is relevant to the type of business structure the investor will then need to form.
Ø Incorporation. Business in Bangladesh can be carried out by a company formed and incorporated locally or by a company incorporated abroad but registered in Bangladesh.
Ø The incorporation or registration is done by the Registrar of Joint Stock Companies and Firms (RJSC&F).
Ø Companies may be private or public limited companies or unlimited companies. In establishing a place of business of a foreign company, the company has to be registered with the RJSC&F as the place of business. Such registration is required in respect of capital issue and obtaining clearance from the Bangladesh Bank.
Ø To open or extend a branch/liaison representative office of a foreign company, the company has to apply to the BOI.
Step 4. Business/plant set-up
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v Obtaining industrial plots.
v Approval of foreign loans, supplier’s credit, PAYE schemes etc.
v Obtaining utility connections: water, gas, electricity, phones.
v Registration for certification for importing raw materials.
v Work permits for foreign nationals and key staff.
v Registration with the Factories Act which regulates work conditions.
v Registration with environmental legislation.
v Remittance of royalty, technical know-how and technical assistance fees.
Step 5. Commercial operation
ü After starting commercial operations BOI will be following up with what the investors need subsequently.
ü Investors need to a submit half-yearly performance report to the BOI on production and employment in their projects. Any changes to the information provided in the registration should be indicated to the BOI.
Tax exemptions
Duty
Income tax
Remittances
Exit
Ownership
Incentives for investors
Concessionary duty
Non-resident Bangladeshis
Other incentives
Additional export-oriented incentives
Investing in the stock market
In order to encourage the inflows of FDI the government of Bangladesh offers one of the most liberal investment policies and attractive packages of fiscal, financial and other incentives to foreign entrepreneurs in South Asia. Major incentives to stimulate private sector direct investment are listed below.
Tax exemptions
Generally five to seven years' tax exemptions are available for many business investments. However, for electric power generation tax exemptions are provided for up to 15 years.
Duty
No import duty is applicable for export oriented industry. For other industries it is 5% ad valorem.
Income tax
Double taxation can be avoided in most cases as the country (Bangladesh) benefits from many bilateral investment agreements. Exemptions of income tax up to three years for the expatriate employees in industries are specified in the relevant schedules of the income tax ordinance.
Remittances
Facilities for full repatriation of invested capital, profits and dividends are the norm in most situations
Exit
An investor can wind up an investment either through a decision of an annual or extraordinary general meeting. Once a foreign investor completes the formalities to exit the country, he or she can repatriate the net proceeds after securing proper authorization from the central bank (Bangladesh Bank).
Ownership
Foreign investors can set up ventures, either wholly owned or in joint collaboration, with local partners.
Investing in the stock market
Foreign investors are allowed to participate in initial primary offerings (IPOs) and right issues without any regulatory restrictions. Also, incomes from dividends are tax-exempt for investors.
Incentives and facilities for the investors
Industries are eligible for tax holidays for the following periods according to the location of the establishment.
v The period of tax holiday is calculated from the month of commencement of commercial production or operation of the industrial undertaking. The eligibility of a tax holiday is to be determined by the National Board of Revenue (NBR).
v The tax holiday facility is applicable to industries set up in Bangladesh before June 30, 2012.
v Accelerated depreciation in lieu of a tax holiday is allowed at the rate of 80% of actual cost of machinery or plant for the year in which the unit starts commercial production and 20% for the following years. The rate of depreciation is 100% for years specified by the NBR.
Concessionary duty on imported capital machinery
Import duty at the rate of 7.5% ad valorem is payable on capital machinery and spares imported for initial installation or BMR/BMRE* of the existing industries. The value of spare parts should not, however, exceed 10% of the total cost and freight value of the machinery. Out of this, 7.5% rate of duty payable, export-oriented industries and industries in the under developed areas, may enjoy a further concession of the import duty in the following manner:
100% export oriented industries:
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No import duty is charged in case of capital machinery and spares listed in NBR's* relevant notification. However, import duty at 7.5% is secured in the form of a bank guarantee or an indemnity bond to be returned after installation of the machinery.
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Minimum 70% export oriented industries in developed areas:
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Import duty at 2.5% is charged in case of capital machinery and spares listed in NBR's relevant notification. Additional duty at 5% is secured in the form of a bank guarantee or cash deposit to be returned after installation of the machinery.
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Minimum 70% export oriented industries in developed areas:
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Import duty at 5% is charged in case of capital machinery and spares listed in NBR's relevant notification. Additional import duty at 2.5% is secured in the norm of a bank guarantee or cash deposit to be returned after installation of the machinery.
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Other industries outside developed areas:
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Import duty at 5% is charged in case of capital machinery and spares listed in NBR's relevant notification. Additional import duty at 2.5% is secured in the form of a bank guarantee or cash deposit to be returned after installation of the machinery.
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Othe industries in developed areas:
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Import duty at 7.5% is charged in case of capital machinery and spares listed in NBR's relevant notification.
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Value Added Tax (VAT) is not payable for imported capital machinery and spares. Duties and taxes on import of goods which are produced locally will be higher than those applicable to import of raw materials for producing such goods.
Non-resident Bangladeshis (NRBs)
Special incentives are provided to encourage non-resident Bangladeshis for investment in the country. Non-resident Bangladeshi investors 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 non-resident Bangladeshis in primary shares. Furthermore, they can maintain foreign currency deposits in the Non-resident Foreign Currency Deposit (NFCD) account.
Other incentives
v Tax exemptions on royalties, technical know-how fees received by any foreign collaborator, firm, company and expert.
v Tax exemption on the interest on foreign loans under certain conditions.
v Avoidance of double taxation in case of foreign investors on the basis of bilateral agreements.
v Exemption of income tax up of to three years for the foreign technicians employed in industries specified in the relevant schedule of the income tax ordinance.
v Tax exemption on income of private sector power generation company for 15 years from the date of commercial production.
v Facilities for repatriation of invested capital, profits and dividends.
v Six months multiple entry visa for investors.
v Citizenship by investing a minimum of US$ 500,000 or by transferring US$ 1,000,000 to any recognized financial institution (non repatriable).
v Permanent residency by investing a minimum of US$ 75,000 (non-repatriable).
v Tax exemption on dividend income of non-resilient shareholders during tax exemption period of an industry set up in export processing zone (EPZ) and also after the expiry of tax exemption period if the dividend is re-investment in the same project.
v Exemption of tax on income from industrial undertakings set up in export processing zone for ten years from the date of start of commercial production.
v Tax exemption on capital gains from the transfer of shares of public limited companies listed with a stock exchange.
Additional incentives to export oriented and export linkage industries
Encouraging export oriented industries is one of the major objectives of the Industrial Policy in place, and as such the government ensures all support and co-operation to the exporter as per the export policy. Some of the facilities and incentives offered are as follows:
Ø Concessionary duty as per SRO* is allowed on the import of capital machinery and spare parts for setting up export-oriented industries or BMRE of existing industries. For 100% export-oriented industries no import duty is payable.
Ø Facilities such as special bonded warehouse against back-to-back letters of credit or notional import duty and non-payment of Value Added Tax (VAT) facilities are available as per SRO of the government.
Ø System for duty drawback is being simplified and concise. The exporter will be able to get back the duty draw-back directly from the concerned commercial bank.
Ø Bank loans, of up to 90% if the value against irrevocable and confirmed letters of credit/sales agreement, are available.
Ø For granting export performance benefits, the list of export products and the rate of export performance benefit (XPB) are reviewed from time to time.
Ø With the intention of encouraging backward linkages, export-oriented industries including export-oriented readymade garment industries using indigenous raw materials instead of imported materials, are given additional facilities and benefits at prescribed rates. Similar incentives are extended to the suppliers of raw materials to export-oriented industries.
Ø Export-oriented industries are allocated foreign exchange for publicity campaigns and for opening offices abroad.
Ø Entire export earnings from handicrafts and cottage industries are exempted from income tax. In case of other industries, proportional income tax rebates on export earnings is given between 30% and 100%. Industries which export 100% of their products are given tax exemption up to 100%.
Ø Facilities for importing raw materials are given for manufacturing exportable commodities under banned/restricted list.
Ø Import of specified quantities of duty-free samples for manufacturing exportable products is allowed. The quantity and value of samples is determined jointly by the concerned sponsoring agency and the NBR.
Ø Local products supplied to local projects against foreign exchange under international tender are treated as indirect exports and the producer is entitled to avail of all export facilities.
Ø Export oriented industries like toys, luggage and fashion articles, electronic goods, leather goods, diamond cutting and polishing, jewellery, stationery goods, silk cloth, gift items, cut and artificial flowers and orchid, vegetable processing and engineering consultancy services identified by the government as thrust sectors are provided special facilities in the form of cash incentives, venture capital and other facilities.
Ø Export oriented industries are exempted from paying local taxes (such as municipal taxes).
Ø Leather industries exporting at least 80% manufactured products will be treated as 100% export oriented industries.
Ø Manufactures of indigenous fabrics (such as woven, knit, hosiery, grey, printed, dyed, garment check, hand loom, silk and specialized fabrics) supplying their products to 100% export oriented garment industries are entitled to avail a cash subsidy equivalent to 25% of the value of the fabrics provided the manufacturers of the fabrics do not enjoy duty draw back or duty free bonded warehouse facility.
Ø Apart from the above mentioned facilities, other facilities as announced and provided in the export policy are also applicable for export-oriented and export-linkage industries.
Ø Tax exemption on dividend income of non-resident shareholders during tax exemption period of an industry set up in an export processing zone and also after the expiry of tax exemption period if the dividend is re-invested in the same project.
Ø Exemption of tax on income from industrial undertakings set up in an export processing zone for ten years from the date of commercial production.
Tax exemption on capital gains from the transfer of shares of public limited companies listed with a stock exchange.
*SRO=Special revenue order
*NBR=National Board of Revenue
BMR/BMRE=Balancing, Modernisation, Rehabiliation and Expansion
Creating a Workforce
Employment conditions
Labor force
Working hours
Labor laws
Bangladesh offers an abundant supply of disciplined, easily trainable and low-cost work force suitable for any labor-intensive industry. Of late, there is an increasing supply of professionals, technologists and other middle and low level skilled workers. They receive technical training from universities, college, technical training centers, polytechnic institutions etc. The expenditure incurred by an employer to train his employee is exempted from income tax.
Employment conditions
The minimum age for workers in Bangladesh is 16 years in factories and establishments. Contracts are made in the form of a letter of offer. Workers may also be engaged on verbal agreements. In government organizations and in some private organizations as well, a probationary period exists for skilled or semi-skilled workers varying between three months’ to one year. During this period either party may serve one month's notice for termination from or giving up to the job. In the private sector, the dignity of labor is ensured in accordance with the principles enunciated in the International Labour Organization (ILO) convention and recommendations.
Employment status (in million)
Labor force characteristics
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MES 2009 (m)*
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LFS 2005-06 (m)*
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Economically active population (15 years+)
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53.7
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49.5
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Employed population
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51.0
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47.4
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Male
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38.5
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36.1
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Female
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12.5
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11.3
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Unemployed population
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2.7
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2.1
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Male
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1.7
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1.2
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Female
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1.0
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0.9
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Self employed/own account workers
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20.0
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19.9
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Employer
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0.2
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0.1
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Employee
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8.7
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6.6
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Unpaid family helper
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10.8
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10.3
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Day laborers
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10.3
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8.6
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Others
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0.9
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1.9
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LFS = Labour Force Survey* MES = Monitoring on Employment Survey
m = million
Source: Report on monitoring and employment survey-2009, Bangladesh Bureau of Statistics
Labor force
According to the survey report on monitoring and employment survey-2009, the labor force increased from 49.5m to 53.7m from 2006 to 2009. The growth rate has been 2.7% a year. 62.7% of the population are of age 15 years and over and out of them 59.3% are economically active and 40.7% are economically not active.
Labor force 2009-10, by sector, %
Source: Bangladesh Economic Review-2010 (Bangla version), Ministry of Finance
Manpower export 2009, by country, %
Source: Bangladesh Economic Review-2010 (Bangla version), Ministry of Finance
Labor laws
In Bangladesh the following major labor laws are now in operation:
v Labor Acts 2006
v Private Road Transport Labor Welfare Fund Law 2005
v Labor Welfare Foundation Law Law 2006
v Minimum Wages Board Laws
The main labor policies are:
v Child Labor Policy
v Domestic Worker Protection and Welfare Policy 2010
Note: For more detailed please visit Ministry of Labour and Employment, GOB
Working hours
Workers in the public or private sector typically work eight and a half hours daily (including half an hour for meal or prayer), or 48 hours per week. Friday and Saturday are typically the weekly holidays.
Industrial Land
Entrepreneurs requiring industrial land for setting up a facility in any industrial area/estate apart from BEPZA* and BSCIC* land, should approach BOI, indicating the plot size required, and providing with copies of the sanction/registration letter and industrial layout plan. After receiving the application BOI provides assistance to get the industrial plot.
Most of the industrial areas/estates are owned/controlled by city development authorities in three divisional headquarters: RAJUK* in Dhaka, CDA* in Chittagong and KDA* in Khulna. Besides these, there are a few industrial estates owned and controlled by some other government agencies, namely (a) Public Works Department and (b) Housing and Settlement Directorate.
*BEPZA = Bangladesh export processing zones authority
BSCIC = Bangladesh small and cottage industry corporation
RAJUK = Rajdhani unnayan kartripakkha
CDA = Chittagong development authority
KDA = Khulna development authority
Entrepreneurs should apply directly to the concerned utility authority for obtaining utility services. Or they can approach BOI for assistance, so long as they provide a copy of the company registration/sanction letter. A utility service cell (one stop service) within BOI is responsible to help investors in obtaining the necessary utility services in locations outside of the export processing zones.
For utility services in locations within the export processing zones BEPZA* is the responsible authority for obtaining utility services.
*BEPZA=Bangladesh export processing zones authority
Forms and Procedures
The page provides prospective investors in Bangladesh with the necessary forms and procedures for investing in Bangladesh.
S/N
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Title of the Application Forms
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PDF
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1
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Application for Registration of Foreign Investment
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2
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Application for Registration of Local Investment
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3
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Application for Open Extension of Branch Office
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4
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Application for Employment of Foreign Nationals in the private sector
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5
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Application for Employment of Foreign Nationals in a Branch Office
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6
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Application for Approval of Remittances
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7
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Visa Application Form
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8
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Application for New Bonded Warehouse Licence
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9
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Application for Import Registration Certificate
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10
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Approval of Foreign Borrowings: Application Form & Checklist
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11
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Application for Foreign Borrowings: Procedures and Guidelines
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