Bangladesh has become one of South Asia’s fastest-growing economies, offering attractive opportunities for global investors. With a strategic location, competitive labor costs, and strong government support, the country has designed a robust legal framework to facilitate Foreign Direct Investment (FDI).
Understanding the foreign direct investment laws in Bangladesh is essential for any investor aiming to start or expand operations in this emerging market. This article explains the major acts, policies, and regulatory bodies that govern FDI in Bangladesh and how businesses can navigate the process successfully.
Foreign investment in Bangladesh is governed by several key laws and policies that ensure investor protection, fair competition, and transparency. The major ones include
This is the principal law regulating FDI in Bangladesh. It guarantees:
Equal treatment for foreign and local investors.
Protection against nationalization or expropriation.
Free repatriation of capital, profits, and dividends.
In case of disputes, foreign investors are entitled to fair compensation and access to international arbitration mechanisms.
BIDA acts as the central authority for promoting and regulating investment. Under this Act:
Investors can register their businesses online through the BIDA One Stop Service (OSS).
BIDA assists with approvals for industrial setup, tax registration, utilities, and work permits.
The authority ensures faster processing of investment-related services and supports investors throughout their business journey.
This policy encourages both local and foreign investment across various sectors. Key highlights include:
Priority to export-oriented industries and high-tech manufacturing.
Incentives for 100% foreign ownership in most sectors.
Encouragement of Public-Private Partnerships (PPP) and Special Economic Zones (SEZs).
Bangladesh follows a liberal investment policy, allowing 100% foreign ownership in most sectors except a few restricted areas.
Examples of high-potential sectors include:
Textiles & RMG (Ready-Made Garments)
Information & Communication Technology (ICT)
Energy and Power
Pharmaceuticals
Real Estate & Construction
Agriculture and Food Processing
Sectors that are restricted or require prior approval include defense, nuclear energy, and certain environmental industries.
The Government of Bangladesh offers various incentives to attract FDI, such as:
Tax holidays for selected industries and zones.
Duty-free import of capital machinery.
Repatriation of profits without restrictions.
Double taxation avoidance agreements (DTAAs) with over 30 countries.
100% foreign equity allowed in most manufacturing and service sectors.
Additionally, investors can enjoy special facilities in Export Processing Zones (EPZs) and Economic Zones (EZs), which provide world-class infrastructure and simplified procedures.
Foreign investors will primarily interact with the following agencies:
BIDA (Bangladesh Investment Development Authority) – Primary regulatory body for investment approval and facilitation.
Bangladesh Export Processing Zones Authority (BEPZA) – For investors in export processing zones.
Bangladesh Economic Zones Authority (BEZA) – For investments in economic zones.
Bangladesh Bank – Regulates foreign exchange, remittance, and capital transactions.
Registrar of Joint Stock Companies and Firms (RJSC) – Company registration and compliance.
The process for setting up a foreign business in Bangladesh involves the following key steps:
Company Incorporation – Register the entity with RJSC.
BIDA Registration – Apply for investment approval and project registration.
Tax Identification Number (TIN) and VAT Registration – Obtain from the National Board of Revenue (NBR).
Bank Account Opening – Open a bank account for capital remittance.
Work Permits and Licenses – Apply for foreign employees through BIDA’s OSS.
Environmental and Sectoral Approvals – If applicable (for manufacturing or energy sectors).
The BIDA One Stop Service Portal (oss.bida.gov.bd) has simplified these procedures, allowing most steps to be completed digitally.
Bangladesh is a signatory to several international conventions for investment protection, such as:
ICSID (International Centre for Settlement of Investment Disputes)
MIGA (Multilateral Investment Guarantee Agency)
UNCITRAL Arbitration Rules
These ensure fair dispute resolution for foreign investors and protect investments from unfair practices.
While the investment climate in Bangladesh is improving, some challenges remain:
Bureaucratic delays in certain approvals
Infrastructure and logistics constraints
Complex taxation procedures
However, the government is actively addressing these through digital transformation, policy reforms, and public-private partnerships, making Bangladesh one of the most promising FDI destinations in Asia.
Bangladesh’s foreign direct investment laws offer a transparent and investor-friendly framework that ensures protection, profitability, and growth potential for global investors. With continued policy support, stable economic growth, and strategic reforms, Bangladesh stands as a top choice for FDI in South Asia.
For expert assistance with FDI registration, company formation, and compliance services,
S. Rahman & Co. (SRCO) provides full legal and financial consultancy support to international investors looking to establish a strong foothold in Bangladesh.