Foreign Direct Investment (FDI) plays a crucial role in Bangladesh’s rapid economic development. The country’s favorable location, cost-effective labor market, and growing infrastructure have positioned it as one of South Asia’s most promising investment destinations. However, to ensure smooth operations and compliance, investors must understand the foreign direct investment in Bangladesh.
This article provides a detailed overview of Bangladesh’s FDI legal framework, regulatory authorities, approval processes, and incentives that make it attractive for foreign investors.
Several government bodies regulate and facilitate FDI in Bangladesh:
Bangladesh Investment Development Authority (BIDA): The primary authority responsible for approving and monitoring foreign investments in the industrial sector.
Bangladesh Economic Zones Authority (BEZA): Regulates investments in special economic zones.
Bangladesh Export Processing Zones Authority (BEPZA): Oversees investment in EPZs (Export Processing Zones).
Bangladesh Bank: Handles foreign currency transactions, remittances, and capital repatriation approvals.
These institutions ensure that foreign investors can establish, operate, and repatriate profits legally and efficiently.
Bangladesh provides strong legal protection for foreign investors under several acts and regulations, including:
Foreign Private Investment (Promotion and Protection) Act, 1980
Ensures non-discriminatory treatment for foreign investors and guarantees the protection of invested capital against nationalization.
Companies Act, 1994
Governs company registration, management, and reporting requirements for both local and foreign entities.
Bangladesh Export Processing Zones Authority Act, 1980
Offers legal structure for establishing industries within EPZs, providing tax and import benefits.
Bangladesh Economic Zones Act, 2010
Facilitates investment in designated economic zones with modern infrastructure and fiscal incentives.
Income Tax Ordinance, 1984 and VAT Act, 2012
Define the taxation and indirect tax structure applicable to foreign and domestic investors.
Bangladesh allows 100% foreign ownership in most sectors except for a few restricted or regulated industries (like defense, nuclear energy, and forest plantation).
Foreign investors are permitted to repatriate profits, dividends, and capital after meeting tax obligations, with approval from Bangladesh Bank.
Foreign investors can enter Bangladesh through several routes:
Wholly-owned subsidiaries
Joint ventures with local partners
Liaison, branch, or representative offices (with BIDA approval)
Public-private partnerships (PPPs) in infrastructure and energy sectors
Each structure requires compliance with specific licensing and reporting rules under BIDA and Bangladesh Bank guidelines.
Bangladesh offers a wide range of fiscal and non-fiscal incentives, including:
Tax holidays (up to 10 years in certain sectors and regions)
Duty-free import of capital machinery and raw materials
Accelerated depreciation benefits
Export incentives and bonded warehouse facilities
Full repatriation of profits and dividends
Additionally, investments in IT, renewable energy, agro-processing, and infrastructure enjoy priority support from BIDA and related ministries.
Bangladesh is a signatory to several international conventions, including:
ICSID (International Centre for Settlement of Investment Disputes)
MIGA (Multilateral Investment Guarantee Agency)
These memberships ensure that foreign investors have access to international arbitration mechanisms in case of disputes.
Domestically, disputes may be resolved under Arbitration Act, 2001, which aligns with UNCITRAL model laws.
While most sectors are open to FDI, the following areas are either restricted or require prior government approval:
Defense and military-related industries
Forestry and mining in reserved areas
Security printing and minting
Production of nuclear energy
A Negative List issued by BIDA outlines these restricted sectors in detail.
Foreign investors must comply with:
Company registration under RJSC (Registrar of Joint Stock Companies and Firms)
Investment approval from BIDA
Tax registration (TIN, VAT, and trade licenses)
Annual return filings and audit reports submission
Non-compliance may result in penalties or restrictions on profit repatriation.
Bangladesh offers a liberal investment regime, investor-friendly policies, and strong legal protection under its foreign direct investment laws. With proper guidance, investors can confidently establish operations, benefit from attractive incentives, and participate in the country’s economic growth story.
At S. Rahman & Co. (SRCO), we assist investors in navigating Bangladesh’s regulatory framework, handling company registration, tax compliance, and advisory services for smooth and compliant business operations.
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