Regulation of inbound foreign investment

Government investment promotion programmes

Does the state have a foreign investment promotion programme?

Yes. The Foreign Private Investment (Promotion and Protection) Act, 1980 is a domestic law that aims to promote private foreign investments in Bangladesh by providing certain protections from indemnification, expropriation and nationalisation, and provides for repatriation of investment and removal of difficulties.

Applicable domestic laws

Identify the domestic laws that apply to foreign investors and foreign investment, including any requirements of admission or registration of investments.

The major domestic laws that apply to foreign investors and foreign investments include:

 

The Bangladesh Investment Development Authority (BIDA) is the key authority and regulator of private foreign investments in Bangladesh. Governed by the Bangladesh Investment Development Authority, 2016, BIDA is empowered to:

  • improve private sector industrialisation by facilitating local and foreign investment;
  • implement government policies and formulate various incentives for investors;
  • register and approve foreign investment projects;
  • issue work permits for foreign nationals;
  • issue approval for foreign loans and supplier credits; and
  • facilitate all the necessary approvals, permission, registrations relevant for foreign investors (eg, trade licence, tax, electricity and gas connectivity and environmental clearance) through a one-stop service.

 

The Industrial Policy 2016 envisions specific incentives for foreign investments (Chapter 12). In general, it offers incentives for green (environmental), high-tech or transformative (transfer of skill and technology) industries. Furthermore, foreign investors who invest US$1 million or transfer US$2 million to a recognised financial institution can apply for Bangladeshi citizenship. Furthermore, foreign and local investors are allowed to invest in almost all type of legal business enterprises, except for the following four sectors which are reserved for the government (clause 3.3.17 of the Industrial Policy, 2016 read with Annexure 4):

  • arms and ammunition, and other defence equipment and machinery;
  • forest plantation and mechanised extraction within the bounds of reserved forests;
  • production of nuclear energy; and
  • security printing.

 

The Bangladesh Export Processing Zone Authority (BEPZA) acts as the investment supervisory authority in export processing zones. BEPZA is the one-stop service provider and regulatory authority for companies operating inside export processing zones, where the export-oriented industries are given special incentives. Furthermore, the Bangladesh Economic Zones Authority is responsible for supervising and promoting investments in the economic zones, which are designed to attract additional foreign investment to locations throughout the country.

In addition to the above, relevant provisions of the general corporate and commercial laws of the country that also apply to the foreign investors and foreign investments in Bangladesh include:

  • the Customs Act, 1969;
  • the Bangladesh Labour Act, 2006;
  • the Companies Act, 1994;
  • the Bankruptcy Act, 1997;
  • the Competition Act, 2012;
  • the Income Tax Ordinance, 1984; and
  • the Value Added Tax and Supplementary Duty Act, 2012.

 

As of now, Bangladesh has signed BITs with 31 countries for the promotion and protection of investments:

  • Austria;
  • Belarus;
  • Belgium;
  • Cambodia;
  • Canada;
  • China;
  • Denmark;
  • France;
  • Germany;
  • India;
  • Indonesia;
  • Iran;
  • Italy;
  • Japan;
  • Malaysia;
  • the Netherlands;
  • North Korea;
  • Pakistan;
  • the Philippines;
  • Poland;
  • Romania;
  • Singapore;
  • South Korea;
  • Switzerland;
  • Thailand;
  • Turkey;
  • the United Arab Emirates;
  • the United Kingdom;
  • the United States;
  • Uzbekistan; and
  • Vietnam.

 

Furthermore, Bangladesh has also signed the Avoidance of Double Taxation Treaty with 33 countries:

  • Bahrain;
  • Belarus;
  • Belgium;
  • Canada;
  • China;
  • Denmark;
  • France;
  • Germany;
  • India;
  • Indonesia;
  • Italy;
  • Japan;
  • Malaysia;
  • Mauritius;
  • Myanmar;
  • the Netherlands;
  • Norway;
  • Pakistan;
  • Philippines;
  • Poland;
  • Romania;
  • Saudi Arabia;
  • Singapore;
  • South Korea;
  • Sri Lanka;
  • Sweden;
  • Switzerland;
  • Thailand;
  • the United Arab Emirates;
  • the United Kingdom;
  • the United States;
  • Turkey; and
  • Vietnam.

 

Relevant regulatory agency

Identify the state agency that regulates and promotes inbound foreign investment.

The Bangladesh Investment Development Authority, established under the Prime Minister’s Office, regulates and promotes inbound foreign investment in Bangladesh.

Relevant dispute agency

Identify the state agency that must be served with process in a dispute with a foreign investor.

The president of Bangladesh is to be served with process in a dispute with a foreign investor.

Law stated date

Correct on

Give the date on which the above content is accurate.

21 September 2020.