Investors looking for a thriving economy should look at Bangladesh! Bangladesh investment climate offers a lovely with a young and dynamic workforce, a growing consumer base, and a business-friendly environment that provides various benefits and incentives. The country has consistently achieved an annual GDP growth of over 6%, except for the COVID-induced economic slowdown in 2020. Bangladesh has impressively maintained a 7% GDP growth rate over the past decade without any contraction for 30 years. The latest report from the Asian Development Bank predicts that the country’s GDP will grow by 6.5% in the fiscal year 2024. Foreign investment in Bangladesh is further encouraged by tax exemptions, policy reforms, and other facilities announced by the government to remove infrastructural deficiencies and create a positive business environment.
Unlocking Opportunities: Bangladesh Investment Climate Explained
Bangladesh’s location on the coast of the Bay of Bengal offers excellent trading conditions within Asian and Middle Eastern markets. Its capital city, Dhaka, has a well-structured communication system with its neighboring countries. Dhaka is Bangladesh’s commercial and financial hub and the largest economic center of Eastern South Asia.
Source: Investment Climate and Opportunities in Bangladesh
Over the past decade, Bangladesh has experienced sustained economic growth, boasts a large, young, and hard-working workforce, is strategically located between large South and Southeast Asian markets, and has a vibrant private sector, making it an attractive destination for increasing investment despite severe economic challenges brought on by the global outbreak of COVID-19 and Russia-Ukraine war. Bangladesh also benefits from political stability under a democratic system, steady inflation due to good monetary and fiscal management, a winning combination of high connectivity, a competitive market, a business-friendly environment, and a competitive cost structure that can provide the best returns.
Source: Investment Climate and Opportunities in Bangladesh
- Bangladesh is a highly homogeneous society with no major internal or external problems, and its people are incredibly resilient in the face of tragedy.
- Also, Bangladesh is a liberal, democratic country. People in this land have lived in peace and harmony for thousands of years, regardless of color or religion.
- Bangladesh is committed to creating an open, predictable, competitive climate for private investment to achieve its development goals.
- There is widespread nonpartisan political support for market-oriented reform and South Asia’s most investor-friendly regulatory system.
- Energy prices in Bangladesh are the most competitive within the region. The Foreign Private Investment (Promotion and Protection) Act 1980 protects investments made in Bangladesh against expropriation & nationalization, equitable treatment, exit, and profit & capital repatriation.
- Bangladesh has been working to create a contemporary business climate through reforms in all spheres, diagnosing and correcting every procedure that impacts business.
- The legal and policy framework for business is favorable for foreign investment.
Source: Foreign Direct Investment and External Debt
- Bangladesh’s open and diverse economy has demonstrated steady growth in GDP per capita and consumption expenditure, reflecting higher living standards for Bangladeshis and expanding the local market, which is an attractive destination for foreign investors.
- Bangladesh has shown a warm attitude towards foreign investors, allowing them to invest in most sectors. The investment authorities of Bangladesh provide favorable conditions for doing business.
- Bangladesh has over 30 bilateral and free tariff agreements with the EU and other developed countries, several Treaties with Investment Provisions (TIPs), and 20 intergovernmental agreements and multilateral or regional agreements or guidelines, principles, resolutions, etc., favoring investing in Bangladesh.
- Bangladeshi products enjoy 100% tariff—and quota-free access to the EU, Canada, Australia, and Norway. They have also gained access to lower-duty markets in Thailand, India, and Pakistan, albeit on a limited scale.
- The country’s young workforce is one of the driving forces of Bangladesh’s economic progress, and technical education shows potential.
- Bangladesh’s strategic and competitive position in the value chain of the global economy makes it an excellent supplier.
- Bangladesh is an ideal destination for outsourcing, with Tech Parks in major cities to boost the progress of the ICT sector and develop Digital Bangladesh.
- Bangladesh has a lot of natural gas and water, and its soil is quite productive.
- With a population of just over 160 million, Bangladesh has strong consumer demand, and the consumer goods market, ranging from white goods and clothes to fintech, is growing fast.
Government Policy and Incentives: Catalysts for Bangladesh Investment Climate
Bangladesh’s foreign direct investment policy framework is the best in South Asia, further influencing this country’s global market access. The Government of Bangladesh offers a range of investment incentives under its industrial policy and export-oriented growth strategy with few formal distinctions between foreign and domestic private investors. Besides, the extension of patent protection duration from 16 to 20 years by the “Bangladesh Patents Act 2022” positively impacted Bangladesh’s Investment Climate by increasing foreign direct investment in Bangladesh, as per UNCTAD. Bangladesh Investment Development Authority (BIDA) was established in 2016 to promote investments in Bangladesh.
Bangladesh’s government also formed:
- Bangladesh Economic Zones Authority (BEZA)
- Bangladesh Export Processing Zones Authority (BEPZA)
- Bangladesh Hi-Tech Park Authority
- Bangabandhu Sheikh Mujib Shilpa Nagar (BSMSN)
Source: Investment Climate and Opportunities in Bangladesh
By 2030, Bangladesh aims to create 100 Special Economic Zones (SEZs), comprising 30 Private Economic Zones and 70 Government Approved Economic Zones. Bangladesh has expanded its lucrative Export Processing Zones (EPZs) in Dhaka and Chittagong and other significant real estate investments across the state. The Bangladesh Export Processing Zones Authority (BEPZA) is the government’s official organization that promotes, recruits, and enables foreign investment inside these zones.
Source: Investment Climate and Opportunities in Bangladesh
Facilities and Incentives for Foreign Investors in Bangladesh:
- 100% foreign equity is allowed for foreign direct investment with no restrictions on foreign equity participation.
- The government has provided a generous Tax Holiday for industries established in various zones – 5, 7, 9, and 12 years for developed, less developed, least developed, and special economic zones, respectively. The existing tax law allows extension units of an industry to be eligible for this incentive as well.
- Taxes do not apply to capital gains from the shares transfer through investing companies.
- Foreigners in Bangladesh can remit up to 50% of their salaries and have the facilities to repatriate their savings and retirement benefits when they return to their home country.
- Foreign nationals and employees involved in project-related work can obtain work permits without limitations.
- Investors can repatriate their profits, dividends, and invested capital.
- Foreign shareholders can transfer their shares to local investors.
- The reinvestment of remittable dividends will be considered a new investment.
- Foreign-owned companies registered in Bangladesh will receive equal treatment to local businesses.
- Royalties, technical know-how, and technical assistance fees are exempt from taxes, and there are facilities to repatriate them.
- Non-resident investors can invest in Bangladesh’s stock exchanges and get total working loans from local banks based on the bank-client relationship.
- Foreign technicians working for foreign companies are not subject to personal tax for a maximum of three years. If such technicians continue to work beyond this period, their individual income tax liability will depend on whether a double taxation avoidance agreement exists with their country of origin.
- Investors from foreign countries can fully retrieve their invested capital and transfer any profits and dividends earned from their investments.
- Foreign investors interested in investing in the country will receive “multiple entry visas,” valid for three years. Furthermore, experts coming to work in the country will be granted “multiple entry visas” that will remain valid for their work assignments.
- Tax exemptions apply to interests on foreign loans.
Source: Investment Climate and Opportunities in Bangladesh
Foreign investors can explore opportunities in numerous industries nationwide. However, specific sectors are restricted due to national security and environmental concerns. Such sectors comprise the manufacture of arms and ammunition, defense machinery and equipment, a forest plantation, mechanized extraction from reserved forests, nuclear energy production, and security printing and mining.
Source: Investment Climate and Opportunities in Bangladesh
The government of Bangladesh has identified several industries with great potential for foreign investment, including agribusiness, electronics, ceramics, foreign foods, apparel and textiles, ICT and business services, leather and leather goods, light engineering, power industry, and life sciences. Sectors with active investments from overseas include agribusiness, garment/textiles, leather/leather goods, light manufacturing, power and energy, electronics, light engineering, information and communications technology (ICT), plastic, healthcare, medical equipment, pharmaceutical, shipbuilding, and infrastructure.
Explore investment opportunities and make your informed decision to invest in Bangladesh today!
Source: Investment Climate and Opportunities in Bangladesh
The Economist has hailed Bangladesh as The New Asian Tiger. Over the past decade, Bangladesh has made remarkable strides in its economy, emerging as one of the fastest-growing economies in the world, with an impressive average GDP growth rate of 6.8% last year. This growth has sparked a surge in investor interest in the country. Last year, Bangladesh received its highest-ever level of foreign direct investment (FDI) worth $3.61 billion, as per the United Nations Conference on Trade and Development. In addition, Bangladesh has achieved significant milestones in various areas, such as poverty reduction and women’s empowerment, outperforming many other South Asian countries. Bangladesh’s success story is truly an inspiration to many.
Bangladesh’s strategic geographic location as a gateway to other countries in the Asia-Pacific region makes it an essential partner, mainly because of its low labor costs compared to other competing nations. Bangladesh has a highly adaptable and dynamic workforce that offers competitive wages and salaries. With 57.3% of the population under 25, the country has a young workforce eager to meet global standards. Additionally, the country’s geographic location is ideal for international trade because of its strategic location, regional connectivity, and worldwide access.
It is worth noting that Bangladesh is the 29th largest economy in the world in terms of purchasing power.
Source: Investment Climate and Opportunities in Bangladesh
Bangladesh is a desirable location for investment compared to other South Asian economies. With its highly liberalized Foreign Direct Investment (FDI) regime, investors can enjoy 100% foreign equity ownership with no restrictions on exit policy.
Investors can take advantage of Bangladesh’s highly favorable investment climate, which provides them access to almost all sectors without any quantitative restrictions. Moreover, Bangladesh has a plethora of incentives, such as tax holidays, reduced tax rates for specific sectors, bond facilities, export incentives, and other fiscal incentives, making it one of the most generous incentive packages in South Asia.
Bangladesh’s remarkable economic progress in Asia is a testament to its highly adaptable and competitive workforce, low-cost manufacturing, and immense potential in various industrial sectors. Its unwavering macroeconomic stability, resilient domestic market, and export-driven industry-led growth have catapulted it to be among the fastest-growing economies globally.
The Bangladesh Investment Development Authority (BIDA) invites private sector investors to explore the investment opportunities available in Bangladesh.
Bangladesh has created an unparalleled investment climate critical to the private sector’s contribution to global sustainable development. An impressive private investment and trade surge has driven Bangladesh’s remarkable growth. Witnessing how these factors have propelled the nation toward progress and prosperity is truly inspiring. Bangladesh has become one of the world’s top investment destinations with access to its vast domestic markets, strategic location, high profitability, demographic dividend, attractive incentive policies, and consistent reforms for a better business climate.
Written by: Tasnim Tarannum Progga
Edited by: Osman Gani Tuhin
