Bangladesh as an Investment Destination
Low wages, competitive production cost, availability of trained resources, availability of energy and a large domestic market makes Bangladesh as one of the top investment destinations for many foreign investors.
In a recent survey conducted by JETRO in 2015 amongst 20 countries in Asia and Oceania, Bangladesh had been found as the most attractive place for investment both in the manufacturing and non-manufacturing sectors. Bangladesh offers the most illiberal FDI regime in South Asia. Bangladesh has seen a stedy GDP growth over 6% for the last ten years and there has been increase in FDI. As per World Investment Report 2016 of United Nation Conference on Trade and Development, FDI inflows to Bangladesh rose by 4.38% to USD 2.33 billion in 2016, whih was USD 2.23 billion in 2015.
According to IMF, the Bangladesh economy will rise to USD 322 billion by 2021 creating enormous economic opportunities. Young and energetic work force, nearly 60% of the total population is economically active and almost a million graduates enter the workforce annually. Bangladesh’s geo-strategic location in the vicinity of China and India also puts further credence to the argument that the country’s economy would forge ahead in the future. Bangladesh has overcomed the energy crisis as presently the installed capacity is 13,705 MW and Govt. is importing LPG & LNG through private initiatives. Bangladesh has already graduated to a lower mid-income state and targets to be a mid-income state by 2021 and a developed nation by 2041.
What is Special Economic Zone-
To increase and diversify the industries, Bangladesh Economic Zones Authority ( BEZA) has taken initiatives to set up 100 Special Economic Zones (EZ) on 30,000 hectares of land with aim to generate ten million labuor force and a sustainable industrialization. EZ are industrial parks/areas which will forster the need of foreign and domestic industries. EZ are being built on Public-Private parternship models or private owned model or Government owned model. Investors can either lease land or lease factorsy spaces within EZ with a very competitive rate. The Government provideds many fiscal incentives for investors who intends to set up factorie and plants in EZ. Due to close governmental connection and sponshorship, these EZ will serve as a hasstel free preferred locations for foreign investors aiming to set up factories and plants in Bangaldesh.
Various Fiscal Incentives in Economic-Zones-
| SL | Incentives | |
| 1 | Tax Holiday | 100% for 1st three years of operation; 80% for 4th year; 70% for 5th year; 60% for 6th year; 50% for 7th year; 40% for 8th year; 30% for 9th year and 20% for 10th year. |
| 2 | Exemption on Customs Duty | Duty free import of raw materials, construction material, capital machineries and goods. |
| 3 | Dividend Tax Exemption | Exemption from dividend tax for 10 years. |
| 4 | VAT on Local Purchase | All purchases excluding petroleum product from Domestic Tariff Area (DTA) shall be exempted from VAT, sales tax etc. |
| 5 | Backward Linkage | 100% backward linkage raw-materials and accessories to sell for Export Oriented Industries in Domestic Tariff Area. |
| 6 | VAT on electricity | Exemption of VAT on electricity for 10 years. |
| 7 | Stamp Duty | 50% exemption on stamp duty and registration fees for registration of leasehold land/factory space. |
| 8 | Exemption on VAT on utilities | 80% exemption of VAT on all utility services consumed inside the zone. |
| 9 | Export Duty Exemption | Duty exemption on Export. |
| 10 | Local Sale | 20% sale of finished product to Domestic Tariff Area |
| 11 | Duty free vehicles | Exemption of CD for import of 2 vehicles within 1st 5 years for foreign investors (for one time) |
| 12 | Avoidance of Double Taxation | Exemption of double taxation subject to Double Taxation Treaty Agreement |
| 13 | Repatriation | Full repatriation of capital and dividend. |
| 14 | Exemption of Income Tax on Expatriates | 50% Rebate of income tax on salary income of expatriates for 5 years. |
| 15 | Bonded Warehouse | Consider EZ as custom bonded area. |
| 16 | Foreign Loan | Foreign loan availability (to ease business activity) |
| 17 | Joint Venture | Investors can establish fully foreign owned or joint venture company. |
| 18 | Exemption on Royalty and Technical Fees. | Royalty, technical fees will be exempted from income tax for 10 years. |
| 19 | Exemption of Tax on capital gains. | Tax exemption on capital gains. |
| 20 | Share Transfer | Share transfer allowed. |
| 21 | Work Permit for Expatriates | Can be issued for up to 5% of the total number of employees. |
| 22 | Reinvestment | Reinvestment of remittable dividend to be treated as new foreign investment. |
| 23 | Resident Visa | Resident visa for investment of US$ 75,000 or more. |
| 24 | Citizenship | Citizenship for investment of US$ 500,000 or more. |
| 25 | Protection of Foreign Investment | Protected from government expropriation under Foreign Private Investment (Promotion & Protection) Act 1980. |
Bangladesh is considered as one of the preferred destination for relocation of industries, specially in the labour intensive sectors. The Government has implemented a number of policy reforms designed to creat more open and competitive climate for private investment, both foreign and local. Government is fostering rapid economic development through increast and diversification of industries, employement, production and export. The Sepcial Economic Zones are designed to provide secured, financially attractive & convenient environment for foreign investors. The incentive and services offered in the EZs are lucrative to pull the interest of right minded foreing investros who are willing to relocate or start fresh in Bangladesh
To ensure a smooth transition when changing business ownership, it’s essential to understand the legal requirements and procedures involved. For detailed guidance, check out our comprehensive guide on how to transfer business ownership successfully in Bangladesh.
