Doing Business in Bangladesh

Foreign companies are attracted to working with Bangladesh for the following reasons:
Abundance of trainable and hardworking manpower at low wages not expected to increase substantially in the near future.
Attractive payback periods (3-4 years) on new projects leveraging the benefits of low wages in the export markets and relatively high prices for most of the goods/services in the domestic market .
Rapidly growing domestic market and potential access to the large South Asian Market.

POTENTIAL INVESTMENT SECTORS IN BANGLADESH

Bangladesh, traditionally known for jute and tea exports, has recently attracted attention for readymade garments and leather exports. Bangladeshi businesses are eager to collaborate with foreign partners and the government of Bangladesh has significantly improved conditions for joint ventures in recent years. Bangladesh has been ranked 88 in the World Bank’s global index for ease of doing business. Local businessmen are particularly receptive to joint ventures in which the foreign partner provides the technology, equipment, expertise and capital if necessary and the local partner provides land, building(s), and local management of the infrastructure and manpower. The Industrial Policy of 1999 ensures equal treatment for local investment, joint venture, and 100% foreign investment. According to the policy, no permission of the government is required to set up a joint venture (JV) project. This could be misleading, however, as licenses, permits, visas, and other authorizations are required from the relevant regulatory and administrative ministries. The joint venture must also register with the Board of Investment (BOI), which enables the enterprise to obtain facilities such as import entitlement for raw materials and spare parts, land, and utility connections.

ESTABLISHING a JV in BANGLADESH

Foreign investors in Bangladesh usually establish a public or a private limited company. The liability of the shareholders of a limited company is restricted to the amount of share capital subscribed by them or held in their name. A minimum of seven shareholders is required to establish a public limited company; there is no upper limit on the number of shareholders it may have. A private company requires a minimum of two shareholders, and its total number of shareholders may not exceed fifty. Any foreign firm incorporated outside of Bangladesh must be registered in Bangladesh in order to carry out business in case a local company is not established. Business firms are registered under the provisions of the Companies Act of 1994. The registration is done by the Registrar of Joint Stock Companies.

BUSINESS OPPORTUNITIES IN BANGLADESH

Agriculture (including fishing) is the dominant sector in Bangladesh, accounting for 20% of the GDP. The manufacturing sector – traditionally based on input from domestically produced agricultural raw materials – take up 16% of the GDP. In order to diversify the country’s industrial base the Government of Bangladesh is trying to promote private sector investments into many different sectors.

Some of the industries offering interesting opportunities for worldwide partners are found especially in garments/textiles, IT & IT related services and food products. However, other sectors in growth and/or in need for being upgraded would comprise:

Clothing/Apparel/Garment/Textile
Leather
Frozen Seafood
Jute goods
Energy
Telecom
Construction
Natural gas
Electronic and Light engineering
Health services
Educational services
Global staffing services.

SPECIAL BUSINESS OPPORTUNITY FOR INVESTORS

Bangladesh is best placed in the region for textiles and garments industry due to cheap labor and favorable trade status with the EU. Again, Government incentives for the spinning and weaving industries in the form of cash subsidy of the fabric cost to exporters sourcing fabrics locally. There is huge yarn and fabric demand supply gap in the RMG industries which is presently met by imports. Thus the potential for backward linkage industry is enormous Prospect for a huge textile industry capable to supply over 3 billion yards of fabrics a year to the export oriented garment industry has also been developed by the industry. Presently, about 85%-90% of this demand is met by import from countries like China, India, Hong Kong, Singapore, Thailand, Korea, Indonesia, Taiwan, etc. Fabric requirement is increasing at 20% per annum. This offers a tremendous opportunity for further investment.

In order to stimulate rapid economic growth of the country, particularly through industrialization, the government has adopted an Open Door Policy to attract foreign investment to Bangladesh. Following this, EPZs have been created to provide complete infrastructural facilities including communication and utility connection where potential investors would find a congenial investment climate, free from cumbersome procedures. The Bangladesh Private Export Processing Act allows establishment in private EPZs entirely through foreign investment or through joint ventures or local initiative.

Followings are the six EPZs of Bangladesh which are in operation now:
Dhaka EPZ
Chittagong EPZ
Comilla EPZ
Mongla EPZ
Ishwardi EPZ
Uttara EPZ (at Nilphamari)
Adamjee EPZ

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