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Executive Summary

Bangladesh, the world’s eighth most populous country, offers promising opportunities for investment, especially in the oil and gas, power, pharmaceutical, information technology, telecommunications, and infrastructure sectors as well as in labor-intensive industries such as ready-made garments, household textiles, and leather processing. With over six percent annual growth sustained over the past two and a half decades, a large, young and hard-working workforce, strategic location, and vibrant private sector, Bangladesh is likely to attract increasing investment in coming years.

The Government of Bangladesh actively seeks foreign investment, particularly in the apparel industry, energy, power, and infrastructure projects. It 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. According to the central bank of Bangladesh, the country received $2.0 billion in foreign direct investment (FDI) FY 2015-16, up from $1.8 billion in the previous year.

Bangladesh has made gradual progress in reducing some constraints on investment, including the progress with ensuring reliable electricity, but inadequate infrastructure, limited financing capabilities, bureaucratic delays, and corruption continue to hinder foreign investment. New government efforts to improve the business environment show promise but implementation has yet to be seen. Slow adoption of alternative dispute resolution mechanisms and sluggish judicial processes impede the enforcement of contracts and the resolution of business disputes.

On July 1, 2016, terrorists killed more than 20 people in a restaurant frequented by foreigners in Dhaka’s diplomatic enclave, including one U.S. citizen. Da’esh (also referred to as IS, ISIL, or ISIS) and Al Qaeda in the Indian Subcontinent (AQIS) have publicly claimed credit for multiple attacks since September 2015. In October 2016, Da’esh threatened to target “expats, tourists, diplomats, garment buyers, missionaries, and sports teams” in the most “secured zones” in Bangladesh.

International brands and the international community continue to press the Government of Bangladesh to meaningfully address worker rights and safety problems in Bangladesh. Labor unrest in December 2016 increased pressure on Bangladesh to show progress towards meeting the U.S. Government’s 16-point Generalized System of Preferences (GSP) Action Plan.

The government has limited resources for intellectual property rights (IPR) protection and Counterfeit goods are readily available in Bangladesh. Government policies in the information and telecommunications (ICT) sector are still under development. Current policies grant the government broad powers to intervene in the sector.

Capital markets in Bangladesh are still developing and the financial sector is still highly dependent on banks.

Table 1: Major Economic Statistics Summary

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2016 145 of 176
World Bank’s Doing Business Report “Ease of Doing Business” 2016 176 of 190
Global Innovation Index 2016 117 of 128
U.S. FDI in partner country ($M USD, stock positions) 2015 USD 589.0 million
World Bank GNI per capita 2015 USD 1,190

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Bangladesh actively seeks foreign investment, particularly in apparel, power, oil and gas, and infrastructure projects. It 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.

Foreign and domestic private entities can establish and own, operate, and dispose of interests in most types of business enterprises. Four sectors, however, are reserved for government investment:

  • Arms and ammunition and other defense equipment and machinery;
  • Forest plantation and mechanized extraction within the bounds of reserved forests;
  • Production of nuclear energy;
  • Security printing.

The Bangladesh Investment Development Authority (BIDA) is the principal authority tasked with promoting supervising and promoting private investment. The BIDA Act of 2016 approved the merger of the now disbanded Board of Investment and the Privatization Committee. BIDA performs the following functions:

  • Provides pre-investment counseling services
  • Registers and approves of private industrial projects
  • Issues approval of branch/liaison/representative offices
  • Issues work permits for foreign nationals
  • Issues approval of royalty remittances, technical know-how and technical assistance fees
  • Facilitates import of capital machinery and raw materials
  • Issues approvals for foreign loans and supplier credits

The Bangladesh Export Processing Zone Authority (BEPZA) acts as the investment supervisory authority in export processing zones (EPZs). BEPZA is the one stop service provider and regulatory authority for companies operating inside EPZs. In addition, Bangladesh plans to establish over 100 Economic Zones (EZs) over the next several years. The EZs are designed to attract additional foreign investment to locations throughout the country. The Bangladesh Economic Zones Authority (BEZA) is responsible for supervising and promoting investments in the economic zones (EZs).

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic private entities can establish and own, operate, and dispose of interests in most types of business enterprises. Bangladesh allows private investment in power generation and natural gas exploration, but efforts to allow full foreign participation in petroleum marketing and gas distribution have stalled. Draft regulations in the area of telecommunication infrastructure currently include provisions precluding 100 percent foreign ownership.

Four sectors are reserved for government investment and exclude both foreign and domestic private sector activity:

  • Arms and ammunition and other defense equipment and machinery;
  • Forest plantation and mechanized extraction within the bounds of reserved forests;
  • Production of nuclear energy;
  • Security printing.

In addition, there are 17 controlled sectors that require prior clearance/ permission from the respective line ministries/authorities. These are:

  1. Fishing in the deep sea
  2. Bank/financial institution in the private sector
  3. Insurance company in the private sector
  4. Generation, supply and distribution of power in the private sector
  5. Exploration, extraction and supply of natural gas/oil
  6. Exploration, extraction and supply of coal
  7. Exploration, extraction and supply of other mineral resources
  8. Large-scale infrastructure project (e.g. flyover, elevated expressway, monorail, economic zone, inland container depot/container freight station)
  9. Crude oil refinery (recycling/refining of lube oil used as fuel)
  10. Medium and large industry using natural gas/condescend and other minerals as raw material
  11. Telecommunication service (mobile/cellular and land phone)
  12. Satellite channel
  13. Cargo/passenger aviation
  14. Sea-bound ship transport
  15. Sea-port/deep seaport
  16. VOIP/IP telephone
  17. Industries using heavy minerals accumulated from sea beach

While discrimination against foreign investors is not widespread, the government frequently promotes local industries and some discriminatory policies and regulations exist. For example, the government closely controls approvals for imported medicines that compete with domestically-manufactured pharmaceutical products and it has required majority local ownership of new shipping and insurance companies, albeit with exemptions for existing foreign-owned firms, following a prime ministerial directive. In practical terms, foreign investors frequently find it necessary to have a local partner even though this requirement may not be statutorily defined.

Business Registration

The Bangladesh Investment Development Authority (BIDA), formerly the Board of Investment, is responsible for screening, reviewing and approving FDI in Bangladesh. BIDA is directly supervised by the Prime Minister’s office and the Chairman of BIDA has Minister-equivalent rank. There have been instances where receiving approval was delayed. Once the foreign investor’s application is submitted to BIDA, the authorities review the proposal to ensure the investment does not create conflicts with local business. Investors note it is frequently necessary to separately register with other entities such as the National Board of Revenue. According to the World Bank, business registration in Bangladesh takes 19.5 days on average with nine distinct steps: 

The steps for investment are also available at: .

Requirements vary by sector, but all foreign investors are also required to obtain clearance certificates from relevant ministries and institutions with regulatory oversight. BIDA establishes time-lines for the submission of all the required documents. For example, if a proposed foreign investment is in the healthcare equipment field, investors need to obtain a No Objection Certificate (NOC) from the Directorate General for Health Services under the Ministry of Health. The NOC states that the specific investment will not hinder local manufacturers and is in alignment with the guidelines of the ministry. Negative outcomes can be appealed, except for applications pertaining to the four restricted sectors previously mentioned.

A foreign investor also must register its company with the Registrar of Joint Stock Companies and Firms (RJSC&F) and open a local bank account under the registered company’s name. For BIDA screening, an investor must submit the RJSC&F Company Registration certificate, legal bank account details, a NOC from the relevant ministry, department, or institution, and a project profile (if the investment is more than $1.25 million) along with BIDA’s formatted application form.

Other Investment Policy Reviews

In 2013 Bangladesh completed an investment policy review (IPR) with the United Nations Conference on Trade and Development (UNCTAD): .

Bangladesh has not conducted an IPR through the Organization for Economic Cooperation and Development.

A Trade Policy Review was last done by the World Trade Organization in October 2012 and can be found at: .

With EU assistance, Bangladesh conducted a trade policy review, the “Comprehensive Trade Policy of Bangladesh” which was published in the ministry of commerce in September 2014 and is still in draft mode pending further review and approval: 

Business Facilitation

The Government has had limited success reducing the time required to establish a company. BIDA and BEZA are both attempting to establish one-stop business registration shops and these agencies have proposed draft legislation for this purpose.

Companies can register their business at Office of the Registrar of Joint Stock Companies and Firms: . However, the online business registration process is not clear and cannot be used by a foreign company to attain the business registration as certain steps are required to be performed in-person.

In addition, BIDA has branch/liaison office registration information on its website at: . The online business registration process is clear and complete but cannot be used by foreign companies to attain the business registration as certain steps are required to be performed in-person.

Other agencies with which a company must typically register are as follows:

  • City Corporation – Trade License
  • National Board of Revenue – Tax & VAT Registration
  • Chief Inspector of Shops and Establishments – Employment of workers notification

The company registration process now takes around 15 workdays to complete. The process to open a branch or liaison office is approximately one month. The process for trade license, tax registration, and VAT registration requires seven days, two days, and three weeks, respectively.

Outward Investment

Outward foreign direct investment is generally restricted through the Foreign Exchange Regulation Act of 1947. As a result, the Bangladesh Bank plays a key role in limiting outbound investment. In September 2015, the government amended the 1947 Act by adding a “conditional provision” that permits outbound investment for export-related enterprises. Private sector contacts note that the few international investments approved by the Bangladesh Bank have been limited to large exporting companies with international experience.

2. Bilateral Investment Agreements and Taxation Treaties

Bangladesh has signed bilateral investment treaties with 28 countries, including Austria, the Belgium-Luxembourg Economic Union, China, Denmark, France, Germany, India, Indonesia, Iran, Italy, Japan, Democratic People’s Republic of Korea, Republic of Korea, Malaysia, Netherlands, Pakistan, Philippines, Poland, Romania, Singapore, Switzerland, Thailand, Turkey, United Arab Emirates, United Kingdom, United States, Uzbekistan and Vietnam.

The U.S.-Bangladesh Bilateral Investment Treaty, signed on March 12, 1986, entered into force on July 23, 1989. The Foreign Investment Act includes a guarantee of national treatment.

The United States and Bangladesh signed a bilateral treaty for the avoidance of double taxation on September 26, 2004. The United States ratified it on March 31, 2006. The parties exchanged instruments of ratification on August 7, 2006. The treaty became effective for most taxpayers beginning in the 2007 tax year.

Bangladesh has successfully negotiated several regional trade and economic agreements, including the South Asian Free Trade Area (SAFTA), the Asia-Pacific Trade Agreement (APTA), and the Bay of Bengal Initiative for Multi-Sectoral, Technical and Economic Cooperation (BIMSTEC). Bangladesh has not signed any bilateral free trade agreements (FTA) but has started initial FTA discussions with Sri Lanka in March 2017.

Bangladesh has taken steps to strengthen bilateral economic relations with India by reducing trade barriers and improving connectivity. Bangladesh gained duty-free access to India via regional, not bilateral trade agreements. The first is the South Asian Association for Regional Cooperation (SAARC) Preferential Trading Arrangement (SAPTA) that was signed in April 1993 and operationalized in December 1995, which gives limited preferential market access to exports of member countries. The second is the South Asian Free Trade Area (SAFTA) agreement that was signed in January 2004 in Islamabad and entered into force from January 2006. Tariff reduction under SAFTA started from July 2006. Since November 2011, under SAFTA Bangladesh can export goods duty-free to India, with the exception of alcohol and tobacco. India also provides duty-free and preferential tariff treatment to Bangladesh under the Duty Free Tariff Preference (DFTP) Scheme for Least Developed Countries (LDCs) effective from August 13, 2008. As a founding member of the World Trade Organization (WTO) and as a Less Developed Country (LDC), Bangladesh has been an active advocate for LDC interests in WTO negotiations.

3. Legal Regime

Transparency of the Regulatory System

Since 1989, the government has gradually moved to decrease regulatory obstruction of private business. The chambers of commerce have called for a greater voice for the private sector in government decisions and for privatization, but at the same time many support protectionism and subsidies for their own industries. The result is that policy and regulations in Bangladesh are often not clear, consistent, or publicized. Registration and regulatory processes are alleged to be frequently used as rent-seeking opportunities. The major rule-making and regulatory authority exist in the national level – under each Ministry with many final decisions being made at the top-most levels, including the Prime Minister’s office (PMO). The PMO is actively engaged in policies, as well as foreign investment in government-controlled projects.

The Bangladesh Investment Development Authority (BIDA) – a merger of the Board of Investment (BOI) and the Privatization Commission (PC) – was formed in accordance with the Bangladesh Investment Development Authority Bill 2016 passed by parliament on July 25, 2016. The bill established BIDA as the apex private investment promotion and facilitation agency in Bangladesh. The move came amid complaints about redundancies in the BOI’s and the PC’s overlapping mandates and concerns that the PC had not made sufficient progress. BIDA hopes to become a “one-stop shop” for investors and a “true” investment promotion authority rather than simply follow the referral service-orientation of BOI. Currently, BIDA is not yet a one-stop shop and companies must still seek approvals from relevant line ministries

Bangladesh has achieved incremental progress in using information technology to improve the transparency and efficiency of some government services and to develop independent agencies to regulate the energy and telecommunication sectors. Some investors cited government laws, regulations, and implementation as impediments to investment. The government has historically limited opportunities for the private sector to comment on proposed regulations. In 2009, Bangladesh adopted the Right to Information Act that provides for multilevel stakeholders consultation through workshops or media outreach. Although the consultation process exists, it is still weak and subject to further improvement.

Ministries do not generally publish and release draft proposals to the public. However, several agencies, including the Bangladesh Bank, BIDA, the Commerce of Ministry and the Bangladesh Telecommunications Regulatory Commission have occasionally posted draft legislation and regulations online and solicited feedback from the business community. In some instances, parliamentary committees have also reached out to relevant stakeholders for input on draft legislation. The media continues to be the main information source for the public on many draft proposals. There is also no legal obligation to publish proposed regulations, consider alternatives to proposed regulation, or solicit comments from the general public.

Regulatory agencies generally do not solicit comments on proposed regulations from the general public; however, when a consultation occurs, comments may be received through public media consultation, feedback on websites (e.g., in the past, the Bangladesh Bank received comments on monetary policy), Focused Group Discussions (FGDs), or workshops with relevant stakeholders. There is no government body tasked with soliciting and receiving comments, but the Bangladesh Government Press of the Ministry of Information is entrusted with the authority of disseminating government information to the public. The law does not require regulatory agencies to report on the results of consultations, and in practice, regulators do not generally report the results. Widespread use of social media in Bangladesh has created an additional platform for public input into developing regulations, and government officials appear to be sensitive to this form of messaging.

The Bangladesh Government Press, , the government printing office, publishes the weekly “Bangladesh Gazette” every Thursday. The gazette provides official notice of government actions, including the issuance of government rules and regulations and the transfer and promotion of government employees. Laws can also be accessed at 

Bangladesh passed the Financial Reporting Act of 2015 that created the Financial Reporting Council (FRC) and aims to establish transparency and accountability in the accounting and auditing of financial institutions. However, the FRC is not fully operational and accounting practices and quality varies widely in Bangladesh. Internationally known and recognized firms have begun establishing local offices in Bangladesh and the presence of these firms is positively influencing the accounting norms in the country. Some firms are capable of providing financial reports audited to international standards while others maintain unreliable (or multiple) sets of accounting reports. Regulatory agencies also do not conduct impact assessment of proposed regulations; hence, regulations are often not reviewed on the basis of data-driven assessments. National budget documents are not prepared according to internationally accepted standards.

International Regulatory Considerations

Bangladesh has successfully negotiated several regional trade and economic agreements, including the South Asian Free Trade Area (SAFTA), the South Asia Association for Regional Cooperation, the Asia-Pacific Trade Agreement (APTA), and the Bay of Bengal Initiative for Multi-Sectoral, Technical and Economic Cooperation (BIMSTEC). BIMSTEC in particular aims to integrate regional regulatory systems between Bangladesh, India, Myanmar, Sri Lanka, Thailand, Nepal and Bhutan. However, efforts to advance regional cooperation measures have stalled in recent years and regulatory systems remain uncoordinated.

Local law is based on English Common Law system, but most fall short of international standards. The country’s regulatory system remains weak, where many of the laws and regulations are not enforced and standards are not maintained.

Bangladesh has been a member of the World Trade Organization (WTO) since January, 1995. WTO requires all signatories to the Agreement on Technical Barriers to Trade (TBT) to establish a National Inquiry Point and Notification Authority to gather and efficiently distribute trade-related regulatory, standards and conformity assessment information to the WTO Member community. Bangladesh Standards and Testing Institute (BSTI) is the National Enquiry Point. There is an internal committee on WTO affairs in BSTI and it participates in the notification activities to WTO through the Ministry of Commerce and the Ministry of Industries.

The contact address of the Bangladesh WTO-TBT National Enquiry Point is:

Maan Bhaban
116/A, Tejgaon Industrial Area, Dhaka-1208
Tel: +88-02 8870278 ( off) , Fax : +88-02-9131581
Mob: +8801552402985, +8801915479519
E-mail ;
Link to BSTI: 

Legal System and Judicial Independence

Bangladesh is a common law based jurisdiction. Many of the basic laws of Bangladesh such as penal code, civil and criminal procedural codes, contract law and company law are influenced by English common laws. However family laws such as laws relating to marriage, dissolution of marriage and inheritance are based on religious scripts, and therefore differ between religious communities. The Bangladeshi legal system is based on a written constitution and the laws often take statutory forms that are enacted by the legislature and interpreted by the higher courts. Ordinarily, executive authorities and statutory corporations cannot make any law, but can make by-laws to the extent authorized by the legislature. Such subordinate legislation is known as rules or regulations and is also enforceable by the court. Yet, being a common law system, the statutes are short, and set out basic rights and responsibilities, but are elaborated by the courts in their application and interpretation of those. The Judiciary of Bangladesh acts through the (1) The Superior Judiciary having Appellate, Revision & Original Jurisdiction, and (2) Sub-Ordinate Judiciary having Original Jurisdiction.

Since 1971, Bangladesh’s legal system has been updated in areas of company, banking, bankruptcy and money loan court laws, and other commercial laws. An important impediment to investment in Bangladesh is a weak and slow legal system in which the enforceability of contracts is uncertain. The judicial system does not provide for interest to be charged in tort judgments, which means delays in proceedings carry no penalties. Bangladesh does not have a separate court or division of a court dedicated solely to hearing commercial cases. The Joint District Judge court (a civil court) is responsible for enforcing contracts. Bangladesh scored 7.5 in the World Bank’s 2016 Quality of Judicial Processes Index out of an 18 score.

Some notable commercial laws include:

  • The Contract Act, 1872 (Act No. IX of 1930)
  • The Sale of Goods Act, 1930 (Act No. III of 1930)
  • The Partnership Act, 1932 (Act No. IX of 1932)
  • The Negotiable Instruments Act, 1881 (Act No. XXVI of 1881)
  • The Bankruptcy Act, 1997 (Act No. X of 1997)
  • The Arbitration Act, 2001 (Act No. I of 2001)

The judicial system of Bangladesh has never been completely independent from the interference of the executive branch of the government. In a significant milestone, the government in 2007 separated the country’s judiciary from the executive, but the executive retains strong influence over the judiciary through control of judicial appointments. Other pillars of the justice system, including the police, courts, and legal profession are also closely aligned with the executive branch. In lower courts, corruption is widely perceived as a serious problem. Regulations or enforcement actions are appealable under the Appellate Division of the Supreme Court.

Laws and Regulations on Foreign Direct Investment

Major laws affecting foreign investment include: the Foreign Private Investment (Promotion and Protection) Act of 1980, the Bangladesh Export Processing Zones Authority Act of 1980, the Companies Act of 1994, the Telecommunications Act of 2001, the Industrial Policy Act of 2005, the Industrial Policy Act of 2010, and the Bangladesh Economic Zones Act 2010. The Industrial Policy Act of 2016 was approved by the Cabinet Committee on Industrial Purchase on February 24, 2016 and replaces the Industrial Policy of 2010.

The Industrial Policy Act of 2016, which replaced the 2010 Act, offers incentives for “green”, high-tech, or “transformative” industries. Foreign investors who invest $1 million or transfer $2 million to a recognized financial institution can apply for Bangladeshi citizenship. The Government of Bangladesh will provide financial and policy support for high-priority industries (those that create large-scale employment and earn substantial export revenue) and creative (architecture, arts and antiques, fashion design, film and video, interactive laser software, software, and computer and media programming) industries. Specific importance will be given to agriculture and food processing, ready-made garments (RMG), information and communication technology (ICT) and software, pharmaceuticals, leather and leather products, and jute and jute goods.

In the past year, BIDA has submitted proposed legislation for a One-Stop Service Act (OSS) to attract further foreign direct investment to Bangladesh. In addition, Petrobangla, the state-owned oil and gas company, has modified its production sharing agreement contract for offshore gas exploration to include an option to export gas.

BIDA has a “one-stop” website that provides relevant laws, rules, procedure, and reporting requirements for investors at: . Aside from information on relevant business laws and licenses, the website includes information on Bangladesh’s investment climate, opportunities for business, potential sectors, and how to do business in Bangladesh. The website also has an eService Portal for Investors, which provides services like visa recommendations for foreign investors, approval/ extension of work permit for expatriates, approval of foreign borrowing, and approval/ renewal of branch/ liaison and representative office. However, the effectiveness of these online services is questionable.

Competition and Anti-Trust Laws

The Government of Bangladesh formed an independent agency in 2011 called the “Bangladesh Competition Commission (BCC)” under the Ministry of Commerce. The Parliament of Bangladesh then passed the Competition Act in June 2012, and in September 2013, Joint Additional Secretary Md. Sujayet Ullah was appointed to operationalize the BCC. However, the BCC has experienced operational delays. Currently, the WTO Cell of the Ministry of Commerce, which has stated the BCC will start functioning soon, handles all competition-related issues but the exact date has not been confirmed.

In January 2016, the two parent companies of Malaysia-based Robi and India-based Airtel signed a formal deal to merge their operations in Bangladesh, completing the country’s first telecommunications merger. The deal, valued at $12.5 million, is to date, Bangladesh’s largest corporate merger. The merger raised anti-competition concerns but it was completed in November 2016 after the Bangladesh Telecommunication Regulatory Commission (BTRC) and Prime Minister Sheikh Hasina gave final approvals.

Expropriation and Compensation

Since the Foreign Investment Act of 1980 banned nationalization or expropriation without adequate compensation, the Government of Bangladesh has not nationalized or expropriated property from foreign investors. In the years immediately following independence in 1971, widespread nationalization resulted in government ownership of more than 90 percent of fixed assets in the modern manufacturing sector, including the textile, jute and sugar industries and all banking and insurance interests, except those in foreign (but non-Pakistani) hands. The government has since taken steps to privatize many of these industries during the last 20 years and the private sector has developed into a main driver of the country’s sustained economic growth of approximately six percent per year during the past two decades.

Dispute Settlement

ICSID Convention and New York Convention

Bangladesh is a signatory to the International Convention for the Settlement of Disputes (ICSID) and it acceded in May 1992 to the United Nations Convention for the Recognition and Enforcement of Foreign Arbitral Awards. Alternative dispute resolutions are possible under the Bangladesh Arbitration Act of 2001. The current legislation allows for enforcement of arbitral awards.

Investor-State Dispute Settlement

Bangladeshi law allows contracts to refer dispute settlement to third country forums for resolution. Bangladesh is also a party to the South Asia Association for Regional Cooperation (SAARC) Agreement for the Establishment of an Arbitration Council, signed November 2005, which aims to establish a permanent center for alternative dispute resolution in one of the SAARC member countries.

In practice, enforcement of arbitration results is applied unevenly and the government has challenged ICSID rulings, especially those that involve rulings against the government. The timeframe for dispute resolution is unpredictable and has no set limit. It can be done as quickly as a few months, but often takes years depending on the type of dispute. Anecdotal information indicates average resolution times can be as high as 16 years. Local courts may be biased against foreign investors in resolving disputes.

Bangladesh is a signatory of the New York Convention and recognizes the enforcement of international arbitration awards. Domestic arbitration is under the authority of the district judge court bench and foreign arbitration is under the authority of the relevant high court bench.

The ability of the Bangladeshi judicial system to enforce its own awards is weak. Senior members of the government have been effective in using their offices to resolve investment disputes on several occasions, but the government’s ability to resolve investment disputes at a lower level is mixed. The government does not publish the numbers of investment disputes involving U.S. or foreign investors. Anecdotal evidence indicates investment disputes occur with limited frequency and the involved parties often resolve the disputes privately rather than seek government intervention.

The greatest number of complaints arising from U.S. investors in recent years involves disputes with the National Board of Revenue (NBR) over prior year tax returns. The investors have alleged that NBR is disproportionately targeting them to meet tax collection targets and not due to legitimate problems with previously filed tax returns.

International Commercial Arbitration and Foreign Courts

Bangladeshi law allows contracts to refer dispute settlement to third country forums for resolution. The Bangladesh Arbitration Act of 2001 and amendments in 2004 reformed alternative dispute resolution in Bangladesh. The Act consolidated the law relating to both domestic and international commercial arbitration. It thus creates a single and unified legal regime for arbitration in Bangladesh. Although the new Act is principally based on the UNCITRAL Model Law, it is a patchwork quilt as some unique provisions are derived from the Indian Arbitration and Conciliation Act 1996 and some from the English Arbitration Act 1996.

The practice of alternative dispute resolution (ADR) in Bangladesh has many challenges, including lack of funds, lack of lawyer cooperation, and lack of good faith. Slow adoption of ADR mechanisms and sluggish judicial processes impede the enforcement of contracts and the resolution of business disputes in Bangladesh.

As in many countries, Bangladesh has adopted a “conflicts of law” approach to determining whether a judgment from a foreign legal jurisdiction is enforceable in Bangladesh. This single criterion allows the courts of Bangladesh broad discretion in choosing whether to enforce foreign judgments with significant effects on matrimonial, adoption, corporate, and property disputes. Most enterprises in Bangladesh, and especially state-owned enterprises (SOEs) because the ruling government party nominates the company leaders, maintain strong ties with the government. Thus, domestic courts strongly tend to favor SOEs and thereafter, local companies, in investment disputes.

Investors are also increasingly turning to the Bangladesh International Arbitration Center (BIAC) for dispute resolution. BIAC is an independent arbitration center established by prominent local business leaders in April 2011 to improve commercial dispute resolution in Bangladesh to stimulate economic growth. The council committee is headed by the President of International Chamber of Commerce – Bangladesh (ICC,B) and includes the presidents of other prominent chambers such as like Dhaka Chamber of Commerce and Industry (DCCI) and Metropolitan Chamber of Commerce and Industry (MCCI). The center operates under the Bangladesh Arbitration Act of 2001. According to BIAC, fast track cases are resolved in approximately six months while typical cases are resolved in one year. Major Bangladeshi trade and business associations such as the American Chamber of Commerce in Bangladesh (AmCham) can sometimes help to resolve transaction disputes.

Bankruptcy Regulations

Many laws affecting investment in Bangladesh are old and outdated. Bankruptcy laws, which apply mainly to individual insolvency, are sometimes not used in business cases because of webs of falsified assets and uncollectible cross-indebtedness supporting insolvent banks and companies. A Bankruptcy Act was enacted in 1997, but has been ineffective in addressing these issues. An amendment to the Bank Companies Act of 1991 was enacted in 2013. Some bankruptcy cases fall under the Money Loan Court Act, which has more stringent and timely procedures.

4. Industrial Policies

Investment Incentives

In certain areas, current regulations permit a tax holiday for designated “thrust” (strategic) sectors and infrastructure projects established between July 01, 2011 and June 30, 2019. Industries set up in Export Processing Zones (EPZs) are also eligible for tax holidays.

Thrust sectors subject to exemption include: certain pharmaceuticals, automobile manufacturing, contraceptives, rubber latex, chemicals or dyes, certain electronics, bicycles, fertilizer, biotechnology, commercial boilers, certain brickmaking technologies, compressors, computer hardware, energy efficient appliances, insecticides, pesticides, petro-chemicals, fruit and vegetable processing textile machinery, tissue grafting and tire manufacturing industries.

Physical infrastructures eligible for exemptions include: deep sea ports, elevated expressways, road overpasses, toll road and bridges, EPZs, gas pipelines, information technology parks, industrial waste and water treatment facilities, liquefied natural gas (LNG) terminals, electricity transmission, rapid transit projects, renewable energy projects, and ports.

Tax Holidays

Year Thrust Industries (Urban Areas) Thrust Industries (Rural Areas) Physical Infra



(Dhaka and Chittagong Urban)

EPZs (Other areas) BEZA and High-Tech Parks Infra


BEZA and High-Tech Park
First 100% 100% 100% 100% 100% 100% 100%
Second 100% 100% 100% 100% 100% 100% 100%
Third 60% 70% 80% 50% 100% 100% 100%
Fourth 40% 55% 70% 50% 50% 100% 80%
Fifth 20% 40% 60% 25% 50% 100% 70%
Sixth 25% 50% 50% 100% 60%
Seventh 10% 40% 25% 100% 50%
Eighth 30% 100% 40%
Ninth 20% 100% 30%
Tenth 10% 100% 30%
Eleventh 70%
Twelfth 30%

In addition to the above tax rebate, manufacturers located in rural areas and commencing commercial operations between July 1, 2014 and June 30, 2019 are eligible for tax exemptions of up to 20 percent for the first 10 years of production.

Independent non-coal fired power plants (IPPs) commencing production (COD) after January 1, 2015 are granted a 100 percent tax exemption for 5 years, a 50 percent exemption for years 6-8, and a 25 percent exemption for years 9-10. For Coal-fired IPPs contracting with Government before June 30, 2020 and COD before June 30, 2023, the tax exemption rate is 100 percent for the first 15 years of operations. For power projects, import duties are waived for imports of capital machinery and spare parts.

The valued-added tax rate on exports is zero. For companies that only export, import duties are waived for imports of capital machinery and spare parts. For companies that primarily export (80 percent and above) an import duty rate of 1 percent is charged for imports of capital machinery and spare parts identified and listed in notifications to relevant regulators. Import duties are also waived for EPZ industries and other export oriented industries for imports of raw materials consumed in production.

Special incentives are provided to encourage non-resident Bangladeshis to investment in the country. Non-resident Bangladeshi investors enjoy benefits similar to those of foreign investors. Moreover, unlike non-Bangladeshi foreign investors, they can buy newly issued shares and debentures in Bangladeshi companies. A quota of 10 percent of primary shares has been fixed for non-resident Bangladeshis. Furthermore, non-resident Bangladeshi’s can maintain foreign currency deposits in Non-resident Foreign Currency Deposit (NFCD) accounts. Additional incentives include:

  • Tax exemptions on: royalties, technical know-how fees paid to any foreign collaborator, firm, company or expert;
  • Under certain conditions, tax exemption for the interest on foreign loans;
  • On the basis of bilateral tax agreements, avoidance of double taxation;
  • For foreign technicians employed in specified industries, an income tax exemption for up to three years;
  • Repatriation of invested capital, profits and dividends;
  • Six month multiple entry investor visas;
  • Consideration for Bangladeshi citizenship for investing a minimum of US$ 500,000 or by transferring US$ 1,000,000 (non-repatriable) to any recognized domestic financial institution;
  • Consideration for permanent residency by investing a minimum of $75,000 (non-repatriable);
  • Capital gains tax exemptions on transfers of shares of publicly listed companies.

Foreign Trade Zones/Free Ports/Trade Facilitation

Under the Bangladesh Export Processing Zones Authority Act of 1980, the government established an EPZ in Chittagong in 1983. Additional EPZs now operate in Dhaka (Savar), Mongla, Ishwardi, Comilla, Uttara, Karnaphuli (Chittagong) and Adamjee (Dhaka). Korean investors are also operating a separate and private EPZ in Chittagong.

Investments that are wholly foreign-owned, joint ventures and wholly Bangladeshi-owned companies are all permitted to operate and enjoy equal treatment in the EPZs. Approximately a dozen U.S. firms — mostly textile producers — are currently operating in Bangladesh EPZs. Investors have begun to view intermittent services and increasing costs as making the EPZs less attractive.

In 2010, Bangladesh enacted the Special Economic Zone Act that allows the creation of privately owned economic zones (EZs) that can produce for export and domestic markets and is still current. The IFC assisted the government to establish an EZ authority, Bangladesh Economic Zones Authority (BEZA), modeled after BEPZA, to implement the new law and oversee the establishment of EZs. BEZA has already started the process to establish the first EZ at Mongla (Khulna).

The government recently announced plans to create up to 100 new EZs and invited private companies to develop the zones. Several EZs are moving forward under this initiative: 

However, assurances regarding access to necessary infrastructure and other resources, including gas and power, have not been made.

Performance and Data Localization Requirements

Performance Requirements

The Bangladesh Investment Development Authority (BIDA) has set restrictions for the employment of foreign nationals and the issuance of work permits as follows:

  • Nationals of countries recognized by Bangladesh are eligible for employment consideration;
  • Expatriate personnel will only be considered for employment in enterprises duly registered with the appropriate regulatory authority;
  • Employment of foreign nationals is generally limited to positions for which qualified local workers are unavailable;
  • Persons below 18 years of age are not eligible for employment;
  • The board of directors of the employing company must issue a resolution for each offers or extension of employment;
  • The percentage of foreign employees should not exceed 5 percent in industrial sectors and 20 percent in commercial sectors, including among senior management positions;
  • Initial employment of any foreign national is for a term of two years, which may be extended based on merit;
  • The Ministry of Home Affairs will issue necessary security clearance certificates.

In response to the high number of expatriate workers in the ready-made garment industry, BIDA has issued informal guidance encouraging industrial units to refrain from hiring additional semi-skilled foreign experts and workers. Overall, the government looks favorably on investments that employ significant numbers of local workers and/or provide training and transfers of technical skills.

The government does not formally mandate that investors use domestic content in goods or technology. However, companies bidding on government procurement tenders are often informally encouraged to have a local partner and to produce or assemble a percentage of their products in country.

Data Storage Requirements

According to a legal overview by the Telenor Group, for reasons of national security or in times of emergency, several regulations and amendments, including the Bangladesh Telecommunication Regulatory Act, 2001 (the “BTRA”), Information and Communication Technology Act 2006 (the “ICT Act”), and the Telegraph Act 1885 (the “1885 Act”), grant law enforcement and intelligence agencies legal authority to lawfully seek disclosure of communications data, and request censorship of communications. A draft Digital Security Act of 2016 (the Digital Security Act” has been approved by the cabinet and is pending review and adoption by parliament.

On the grounds of national security and maintaining public order, the government can authorize relevant government authorities (intelligence agencies, national security agencies, investigation agencies, or any officer of any law enforcement agency) to suspend or prohibit the transmission of any data or any voice call, and record or collect user information relating to any subscriber to a telecommunications service.

Under section 30 of the ICT Act, the government, through the ICT Controller, may access any computer system, any apparatus, data or any other material connected with a computer system, for the purpose of searching for and obtaining any such information or data. The ICT Controller may, by order, direct any person in charge of, or otherwise concerned with the operation of a computer system, data apparatus or material, to provide reasonable technical and other assistance as may be considered necessary. Under section 46 of the ICT Act, the ICT Controller can also direct any government agency to intercept any information transmitted through any computer resource, and may order any subscriber or any person in charge of computer resources to provide all necessary assistance to decrypt relevant information.

There is no direct reference in the BTRA to the storage of metadata. Under the broad powers granted to the BTRA, however, the government, on the grounds of national security and public order, may require telecommunications operators to keep records relating to the communications of a specific user. Telecommunications operators are also required to provide any metadata as evidence if ordered to do so by any civil court.

The ICT Controller enforces the ICT Act and the Bangladesh Telecommunication Regulatory Commission (BTRC) enforces the BTRA. The Ministry of Home Affairs grants approval for use of powers given under the BTRA. The ICT Act also established a Cyber Tribunal to adjudicate cases. If approved, the Digital Act would create a Digital Security Agency (DSA) empowered to monitor and supervise digital content. Also under the Digital Act, for reasons of national security or maintenance of public order, the Director General (DG) of the DSA would be authorized to block communications and to require that service providers facilitate the interception, monitoring and decryption of a computer or other data source.

5. Protection of Property Rights

Real Property

Although land, whether for purchase or lease, is often critical for investment and as security against loans, antiquated real property laws and poor record-keeping systems can complicate land and property transactions. Instruments take effect from the date of execution, not the date of registration, so a bona fide purchaser can never be certain of title. Land registration records have been historically prone to competing claims. Land disputes are common, and both U.S. companies and citizens have filed complaints about fraudulent land sales. For example, sellers fraudulently claiming ownership have transferred land to good faith purchasers while the actual owners were living outside of Bangladesh. In other instances, U.S.-Bangladeshi dual citizens have purchased land from legitimate owners only to have third parties make fraudulent claims of title to extort settlement compensation.

Property owners can obtain mortgages, but parties generally avoid registering mortgages, liens, and encumbrances due to the high cost of stamp duties (i.e., transaction taxes based on property value) and other charges.

Article 42 of the Bangladesh Constitution guarantees right to property for all citizens, but property rights are often not protected due to a weak judiciary system. The Transfer of Property Act of 1882  and the Registration Act of 1908  are the two main laws that regulate transfer of property in Bangladesh, but these laws do not have any specific provisions covering foreign and/or non-resident investors. Currently, foreigners and non-residents can incorporate a company with the Registrar of Joint Stock Companies and Firms. The company would be considered a local entity and would be able to buy land in its name.

Intellectual Property Rights

Counterfeit goods are readily available in Bangladesh. The government has limited resources for intellectual property rights (IPR) protection. Industry estimates that 90 percent of business software is pirated. A number of U.S. firms, including film studios, manufacturers of consumer goods, and software firms, have reported violations of their intellectual property rights. Investors note police are willing to investigate counterfeit goods producers when informed but are unlikely to initiate independent investigations.

BSA, the Software Alliance, established a Bangladesh office in early 2014 as a platform to improve IPR protection in Bangladesh. Public awareness of intellectual property rights is growing, thanks in part to the efforts of the Intellectual Property Rights Association of Bangladesh: . Bangladesh is not currently listed in the U.S. Trade Representative’s Special 301 or Notorious Markets reports. Bangladesh is a member of the World Intellectual Property Organization (WIPO) and acceded to the Paris Convention on Intellectual Property in 1991.

Bangladesh has slowly made progress toward bringing its legislative framework into compliance with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The government enacted a Copyright Law in July 2000 (amended in 2005), a Trademarks Act in 2009, and Geographical Indication of Goods (Registration and Protection) Act in 2013. The Department of Patent, Designs and Trademarks (DPDT) drafted a new Patent Act in 2014 prepared in compliance with the requirements of the TRIPS Agreement. The draft act remains under Ministry of Industries review, and this effort has not made measurable progress during the past year.

A number of government agencies are empowered to take action against counterfeiting, including the NBR/Customs, Mobile Courts, the Rapid Action Battalion (RAB) and local Police. The Department of National Consumer Rights Protection (DNCRP) is charged with tracking and reporting on counterfeit goods and the NBR/Customs tracks counterfeit goods seizures at ports of entry. Reports are not publicly available.

6. Financial Sector

Capital Markets and Portfolio Investment

Capital markets in Bangladesh are still developing and the financial sector remains highly dependent on bank lending. Current government policy inhibits the creation of reliable benchmarks for long-term bonds and prevents the development of a tradable bond market.

Bangladesh is home to the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE). The Bangladesh Securities and Exchange Commission (BSEC), a statutory body formed in 1993 and attached to the Ministry of Finance, regulate both. As of March 2016, the DSE market capitalization stood at $41 billion.

Although the Bangladesh government has a positive attitude towards foreign portfolio investors, participation remains low due to limited liquidity and the lack of publicly available and reliable company information. The DSE has attracted some foreign portfolio investors to the country’s capital market; however, the volume of foreign investment in Bangladesh has remained a small fraction of total market capitalization. As a result, foreign portfolio investment has had limited influence on market trends and Bangladesh’s capital markets have been largely insulated from the volatility of international financial markets. Bangladeshi markets continue to rely primarily on domestic investors, and Bangladeshi firms increasingly rely on capital markets to finance investment projects. In March 2017, the government relaxed investment rules making it possible for foreign investors to use local currency to invest in directly local companies through the purchase of corporate shares.

BSEC has formed separate committees to establish a central clearing and settlement company, allow venture capital and private equity firms, launch derivatives products, and activate the bond market. In December 2013, BSEC became a full signatory of International Organization of Securities Commissions (IOSCO) Memorandum of Understanding and was elevated to the ‘A’ category of regulators.

BSEC has taken steps to improve regulatory oversight including installing a modern surveillance system, the “Instant Market Watch”, that provides real time connectivity with exchanges and depository institutions. As a result, the market abuse detection capabilities of BSEC have increased significantly. A new mandatory Corporate Governance Code for listed companies was introduced in August 2012. Demutualization of both the DSE and CSE was completed in November 2013 to separate ownership of the exchanges from trading rights. A majority of the members of the Demutualization Board, including the Chairman, are independent directors. Apart from this, a separate tribunal has been established to resolve capital market-related criminal cases expeditiously. All these reforms target a disciplined market with better infrastructure so that entrepreneurs can raise capital and attract foreign investors.

According to the International Monetary Fund (IMF), Bangladesh is an Article VIII member and maintains restrictions on the unapproved exchange, conversion, and/or transfer of proceeds of international transactions into non-resident taka-denominated accounts. Since 2015, authorities have relaxed restrictions by allowing some debits of balances in such accounts for outward remittances, but there is currently no established timetable for the complete removal of the restrictions.

Money and Banking System
According to the Asian Development Bank Institute, four types of banks operate in formal financial markets — public sector commercial banks (PSCBs), development financial institutions (DFIs), private commercial banks (PCBs), and foreign commercial banks (FCBs). Some 56 banks including four PSCBs, four DFIs, 39 PCBs, and nine FCBs operate in Bangladesh within a network of 8,794 total branch offices as of the end June 2014. Microfinance institutions (MFIs) remain the dominant players in rural financial markets and, as of 2016, there were 692 licensed micro-finance institutions operating a network of 17,241 branches with 33.17 million members. A 2014 Institute of Microfinance survey study showed that around 40 percent of the adult population and 75 percent of households had access to financial services in Bangladesh.

The banking sector has had a mixed record of performance over the past several years, but the sector has maintained overall healthy growth. Total assets in the banking sector stood at 65.2 percent of gross domestic product through September 2016. The gross non-performing loan (NPL) ratio was 10.3 percent through September 2016, with NPLs concentrated in six banks, each holding double-digit NPL rates in 2016.

The Bangladesh Bank acts as the Central Bank of Bangladesh (BB), which was established on December 16, 1971 through the enactment of the Bangladesh Bank Order-1972. General supervision and strategic direction of BB has been entrusted to a 9-member Board of Directors, which is headed by the BB Governor. BB has 45 departments and 10 branch offices.

Foreign Exchange and Remittances

Foreign Exchange

Free repatriation of profits is legally allowed for registered companies and profits are generally fully convertible on the current account. However, companies report that the procedures for repatriation of foreign currency are lengthy and cumbersome. The Foreign Investment Act guarantees the right of repatriation of invested capital, profits, capital gains, post-tax dividends, and approved royalties and fees for businesses. The central bank’s exchange control regulations and the U.S.-Bangladesh Bilateral Investment Treaty (in force since 1989) provide similar investment transfer guarantees. The Bangladesh Investment Development Authority may need to approve repatriation of royalties and other fees.

According to the IMF, Bangladesh maintains a de jure floating exchange rate regime. Effective February 2013, the de facto regime was reclassified from “other managed” to a “stabilized arrangement”. The Bangladesh currency, the taka, is approaching full convertibility for current account transactions, such as imports and travel, but not for capital account transactions, such as investing, currency speculation, or e-commerce. The Bangladesh taka has been relatively stable vis-à-vis the U.S. dollar from 2013-2016, largely trading between 76 and 78.5 taka for each U.S. dollar.

Remittance Policies

There are no set time limitations or waiting periods for remitting all types of investment returns. Remitting dividends, returns on investments, interest, and payments on private foreign debts do not require approval from the central bank and transfers are done within one to two weeks. For repatriating lease payments, royalties and management fees, some central bank approval is required, and this process can take between two and three-weeks. If a company fails to submit all the proper documents for remitting, it may take up to 60 days. Foreign investors have reported difficulties in transferring funds to overseas affiliates and making payments for certain technical fees without the government’s prior approval to do so. Additionally, some regulatory agencies have reportedly blocked the repatriation of profits due to sector-specific regulations. The U.S. Embassy also received complaints of American citizens not being able to transfer the proceeds from the sale of their properties. There is no mechanism in place for foreign investors to repatriate through government bonds issued in lieu of foreign currency payments. Bangladesh is not involved in currency manipulation tactics.

The Financial Action Task Force (FATF) notes that Bangladesh has established the legal and regulatory framework to meet its Anti-Money Laundering/Counterterrorism Finance commitments. The Asia/Pacific Group on Money Laundering (APG), an independent and collaborative international organization based in Bangkok, conducted its Mutual Evaluation of Bangladesh’s AML/CTF regime in September 2016 and found that Bangladesh had made significant progress since the last Mutual Evaluation Report (MER) in 2009, but that Bangladesh still faces significant money laundering and terrorism financing risks. The APG report is available online: 

Sovereign Wealth Funds

The Bangladeshi Finance Ministry announced in 2015 that it is exploring the possibility of establishing a sovereign wealth fund for the purposes of investing a portion of Bangladesh’s foreign currency reserves. In February 2017, the Cabinet gave initial approval for the “Bangladesh Sovereign Wealth Fund,” (BSWF) which will be created with funds from the excess foreign exchange reserves. The government claims the BSWF will be used to invest in “public interest” projects. Bangladesh does not currently follow the Santiago Principles, a voluntary set of 24 principles and practices designed to maintain an open and stable investment climate.

7. State-Owned Enterprises

The government privatized 74 state-owned enterprises (SOEs) during the past 20 years, but many SOEs retain an important role in the economy, particularly in the financial and energy sectors. Out of the 75 SOEs, 54 were privatized through outright sale and 20 through offloading of shares. The Privatization Commission (PC) has slowed its rate of privatization activities and in 2016, the PC merged with the Board of Investment (BOI) to form a new Bangladesh Investment Development Authority (BIDA). The 54 non-financial public enterprises in the country have been categorized into 7 sectors following the Bangladesh Standard Industrial Classification (BSIC) and their economic and financial performances are analyzed in the government budget.

Bangladesh’s 45 non-financial SOEs are spread among seven sectors – industrial; power, gas and water; transport and communication; trade; agriculture; construction; and services. The list of non-financial SOEs is published in Bangla in the Ministry of Finance’s SOE Budget Summary 2016-17.

List of Non-Financial State Owned Enterprises

Sector No. of Enterprises Title of Enterprises (Non-financial)
Industrial 6 Bangladesh Textile Mills Corporation (BTMC), Bangladesh Steel & Engineering Corporation (BSEC), Bangladesh Sugar & Food Industries Corporation (BSFIC), Bangladesh Chemical Industries Corporation (BCIC), Bangladesh Forest Industries Development Corporation (BFIDC), and Bangladesh Jute Mills Corporation (BJMC).
Power, Gas and Water 5 Bangladesh Oil, Gas & Mineral Resources Corporation, Bangladesh Power Development Board (BPDB), Dhaka Water and Sewerage Authority (WASA), Chittagong Water and Sewerage Authority, and Khulna Water and Sewerage Authority.
Transport and Communication 7 Bangladesh Shipping Corporation (BSC), Bangladesh Inland Water Transport Corporation (BIWTC), Bangladesh Road Transport Corporation (BRTC), Chittagong Port Authority, Mongla Port Authority, Mongla Dock Worker’s Management Board, and Bangladesh Land Port Authority.
Trade 3 Bangladesh Petroleum Corporation (BPC), Bangladesh Jute Corporation (BJC), and Trading Corporation of Bangladesh (TCB).
Agriculture 2 Bangladesh Fisheries Development Corporation (BFDC), and Bangladesh Agriculture Development Corporation (BADC).
Construction 5 Rajdhani Unnayan Kartipaksha (RAJUK), Chittagong Development Authority (CDA), Rajshahi Development Authority (RDA), Khulna Development Authority (KDA), and the National Housing Authority.
Services 17 Bangladesh Muktijoddha Kalyan Trust, Bangladesh Film Development Corporation (BFDC), Bangladesh Parjatan Corporation (BPC), Bangladesh Small and Cottage Industries Corporation (BSCIC), Bangladesh Civil Aviation Authority, Bangladesh Inland Water Transport Authority (BIWTA), Rural Electrification Board (REB), Bangladesh Export Processing Zone Authority (BEPZA), Bangladesh Handloom Board, Bangladesh Sericulture Board, Bangladesh Water Development Board (BWDB), Bangladesh Tea Board, Bangladesh Telecommunication Regulatory Commission (BTRC), Export Promotion Bureau (EPB), Bangladesh Sericulture Research Institute, Bangladesh Bridge Authority, and Bangladesh Energy Regulatory Commission.

* Source: Ministry of Finance, SOE Annual Budget
Assets and Revenue of Non-financial State Owned Enterprises (millions of taka)

2016-17 Estimated Budget 2015-16 Revised Budget
Operating revenue 1,527,962 1,422,988
Operating surplus 140,352 130,549
Non-operating Revenue 24,882 23,711
Employee participation fund 782 637
Subsidy (direct) 5 5
Interest 26,852 25,072
Net profit/loss (after taxes) 137,553 128,505
Taxes 11,728 11,340
Net profit after taxes 125,825 117,165
Dividend 40,479 63,062
Retained earning 81,869 50,566
Total investment/fund 3,637,727 3,206,634
Equity 860,171 656,438
% of operating profit to total assets 3.86 4.07
% of net profit to operating revenue 8.23 8.23
% of dividends to equity 4.71 9.61
Turnover on total assets 0.42 0.44

* Source: Ministry of Finance, SOE Annual Budget

The current government has taken steps to restructure several SOEs to improve their competitiveness. The government converted Biman Bangladesh Airline, the national airline, into a public limited company that initiated a rebranding and fleet renewal program, including the purchase of ten aircraft from Boeing, six of which were delivered by March 2016. Three nationalized commercial banks (NCBs) — Sonali, Janata and Agrani — have been converted to public limited companies. The government also liberalized the telecommunications sector during the last decade, which led to the development of a competitive cellular phone market.

The contribution of SOEs to gross domestic product (GDP), value addition, employment generation and revenue earning is substantial. SOEs usually report to the ministries, though the government has allowed some enhanced autonomy for certain SOEs, such as Biman Bangladesh Airline. SOEs maintain control of rail transportation whereas private companies compete freely in air and road transportation. The corporate governance structure of SOEs in Bangladesh has been restructured as per the guidelines published by the Organization for Economic Cooperation and Development (OECD), but the country’s practices are still not quite up to OECD standards. There are no guidelines regarding ownership of SOEs, and while SOEs are required to prepare annual reports and make financial disclosures, disclosure documents are often unavailable to the public. Each SOE has an independent board of directors composed of both government and private sector nominees. The boards report to the relevant regulatory ministry. Most SOEs have strong ties with the government, and the ruling government party nominates most SOE leaders. As the government controls most of the SOEs, domestic courts tend to favor the SOEs in investment disputes.

The Bangladesh Petroleum Act of 1974 grants authority for the government to award natural resources contracts and the Bangladesh Oil, Gas and Mineral Corporation Ordinance of 1984 gives Petrobangla, the state-owned oil and gas company, authority to assess and award natural resource contracts and licenses, to both SOEs and private companies. Currently, oil and gas firms can pursue exploration and production ventures only through production sharing agreements with Petrobangla.

Privatization Program

Since 2010, the government’s privatization drive has slowed. Previous privatization drives were plagued with allegations of corruption, undervaluation, political favoritism, and unfair competition. Nonetheless, the government has publicly stated its goal of continuing the privatization drive. As of January 2010, 22 SOEs were included in the Privatization Commission’s (now the Bangladesh Investment Development Authority’s) program for privatization. These are:

  • Procurement & Sales Organization, Kaptai, Rangamati;
  • Lumber Processing Complex, Kaptai, Rangamati;
  • Karnafuli Timber Extraction Unit, Kaptai, Rangamati;
  • Arco Industries Ltd., Chittagong;
  • SAF Industries Ltd., Noapara, Jessore;
  • Rangamati Textiles Mills Ltd., Ghagra, Rangamati;
  • Tangail Cotton Mills Ltd., Gorai, Tangail;
  • Magura Textile Mills Ltd., Magura;
  • Rajshahi Silk Factory, Rajshahi;
  • Thakurgaon Silk Factory, Thakurgaon;
  • Dhaka Leather Company Ltd., Nayarhat, Savar, Dhaka;
  • North Bengal Paper Mills Ltd., Pakshi, Pabna;
  • Chittagong Chemical Complex, Chittagong;
  • Karnafuli Rayon & Chemical Ltd., Kaptai, Rangamati;
  • Bangladesh Can Company Ltd., Chittagong;
  • Monowar Jute Mills Ltd., Siddirganj, Narayanganj;
  • Aroma Tea Ltd., Fauzdarhat, Chittagong;
  • Handloom Facilities Center (HFC), Raypura, Narsingdi;
  • Fish Landing Center & Wholesale Fish Market, Daburghat, Sunamganj;
  • Dhaka Match Factory;
  • Salatin Syndicate, Dhaka;
  • Tiger Wire Products.

SOEs can be privatized through a variety of methods including: sales through international tender; sales of government shares in the capital market; transfers of some portion of the shares to the employees of the enterprises when shares are sold through the stock exchange; sale of government shares to a private equity company (restructuring); mixed sales methods; management contracts; leasing; and direct asset sales (liquidation).

8. Responsible Business Conduct

The business community is increasingly aware and engaged in responsible business conduct (RBC) activities with multinational firms leading the way. While many firms in Bangladesh fall short on RBC activities and instead often focus on philanthropic giving, some of the leading local conglomerates have begun to incorporate increasingly rigorous environmental and safety standards in their workplaces. U.S. companies present in Bangladesh maintain diverse RBC activities. Consumers in Bangladesh are generally less aware of RBC, and consumers and shareholders exert little pressure on companies to engage in RBC activities.

While many international firms are aware of OECD guidelines and international best practices in RBC, many local firms have limited familiarity with international standards. Two RBC NGOs are currently active that work with the private sector, Bangladesh Bank and the United Nations: 1) CSR Bangladesh, ; and 2) CSR Centre Bangladesh, . Along with the Bangladesh Enterprise Institute (BEI), the CSR Centre is the joint focal point for United Nations Global Compact (UNGC) and its principles in Bangladesh. The UN Global Compact is the world’s largest corporate citizenship and sustainability initiative. The Centre is a member of a regional RBC platform called the South Asian Network on Sustainability and Responsibility (SANSAR). Currently, SANSAR has five member countries including Afghanistan, Bangladesh, India, Nepal, and Pakistan.

While several NGOs have proposed National Corporate Social Responsibility Guidelines, the Government of Bangladesh has yet to adopt any national standards for RBC. As a result, the government encourages enterprises to follow generally accepted RBC principles and does not mandate any specific guidelines.

Bangladesh has natural resources, but it has not joined the Extractive Industries Transparency Initiative (EITI). The country does not adhere to the Voluntary Principles on Security and Human Rights.

9. Corruption

Corruption remains a serious impediment to investment and economic growth in Bangladesh. While the government has established legislation to combat bribery, embezzlement and other forms of corruption, enforcement is inconsistent. The Anti-Corruption Commission (ACC) is the main institutional anti-corruption watchdog. With recent amendments to the Money Prevention Act, the ACC is no longer the sole authority to probe money-laundering offenses. Although it still has primary authority for bribery and corruption, other agencies will now investigate related offenses.

  • Bangladesh Police (Criminal Investigation Department) – Most predicate offenses.
  • NBR – VAT, taxation, and customs offenses.
  • Department of Narcotics Control – Drug related offenses.

The current Awami League-led government has publicly underscored its commitment to anticorruption efforts and reaffirmed the need for a strong ACC. Efforts to ease public procurement rules and a recent constitutional amendment that reduced the independence of the ACC, however, may undermine institutional safeguards against corruption. Bangladesh is a party to the UN Anticorruption Convention, but it has still not joined the OECD Convention on Combating Bribery of Public Officials.

Corruption is common in public procurement, tax and customs collection, and regulatory authorities. Corruption, including bribery, raises the costs and risks of doing business. By some estimates, off-the-record payments by firms may result in an annual reduction of two to three percent of GDP. Corruption has a corrosive impact on the broader business climate market and opportunities for U.S. companies in Bangladesh. It also deters investment, stifles economic growth and development, distorts prices, and undermines the rule of law.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Bangladesh has signed and ratified the UN Anticorruption Convention. Bangladesh is currently not a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

Resources to Report Corruption

Contact at government agency responsible for combating corruption:

Md. Badiuzzaman
Chairman, Anti-Corruption Commission, Bangladesh
1, Segun Bagicha, Dhaka 1000

Contact at “watchdog” organization:
M. Hafizuddin Khan
Chairman, Transparency International Bangladesh (TIB)
House #141, Block-E, Road # 12 Banani, Dhaka -1213
+880 2 988 7884, 882 6036

10. Political and Security Environment

Clashes between supporters of rival political parties and their student and youth wings and even factions within the same party are frequent occurrences, particularly in the run-up to elections. General strikes and blockades called by political parties affect businesses by keeping workers away with threats of violence and by blocking transport, resulting in increased costs and productivity losses. Vehicles and other property are at risk from vandalism or arson during such events, and looting of shops has occurred. There were significant periods of political violence and unrest for the first few months in both 2014 and 2015, but this type of violence has diminished significantly in 2016.

Starting in September and October 2015, a new threat stream emerged, culminating in attacks against foreigners, religious minorities and law enforcement personnel. Militants claiming to be affiliated with the Islamic State of Iraq and ash Sham / Islamic State of Iraq and the Levant (ISIS) and Al Qaeda in the Indian Subcontinent (AQIS) claimed responsibility for these attacks, including the murders of two foreign nationals, an Italian and a Japanese, and several attacks on religious minorities and government military installations.

On July 1, 2016, terrorists killed more than 20 people, including one U.S. citizen, in a restaurant frequented by foreigners in Dhaka’s diplomatic enclave. In October 2016, ISIS threatened to target “expats, tourists, diplomats, garment buyers, missionaries, and sports teams” in the most “secured zones” in Bangladesh.

The U.S. government considers the potential threat to U.S. government personnel in Bangladesh to be serious enough to require them to live, work, and travel under strict security guidelines. The internal security policies of the U.S. Mission in Bangladesh may be changed or adjusted at any time and without advance notice.

New security guidelines encourage U.S. citizens to take stringent security measures, remain vigilant, and to be alert to local security developments. U.S. government officials currently are not permitted to:

  • Visit public establishments or places in Bangladesh
  • Travel on foot, motorcycle, bicycle, rickshaw, or other uncovered means on public thoroughfares and sidewalks in Bangladesh
  • Attend large gatherings in Bangladesh

For further information, see the State Department’s travel website for the Worldwide Caution, Travel Warnings, Travel Alerts, and Bangladesh Country Specific Information.

11. Labor Policies and Practices

Bangladesh has a population of approximately 156 million people and a working age population (15 years or older) of 106.3 million, of whom 58 million are employed and 2.6 million meet the definition of unemployed. Of the employed population, 37 percent (21.5 million) were between the ages of 15-29 years old. The 2013 Bangladesh Bureau of Statistics Survey indicates 45 percent of the employed labor force works in agriculture, 34.1 in services and 20.8 percent in the industrial sector. It estimates 86.9 percent of the employed workers are in the informal sector.

Bangladesh’s comparative advantage in cheap labor for manufacturing is partially offset by lower productivity due to lack of skills development, poor management, pervasive corruption, and inefficient infrastructure. Bangladeshi workers have a strong reputation for hard work, entrepreneurial spirit, and a positive and optimistic attitude. With an average age in Bangladesh of 26 years, the country boasts one of the largest and youngest labor forces in the world.

Bangladesh has labor laws that specify employment conditions, working hours, minimum wage levels, leave policies, health and sanitary conditions, and compensation for injured workers. Freedom of association and the right to join unions are guaranteed in the constitution. In practice, compliance and enforcement of labor laws are inconsistent, and companies frequently discourage the formation of labor unions. Export Processing Zones (EPZs), which currently do not allow trade union participation, are a notable exception to the national labor law (see below). Historically, unions have been heavily politicized and labor-management relations contentious. After the highly publicized collapse of the Rana Plaza garment factory building in 2013, which killed more than 1,100 people, international pressure forced the government to amend the country’s labor laws, although there remain some deviations from international standards.

The Ministry of Labor and Employment (MOLE) reports that there are 7,659 trade unions in Bangladesh, covering nearly 3 million workers, with 507 unions in the garment sector, including 375 new unions registered since 2013. MOLE reported that there were 16 unions in the shrimp sector and 13 unions in the leather and tannery sector.

The Joint Directorate of Labor is the body responsible for approving union applications and has broad authority in this regard. Since July 2013, following the establishment of the U.S. GSP Action Plan for Bangladesh to work toward regaining suspended GSP benefits, more than 300 unions have been registered, although reports of problems with the registration process are on the rise. Despite international efforts to support the registration of unions and to investigate unfair labor practices, threats and harassment of union leaders continue to be reported. In a sector with more than 3,500 factories, approximately only a dozen have collective bargaining agreements.

The Bangladesh Labor Act (BLA) was amended in 2013, and its implementing rules and regulations published in October 2015. The Rules provided much awaited clarification on key issues, such as the process to form occupational safety and health committees. The Rules also include regulations for outsourcing companies, requiring them to register with the Ministry of Labor and Employment.

Under the BLA, legally registered unions are entitled to submit charters of demands and bargain collectively with employers, but this has rarely occurred in practice. The law provides criminal penalties for unfair labor practices such as retaliation against union members for exercising their legal rights. Labor organizations reported that in some companies, workers did not exercise their collective bargaining rights due to fear of reprisal, but also because their unions’ found success addressing grievances with management informally.

The government does not consistently and effectively enforce applicable labor law. For example, the law establishes mechanisms for conciliation, arbitration, and dispute resolution by a labor court and workers in a collective-bargaining union have the right to strike in the event of a failure to reach a settlement. In practical terms, few strikes followed the cumbersome and time consuming legal requirements for settlements, and strikes or walkouts often occurred spontaneously.

In July 2004, parliament enacted a law for export processing zones (EPZs). The 2004 EPZ law does not currently guarantee freedom of association for workers within the EPZs. Parliament has continued to defer action on a draft EPZ law, and according to the ILO, neither the draft EPZ law nor the BLA meet international labor standards. The Parliamentary Standing Committee on Law, Justice, and Parliamentary Affairs held several hearings on the draft law, including one on September 29 at which the committee solicited feedback from the international community. Following the September 29 meeting, the committee chair assigned a subcommittee the task of reviewing comparable practices in neighboring countries. The subcommittee had not submitted its report to the committee chair as of the end of 2016.

The BLA guarantees workers the right to conduct lawful strikes, but with many limitations. For example, the government may prohibit a strike deemed to pose a “serious hardship to the community” and may terminate any strike lasting more than 30 days. The BLA also prohibits strikes at factories in the first three years of commercial production, and at factories owned by foreign investors or built with foreign investment funds. Starting in December 2016, 59 factories in Ashulia, an industrial suburb of Dhaka, experienced work stoppages when thousands of workers went on strike to demand wage increases. Although the country’s major labor federations did not organize the strike, at least 25 labor leaders and workers were detained and charged by local authorities for a range of allegations, including charges under the Special Powers Act of 1974. Following reported harassment from the industrial police, several labor federations operating in Ashulia and other areas closed their offices.

In the aftermath of the 2013 Rana Plaza building collapse that killed 1,138 workers and injured more than 2,500, private companies, foreign governments, and international organizations worked with the government to inspect more than 3,660 garment factories, leading to 39 full and 42 partial closures of factories for imminent danger to human life as of August 2016. Many factories began to take action to improve safety conditions, although remediation efforts have proceeded slowly due to a range of factors, including inadequate financing for factories.

12. OPIC and Other Investment Insurance Programs

The U.S. Overseas Private Investment Corporation (OPIC) is not currently authorized for operation in Bangladesh. Investors should check OPIC’s website for updates: 

OPIC and the Government of Bangladesh signed an updated bilateral agreement in May 1998: 

More information on OPIC services can be found at: 

Bangladesh is also a member of the Multilateral Investment Guarantee Agency (MIGA): 

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2016 $219.4 billion 2015 $195.1 billion 
Foreign Direct Investment Host Country Statistical Source USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2016 $449.74 million 2015 $589 million
Host country’s FDI in the United States ($M USD, stock positions) 2014 $0.45 2015 N/A
Total inbound stock of FDI as % host GDP 2016 0.9% 2015 0.9% Bangladesh Bureau of Statistics 

Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data (2015)
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward $12,352 100% Total Outward $188 100%
United States $3,019 24.4% United Kingdom $47 25.0%
United Kingdom $1,294 10.5% China, P.R.: Hong Kong $36 19.1%
Australia $909 7.4% India $35 18.6%
South Korea $715 5.8% United Arab Emirates $27 14.4%
Netherlands $689 5.6% Nepal $20 10.6%
“0” reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment

Portfolio Investment Assets (December, 2015)
Top Five Partners (Millions, US Dollars)
Total Equity Securities Total Debt Securities
All Countries $2,452 100% All Countries $20 100% All Countries $2,432 100%
United States $329 13.4% Saudi Arabia $8 40.0% United States $329 13.5%
Germany $313 12.8% Sri Lanka $8 40.0% Germany $313 12.9%
United Kingdom $221 9.0% Pakistan $5 25.0% United Kingdom $221 9.1%
France $119 4.9% N/A N/A N/A France $119 4.9%
Spain $112 4.6% N/A N/A N/A Spain $112 4.6%

Data from the Bangladesh Bank, the country’s central bank, showed the United States was the highest net contributor of foreign direct investment (FDI) to Bangladesh during fiscal year 2016, which ended June 30. Net FDI from the United States doubled from $225 million in FY2015 to $450 million in FY2016. However, gross FDI inflows from the United States were down slightly to $456.1 million in FY2016 from $479 million in FY2015. U.S. FDI in Bangladesh was concentrated in the energy sector.

Bangladesh’s net FDI reached $2 billion in FY2016, a 9 percent year-on-year increase. Following the United States, the United Kingdom, South Korea, Singapore, and Hong Kong rounded out the top five contributors of FDI in Bangladesh. Over the past five years, the country has also seen a notable increase in FDI from Southeast Asia with Singapore, Malaysia, and Thailand accounting for nearly 15 percent of net FDI inflows in FY 2016 compared to only 5 percent in FY2012.

The Bangladesh Bank report also showed the United States has the largest cumulative investments (FDI stock) in Bangladesh, $3.2 billion, over twice as much as the next country, the United Kingdom with $1.53 billion. Of the United States’ total $3.2 billion in FDI stock, 83 percent was in the gas and petroleum sector followed by the banking and “other” sectors. Overall, Bangladesh’s FDI stock reached record levels growing 7.56 percent to $13.4 billion in FY2016. Gas and petroleum, textiles and garments, and banking constituted the top three sectors overall.

14. Contact for More Information

Commercial Section
Embassy of the United States of America
Madani Avenue, Baridhara
Dhaka — 1212
+880 2 5566-2000

2017 Investment Climate Statements: Bangladesh
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