Investment In Bangladesh

Foreign Investment

Private investment from overseas sources is welcome in all areas of the economy with the exception of only five industrial sectors (reserved for public sector) as mentioned earlier. Such investments can be made either independently or through joint venture on mutually beneficial terms and conditions. In other words, 100% foreign direct investment as well as joint venture both with local private sponsor or with public sector is allowed. Foreign investment, however, is specially desired in the following categories:

  • Export-oriented industries;

  • Industries in the Export Processing Zones;

  • High technology products that will be either import-substitute or export-oriented;

  • Undertaking in which more diversified use of indigenous natural resources is-possible;

  • Basic industries based mainly on local raw materials;

  • Investment towards improvement of quality and marketing of goods manufactured and/or increase of production capacities of existing industries;

  • And labour intensive/technology intensive/capital intensive industries

Industrial Policy

The gradual liberalisation of industrial policy in Bangladesh started with the announcement of Industrial Policy, 1982. This was followed by successive reforms and amendments within the broad theme of a liberalised and competitive market economy.

Salient features of the policy

The Industrial Policy, 1991 (Revised in 1992) is based on the philosophy of market economy. The objectives of the Policy are to:

  • Develop the industrial sector in order to increase its contribution to the gross domestic product, income, resources and employment;

  • Expand industries by putting more emphasis on development of the private sector and in this respect to make the role of the government ‘promotional’ rather than ‘regulatory’;

  • Encourage domestic and foreign investment in overall industrial development;

  • Develop export-oriented, export-linkage and efficient import-substitute industries

  • Encourage specially the development of small & cottage industries;

  • Expedite development of labour intensive industries through acquisition and improvement of appropriate technology;

  • Encourage the development of agro-based and agro-supportive industries;

  • Stimulate development of industries based on indigenous raw materials and indigenous technology;

  • Motivate investment in the intermediate and basic industries;

  • Confine the role of the Government particularly in establishing strategic and heavy industries and to improve efficiency of the public sector;

  • Create possible opportunities for revitalising and rehabilitating sick industries;

  • Make effective arrangements for improving standards and controlling quality of products; and

  • Take appropriate measures for preventing environmental pollution and maintaining ecological balance.

Board of Investment (BOI)

BOARD OF INVESTMENT (BOI) The Government of Bangladesh established the Board of Investment (BOI) in 1989 for accelerating private investment in Bangladesh. The Board, headed by the Prime Minister of the Republic and represented by Ministers and Secretaries of the concerned Ministries, is vested with necessary powers to take decisions for speedy implementation of new industrial projects and provide operational support services to the existing ones.

The major functions of the Board are as follows

  • Promotion of investment;

  • Providing all types of facilities for capital investment and rapid industrialisation

  • Registration of industrial projects, foreign loan agreements, royalty, technical know-how; technical assistance agreement wherever required;

  • Providing assistance to avail infrastructure facilities for industries;

  • Issuing work permit to expatriate personnel working in private sector industrial enterprises;

  • Providing import facilities to industrial units in the private sector;

  • Approval of the terms and conditions of foreign private loan and suppliers’ credit beyond the prescribed limit;

  • Approval of payment of royalty, technical know-how and technical assistance fee to foreign nationals/organisations beyond the prescribed limits; and

  • Recommendation for allotment of land in the industrial areas/estates for industrial purpose.

  • In addition, BOI assists the investors in obtaining the following services:

  • Electricity, gas and water connection;

  • Sewerage connection;

  • All kinds of telecommunication facilities;

  • Custom clearance for imported machinery, spare-parts and raw materials;

  • Clearance regarding environment pollution; and

  • All other facilities and services that may be required for speedy setting up of an industry.

There is an Executive Council of BOI consisting of an Executive Chairman and Members entrusted with the responsibility of creating a congenial climate for industrial investment in Bangladesh by simplifying the procedural matters and providing necessary facilities and services to the investors.

The decisions of the Board are deemed as decisions given by the Government and are required to be implemented by all concerned agencies.

Public / Reserve Sector

In the Industrial Policy, 1991 (revised in 1992) industries earmarked for only public sector investment are included in the Reserve Sector. These are:

  • Arms, ammunitions and other defence equipment and machinery;

  • Production of nuclear energy;

  • Forest plantation and mechanized extraction within the bounds of reserved forests

  • Security printing (currency notes) and minting; and

  • Air transportation and railways.

All sectors excepting the aforementioned reserved industries are open for investment by the private sector. Air transportation to certain routes within Bangladesh has been opened for private sector investment.

Role of the Private Sector

In the Industrial Policy, the role of the private sector has been recognised as a predominant one. Except reserve sectors, private sector investment has been kept open without any ceiling and with the only formality for automatic registration. Private investment both local and foreign or under joint venture between local and foreign or with public sector is allowed.

Regulated Industries

To protect environment, public health and national interest the Government may frame rules from time to time for certain industries and such industries can be established subject to these rules. These industries will be treated as Regulated Industries.

Sanctioning / Registration Authorities

Authorities power
of Investment of all industrial projects in the private sector outside the authorities of BSCIC and BEPZA.

For institutional facility purposes, registration of industrial projects financed by Commercial Banks or by different financing institutions outside the authorities of BSCIC & BEPZA.

Small and Cottage Industries Corporation (BSCIC)
of industrial projects having capital investment not exceeding Tk. 30.00 million (for BMRE maximum Tk. 45.00 million)
Export Processing Zones Authority (BEPZA) of all projects to be located in the EPZs
Institutions (FI) and Commercial Banks (CB) including Development Financing Institutions (DFI) and Nationalised Commercial Banks (NCB).
and financing of projects having investment of any amount.

Sponsoring Agencies and Their Areas of Responsibilities

The term ‘Sponsoring Agency’ means an agency engaged in promoting, assisting, supervising and administering as well as offering pre & post-registration assistance to industries. The list of sponsoring agencies responsible for private sector industrial development and their respective areas of responsibilities are as follows:

Name of the Sponsoring Agencies Areas of Responsibilities
of Investment (BOI) industries under private sector other than mentioned at serial nos. 2 and 3 below.
Export Processing Zones Authority (BEPZA).
located in EPZs.
Small and Cottage Industries Corporation (BSCIC). and cottage industries