: A New Horizon For Investment
is now trying to establish itself as the next rising
star in South Asia for foreign investment. The government
has implemented a number of policy reforms designed
to create a more open and competitive climate for
private investment, both foreign and local.
The country has a genuinely democratic system of
government and enjoys political stability seen as
a sine qua non for ensuring a favorable climate
for investment and sustained development.
Bangladesh has been quick to undertake major restructuring
for establishing a market economy, with the major
thrust coming from the private sector. The country
enjoys modest but steady economic growth. Its current
development strategy is based on the premise that
the creation and distribution of wealth occurs through
the acceleration of growth driven by competitive
market forces, with the government facilitating
growth and making a clean break from the practices
of a controlled economy where private investment
is constrained. With this end in view. The government
has been gradually withdrawing its involvement in
this industrial and infrastructure sectors and promoting
private sector participation.
The government has moved speedily to translate its
policy pronouncements into specific reforms. It
has been consistently pursuing an open-door investment
policy and playing a catalytic rather than a regulatory
Regulatory controls and constrains have been reduced
to a minimum. The government has steadily liberalized
its trade regime. Significant progress has been
achieved in reducing non-tariff restrictions on
trade, rationalizing tariff rates and improving
export incentives. The introduction of VAT has helped
rationalization of the import tariff and domestic
tax structures. The tariff structure and the import
policy are kept under constant review to identify
areas where further improvements are called for.
On the legal and administrative front, the government
has initiated measures to give greater autonomy
and independence to the judiciary - a pre-requisite
as viewed by investors, for the restoration of confidence
in the judicial system.
A permanent Law Reform Commission has already been
set up to ensure greater transparency and predictability
in the way rules and regulations are made and implemented.
An Administrative Reform Commission to rationalize
existing rules, regulations and procedures has also
been set up.
The Company Law has been updated and modernized.
The Securities and Exchange Commission has been
established to oversee and regulate the operations
of the stock market.
The financial services have been strengthened through
enactment of the Banking Companies Act, 1991 and
the Financial Institution Act, 1993. The Industrial
Relations Act has been amended to enhance labour
Motivated by the simple realization that state-owned
enterprises are a drain on its scarce resources
and that these are generally inefficient, very costly
and slow in responding to changing markets and consumer
desires, the country has embarked on a privatization
programme, offering substantial opportunities for
In order to entice investors,
the government has put in place an extensive programe
of incentives, which include :
ceiling on investment.
and duty-free importation of capital machinery
and spare parts for 100% export-oriented industries.
permits for foreign nationals.
profit and dividend repatriation facilities.
percent foreign equity allowed.
of income tax upto three years for expatriate
loans and working capital loans from local banks
of repatriable dividends treated as new investment.
avoidance, as per bilateral agreements already
exemption on the interest payable on foreign
loans and on royalties and technical know-how
visas for foreign investors.
can take advantage of the generalized system
of preference, which allows duty-free access
to American, European and Japanese markets.
is convertible for current account transactions.
Country also offers :
competitive labour costs, perhaps the lowest
trainable workforce of 56 million.
large domestic market, with disposable income
growing especially among the middle class.
location as the bridge between South and East
Asian high-growth regions as well as links with
other markets e.g. India, Pakistan, Malaysia,
land and energy costs.
road/bridge/rail infrastructure, which are being
improved; two sea-ports being further developed.
Most Favoured Nations status.
protection to foreign investment against nationalization
treatment with local investors regarding indemnification,
sectors of industry (except five) are open for private
investment. The five sectors reserved for public
investment only are defense and defense production,
nuclear energy, extraction from reserved forests,
security printing and mint and air transportation
(some domestic routes and international air cargo
already opened for private investment.) and railways.
Some of the foreign private
investment opportunities are:
(100%) foreign investment or joint venture investment
in the Export Processing Zones (EPZs) or outside
EPZs (with the exception of the five industries
investment by purchasing shares in publicly
listed companies through the stock exchange.
in infrastructure projects such as power generation
(private power generation policy announced);
oil, gas and mineral exploration, telecommunication,
ports, roads and highways.
purchase or purchase of shares of state-owned
enterprises, which are under process of privatization.
in private EPZ (Private EPZ Act recently passed).
investment is particularly welcome in the export-oriented
industries such as textiles, leather goods, electronic
products and components, chemicals and petrochemicals,
agro-based industries, green jute pulp, paper, rayon
products, frozen foods (dominated by shrimp farming),
tourism, agriculture, light industries, software
and data processing.
Foreign investment is also desired in high technology
products that will help import substitution or industries
that will be labour as well as technology intensive.
The country's drive for foreign investment is being
spearheaded by the Board of Investment, which was
created to facilitate the setting up of manufacturing
and other industries in the private sector, both
local and foreign. It is a promotional organization
dedicated towards providing investment assistance
to all investors.
The Board is headed by the country's Prime Minister
and it includes Ministers and Secretaries from the
concerned ministries as well as representatives
from the private sector.
The Board has launched an investment promotion drive
at home and abroad to attract investors. The BOI
has been assisting in the implementation of new
projects as well as providing services.
Bangladesh is on the verge of a significant breakthrough
in terms both of international investor confidence
and significant inflow of new investment funds.