Fdi in bd (Foreign direct investment in Bangladesh)
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Transcript of Fdi in bd (Foreign direct investment in Bangladesh)
Foreign direct investment in bangladesh
Konok Kumar Mondal #1407016
Foreign direct investment
A foreign direct investment is a controlling ownership in a business enterprise in one country by an entity based in another country.
Key Economic Indicators of Bangladesh
GDP size $223.941 billion (2016) Expected GDP Growth Rate- 7.10% ( 2016) Per Capita Income- $1466 (April, 2016) Inflation Rate- 5.6% ( 2016) Investment Contribution to GDP- 13% ( July 2015-May 2016) FDI- $1.53 billion (2015) Export- 192.41Billion BDT (February 2016) Import- 239Billion BDT (February 2016) Gold Reserves 13.78 tones (apx) Remittance $1397.49 million Foreign currency reserve over $24billion.
Source: BOI and Bangladesh Bank
Why Bangladesh? Industrial low cost laborPer hour labor cost in Bangladesh is $0.62 in 2014 the lowest among the developing countries. Low cost of energy Water Supply : Tariff : 22.43 euro cents / cu-m. Gas Supply : Tariff : 6.45 euro cents / cu-m. Power Supply : Tariff : 6.11 euro cents / kwh. Good ranking in FDI magazine by CTG EPZ is 200 out of 700 global economic
zones Proven export competitor
Bangladesh is one of the top exporters of readymade garments to US and Europe. Bangladesh also has some preferential treatment benefits in European countries.
Why Bangladesh?
Strategic Location
Why Bangladesh? Competitive Incentives
Fiscal and non-fiscal incentives
Tax Exemptions
Generally 5 to 7 years.
For power generation
exemption isallowed for 15
years
Double taxation can be avoided on the basis of
bilateral agreements.
Duty
No import duty for export
oriented industry
For other industry it is @ 5% ad valorem
Remittance and Exit
Full repatriation of invested
capital, profit and dividend
Wind up on investment either
through a decision of the AGM or EGM
Repatriation of the sales proceeds after securing
proper authorization from the Central Bank
Export Processing Zone (EPZ)
Eight EPZs so far
Directly supervised by Prime ministers office
Specially allocated for FDI of manufacturing
sectors
Why Bangladesh? Export and economic zones
Facilities Provided by Bangladesh Export Processing Zone Authority (BEPZA)
Duty free import and export of raw materials and finished goods
GSP facility available
Duty & quota free access to EU, Canada, Norway, Australia etc.
Enjoy MFN (most favored nation) status
No ceiling on foreign and local investment
Foreign Currency loan from abroad under direct automatic route
Non-resident Foreign Currency Deposit (NFCD) Account permitted
Off-Shore banking available
Relocation of foreign industries allowed
Sub-contracting with export oriented Industries inside and outside EPZ allowed
Facilities Provided by Bangladesh Export Processing Zone Authority (BEPZA)Duration and rate of tax exemption for Chittagong, Dhaka, Comilla, Adamjee,& Karnaphuli EPZ for the industries set up after January 01, 2012:
Why Bangladesh? Risk factors of FDI are the minimum in Bangladesh Since independence non of the governments of Bangladesh had imposed any
unfavorable policy against foreign investors.
Stable exchange rate – Over the last few years Bangladesh managed to maintain the foreign currency exchange rate at a stable position.
Exchange rate on 20.06.2015 British Pound = 122.9tk Euro =87.88tk American Dollar =78.39tk Low sovereign risk - Bangladesh has never defaulted in its debt repayment as
Bangladesh has over $24 billion of foreign currency reserve. Growing market
Increasing purchasing power with per capital income $1314.
Board of investment- one stop service center.
1. Pre-Investment Information and Counseling Service
2. Investor Welcome Service (faster immigration)
3. Registration /approval of foreign, joint-venture and local
project
4. Registration /approval of Branch/Liaison/Representative
Offices
5. Approving work permit for the Foreign Nationals
6. Facilitating utility connections (electricity, gas, water &
sewerage, telecom etc.)
7. Assistance in obtaining industrial plots
8. Pre-Investment Information and Counseling Service
9. Approving remittance of royalty, technical know-how and
technical assistance fees
10. Facilitating import of capital machinery & raw materials
11. Approving foreign loan suppliers' credit, PAYE scheme.
Sectors in which Bangladesh gives most incentives
Energy Infrastructure, Pharmaceutical Textiles Agriculture Healthcare Telecom Climate change Education Shipbuilding and light engineering
Import Registration Certificate (IRC)
For the Import Registration Certificate (IRC) one needs to register with the BOI and the Chief Controller of Imports & Exports. The following supporting documents are needed:
a. Trade License photocopy b. Valid membership of association (e.g. FBCCI) c. Passport photocopy of the Managing Director d. Bank solvency certificate (original) e. Original receipt (challan) of bank deposit for the fees
Export Registration Certificate (ERC)
For the Export Registration Certificate (ERC) the following documents are needed:
a. Attested copy of: i. Trade License ii. Valid membership of association or chamber iii. AOA iv. MOA v. Incorporation certificate b. Original of Bank receipt (challan) for deposit of the fees
Factors influencing FDI in Bangladesh