Investment Climate and Opportunities network-4th 2014-Bangladesh.pdf · No upper ceiling for...

© Board of Investment 2014 www.boi.gov.bd

Investment Climate and Opportunities


Bangladesh at a glance

Source: Ministry of Finance, Bangladesh. Bangladesh Land Port Authority

2

8 Airports $1044

GDP Per

Capita

$129.9bn

GDP

6.2%

GDP

Growth

156.6mn

Population

9

River ports

20 Land ports

2 Sea ports

$1.6bn FDI

$30.1bn Export

8 EPZs

© Board of Investment 2014 www.boi.gov.bd 3

Why Bangladesh?

Investment Climate

Bangladesh is a winning combination with its competitive business-

friendly environment and cost structure that can give you best returns:

• Industrious competitive workforce

• Strategic location between china and India with regional connectivity and

worldwide access.

• Strong local market and growth

• Low cost of energy

• Proven export competitiveness

• Competitive incentives

• Export and Economic Zones

• Positive investment climate.


Why Invest in Bangladesh?

Policies and Reforms

Continued reforms taking

place embracing global best

practices

A positive attitude among

policy makers towards

undertaking reforms for

business growth

A special high-level

committee works for policy

and regulatory improvement

Appealing incentives

Offering a whole range of

investment incentives and

benefits

All fiscal, financial and other

types of incentives are

competitive among similar

locations

Market Access

• Bangladesh has a large domestic market of nearly 160 million

• Middle class (with purchasing power) is growing fast

• Has access to regional market of about 1.5 billion people through regional and bilateral integration in South Asia

• Bangladesh has preferred market access (global reach) to large developed markets

• ASEAN /East Asian investors can utilize Bangladesh as an export springboard to the world

Conducive policies, greater market access and encouraging incentives …

Source: International Finance Corporation

Source: CIA World Factbook (Tractus Asia Analysis)

Sustained

supply of

working-

age

workforce 23.8

26.6

28.5

34.7

35.8

15 25 35 45

Bangladesh

India

Vietnam

Thailand

China

Median Age: One of Asia’s Youngest Populations


Why Bangladesh – Steady rise in investments

FDI in Bangladesh last year rose by 24% to US$ 1.6bn, the highest in its history;

In SA region, Bangladesh has fared well during the global downturn and has secured 2nd position;

It is also one of the few countries that have shown an upward trend, despite the global downturn.


Investment Promotion and Protection

Foreign investment in Bangladesh is secured by law against

nationalization and expropriation.

Local and Foreign investment is given equal treatment

100% foreign equity is allowed along with unrestricted exit.

Bilateral and multilateral investment agreements ensures protection of

investment.

Bangladesh is a signatory to ICSID, UNCITRAL, OPIC, MIGA, WAIPA,

WIPO and WTO.

Bilateral Investment treaties (BITs) signed with 29 countries Austria, DPR Korea , Thailand, Belgium, Republic of Korea, UK, Canada, Malaysia, USA, China. Pakistan Uzbekistan, France, Poland, Vietnam, Germany, Romania, Singapore, Indonesia, Switzerland, Denmark, Iran, The Netherlands, India, Italy, The Philippines, UAE, Japan, Turkey)

Double taxation treaties (DTTs) with 33 countries Canada, Poland, Norway, China, Romania, Turkey, Denmark, Sigapore, Vietnam, France, Republic of Korea, Philippines, Germany, Sri Lanka, Indonesia, India, Sweden, Switzerland, Italy, Thailand, Oman, Japan, The Netherlands, Malaysia, UK, Belarus, Belgium, KSA, Mauritus. Myanmer,Pakistan, UAE, USA)

6

Investment Climate


The National Industrial Policy, 2010 of Bangladesh recognizes:

a. Private sector is treated as the engine of growth

b. No upper ceiling for foreign investors or performance requirements

c. 100% foreign equity is allowed

d. All industrial sectors are open for foreign investors for investment

except 4 reserve sectors for the government.

e. Equal treatment for both local and foreign investment

f. Export oriented industries are given top priority

7

Investment Climate FDI Policy Framework


Business Stage Policy & Regulation

1. General - Bangladesh Industrial Policy (as undertaken from time to time)

1. Business start-up - The Companies Act, 1994

- Securities and Exchange Commission Act, 1993

1. Protection - The Foreign Private Investment (Promotion & Protection) Act, 1980

1. Export Zones - Bangladesh Export Processing Zones Authority Act, 1980

- Bangladesh Private Export Processing Zones Authority Act, 1996

1. Facilitation - The Investment Board Act, 1989

1. Corporate /

Personal Taxation

and incentives

- Income Tax Ordinance 1984 and related rules and SROs

- National Budget

- The Finance Act/Bill

1. International Trade

(Export & Import)

- Bangladesh Export Policy (as undertaken from time to time)

- Bangladesh Import Order (as undertaken from time to time)

1. Sectoral - Bangladesh Energy Regulatory Commission Act, 2003 (BERC)

- Bangladesh Telecommunication Regulatory Commission Act, 2001 (BTRC)

- The National Drug Policy, 2005

1. Foreign Exchange - Bangladesh Foreign Exchange Guidelines (issued from time to time)

8

The broader FDI policy & regulatory framework include, among others, the following:

FDI Policy Framework

Investment Climate


Fiscal Incentives • Corporate tax holiday: 5 to 7 years for

selected sectors and areas

• Tax holiday for infrastructure

investment: upto 10 years

• Accelerated depreciation on cost of

machinery for new industries in lieu of

tax holiday

• Avoidance of double taxation under

bilateral tax convention

• Tariff concessions on import of capital

machinery

• Tariff concessions on import of raw

materials of the export oriented

industries

• Bonded warehousing facility

Financial & Other Incentives • Cash incentives and export

subsidies ranging from 5% to 20%

on the FOB value of selected

products:

• Funds for export promotion, export

credit guarantee scheme, permission

for domestic sales up to 20% by

export-oriented companies outside

EPZ.

• Remittance of royalty, technical

know-how and technical assistance

fees

• Citizenship by investing a minimum

of US$ 5,00,000

• Permanent resident permits on

investing US$ 75,000

• And many more .....

Investment Climate FDI Policy Framework - Incentives


Investment Climate FDI Policy Framework - Incentives Financial incentives:

Businesses exporting 80% or more of goods or services

• Reduced import duty on machinery & spares

• (1% for export oriented industries and 3% for other industries)

Export credit guarantee scheme

• Domestic market sales up to 20% allowed to export-oriented

companies outside EPZ (relevant duties apply)

Cash incentives and export subsidies (on the FOB value)

• 2% on 5% for export oriented local textiles (instead of duty drawback

and custom bond) , ship building, SME in textile industry, 7.5% on

frozen shrimp, Jute thread, 10% for jute products, light engineering

products, PET flex, export bone powder, 12.5% frozen fish, potato,

15% for leather products, and 17.5% for bicycles. 20% for agro-

processing and agricultural produce, potato export, handicrafts made

of straw sugarcane straw , halal meat.


1. Agro-based & agro-

processing industry

2. Jute & jute-mixed goods

3. Flower cultivation

5. Commercial plantation

6. Horticulture

7. Silkworm & silk industry

8. Furniture

9.Handicrafts

10. Home Textiles

11. Textiles industry

12. Readymade garments industry

13. High value added RMG

14. Computer software & ICT goods

15. Electronics

16. Light engineering incl. automobiles

18. Pharmaceutical goods

19. Leather and leather products.

20. Herbal medicines

11

Investment Opportunities Allowed Sectors for investment (as per the Industrial Policy 2010)

Sectors open for investment by the private sector – local & foreign


Investment Opportunities Allowed Sectors for investment (as per the Industrial Policy 2010)

21. Ceramics

22. Frozen Food

23. Integrated shrimp

cultivation

24. Infrastructure

25. Jewellery and diamond

cutting polishing

26. Oil and gas

27. Tourism industry

28. Basic chemicals/raw materials

used in industries.

29. Dye and chemicals used in

textiles industry.

30. Cosmetics and toiletries.

31. Information & Communication

Technology

32. Health care

Sectors open for investment by the private sector – local & foreign


1. Arms and ammunitions and other military equipments and

machinery

2. Nuclear power

3. Security printing and minting

4. Forestation on and Mechanized Extract on within the boundary

of reserved forest

13

Investment Opportunities Reserved Industries (as per the Industrial Policy 2010)

Sectors Reserved for investment by public sector. Private sector may

participate in procurement process as vendor/contractor.


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 infrastructural project (e.g. flyover, elevated

expressway, monorail, economic zone, inland container depot/

container freight station)

14

Investment Opportunities Controlled Industries (as per the Industrial Policy 2010)

Controlled Industries (considered as strategic investment. Free to

invest but requires pre-approval from specific regulatory agencies).


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 vessels

14. Sea bound ship transport

15. Sea-port/deep sea-port

16. VOIP/IP telephone

17. Industries using heavy minerals accumulated from sea beach

15

Investment Opportunities Controlled Industries (as per the Industrial Policy 2010)

Controlled Industries (considered as strategic investment. Free to

invest but requires pre-approval from specific regulatory agencies)


Investment Opportunities Economic Zones

Govt has promulgated Economic Zones Act in 2010 to build EZ in the country

- Key Features:

Comprehensive industrial Infrastructure

Development under PPP (Private Public Partnership) model

Owned and regulated by the government, but managed by the private sector

Encompasses multiple business sectors within each zone

Combines both bonded and non-bonded area

EZ includes non processing & domestic area

Economic Zones under

implementation…

Mongla,

Sirajganj,

Anowara,

Mirershorai

Maulvibazar


Total

34 projects

($12.5b)

Medium Projects

6 Projects

($110m)

Large Project

25 Projects

($12b)

Small Projects

3 Projects

($7m)

PPP Projects by Size

SL. Sectors Implementing Agency Name of the ProjectProject

Size

Estimated

Cost (US$m)

1 Road BD Bridge Authority Dhaka-Elevated Expressway Large $1,088

2 ICT BD Hi-tech Park Auth Hi-tech Park at Kaliakoir Large $125

3 Health DGHS 40 beds Hemodialysis Centre at CMCH Small $2

4 Health DGHS Hemodialysis Centre at NIKDU Small $1

5 Bridge BD Bridge Auth Dhaka-Ashulia Elevated Expressway Large $1,471

6 Road RAJUK Flyover - Santinagar to Mawa over Buriganga River Large $313

7 Port MPA 2 Jetties at Mongla Port through PPP Large $50

8 Social Care DSS Oboshor: Senior Citizen Health Care Complex Medium $6

9 Road Roads & Highways

Dept Dhaka-Chittagong Access Controlled Highway Large $1,585

10 Rail Bridge Bangladesh Railway Fulchhari Bahadurabad MG Railway Bridge Large $1,400

11 Rail Bridge Bangladesh Railway Dual gauge Double line Bangabandhu Bridge Large $1,000


Dept Dhaka Bypass 4 Lane (Joydevpur-Madanpur) Large $114

13 Tourism BD Parjatan Corp 5 Star Beach Hotel with 18-Hole Golf Course Large $125

14 Housing Nat Housing Assoc NHA Housing Satellite Project at Mirpur Large $57

15 Port CTG Port Authority Construction of Laldia Bulk Terminal Large $60

16 Bridge BD Bridge Authority 2nd Padma Multipurpose Bridge Paturia-Goalundo Large $1,902

17 Port CTG Port Authority 3rd Sea Port Large $1,200


Dept Jatrabari-Sultana Kamal Brdg-Tarabo PPP Rd Large $44


Dept Hemayetpur-Singair-Manikganj PPP Road Large $84

20 Housing RAJUK High–Rise Apartment Complex Purbachal Phase 1 Large $1,199

21 Airport CAAB Multi Mode Surveillance System (Radar) HSIA Medium $23

22 Health Bangladesh Railway Med College/Hospital Upgrade-Kamlapur Large $97

23 Health Bangladesh Railway Medical College/Hospital Upgrade- CRB Chittagong Large $73

24 Health Bangladesh Railway Med College/Hospital Upgrade- Saidpur Nilphamary Large $73

25 Health Bangladesh Railway Med College/Hospital Upgrade-Paksey Pabna Large $73

26 Health Bangladesh Railway New Medical College & Hospital - Khulna Large $97

27 Rail Depot Bangladesh Railway New Inland Container Depot - Dhirasram Rail

StationLarge $150

28 Port BIWTA Inland Container Terminal PPP-Khanpur Large $40

29 Tourism Bangladesh Railway 5 Star Hotel at Zakir Hossen Road, Chittagong Large $36

30 Hospitality Bangladesh Railway Shoping Mall with Hotel-cum-Guest House in Khulna Medium $29

31 Hospitality Bangladesh Railway Shoping Mall with Hotelin Chittagong Medium $11

32 LPG /

EnergyBD Petroleum Corp LPG Bottling Plant (Jetty, Pipelines) Kumira Medium $31

33 Hospitality MPA Mongla Port Tower Medium $10

34 Fisheries Dep of Livestock Serv 16 X Fisheries and Livestock Projects Small $4

PPP Projects Pipeline (Note: Project names have been shortened)

Note: (1) All figures are initial estimates and will be updated in project development & procurement phase.

(2) Figures have been converted to US$ @ BDT80=US$1

Growing PPP portfolio…

Bangladesh Context

Source: PPP Office, Bangladesh


Arrival in Bangladesh

Help Desk of Board of

Investment at Airport

Opening a Bank Account

(As per “GFET 1996, Vol-1,

Bangladesh bank) http://www.bangladesh-bank.org

Trade License

from Local Govt.

Bodies

Tin Certificate

from Income

Tax Office

Company Formation

& RJSCF registration

http://www.roc.gov.bd

Application for BOI

Registration

• BOI Prescribed Form

• Project Profile

• Memorandum of Articles

of Association

• Certificate of

Incorporation

• Land Information &

Document

• Machinery Details

• Tax Identification

Number

• VAT Registration

• Trade License

• Pay Order

Import of Machinery Open

Letter of Credit (LC) or as

Equity Investment

Clearing of Capital

Machinery paying

VAT

Fire License

Industrial ad-hoc IRC from

CCI&E being Recommended

by BOI

http://www.ccie.gov.bd

VAT Registration from NBR

http://www.nbr-bd.org

DOE Clearance

Private Limited Company

(Capital if exceeds Tk. 10

crore, SEC permission

needed)

Public Limited Company

(Minimum paid-up capital

shall be Tk. 400 million)

Roadmap to Invest in Bangladesh

http://www.bangladesh-bank.org/









http://www.roc.gov.bd/

http://www.ccie.gov.bd/









http://www.nbr-bd.org/










Regulatory services:

Registration of New Industries

Facilitation of Setting up Foreign Commercial Offices

Facilitation of Utility Services

Visa Recommendation

Work Permit Issue

Recommendation for IRC, Bonded Warehouse

Approval of Royalty and Technical Assistance Fees

Processing of Foreign Borrowing

Board of Investment Services to Investors


Facilitation services:

Responding to investment-related queries

Guidance on doing business in Bangladesh

Support forming Sector-specific legislations/regulations,

Industrial policy, custom and excise duties, taxation,

investment and trade agreements, etc.

Investment guidance and advice in specific sectors and in

areas of land, incentives, etc.

Business-to-business linkages:

Helping identify and connect with potential joint venture

partners/technical collaborations

Help finding Bangladeshi partners for investments



Handholding support for investments :

• Coordinating with governments agencies for facilitating

information on land availability/infrastructure/power, etc.

• Coordinating meetings with relevant authorities in various govt

agencies and organize visits for investors

• Addressing any concerns faced by individual companies — with

government departments and other areas



Business process Simplification: at a glance

Types of the Process simplified No. of

process

reformed

A Business Regulation Simplification 18

B Legal/Policy Amendments and New

Laws

12

C Private public joint efforts 4


Board of Investment, Prime Minister’s Office

Government of the People's Republic of Bangladesh,

Jiban Bima Tower (19th Floor), 10 Dilkusha C/A, Dhaka-1000, Bangladesh

Phone: (880-2) 957 7271 Fax: (880-2) 956 2312 Email: [email protected] Web: www.boi.gov.bd

Thank you

Investment Climate and Opportunities network-4th 2014-Bangladesh.pdf · No upper ceiling for...

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