Bangladesh is virtually located as a bridge
between the emerging markets of South Asia and fastest
growing markets of South East Asia and ASEAN countries.
With the proposed concept of a "Bay of Bengal Growth
Triangle" with its apex Chittagong port extending south-west
to Calcutta, Madras and Colombo and the south-eastern
arm extends through Yangon, to Thailand, to Penang with
the third arm to Colombo, this region should have growing
attention of the investment world. Bangladesh has the
potential to be an entry port to the region, a potential
small scale Singapore, for the region covering Bangladesh,
Nepal, Bhutan, eight north-east Indian states (of Assam,
Meghalaya, Monipur, Imphal, Arunachal, Nagaland, Mizoram
and Tripura) and resource-rich northern Myanmar, a land
locked region. Bangladesh is poised to become a regional
hub where activities relating to assembling, manufacturing,
trading and services, would be some of the areas that
are picking up over the years. This geopolitico-economic
location of Bangladesh indicates its history of being
a nation of sea-farers, traders and suppliers.
Bangladesh is a developing democratic polity on the
Westminister model; secular, but not a theocratic state.
Bangladesh is a moderating influence in a consistently
volatile and often mutually hostile South Asian scenario.
The current macroeconomic situation in the country is,
by and large, stable, characterized by a manageable
fiscal deficit and a quite low current account deficit.
The stable macroeconomic situation is an outcome of
a mixture of prudent monetary and fiscal policies that
are being pursued. The external current account deficit
has also been low. This reflects the continued high
growth of exports, increased flows of remittances, moderate
growth in money supply as well as that of imports.
The country has a policy of private sector led, liberal
economic approach; export oriented, gradually transforming
into assembling & manufacturing; seeking for rapid
expansion of the service sector. Also looking for substantial
joint venture and Direct Foreign Investment (DFI) from
abroad in medium and large-scale industries and enterprises,
including infrastructure building.
The following facts deserve attention in relation to
assessment of Bangladesh as an investment destination:
i) Bangladesh has never defaulted in its debt-service
liabilities to multi-lateral and bilateral donors.
ii) Bangladesh grow over 21 million metric tons of food
grains, basically rice and some wheat and potatoes which
is enough to feed the population of the country, and
for building reserve stocks.
iii) Bangladesh never experienced negative growth during
last 27 years of it's independence.
iv) Bangladesh exports readymade garments, knitwear,
brand name wind cheaters, walking shoes, leather goods,
shoes and other products, urea fertilizer, pharmaceutical,
shrimps and prawn, vegetables, jute and jute products
etc. to sophisticated markets of EU, USA, Japan and
many other countries. Garments and related export account
for more than US $4 billion.
v) The frequency and intensity of natural disasters
are far less in Bangladesh than those in the Philippines,
Japan and even the USA, Bangladesh is located outside
the major earthquake zones.
Reforms and liberalization
A significant array of reforms, deregulation and liberalization
have been carried out over the recent years in policies
relating to virtually every sector of the economy including
financial reforms with the aim of globalization challenges
for the economy through introduction of international
competitiveness and productive efficiency.
We have opened up our economy. We are one of the top
exporters of readymade garments to USA and Europe. Our
shrimp and leather products exports are rising sharply.
We have removed all barriers to investment and business.
Government is offering unparalleled facilities to investors.
100% foreign investment is allowed, excepting four reserved
(a) production of arms and ammunition and other defense
equipment, and machinery,
(b) forest plantation and mechanized extraction within
the bounds of reserved forests,
(c) production of nuclear energy and
(d) security printing (currency notes) and minting.
All other areas are open to private investment. We are
providing tax holidays and duty free import of capital
machinery, raw materials import for export manufacturing.
Expatriates' work permits are easily obtained and unhindered
remittance of dividends, capitals, gains on capital
etc. are allowed. We have eliminated licensing system
and simplified government approval procedure for investment
Government has enacted a law in the parliament enabling
the private investors to set up private Export Processing
Zones (EPZ). The units in private EPZ will enjoy facilities
similar to those in government EPZs. The Private Power
Generation Policy has been formulated paving the way
for private investment in power generation for which
a new Electricity Act and a regulatory commission is
on their way. Private investments have already been
allowed in gas exploration, gas development, power generation
and other mining & exploration activities.
An attractive investment destination
Following are some positive aspects which make Bangladesh
an attractive location to foreign investors:
i) We have opened up our economy with rapid liberalization
of import policies helping globalization of our economy;
ii) According to a Survey of the Economist-risk factors
for FDI in Bangladesh are minimum compared to many other
countries of this region;
iii) Cost of production especially cost of labor both
skilled and semi-skilled is comparatively lower;
ix) Cost of living is also quite low and reasonable
and there is no communal or ethnic problems;
v) English language is widely spoken and understood;
vi) Working capital loan as well as term loan from local
commercial banks allowed to the industries setup with
vii) Citizenship by investing a minimum of US $5,00,000
or by transferring US $10,00,000 to any recognised financial
viii) Permanent residentship is granted to an expatriable
by investing a minimum of US $75,000 (non-repatriable);
ix) Avoidance of Double Taxation Agreements and Bilateral
Investment Promotion Treaties have been signed with
many countries including U.K.
Legal security for investment
i) Foreign Private Investment (Promotion and Protection)
Act, 1980 ensures legal protection to foreign investment.
ii) Bangladesh is a member of Multi-Lateral Investment
Guarantee Agency (MIGA), Overseas Private Investment
Corporation (OPIC) of USA and International Centre for
Settlement of Industrial Disputes (ICSID)
iii) Member of World Intellectual Property Organization
(WIPO) and World Association of Investment Promotion
Private Investment Trend
Board of Investment (BOI), the government's investment
promotion agency, is at the forefront of the country's
efforts to attract and facilitate investment. Board
of Investment headed by the Hon'ble Prime Minister,
was created in 1989 to implement governments' investment
policy and promote private participation in the industrial
sector. As a result of reformed policy measures undertaken
by the government, private investments especially foreign
investments in the country have increased manifold.
This has been achieved due to adoption of various programmes
including holding of seminars/symposium, bilateral talks,
press briefings and other interactive processes at home
From the analysis of investment trend, it reveals that
from 1991-1992 to 1999-2000 as many as 10412 industrial
projects both local & foreign have been registered
with BOI having total investment outlay of US$ 19074
million with employment opportunities of 1442568 persons.
During that period a total of 998 industrial projects
both under joint venture and 100% direct foreign investment
was registered with Board of Investment having proposed
investment of US$ 11667million with employment opportunities
of 257159 persons.
The top investing countries are USA, UK, Malaysia, Japan,
Hong King, Singapore, Republic of Korea. France, India,
Germany, China, in that order. During the fiscal year
1999-2000, 135 projects involving an estimated foreign
investment of US $2119 million have been registered
with Board of Investment. Several major oil companies
e.g. Shell, UNOCAL, etc. have already invested. Burlington
Resources have notified their intent to have major investment
in gas and oil exploration. The French TNC LaFarge,
the world's largest cement producer is setting up a
US $240 million cement factory with 1.2 million MT initial
capacity, to be raised to 2.4 MT in phase-wise. Several
international telecom companies have set up successful
joint ventures and others are expected to make substantial
investment in infrastructure projects.