Bangladesh has emerged as a hub of hope for foreign investment in recent years because of its sustained economy growth, cheap labour, large consumer base, and positive policies of the government. The country's strategic location in South Asia, combined with its thriving export sector and supportive manufacturing environment, has attracted potential businesspeople and multinational firms. For international players seeking entry into the Bangladeshi market, it is essential to be aware of the legal and administrative procedures for starting a business in a compliant and hassle-free manner.
Foreign direct investment (FDI) is encouraged by the government of Bangladesh in almost all sectors with the exception of a few sensitive or restricted sectors. Foreigners are given equal treatment with local investors, with benefits such as complete repatriation of profit, protection of investment under the law, and tax incentives in selected industries. However, business in Bangladesh entails following some procedures and coordinating with different government agencies. The procedure seems to be complex, especially for new investors, but can be handled if there is support and proper documentation.
Foreigners can choose different forms of business when setting up operations in Bangladesh. The preferred and most favoured form is the Private Limited Company, which gives protection of liability as well as operational flexibility. Options are opening a Branch Office or Liaison Office, which is particularly appealing to foreign parent companies that have to expand but do not require full incorporation. Joint ventures with local partners are also common, particularly where there is favourable local experience or infrastructure.
The first formal procedure for forming a company in Bangladesh is to seek clearance of the name with the Registrar of Joint Stock Companies and Firms (RJSC). It will ensure that the intended company name is unique and complies with domestic legal standards. Once approved, the name will be reserved for a period during which the procedure for incorporation must be completed. Following the name clearance, the company must prepare its fundamental documents, including the Memorandum of Association (MOA) and Articles of Association (AOA), which define the objectives of the company, its organization, and internal rules.
To proceed with incorporation, foreign investors must open a temporary bank account in a scheduled bank in Bangladesh. For 100% foreign companies, a minimum inward remittance of USD 50,000 is typically expected. This remitted capital is to be authenticated by the bank as an encashment certificate, which is a confirmation of foreign investment and mandatorily needed for further clearances. This fund can be used later for operational expenses or capital investment according to local regulations.
Having these requirements in hand, the firm can submit a request for incorporation to the RJSC, with the required forms and payment. Assuming all paperwork is correct, RJSC issues a Certificate of Incorporation, attesting the de facto birth of the company in Bangladesh. The firm is also given soft copies of the MOA, AOA, and incorporation papers, which are utilized for follow-up registrations and licenses.
For foreign-owned or partially foreign-owned enterprises, there is mandatory registration with the Bangladesh Investment Development Authority (BIDA). BIDA is the apex investment promotion agency and provides primary services including approvals, work permits, and incentives. BIDA registration involves submission of the documents of incorporation, details of the investor, business plan, and bank encashment certificate. Upon approval, the company is officially declared a foreign-invested enterprise in Bangladesh and is eligible for a variety of benefits like repatriation of capital and profits.
Post-incorporation compliance involves acquiring other licenses and approvals based on the nature of the business. These are obtaining a Trade License from the local Municipality or City Corporation, Electronic Tax Identification Number(eTIN) from the National Board of Revenue (NBR), and Value Added Tax (VAT) registration when required. Import/export businesses also require Import Registration Certificates (IRC) or Export Registration Certificates (ERC). Environmental clearance, fire safety certificates, and other industry-specific licenses may also be required depending on the industry.
For those foreign businesses that are not interested in creating a fresh legal entity, a Branch or Liaison Office might be more suitable. Such offices will be required to approach BIDA directly with all details of the parent company, account statements, intended activities in Bangladesh, and proof of financial strength. Branch offices are permitted to engage in commercial business such as consultancy, whereas Liaison Offices are permitted to carry out only non-commercial activities such as market research and coordination. They will be required to register with the RJSC and NBR, after approval by BIDA, before they can begin operating.
Taxation in Bangladesh is on an equal basis for domestic as well as foreign companies. Corporate tax rates vary depending on the industry, which usually ranges between 20 and 45 percent. Dividends, royalties, charges for technical services, and interest on money are liable to be charged with withholding tax. There have been avoidance of double taxation arrangements entered into with over 30 countries to grant concessionary taxation to eligible foreign entities. There must be maintenance of proper books of accounts in finances and use of certified tax agents in order to fulfil all statutes.
One of the biggest attractions for foreign investors is repatriation of profits, dividends, and capital after satisfying all tax and regulatory obligations. This is subject to approval by Bangladesh Bank, the central bank of Bangladesh, and subject to submission of audited accounts and tax clearance certificates. On closure of business, even initial capital investment can be repatriated after completion of required legal formalities.
Several government departments and support institutions work together to encourage foreign investment and business registration in Bangladesh. These include the Bangladesh Investment Development Authority (BIDA), Registrar of Joint Stock Companies and Firms (RJSC), Bangladesh Bank, National Board of Revenue (NBR), Bangladesh Economic Zones Authority (BEZA), Bangladesh Export Processing Zones Authority (BEPZA) and the Export Promotion Bureau (EPB). All these institutions collectively offer foreign investors the necessary advice, licenses, and infrastructure assistance to operate legally and efficiently in the country.
Lastly, Bangladesh has a favourable and liberal platform for foreign investors that is backed by policy support and legal protection. Although there are multiple-stage registration with contacts involving various government bodies, the process is well-documented and understandable. With proper preparation and expert advice, foreigners can gladly register and do businesses in Bangladesh as the country enjoys sustained economic growth while foreigners also enjoy the dividends of an active and growing market.
