The new South Asian powerhouse

Foreign Direct Investment
| The European | 25th January 2019
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In recent years, Bangladesh has established a position as one of the most attractive investment destinations in the world. In 2018 it attracted $2.58bn in FDI, up from $700m in 2009 and there is much for investors to be excited about. These achievements have been built on a strong, stable and sustainable economy, attractive incentive packages for businesses, and an efficient system of governance.

Bangladesh’s economic progress has been impressive, even in global terms. Its GDP growth rate has been higher than 6% over the last decade (more than 7% for the last three years) and without posting negative growth for the last 30 years. A per capita income of $1,754 (up from $725 in 2009) saw the country graduate from the UN’s least developed country (LDC) status to that of a middle-income country in 2017. Add the moderate inflation rate of around 5% and the government’s aspiration of becoming a developed country by 2041 is now a reality.

Goldman Sachs included Bangladesh as a member of the “Next 11” nations to power the world economy. It should also be noted that Bangladesh has been one of the highest achievers of the UN’s millennium development goals (MDG) with equal commitment to the sustainable development goals (SDG) in place – a glance at the UN’s SDG tracker is testimony to this.

Bangladesh is a socially cohesive, democratic country that enjoys bi-partisan political support for private investment. The country has strict regulation in place and offers a well-educated, highly adaptive workforce combined with the lowest wages and salaries in the Asian subcontinent. Approximately 57% of the population is under 25 years of age, providing a young and talented workforce that caters to the needs of modern business.

Among the country’s strongest assets are the economic zones and export-orientated industrial enclaves, which have all the transport, logistics and infrastructure foreign investors need. Energy prices in Bangladesh are the most competitive in the region (0.09$ per kwh). Infrastructure and power generation is a leading government priority.

Bangladesh currently offers an attractive range of incentives to investors. These include:

  • Investing with 100% equity (and/or joint ventures) with unrestricted exit
  • Tax holidays for 5-10 years for selected sectors
  • Remittance of royalty-technical know-how-technical assistance-franchise and other permissible fees
  • Tariff concessions on import of capital machinery and raw materials
  • Cash incentives and export subsidies ranging from 5-20% on the FOB value of selected products
  • Funds for export promotion, and export credit guarantee scheme

Investment opportunities are open to almost every sector excluding firearms and security printing. A population of 160 million and a rapidly growing middle class also mean a huge local market. Investors are permitted domestic sales for up to 20% of the produce. Also, Bangladesh’s strategic geographic position provides access to a regional market of three billion people full of young and brand-conscious consumers.

The Bangladesh Investment Development Authority (BIDA) works under the direct supervision of Prime Minister Sheikh Hasina. BIDA provides a one-stop investment promotion agency facilitating registration, tax/tariff certification and all other supportive services throughout the country outside of the economic/export processing zones.

This year, BIDA plans to initiate a One Stop Service (OSS) to bring all supporting agencies under one umbrella and to make the most of the business services available online.

Further information
www.bida.gov.bd

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