“Investing and Doing Business in Bangladesh”©Bangladesh Investment Development Authority...

©Bangladesh Investment Development Authority

“Investing and Doing Business in Bangladesh”


The World’s

44th

Largest Economy Ranked by World Bank and will be

23rd

largest economy by 2041

2ndin RMG Export after CHINA

Economic Indicators (2016)

GDP Growth Rate (Last 10 years) 6% - 7%

GDP Size (2017-18) $285 Billion

GDP Growth (2016-17) 7.28 %

Per Capita GDP $ 1,754

Share of Investment to GDP 30.3%

Source: Bangladesh Economic Review 2016, Ministry of Finance, World Bank, Digital Year Book 2016

Economy of Bangladesh: Overview

2

Poverty rate

dropped to

12.9% from

44.2%

Each year

Bangladesh

creates

around 1.2

million jobs

Export

reaches to

37 billion in

from 16

billion in

FY10

FDI jumps to

2.15 billion in

FY17 from

1.2 bil in

FY10

Source: World Development Indicators, World Bank and 7th five year plan, GoB


To become a Middle Income Country by 2021 and developed country by 2041 we

need to move faster…

Growth Story of Bangladesh

Parameters What we were As of now

Per capita (USD ) 129.71 (1971) 1754 (2017-18)

Population under the poverty line 82% (1970) 18.5%

Literacy Rate 29.23% (1981) 70% (estimated 2015 )

Female Literacy Rate 27(1971) 77% (estimated 2015 )

GDP growth 4.62% (1976) 7.24%

Export (USD ) 0.4bn (1976) 36.66 bn (2017-18)

FDI (USD ) 7 million (1977) 2152 million (2017)

Forex Reserve (US$) 7.50 bn (2009) 32.40 bn ( April ’2018)

Electricity Gen. Capacity 3362 MW (2009) 15,351 MW (March, 18)

(Mx. Gen. 10,084 MW)

3


Vision

2021Vision

2041

GDP Growth 8% 8%

Visions to grow…

Per Capita Income $ 2000 $ 12600

Investment to GDP 34.4% 36%

Share of Industry to GDP 34% 40%

FDI $9.56 billion $153 billion

Infra Investment $100 billion $1150 billion

Economic Status Middle Income High Income

GDP in Value $335 billion $2580 billion

Export earning $70 billion $350 billion

4


SDGs: financing…

5

$928.48 billion requires from 2017 to 2030 to implement the SDGs:

• Private sector financing (42.09%),

• public sector financing (35.50%),

• public-private partnership (PPP)

(5.59%),

• external financing (14.89%) of which:

• foreign direct investment (9.95%),

• foreign aid and grants (4.94%)

• non-government organization (NGO)

(3.93%).

Annually USD 66.32 billion

needed…

Potential sources of gap

financing per annum are:


“Bangladesh one of

the Frontier five

economies- “JP

Morgan

“Bangladesh the

Next China”

Mckinsey &

Company

“Bangladesh will be the 12th

economic power of the world in

2050” UBS.

How does World behold Bangladesh?

“28th &23rd largest economy of World

by 2030&by2041” PwC

“Low cost and high

return Manufacturing

destination in Asia”

JETRO

“The Next Eleven (N-11),

Bangladesh one of 11

nations, have high

economic potential”Goldman Sachs

6


Big name in Business World already in Bangladesh

7


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.

Almost all industrial sectors are open for foreign investors for investment

Bangladesh never posted negative economic growth during the past 30 years

• Bilateral Investment treaties (BITs) signed with 31 countries

• Double taxation treaties (DTTs) with 28 countries:

• Bangladesh is a signatory to ICSID, UNCITRAL, OPIC, MIGA, WAIPA, WIPO and WTO.

• All laws, regulations are conducive to investment

• Bangladesh is making all out reforms in Ease of Doing Business (EODB) to attain

double digit ranking by 2021

Investment climate of Bangladesh

8


Opportunities Unbounded

In this growing Bangladesh, investment opportunities are unbounded, diverse and long-term

Competitive Services

IT & ITES, BPOs Logistics, Health

SkillsEducation,

Training, HR development

InfrastructureCommunication, Energy, Power, Ports, Economic

Zones

ManufacturingCompetitive

Manufacturing supporting global

value chains

All Modes of Investments

100% FDI

Joint Ventures

Partnerships

PPPs

Non-equity modes(Technology transfer, licensing

Franchising, Contracting etc)

• Foreign Lending

9



Almost all the sectors are open to FDI

Reserved Sectors

1.Arms & ammunitions 2.Nuclear Power 3.Security printing and minting 4.Afforestation and Mechanize Extraction within the boundary of reserved forest.

Agribusiness &

Food processing

Agro-based & agro-

processing

Jute & Jute goods

Flower cultivation

Commercial plantation

Horticulture

Silkworm &Silk Industry

Furniture

Handicrafts

Integrated shrimp cultivation

Frozen Food

Textile &

Clothing Home Textiles

Textiles industry

Readymade garments

industry

High value added RMG

ICT &

Electronics

ICT and ITES

Computer software &

ICT goods

Electronics

Light engineering incl.

automobiles

Energy &

Infrastructure

Power

Ports and Logistics

Economic Zones

Oil and gas

Tourism

Transport Infrastructure

Pharmaceuticals

Herbal medicines

Plastics Ceramics

Leather & leather goods

Textile Dye & chemicals

Basic chemicals

Pharma &

Chemicals Health care

Footwear

Cosmetics and toiletries

Jewelry and diamond

cutting polishing

Healthcare

& Others

10



17 strategic sectors are open to FDI separately regulated…

• Exploration, extraction and

supply of other mineral

resources

• Large-scale infrastructural

project (e.g. flyover,

elevated expressway,

monorail, economic zone,

inland container depot/

container freight station)

• Crude oil refinery

(recycling/refining of lube oil

used as fuel)

• Fishing in the deep sea

• Bank/financial institution in

the private sector

• Insurance Company in the

private sector

• Generation, supply and

distribution of power in the

private sector

• Exploration extraction and

supply of Natural gas/oil

• Exploration, extraction and

supply of coal

• Medium and large industry

using natural gas/condescend

and other minerals as raw

material

• Telecommunication Service

(mobile/cellular and land

phone)

• Satellite channel

• Cargo/passenger vessels

• Sea bound ship transport

• Sea-port/deep sea-port

• VOIP/IP telephone

• Industries using heavy minerals

accumulated from sea beach

11


Attractive Incentives Schemes

Bangladesh offers most attractive

investments incentives across sectors and locations

Fiscal & Tax Incentives

Tax holiday • 5 to 10 yrs for selected sectors• Upto 10 yrs for infrastructure• Upto 10 years for EZs

Accelerated depreciation

• in lieu of tax holidayDouble tax avoidance under

DTTs

Tariff concessions• capital machinery• import of raw materials

Bonded warehousing for

export oriented industries

Financial Incentives

Cash incentives • Exporting selected products

Export Development Fund

Equity Entrepreneurship Fund

Investment Incentives

OthersFast Track Approvals

Citizenship

Permanent Residency

Quick Immigration

Skilled Work Permits

NRB Preferences

12

©Bangladesh Investment Development Authority13

27th Investment cost survey JETRO 2017

Cost of components (water and electricity) rate: (US Dollar)

0.09

0.11

0.13

0.09

0.12

0.13

0.1

0.16

0.2

0.15

1.37

0.45

1.11

0.4

0.82

0.55

0.16

1.33

0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6

Dhaka

Beijing

Kulalampur

Manila

Bangkok

Hanoi

New Delhi

Mumbai

Karachi

Water rate for general use (per cu.m) Electricity rate for general use (per kWh)

Competitive factor cost among the peer cities:

©Bangladesh Investment Development Authority 14

(US Dollar)Cost of wages and salaries:

27th Investment cost survey JETRO 2017

111

677

345

262

346

192

217

260

208

582

1881

1712

1345

1478

979

1713

1593

1251

56

273

223

295

245

169

159

130

134

0 200 400 600 800 1000 1200 1400 1600 1800 2000

Dhaka

Beijing

Kulalampur

Manila

Bangkok

Hanoi

New Delhi

Mumbai

Karachi

Legal minimum wage Manager's salary Workers wages

Competitive factor cost among the peer cities:


Competitive edge of Bangladesh in investment segments

Abundance of work-force, Lowest Wage in Asia,

Duty Free Market Access, Bond Facilities, EZs/EPZs

Population of 160 Million, with 3 billion regional

market with Young and Brand Conscious

Consumers

High demand from Industrial Upgrading, Pursuit of

Efficiency and Productivity in Various Sectors,

Number of Mega Projects, Volume of ODA, external

finance

High Mobile Density, Internet Density, Tech Savvy

Young Generation, Digital Bangladesh Policy

Export Oriented

Consumer Market/ Finance

Trading

Infrastructure / Energy

Start-Ups / ITeS

15


Prospective sectors : Electronics Sector

• Global Electrical and Electronic products are highly branded. Bangladesh is producing mostly for the

domestic market.

• Approx USD 1.9bn market demand while local production approx. USD 1bn

• More than 3000 units are in operation, creating employment (direct and indirect) 0.1 million & 0.4 million

• Major Import substitution opportunity exists

• Middle class consumers of Bangladesh consist population more than Malaysia, Singapore, Thailand

• 40,000 light engineering workshops/enterprises operating. About 1 million people and innovative

entrepreneurs are actively engaged

• Annual turnover is US$ 1600 million of which Import substitute products is around US$ 200 million

• Over 90% are serving the local needs of the people.

• 10% cash incentives for export

• Availability of trainable labors at competitive cost

• Declared as special development sector in its Export Policy

Prospective sectors : Light Engineering Sector


Over 1000 IT companies thriving in the country and capturing a significant share in the

international markets worldwide.

Total estimated IT Industry Size is US$ 120 Million (including export)

Software contributes around 44%, whereas ITES contributes around 56% to the overall

industry revenue.

Approx 30000 professionals, majority IT and other graduates, are employed in the industry.

Total investment in this sector is more than 50000 crore and this sector is the largest contributor

to FDI in Bangladesh.

Online outsourcing, data entry and call center business are flourishing.

In the next 5 years, 1% of the country’s total GDP will come from the software and IT

services sector.

Prospective sectors : IT & ITES Sector


• Market Size: USD 2.8 Billion

• Industry Growth: 18.7%

• Registered companies : 266 (222 in operation)

• Total number of Brand : 12,500+

• Total number of generic : 934

• Export earnings reached USD 89.175 million in 2016-17

• Exported to more than 83 different countries over the last 7 years, an export growth rate

recorded 25.5% annually.

• Bangladesh holds the 14th position in 17 regional markets surveyed in BMIs Pharmaceutical,

also occupies 67th position in BMI’s pharmaceutical universe.

• Domestic manufacturers account for 97% of the drug sales, remaining 3% is imported.

• About 5,600 brands of medicines are manufactured

• API park where 40 API industries will be able to operate.

• The WTO TRIPS permits Bangladesh to reverse-engineer patented generics till 2033.

Prospective sectors : Pharmaceuticals Sector

18


• The medical device market is projected to USD 243.6 million in 2018

• Hospitals in Bangladesh experienced up to 24.5% growth in patients in 2016

• medical equipment market of Bangladesh is almost import dependent hence a potential sector to

invest

• Huge private hospitals as such best opportunity for selling high end equipment and medical

devices.

• Government builds hundreds of new healthcare facilities and upgrades existing facilities

• The average growth rate is more than 20% per year.

• 300 manufacturers, export plastic goods worth nearly USD 116.25 million in the FY 2016-2017.

• Currently, around 5000 companies are operating in this sector of which 98% of them are SME’s.

• Direct & indirect employment to over 1.2 million people in Bangladesh

• Annual sales at around BDT 150 billion in the local market, in which household items account for nearly

BDT 20 billion.

• Strong backward linkage sectors, such as light engineering sector in BD etc.

• Supports many products and technologies like packaging, textile, healthcare, construction, electronics,

energy generation automotive.

Prospective sectors : Medical Equipment Sector

Prospective sectors : Plastic Sector


• top priority sector in the overall development of the country.

• 48.5% of the total population of Bangladesh is enjoying the electric facilities.

• Total demand is projected to be more than 12000MW in 2017.

• Bangladesh needs total USD 18 billion investments in the power sector to minimize this demand-supply gap

• Public and private sector produce 63% and 37% of electricity respectively.

• The power sector is a capital-intensive industry, huge investments is required in order to generate addition to

the capacity.

• USD 40 billion investment will be required for new generation and USD 8 billion for transmission

network.

• Private sector Power Generation Policy of Bangladesh has offered attractive fiscal and non-fiscal incentives.

• Local Demand USD 2.5 Billion

• Raw Material Source 5:95 (Local: Imported)

• Future Investment Possibility: USD 2.5 to 3 billion

• Future Employment option: 1.5 Million

• Import Situation: 2.0 Billion

Prospective sectors : Power Sector

Prospective sectors : Automobile Sector


More than 47.5% of population dependent on agriculture for livelihood

Investment Areas

•Agri-input sectors like seed, fertilizer, Pesticide, irrigation & Farm Machinery

•Post-Harvest infrastructure

•Food processing like eligible oil, rice, sugarcane, potato, fruits & vegetables & spices

Special Incentives

•100% foreign equity is allowed (Except for defense, nuclear energy, currency and forest

plantations)

•Tax incentives for 5-7 years based on location and industry dependent

•Cash Incentives: 20%

•electricity consumption special rebate of 20% to agro-processing sector

•Loan disbursement target in agriculture is USD 2 Billion

•Entrepreneurs Equipment Fund (EEF) is allowed agro-sector

Prospective sectors : Agri-business Sector


FDI performance of Bangladesh

22


328 350460

845 793666

1086

700

913

11361293

1599

22362332

2152

1527

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

(US$ Mill)

Bangladesh FDI Statistics

FDI Inflow since 2001

Source: Enterprise Survey, Bangladesh Bank

23


Bangladesh FDI StatisticsDistribution by Components


(Million US$)

24

2011 2012 2013 2014 2015 2016 2017

Equity 432 498 541 280 697 911 539

Reinvested

earnings 490 588 697 989 1145 1215 1280

Intra-company

loans 215 207 361 258 394 206 333

Total 1137 1293 1599 1527 2236 2332 2152

24



Bangladesh FDI StatisticsDistribution by Sectors: (Million US$)

181375 324 227 255

573272

307 422391 443

364

249

136

327312

310

166

238127

99 50

574 434

23 75

40

53

125 87

6

61

31

32

25 43

167212

356462

505 665

0

500

1000

1500

2000

2500

2011 2012 2013 2014 2015 2016

Telecommunication Textiles & Wearing Banking

Power, Gas & Petroleum Food Products Agriculture & Fishing

25


FDI Stock…

26

6072.07 6165.817750.24

8593.4910028.8

12912.14

14539.32

0

2000

4000

6000

8000

10000

12000

14000

16000

2010 2011 2012 2013 2014 2015 2016

FDI Stock from 2010 to 2016


FDI Inflow since 2009- 2017 (South Asia):

Country 2009 2010 2011 2012 2013 2014 2015 2016 2017

Afghanistan 185 76 58 27 47 37 163 100 54

Bangladesh 700 913 1136 1293 1599 1551 2235 2333 2152

Bhutan 15 12 20 36 16 17 7 -12 10

India 35649 24640 36 190 24 196 28 199 34582 44046 44486 39916

Pakistan 2338 2 022 1 162 859 1333 1867 1289 2006 2806

Sri Lanka 404 478 956 941 933 994 680 898 1375

Maldives 112 164 424 *228 *361 *333 *308 *448 517

Nepal 39 39 95 92 71 30 52 106 198

Bangladesh FDI Statistics of South Asia


FDI of Bangladesh

28

(In million USD)

Year Total Equity

capital

Reinvested

earnings

Intra-

company

loans

2011 1136.38 431.85 489.63 214.9

2012 1292.57 497.63 587.54 207.4

2013 1599.16 541.06 697.11 360.99

2014 1551.28 280.3 988.81 282.17

2015 2235.39 696.67 1144.74 393.98

2016 2332.72 911.38 1215.39 205.95

2017 2151.56 538.90 1279.42 333.24 0 500 1000 1500 2000 2500

2011

2012

2013

2014

2015

2016

2017

1136.38

1292.57

1599.16

1551.28

2235.39

2332.72

2151.56

431.85

497.63

541.06

280.3

696.67

911.38

538.9

489.63

587.54

697.11

988.81

1144.74

1215.39

1279.42

214.9

207.4

360.99

282.17

393.98

205.95

333.24

Intra-company loans

Reinvested earnings

Equity capital

Total


Foreign borrowings trends:

Foreign borrowings for project financing has increased manifold recently mostly from multilaterals and investment banks…

Private Sector Foreign Borrowing

Year Amount (in million USD)

2009-10 175.93

2010-11 431.46

2011-12 1047.93

2012-13 1795.28

2013-14 1453.38

2014-15 2299.61

2015-16 887.69

2016-17 1604.37

2017-18 1422.84

Total 11118.49

0.00

500.00

1000.00

1500.00

2000.00

2500.00


Bangladesh-Singapore Relationship

30


Bangladesh-Singapore Bilateral Trade Statistics

31

Year Export Import

2009-10 80.03 1550.68

2010-11 113.41 1291.90

2011-12 179.23 1709.61

2012-13 155.99 1421.9

2013-14 135.86 2407.32

2014-15 153.463 2197.83

2015-16 164.99 1861.97

2016-17 335.12 2447.00

Value in Million US $

Major Export Items:Woven Garments, Knitwear, HomeTextile, Agri-Products, Frozen Food,Leather & Leather Products,Footwear, Raw Jute.

Major Import Items:Vegetable products; Animal orvegetable fats and oils etc; Preparedfoodstuffs; Mineral products;Products of the chemical or alliedindustries; Plastics & rubber articles;Pulp of wood products; Base metals& articles of base metal; Machinery& mechanical appliances; electricalequipment.


Bangladesh Investment Opportunity By Singapore Business Leader

Bangladesh is the third-largest South Asian economy and has shown consistent annual growth of 6-7% for the past three

years. Bangladesh is a significant trading partner of Singapore, with bilateral trade amounting to S$3.9 billion in 2016. In

the same year, Bangladesh was Singapore’s 28th largest trading partner and 22nd largest export destination.

Singapore’s top exports include fuel oils, automotive diesel fuel, jewellery of other precious metals and non-monetary gold in

semi-manufactured forms. Singapore is a major business hub with an estimated 150 Bangladeshi companies based here.

Singapore also serves as a medical, education and travel destination;

Mr Teo said: “Bangladesh is a highly promising market that has not been getting the attention it deserves, and has

established both economic and political stability for a number of years. Bangladeshi businesses are familiar with Singapore

and attach a premium to our brand name, and it is opportune for our companies to explore emerging opportunities there.

From the feedback of Singaporean enterprises with businesses in multiple South Asian countries, Bangladesh is considered

as an easier destination to conduct profitable business.”

Singapore is looking for investment in a bigger way in Bangladesh as the world is beginning to take notice of "very strong

economic opportunities in Bangladesh“;

The strong and very consistent growth profile of Bangladesh has attracted Singapore to engage deeply with Bangladesh like

other countries of the world;

Countries all over the world compete for investment and companies will navigate towards those countries which are

welcoming having clean set of rules, strong rule of law and stable policies, significant steps are taken by the government to

that direction;

"Bangladeshi people have very good reputation they are very hardworking, friendly and very obliging.“

32


Singapore FDI in Bangladesh

31

(In million USD)

Year Total FDIFDI from Singapore

2011 1136.38 13.74

2012 1292.57 37.88

2013 1599.16 162.39

2014 1551.28 117.41

2015 2235.39 175.27

2016 2332.72 673.05

2017 2151.56 202.73 0 500 1000 1500 2000 2500

2011

2012

2013

2014

2015

2016

2017

1136.38

1292.57

1599.16

1551.28

2235.39

2332.72

2151.56

13.74

37.88

162.39

117.41

175.27

673.05

202.73

FDI from Singapore

Total FDI

FDI from Singapore in Bangladesh


FDI Stock of Singapore in Bangladesh

(In million USD)

FDI Stock

Year Value

2011 133.74

2012 172.00

2013 364.79

2014 426.00

2015 434.35

2016 1106.36

2017 936.00 0 200 400 600 800 1000 1200

2011

2012

2013

2014

2015

2016

2017

133.74

172

364.79

426

434.35

1106.36

936

FDI Stock of Singapore in Bangladesh


FDI Inflows & Outflows of Singapore

33

(In million USD)

Year FDI inflows FDI outflows

2011 48329 31459

2012 57150 18341

2013 66067 39592

2014 68496 39131

2015 65262 35485

2016 61597 23888

2017 62006 24682

0 10000 20000 30000 40000 50000 60000 70000

2011

2012

2013

2014

2015

2016

48329

57150

66067

68496

65262

61597

31459

18341

39592

39131

35485

23888

FDI outflows

FDI inflows

FDI Flows of Singapore


Singapore Investment in Pipeline

Share-Equity wise Joint venture/100% Foreign Investment Projects Registered with BIDA up to April-2018

Singapore No. of UnitProposed Investment

(TK. In million) Proposed Investment

(USD In million) Proposed Employment

100% Foreign Investment 44 13373.018 196.951 8600

Joint venture Investment 122 94050.985 1476.102 19062

TOTAL 166 107,424.003 1,673.053 27,662

Sector wise Joint venture/100% Foreign Investment Projects Registered with BIDA up to April-2018

Name of the Sector No. of UnitProposed Investment

(TK. In million) Proposed Investment

(USD In million) Proposed Employment

Agro-Based 20 9,507.924 149.070 5,367

Food And Allied 5 4,462.332 59.815 760

Textile 17 5,302.167 124.036 7,717

Printing & Packaging 3 434.760 7.292 401

Chemical 24 10,488.104 209.036 2,251

Glass & Ceramics 1 358.000 4.837 60

Engineering 30 1,563.837 23.255 2,637

Service 64 75,146.301 1,093.649 8,259

Misc. 2 160.578 2.063 210 TOTAL 166 107,424.003 1,673.053 27,662

36


Prime Minister’s Office

BIDA

Investment Promotion and facilitating Agencies

Key Services• Investment promotion

• Investment facilitation

• Policy Advocacy

• Match-making

• Sector briefings

• Project Structuring

• Transaction Advisory

Key Services

• Counseling/ Advisory

• Regulatory Approvals

• Visas & Work Permits

• Foreign borrowing

• Investors aftercare


BIDA and its Responsibility

Bangladesh Investment Development Authority (BIDA) was created

under Bangladesh Investment Development Authority Act 2016.

BIDA’s Functions are broadly categorized into :

1. Investment promotion;

2. Investment Facilitation (approval, recommendations and aftercare)

3. Policy Advocacy

4. Ensure inclusive investment improving ‘Ease of Doing Business’

5. Creating entrepreneurs and creating necessary skill to complement local

industry needs.

6. Facilitate private investment to make Bangladesh MIC by 2021 and developed country by 2041

38


BIDA’s vision and mission

Vision

To be a leading agency contributing towards Bangladesh’s achievement of

high income status

Key underlying Assumptions

Foster a Private Sector-Focused Culture

Accumulate Deep Business Knowledge

Implement Internal Systems for Consistent Good Facilitation

Organizational Values

MISSIONTo promote and support pro-growth private sector investment and foster a

world-class investment ecosystem

Integrity

39


Bangladesh Investment Development Authority: Services to

Investors

Guidance on doing business in Bangladesh Registration of New Industries

Responding to investment-related queries Facilitation of Utility Services

Investment guidance and advice in specific

sectors

Support for importing machineries and raw materials

Support in forming statutes policies and

regulations

Support for obtaining external financing

Supporting potential foreign investors to

match with local investors

Approval of Royalty and Technical

Assistance Fees

Organize visit, meetings with various govt.

and private agencies

Facilitation of Setting up commercial offices

Addressees Issues relating to individual

companies on their smooth operation

Visa Recommendation and Work Permit

Issue

40

http://www.google.com.bd/url?sa=i&source=images&cd=&cad=rja&uact=8&ved=0CAgQjRw&url=http://www.dhakatribune.com/bangladesh/2014/jul/12/government-trying-identify-basic-bank-scammers&ei=3Gu7VJmFK4r88QWXhYDQCw&psig=AFQjCNG9BWLt4TrfcW3sb1KDUdTJ_EYhTQ&ust=1421655388772909

http://www.google.com.bd/url?sa=i&source=images&cd=&cad=rja&uact=8&ved=0CAgQjRw&url=http://www.dhakatribune.com/bangladesh/2014/jul/12/government-trying-identify-basic-bank-scammers&ei=3Gu7VJmFK4r88QWXhYDQCw&psig=AFQjCNG9BWLt4TrfcW3sb1KDUdTJ_EYhTQ&ust=1421655388772909


Development of Investment Climate in

Bangladesh by

Doing Business Reform

41


The need for Investment Climate Development and

Doing Business Index (Rankings)

Bangladesh is advancing with a constant GDP growth of more than 6% and with proper

adoption of the Doing Business reforms can ensure a ‘double-digit’ GDP growth.

The journey has started to create favorable investment climate started in January 2017.

A higher ranking in the ‘Ease of Doing Business’ index gives confidence to both local

and foreign investors

42


Doing Business 2018 Rankings

DB-2018 Rank DB-2017 Rank DB-2018 DTF DB-2017 DTF Change in DTF (% Points)

177 176 40.99 40.84 ↑ 0.15

• Needed 404 days for a new electricity connection in the major cities.

• 19.5 days required for ‘Starting a Business’

• Required 278 days to acquire all permissions required to build a warehouse in major cities.

• Property Registration took 244 days.

• 1442 days for enforcing contracts.

• Resolving Insolvency: 1461 days.

Indicator-wise Ranking of 2018

43


Doing Business Position 2017-2018

Sl. No. Topics DB-2018 Rank DB-2017 Rank DB-2018 DTF DB-2017 DTFChange in DTF

(% Points)

Overall 177 176 40.99 40.84 ↑ 0.15

1. Starting Business 131 122 80.67 81.51 ↓ 0.84

2. Dealing with Construction Permit 130 138 61.97 61.60 ↑ 0.37

3. Getting Electricity 185 187 16.97 16.16 ↑ 0.81

4. Registering Property 185 185 27.67 27.58 ↑ 0.09

5. Getting Credit 159 157 25.00 25.00 --

6. Protecting Minority Investors 76 70 56.67 56.67 --

7. Paying Taxes 152 151 56.13 55.76 ↑ 0.37

8. Trading Across Border 173 173 34.86 34.86 --

9. Enforcing Contracts 189 189 22.21 22.21 --

10. Resolving Insolvency 152 151 27.71 27.02 ↑ 0.69

= Doing Business Reform making if easier to do business. × = Change making it more difficult to do business.

44


How ‘Ease of Doing Business’ Action Plan is Implemented By BIDA

1. Ease of Doing Business reforms, covering the 10 Indicators was launched on January 1, 2017 in presence of

Cabinet Secretary, Principle Coordinator (SDG affairs) and all Secretaries. Executive Chairman, BIDA has

presented target plan on each indicator. A Taskforce in all relevant Ministries for achieving the target is formed.

2. The Hon’ble Prime Minister has given her consent for implementation of the recommendations provided by DB

reforms, on November 9, 2016.

3. BIDA has taken the initiative instructed by PMO to establish an ‘Ease of Doing Business’ reforms

recommendation. acting with relevant agencies, addressing all indicators, formation of a time lined action plan.

BIDA successfully completed preparation of this action plan.

4. BIDA team headed by Executive Chairman of BIDA, met with Minister/Secretary of the concerned Ministries

and the Governor of Bangladesh Bank for implementation of the action plan.

5. Two National level committee were formed to coordinate all DB reform and related activities, Namely:

a. National Steering Committee , headed by Hon’ble Finance Minister,

b. National committee for Monitoring and Implementation of DB reforms, headed by Cabinet Secretary.

7. Amendment of relevant section of Company Act 1994, Arbitration Act, Contract Act, Insolvency Act, Artha Rin

Adalat Ain-2003 are identified by BIDA team and sent to concerned Ministries for implementation of ease of

doing business reforms.

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Bangladesh status in 'Ease of Doing Business Report based on DB 2018

1.Starting a business

2. Dealing with construction

permit

3. Getting Electricity

Current Rank 177 Target Rank 99 (By 2020)

Indicator Current Status Target

Procedures (number) 9 8Time (days) 19.5 7.5

Cost (% of income per capita) 13.9 4.0

Paid-in min. capital (% of income per capita) 0.0 0.0


Procedures (number) 13 13

Time (days) 278.0 95

Cost (% of warehouse value) 1.7 0.3

Building quality control index (0-15)* 11.0 8.0


Procedures (number) 9 9

Time (days) 404.0 100.0

Cost (% of income per capita) 3,229.6 550.0

Reliability of supply and transparency of tariff index (0-8)*

0.0 5.0

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Reform Proposal of Ease of Doing Business in Bangladesh


4. Registering

Property

5. Getting Credit

6. Protecting Minority

Investors

Indicator Current Status TargetProcedures (number) 8 7Time (days) 244.0 77.0Cost (% of property value) 6.5 2.9Quality of the land administration index (0-30)* 4.5 24.0

Indicator Current Status TargetStrength of legal rights index (0-12) 6.0 12Depth of credit information index (0-8) 0.0 8.0Credit registry coverage (% of adults)* 0.9 0.0Credit bureau coverage (% of adults)* 0.0 58.6


Strength of minority investor protection index (0-10) 5.3 8.3Extent of conflict of interest regulation index (0-10) 6.3 9.3

Extent of disclosure index (0-10) 6.0 10.0Extent of director liability index (0-10) 7.0 9.0

Ease of shareholder suits index (0-10) 6.0 9.0Extent of shareholder governance index (0-10) 4.3 7.3

Extent of shareholder rights index (0-10) 3.0 8.0

Extent of ownership and control index (0-10) 5.0 7.0

Extent of corporate transparency index (0-10) 5.0 7.0

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7. Paying Taxes

8. Trading

Across

Borders

9. Enforcing

Contracts

Indicator Current Status TargetPayments (number per year) 21.0 6.0Time (hours per year) 302.0 83.5Total tax rate (% of profit) 31.6 18.4

Indicator Current Status TargetTime to export: Border compliance (hours) 100 12Cost to export: Border compliance (USD) 408 335Time to export: Documentary compliance (hours) 147 4Cost to export: Documentary compliance (USD) 225 37Time to import: Border compliance (hours) 183 35Cost to import: Border compliance (USD) 1294 220Time to import: Documentary compliance (hours) 144 1Cost to import: Documentary compliance (USD) 370 37

IndicatorCurrent Status Target

Time (days) 1442 150

Cost (% of claim) 66.8 25.8

Quality of judicial processes index (0-18) 7.5 15.5

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10. Resolving

Insolvency


Recovery rate (cents on the dollar) 25.8 89.7

Time (years) 4.0 0.8

Cost (% of estate) 8.0 3.0

Outcome (0 as piecemeal sale and 1 as going concern) 0.0 1

Strength of insolvency framework index (0-16) 4.0 8.5

Commencement of proceedings index (0-3) 2.0 3.0

Management of debtor's assets index (0-6) 2.0 4.0

Reorganization proceedings index (0-3) 0.0 0.5

Creditor participation index (0-4) 0.0 1.0


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Achievements of Doing Business Reforms in Bangladesh

A. Getting Electricity

Reduction in number of days to obtain a permanent electricity

connection, from 404 days to 28 days.

System average interruption duration index (SAIDI) – 400 minutes

System average interruption frequency index (SAIFI) – 20 times

Minimum outage time is 3 minutes in calculating SAIDI/SAIFI in

Bangladesh

Electricity distribution utility use automated tools to monitor outages.

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B. Paying Taxes

Online Facility(e-filing and e-payment) of personal and business income

taxes.

Implementation of ASYCUDA for e-filing ad e-payment of customs duties.

Mandatory VAT e-registration for Chittagong and Dhaka.

TIN and VAT services are becoming interlinked

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C. Dealing with Construction Permits Reduction in number of days to get permit of building from 278 days to 60

days

Scheduled inspections are required by law to be carried out during construction.

Structural Engineers are held liable by law for structural flaws or problems in the building once it is in use.

Diploma Engineers supervises the construction on the ground.

RAJUK and City corporation are in charge of the plans showing legal boundaries in the metropolitan city

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D. Registering Properties Public availability of list of documents that are required to complete any

type of property transaction,

Public availability of of applicable fee schedule for any property transaction at the agency in charge of immovable property registration and fee schedule for accessing maps of land plots

Property ownership documents are provided on time by the responsible agency.

Specific and separate mechanism for filing complaints on a problem at the agency in charge of immovable property registration are in place

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E. Protecting Minority Investors: Terms are required to be reviewed by an external body if more than 10% of

company's shares are being acquired.

Buyer of share must immediately disclose the transaction to the public and/or shareholders.

The plaintiff can directly question the defendant and witnesses at trial.

The board of directors must include independent and nonexecutive board members.

Buyer must pay declared dividends within a maximum period set by law.

Buyer must distribute profits within a maximum period set by law.

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One Stop Services (OSS) for the Investors

Investors require various services such as clearances, certificates, certificate of origin, licenses

and approvals, loan sanction permits, recommendations for visa and work permit, environment

related certificates, resident and non-resident visa processing, various fiscal and non-fiscal

services, corporate tax and VAT related certificates and various exemptions and utility services

etc.

The current Government, decided to create a ‘One Stop Service (OSS) Centre’ and provide the

investors with as many services as are possible through the Centre and passed the OSS Act.

150 services of 34 agencies are identified and process simplification of these have started. Once

these are completed clients will get their services from one point.

The model of service delivery will be virtual and cloud based. As such agencies will deliver the

services from their end with online connectivity and clients will not be needed to go to any offices.

To ensure prompt and in time services delivery their will be and ‘OSS Assurance Committee’

headed by hon’ble Finance Minister.


Thank you for your kind patience

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“Investing and Doing Business in Bangladesh”©Bangladesh Investment Development Authority...

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