Investment opportunities in bangladesh

© Board of Investment 2015 www.boi.gov.bd

Foreign Direct Investment in Bangladesh: regulations and opportunities

Md Ariful Hoque, Deputy Director


Bangladesh – a stable, fast growing economy

Population : 159 million (Est, 2015) Area : 147,570 km2 GDP total : USD 174 bn (FY’15) GDP Per Capita : USD 1314 (FY 2015) Total Exports : USD 31.21 bn (FY2015) Total Imports : USD 37.42 billon (FY2014) Total FDI (Gross) : USD 2058.98* Mill. (CY 2014) Forex. Reserve : USD 25.02 billion (June’2015) Source: Bangladesh Economic Review, 2015, BBS, EPB, Bangladesh Bank

-0.5

1.5

3.5

5.5

7.5

9.5

11.5

2008 2009 2010 2011 2012 2013 2014P 2015P 2019P

GDP Growth of South Asian Countries

India Pakistan Bangladesh Sri Lanka

Bangladesh 914

1137 12931599 1527

2010 2011 2012 2013 2014

FDI inflow in Bangladesh $mn

2

Source: Bangladesh Bank, 2015 Source: Various


Real GDP Growth (%)

Developing Economies

South Asia excl. India

Bangladesh

World

2013

6.1

2014e

5.6

2015

6.3

2016f

6.7

2017f

6.7 7%

6%

0%


Table 1- Comparative Economic Snapshot of Bangladesh

No. Indicators FY 2014 FY 2015

1. GDP (US$ billion) 173.95 194.55

2. GDP Growth 6.12% 6.51%

3. GDP Per Capita (US$) 1110 1235

4. GNI Per Capita (US$) 1184 1314

5. Export (US$ billion) Export Growth

30.18 11.65%

31.20 3.35%

6. Import (US$ billion) Import Growth

40.62 19.17%

37.16 (April’15) 12.21%

7. Export Import Coverage 74.3%

Source: Bangladesh Bank, BBS, EPB

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Large educated and motivated youth • 57% of the population is under 25 years old • High literacy rate (72%) among youths aged 15-24 • Inspired young, hungry for work and growth • 2 million youth entering in job market each year

Increasing trade integration • Labor cost advantage (less than half the average of

other Asian economies) • Already the second largest garments exporter globally

with other sectors coming up such as IT outsourcing, ceramics, light engineering, etc.

• Progress on SAFTA, BIMSTEC talks

Increasing urbanization • Urbanization rate is fast; will double over the next four

decades • rapid industrialization, infrastructure development and

demographic shifts • Dhaka will be the world’s 5th largest city with a

population of 19 million by 2019 (UN forecasts )

Bangladesh – an attractive investment location

Bangladesh offers a profitable location

both as a market and a production/sourcing base Faster growth in industry (overtaken

agriculture) Developing infrastructure – significant

target for infra investment Export springboard – access to all the

large markets of world High demand for technology transfer Continued business environment reforms

On global investors spotlight Strong local market and growth Competitive utility cost

3

© Board of Investment 2014 www.boi.gov.bd 6

Bangladesh is one of the top exporters of readymade garments to US & Europe Risk factors for FDI are the minimum in Bangladesh Bangladesh never posted negative economic growth during the past

30 years Bangladesh has ‘never defaulted in its debt repayments, nor asked for

its rescheduling Bangladesh has an open, market based economy led by a vibrant and

innovative private sector which provides the main stimulus to its growth Bangladesh is a homogeneous country with no religious, ethnic or other

forms of cultural conflicts Bangladesh is one of the largest contributors to UN peacekeeping

forces and missions and the records of the forces have been exemplary and laudable

Bangladesh – an attractive investment location


Investment Promotion and Protection Foreign investment in Bangladesh is secured by law against

nationalization and expropriation. Local and Foreign investment is given equal treatment Bilateral and multilateral investment agreements ensures protection of

investment. The repatriation of return on investment is guaranteed Bangladesh is a signatory to ICSID, UNCITRAL, OPIC, MIGA, WAIPA,

WIPO and WTO. Bilateral Investment treaties (BITs) signed with 31 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, Belarus)

Double taxation treaties (DTTs) with 28 countries Canada, Poland, Norway, China, Romania, Turkey, Denmark, Singapore, Vietnam, France, Republic of Korea, Philippines, Germany, Sri Lanka, Indonesia, India, Sweden, Switzerland, Italy, Thailand, Oman, Japan, The Netherlands, Malaysia, UK)

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Investment Climate


What is told about Bangladesh Citi Investment Research & Analysis termed Bangladesh, China, Egypt,

India, Indonesia, Iraq, Mongolia, Nigeria, Philippines, Sri Lanka and Vietnam have the most promising (per capita) growth prospects .

Goldman Sachs branded as Bangladesh is in ‘Next 11’ list after the BRIC nations

The International Monetary Fund (IMF) commented on the economy of Bangladesh as Resilient export and remittance flows have bolstered growth and external stability

The Wall Street Journal (WSJ) dismissed the previous branding of Bangladesh saying , 'Basket Case' No More - with a higher growth rate, a lower birth rate, and a more internationally competitive economy,

JPMorganChase commented Bangladesh The country ranks fourth in growth in economically active population.

Morgan Stanley has commented Bangladesh is at the very early stages of an investment boom…

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Investment Climate


New York Times has termed Bangladesh as “an unlikely corner of Asia, strong promise of growth”… An HSBC report (2012),titled ‘The World in 2050’, listed Bangladesh as

one of the top 7 countries expected to deliver the fastest growth en route to 2050. “World Economic Situation and Prospects 2013” of United Nations

termed Bangladesh as “ …strong growth performances continued… ”. The Global Competitive Report 2013” of World Economic Forum (WEF)

reported that Bangladesh has elevated to 8 stages point this year McKinsey & Co. in its latest survey Viewed "Bangladesh is still No.

1,”as the global sourcing hub for RMG

What is told about Bangladesh

Investment Climate


The Deutsche Bank AG, Germany commented Bangladesh having Robust economic growth pattern, Comfortable buffer against external shocks, favorable external liquidity profile The World Bank has on July 1, 2015, categorized Bangladesh as a Low

Middle Income Country (LMIC), up from Low Income Country (LIC)

What is told about Bangladesh

Investment Climate


Opportunities Unbounded

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

Competitive Services

IT & ITES, BPOs Logistics, Health

Skills Education,

Training, HR development

Infrastructure Communication, Energy, Power, Ports, Economic

Zones

Manufacturing Competitive

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

7


Opportunities Unbounded 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.

8

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


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)

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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)


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

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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)

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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 Cash- Incentives (FY 2015-16)

Rate Particulars 3% new market and product expansion of textile market (except US, Canada, and

EU) 4% export oriented local textiles (instead of duty drawback and custom bond)

additional facility for SME textile 5% ship building, SME in textile industry, export of bone powder, potato, jute

thread 7.5% frozen shrimp 10% Diversified jute products, PET flex, Hessian and sacking (jute finished goods) 2-10% frozen fish (based on ice coating) 12.5% leather products 15% light engineering products 15% - 20% for hand made products using straw, sugarcane extract 20% agro-processing and agricultural produce(vegetable and fruit), potato export,

halal meat

Source Bangladesh Bank


Status Rate Corporate Tax: (on net profit) Publicly Traded Company 25% Non-Publicly Traded Company 35% Bank, Insurances, Financial Institutions (listed) 40% Bank, Insurances, Financial Institutions (not listed)

42.5%

Merchant Banks 37.5% Cell Phone Company (40% if listed ) 45% Cigarette producing companies 45% Personal taxes (Based on defined income slabs) 10%-25%

A competitive Corporate tax structure:

Investment Climate Taxation


Investment Opportunities - Financial incentives: Tax holiday:

Year Rate of Tax exemption Areas Out side the area of the city

Corporation of Rajshahi, Khulna, Sylhet, Barisal and Rangpur

1st year 100% 2nd year 100% 3rd year 70% 4th year 55% 5th year 40% 6th year 25% 7th year 10%

Tax holiday:

Depreciation allowances: Accelerated depreciation allowed for new industries instead of Tax holiday: 50%, 30% and 20% for 1st, 2nd, 3rd years on cost of plant & machinery

(a) active pharmaceuticals ingredient industry and radio pharmaceuticals industry; (b) automobile manufacturing industry;(c)barrier contraceptive and rubber latex; (d) basic chemicals or dyes and chemicals; (e) basic ingredients of electronic industry (e.g. resistance, capacitor, transistor, integrator circuit); (f) bi-cycle manufacturing industry (g) bio-fertilizer; (h) biotechnology; I) boilers; (j) brick made of automatic Hybrid Hoffmann Kiln or Tunnel Kiln technology; (k) compressors; (l) computer hardware; (m) energy efficient appliances; (n) insecticide or pesticide; (o) petro- chemicals; (p) pharmaceuticals; (q) processing of locally produced fruits and vegetables; (r) radio-active (diffusion) application industry (e.g. developing quality or decaying polymer or preservation of food or disinfecting medicinal equipment); (s) textile machinery; (t) tissue grafting; (u) tyre manufacturing industry;

Sectors:


Investment Opportunities - Financial incentives

• 0% and 1% customs duty rate is in force for the import of industrial capital machinery and spare parts…

• Special concessionary customs duty rate for import of raw materials for Ship-Building Industry, Pharmaceuticals Industry, Textile Industry, Toys Manufacturing Industry, Telecommunication Industry, Handloom Industry…

• Raw materials, machinery and spare parts of poultry and dairy farms, Solar Panel Manufacturing Plants are exempted from customs duty

• Import of raw materials by Generator Producing and Assembling Industry is exempted from customs duty

• Raw materials, machinery and spare parts imported by power generation plants are exempted from customs duty

• raw materials, machinery and spare parts imported by Oil and Gas exploration and extraction companies, and also by CNG filling station are exemptions from customs duty

Sector specific incentives:


Investment Opportunities - Financial incentives

• Medical equipments and medication materials are exempted from customs duty • Technical grades imported by the pharmaceutical raw materials producing

industries are exempted from customs duty • Specific utility goods imported by textile industry are exempted from customs

duty • Import of De-inking chemicals and waste paper by newsprint paper

manufacturing industries is exempted from customs duty • Special concessionary customs duty rate is allowed for the machineries and

materials imported for the construction of residential hotels for the development of tourism sector

• Special concessionary customs duty rate is in force for the import of chemical materials by the leather industries

• Imports undertaken by 100% export-oriented industries are exempted from customs duty

Sector specific incentives:


Investment Opportunities Economic Zones: a part of planned industrialization The regulatory framework is as under:

Economic Zones Act, 2010 Draft Policy of Private EPZ ,2014 Private Economic Zone Policy 2015( under approval)

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 includes FDI and local investment


Govt EZ’s: 19 EZ comprising 17051 acres of land Mongla, Mirsharai, Anwara-1, Sherpur, Sirajganj Sadar & Belkuchi, Shreepur, Taknaf, Anwara-2, Karanigonj, Jamalpur sadar, Sonarga, Bhola sadar, Ashugonj, Debiganj, Narsingdi Sadar, Shibaloy, Bheramara, Agailjhara, Nilphamari Sadar. Private EZ’s: 3 EZ’s comprising 908 acres of land Polash (AK Khan), Gajaria ( Abdul Monem PEZ), Gajaria (Garments Shilpa Park BGMEA, PSEZ),

Investment Opportunities Economic Zones: a part of planned industrialization


The objectives of this Policy and Strategy are to: • Spell out the principles of partnership with private sector for undertaking

various projects related to infrastructure as well as public service delivery;

• Define an institutional framework, which is conducive and efficient in handling the PPP projects as well as effective to protect public interest; and

• Ensure balance between risk and reward for both the government and private partners

Public Private Partnership (PPP) Govt has adopted PPP (Public Private Partnership) to spearhead mostly the infrastructural development under PPP model. The policy adopted are : Policy and Strategy for Public-Private Partnership (PPP), 2010, Guideline for PPPTAF 2012 & Scheme for PPPTAF, 2012, Guideline for VGF for PPP Project, 2012, PPP Law, 2015 (Draft). Besides standard forms, guidelines, model documents are also made available


•Roads and highways •Mass-transit

•Railways •Ports

•Airports •Electricity •Tourism

•Irrigation and agricultural services

•Industrial estates

•Water supply and

distribution •Wastewater management

•Waste management•Information

and •communications technology

•Land reclamation

and dredging•Oil and gas downstream production

•Mineral resources

•Health •Education

•Public

facilities, social

infrastructure and other

social services

•Other urban, municipal and rural projects

Sectors Covered under PPP Policy:

• Identify and Screen eligible projects

• Develop projects to a standard attractive for international competitive bidding

• Ensure tendering in a robust and transparent process.

• Facilitate Financing for PPP projects

• Oversee the commercial negotiation of PPP contracts

• Monitor and Support sector line ministries during the implementation phase of PPP

What PPPO doses:

Public Private partnership (PPP)


Total 42 projects

($14.5b)

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 D t

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


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


Jatrabari‐Sultana Kamal Brdg‐Tarabo PPP Rd Large $44


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 St ti

Large $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 / E

BD 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

PPPProjectsPipeline(Note:Projectnameshavebeenshortened)

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


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


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


Jatrabari‐Sultana Kamal Brdg‐Tarabo PPP Rd Large $44


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 St ti

Large $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 / E

BD 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

PPPProjectsPipeline(Note:Projectnameshavebeenshortened)

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… PPP 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


BOI and its Responsibility

Board of Investment (BOI) was created under Investment Board Act 1989 to:

“encourage investment in the industry in private sector and to promote necessary facilities and assistance in the establishment of industries”.

The act mandated BOI as an organization for promoting and facilitating private sector investment.

BOI Functions are broadly categorized into three areas: 1. Investment promotion; 2. Investment Facilitation (approval, recommendations and aftercare) 3. Policy Advocacy


Board of Investment: Services to Investors

Registration of New Industries Approve to start up as an industry

Facilitation of Utility Services Facilitate with relevant agencies getting gas, water, electricity etc. connections

Visa Recommendation For the foreign workers and investors to enter into Bangladesh with proper authority both for industries and commercial offices

Work Permit Issue Issued to expatriates to work and stay in Bangladesh for definite period

Recommendation for IRC To facilities industries to import capital machineries and raw materials for industry use.

Recommendation of Foreign Borrowing

Recommend for bringing foreign loan for industrial enterprises as per guidelines to Bangladesh

Approval of Royalty and Technical Assistance Fees

Support foreign companies to remit royalty, technical assistance and technical know fees to their parent company

Facilitation of Setting up Liaison/Branch Office

Approve for opening of Branch, Liaison and representative offices f the foreign companies

Regulatory services:


Responding to investment-related queries

Responds in person or in communication to investors various queries related to various elements of investment decisions.

Guidance on doing business in Bangladesh

On a daily basis guidance is given to prospective investors to help their investment decisions

Support in forming statutes policies and regulations

Expert opinion is given while forming policies related with investment such as Sector-specific legislations/regulations, policies, custom and excise duties, taxation, investment and trade agreements, etc.

Investment guidance and advice in specific sectors

Undertake promotional measures to promote specific sector having potentials and advise accordingly related stakeholders


Facilitation services :

© Board of Investment 2014 www.boi.gov.bd 33 33

Helping identify and connect with potential joint venture partners/technical collaborations

Supporting potential foreign investors to match with local investors interested to form any convenient collaboration in the form of Joint venture, technical assistance, technology transfer etc.


Matchmaking support for investors :

Coordinating meetings with relevant authorities

Organize visit, meetings with various govt. and private agencies to facilitate investors for their investment decisions

Addressing concerns faced by individual companies

Issues relating to individual companies on their smooth operation are raised with government departments

Handholding support for investments :


Online Registration Services (ORS)

This online service enable investors to register their investment project online reducing time to one day.

BOI Online Service Tracking (BOST)

BOST is used to track services applied by clients. This ensures transparency and efficiency.

Online Processing of Visa and Work Permits

This services helps expatriates to avail visa and work permit facility convenient for the investors.

Online Processing of Foreign Borrowings

Companies that are willing to avail foreign loan will be supported by this services reducing the time and processes.


BOI has introduced many online services as a part of Digital Bangladesh initiatives:


35

Board of Investment:

• FDI inflow was 701 million USD 2009 reached 2058 million USD in 2014 cumulative figure stands at 7,692 million USD

• Foreign borrowing from 2009 to 2015 June accumulates to 7,593 million USD complementing FDI

• Local investment registered since 2009 to June, 2015 stands at 43,224 million USD and employment opportunities stands at 18,60,657 person in 9,734 projects

• Foreign Investment registered since 2009 to June, 2015 stands at 16,730 million USD and employment opportunities stands at 3,37,621 person in 1,102 projects.

Achievements:


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Bangladesh FDI Statistics

FDI Inflow since 2001: South Asian Comparison

Source: Enterprise Survey, Bangladesh Bank

Country 2010 2011 2012 2013 2014

Afganistan 211 83 94 69 54

Bangladesh 913 1 136 1 293 1 599 2047*

Bhutan 31 26 22 21 6

India 27 431 36 190 24 196 28 199 34417

Pakistan 2 022 1 326 859 1307 1747

Sri Lanka 478 981 941 916 944

Maldives 216 256 284 325 363

Nepal 87 95 92 74 30

Iran 3 649 4 277 4662 3050 2105

(Million US $)


0

100

200

300

400

500

600

700

8002013 (Mn US $)2014 (Mn US $)

Based on the two years sector-wise FDI flow shows highest investment is concentrated in the manufacturing sector, followed by trade and commerce and transport.

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Comparative Sector wise FDI Flow in 2013 & 2014


Top Investors in Bangladesh: CY 2014

United States of America

(USA) 22%

United Kingdom (UK)

9%

Singapore 7%

South Korea 7%

Pakistan 6% Hong Kong

6%

Norway 5%

Japan 5%

Netherlands 4%

Other 29%

Country Wise FDI for the Year 2014

Total FDI countries: 56 71% of the FDI comes from 9 countries as shown in the chart. 29% of the FDI comes from 47 countries.

38


39

Bangladesh FDI Statistics Distribution by Components


2009 2010 2011 2012 2013 2014 Growth (YoY)

Equity 219 520 432 498 541 280 9%

Reinvested earnings

365 365 490 588 697 989 19%

Intra-company loans

117 29 215 207 361 258 74%

Total 701 914 1137 1293 1599 1527 24%

(Million US$)

A survey by BB and BOI shows that gross inflow this year shows 2047 million USD…



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Bangladesh FDI Statistics Distribution by Sectors

Sectors 2010 2011 2012 2013 2014

Telecommunication 360 181 375 324 227

Textiles & Wearing 145 272 307 422 391

Banking 163 249 136 327 312

Power, Gas & Petroleum 92 238 127 99 50

Food Products 13 23 75 40 53

Agriculture & Fishing 14 6 61 31 32 Others 127 167 212 356 462

Total FDI 914 1137 1293 1599 1527


Source Country 2014 (US$ Mill)

UK 180.98 South Korea 134.70 Pakistan 130.74 Singapore 117.13 Hong Kong 111.41 Norway 103.58 Japan 95.71 Netherlands 78.70 India 67.82 Sri Lanka 61.35 Others 444.58 Total FDI 1526.70

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Bangladesh FDI Statistics Distribution by Major Sources/Countries


Sl Particulars Existing Rate

1. Royalty Fee 6% 2. Technical Know How

Fee 6%

3. Technical Assistance Fee

6%

The rates of remittances are:

Particulars Existing Guideline for ongoing concerns (a) for ongoing concerns,

not exceeding 6% of the previous years’ sales as declared in the income tax returns

for new projects under implementation

(b) for new projects under implementation, not exceeding 6% of the cost of imported machineries;

For projects going to be implemented (subject to specific need of the project )

Not available

Regulations and prescribed rate regarding the remittances regarding royalties and technical assistance

The outward remittances of 99 million USD during the year 2014 comprises 6.48% of 1527 million USD FDI inflow of that year apart from dividend, management fees, sent by companies abroad…


Foreign borrowings trends:

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Private Sector Foreign Borrowing Complementing FDI

[Source: Board of Investment]

Period Amount USD in

million Number of Proposals

2009 478.09 18 2010 302.77 20 2011 909.27 24 2012 1466.71 62 2013 1182.29 102 2014 1835.17 126

2015 (up to June) 1419.38 80

Total 7593.68 432

Foreign borrowings for project financing has increased manifold recently mostly from multilaterals and investment banks in home and from abroad and complementing the FDI inflow…


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 opportunities in bangladesh

Economy & Finance

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