Publicatie Investing in Bangladesh

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Embassy o the Kingdom o the Netherlands (EKN), Dhaka, BangladeshDhaka: 2011

Address:Embassy o the Kingdom o the NetherlandsRoad 90, House 49Gulshan 2, DHAKABangladeshE-mail: [email protected]://www.netherlandsembassydhaka.org/


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Investing in Bangladesh:A Guide or New Investors

Dhaka, June 2011


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Map 1: Map o Bangladesh

B

A

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List o Abbreviations ........................................................................................................................................................... vii

Message rom the Ambassador ...................................................................................................................................... ix

1 Favorable Conditions, Constraints and Niche Markets in Bangladesh............................................ 1

2 Introduction to Bangladesh, its Geography and its Economy............................................................. 5

3 Structure o the Government o Bangladesh............................................................................................... 8

4 Steps or Establishing a Company in Bangladesh: Preliminaries....................................................... 11

5 Getting the Required Documents: Steps or Establishing a Company in Bangladesh ............ 15

5.1 Clearance o Company Name ....................................................................................................................... 15

5.2 Opening a Bank Account ............................................................................................................................... 15

5.3 Certicate o Incorporation (Investment Permit) .................................................................................. 16

5.4 Business Registration ....................................................................................................................................... 17

5.5 Tax Identication Number (TIN) .................................................................................................................. 17

5.6 Value Added Tax (VAT) Number ................................................................................................................... 17

5.7 Trade License ...................................................................................................................................................... 18

5.8 Industrial Registration Application.............................................................................................................. 18

5.9 Tax Privileges ....................................................................................................................................................... 18

5.10 Import Registration Certicate (IRC) ........................................................................................................... 19

5.11 Export Registration Certicate (ERC) .......................................................................................................... 19

5.12 BOI Recommendation Letter (or visa) ...................................................................................................... 19

5.13 Visa Application ................................................................................................................................................. 20

5.14 Work Permit ......................................................................................................................................................... 20

5.15 Acquisition o Land .......................................................................................................................................... 20

5.16 Environmental Clearance Certicate ......................................................................................................... 21

5.17 Social Compliance ............................................................................................................................................ 21

5.18 Driving License .................................................................................................................................................. 22

5.19 Overview o Costs o Registration ............................................................................................................... 22

6 Indicative Costs o Doing Business ................................................................................................................... 24

7 Transport and Energy Inrastructure in Bangladesh................................................................................ 26

8 Financial System and Loan Facilities in Bangladesh ................................................................................ 30

9 Obtaining Utility Connections ............................................................................................................................ 34

Table of Contents

A Guide or New Investors in Bangladesh V


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Embassy o the Kingdom o the Netherlands in Dhaka

10 Employers Organizations ..................................................................................................................................... 35

11 Labor Force and Tripartite Dialogue ................................................................................................................ 37

12 Good Business Practices......................................................................................................................................... 38

13 Practical Inormation on Dhaka and Other Cities...................................................................................... 41

List of AnnexesAnnex 1 Export Processing Zones (EPZ) and the Economic Zones (EZ) Act 2010 .......................... 47

Annex 2 Chittagong Port........................................................................................................................................... 49

Annex 3 Climatic Indicators o Bangladesh...................................................................................................... 51

Annex 4 Application Forms ...................................................................................................................................... 52

Annex 5 List o Business Licenses, Agencies and Websites....................................................................... 53

Annex 6 Investment Incentives .............................................................................................................................. 54

Annex 7 Translations o Specic Bangla Words.............................................................................................. 59

Annex 8 Sector Study: Water ................................................................................................................................... 60

Annex 9 Ranking o Bangladesh and Selected Countries on Several Indices.................................. 66

List of MapsMap 1 Map o Bangladesh .................................................................................................................................... iv

Map 2 Transport Network o Bangladesh ..................................................................................................... 27

Map 3 Map o Dhaka City ...................................................................................................................................... 43

Map 4 Map o Gulshan, Baridara and Banani.............................................................................................. 45

Map 5 Map o Chittagong District and City.................................................................................................. 50


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A Guide or New Investors in Bangladesh

AD Authorised Dealers (in oreign exchange)

AISD American International School o Dhaka

AL Awami League

AOA Articles o Association

ASEAN Association o South East Asian Nations

BB Bangladesh Bank

BDCC Bangla Dutch Chamber o Commerce (in Groningen)

BDT Bangladesh Taka

BEF Bangladesh Employers Federation

BEI Bangladesh Enterprise Institute

BGMEA Bangladesh Garment Manuacturers and Exporters Association

BKMEA Bangladesh Knitwear Manuacturers and Exporters Association

BEPZA Bangladesh Export Processing Zones Authority

BGSL Bakhrabad Gas System Ltd.

BILS Bangladesh Institute o Labor Studies

BIWTA Bangladesh Inland Water Transport Authority

BIWTC Bangladesh Inland Water Transport Corporation

BNP Bangladesh Nationalist Party

BOI Board o Investment

BOST BOI Online Service Tracking

BRTA Bangladesh Road Transport Authority

BSCIC Bangladesh Small and Cottage Industry Corporation

BTTB Bangladesh Telegraph and Telephone Board

CBC Customs Bond Commissionerate

CCI&E Chie Controller o Imports and Exports

CDA Chittagong Development Authority

CIFE Chie Inspector o Factories and Establishment

CPA Chittagong Port Authority

CSR Corporate Social Responsibility

DBCCI Dutch Bangla Chamber o Commerce & Industry (in Dhaka)

DCC Dhaka City Corporation

DDCI Dhaka Chamber o Commerce and Industry

DESA Dhaka Electric Supply Authority

DESCO Dhaka Electric Supply Company

VII

List of Abbreviations


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DOE Department o Environment

DPDT Department o Patents, Designs & Trademarks

DSE Dhaka Stock Exchange

EIU Economist Intelligence Unit

EKN Embassy o the Kingdom o the Netherlands

EPB Export Promotion Bureau

EPZ Export Processing Zone

ERC Export Registration Certicate

EU European Union

EVD (Dutch) Economic Inormation Service (Economische Voorlichtings Dienst)

FDI Foreign Direct Investment

FOB Free on Board

FS&CD Fire Service and Civil Deense

FY Fiscal Year

GOB Government o Bangladesh

GSP Generalized System o Preerences

ICT Inormation and Communication Technology

IDCOL Inrastructure Development Company Limited

ILO International Labor Organization

IRC Import Registration Certicate

JGTDSL Jalalabad Gas Transmission & Distribution System Ltd.

JV Joint Venture

KDA Khulna Development Authority

LFMEAB Leather goods & Footwear Manuacturers & Exporters Association o Bangladesh

MOA Memorandum o Association

MOLE Ministry o Labor and Employment

NBFI Non-Bank Financial Institution

NBR National Board o Revenue

NRC Netherlands Recreation Centre (Dutch Club)

NRTA Non-Resident Taka Account

PDB Power Development Board

PMO Prime Ministers Oce

PPP Public Private Partnership

RAJUK Dhaka City Development Authority (Rajdhani Unnayan Kartripakkha)

REB Rural Electrication Board

RJSC&F Registrar o Joint Stock Companies and Firms

TGTDCL Titas Gas Transmission & Distribution Company Ltd.

TIN Tax Identication Number

USC Utility Service Cell (o the BOI)

VAT Value Added Tax

WASA Water and Sewerage Authority


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01

Asia is the worlds economic powerhouse, Bangladesh is part o this dynamic environment.

During the last decennium Bangladesh has realised impressive economic growth,approximately 6% annually, and managed to decrease the percentage o people living

below the poverty line rom 40% in 2005 to 31.5% in 2010.

Bangladesh is a new emerging market with a young population o close to 165 million and

a ast increasing middle class. As a consequence, this growing internal market oers ample

opportunities or trade and investment in consumer goods and luxury items.

The Government o Bangladesh aims at diversiying the economic base o the country by

acilitating investments in an identied series o priority areas. Furthermore it provides

incentives to the earmarked sectors that will lead the growth o the export perormance

such as Ready Made Garments, Pharmaceuticals and Shipbuilding.

It is a well known act that the country aces challenges such as the lack o proper road and

rail inrastucture and requently interrupted power supply. Since the Government o

Bangladesh has unveiled plans to address these challenges and actually acilitates

investments in these areas the aorementioned constraints provide actually business and

investment opportunities.

Issues o governance and the absence o implementing policies in general remains,

however, a serious impediment or attracting FDI and require constant attention.

The brochure Investing in Bangladesh will give you an insight in the above mentioned

issues and will provide you with answers to your initial questions when considering

investing in this destination o the uture.

The Netherlands Embassy at Dhaka looks orward to assist you urther to set up business in

Bangladesh.

Alphons Hennekens

Ambassador

IX

MESSAGE FROM THE AMBASSADOR


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Garments

Workers make clothes at a

garment actory in Dhaka.

Bangladeshs exports,

dominated by the sale

o low-cost garments to

mass-market retailers like

Wall-Mart, have ared well.

Pharmaceuticals

Bangladesh, one o the least

developed countries, is trying

to boost its pharmaceutical

exports to, or example, the

Middle East as the country

enjoys unique concessions as

a least developed country in

the drug patent rules o the

World Trade Organization

(WTO).

Shipbuilding

Shipbuilding has been the

astest growing export

sector in the past year

[email protected]

MominulHaqueDulu


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A Guide or New Investors in Bangladesh

01

1

Bangladesh can be considered as a rapidly emerging market pushed orward by its export

industries: exports have grown by 40 % in the period rom July 2010 to January 2011. This is

remarkable in a time when most economies are still suering rom the eects o the global

nancial crisis. The main products responsible or this growth are knitwear and woven products,

together responsible or over three-quarters o Bangladeshs exports. Interestingly, the astest

growing sector in this period was shipbuilding (with almost 1,400 % gro wth).1

Apparel exports increased mainly because o the shit o

international buyers rom China to Bangladesh; due to the

increasing costs o production in China, this country has a

decreasing competitiveness, and signicantly it is losing

market to Bangladesh.2 The other opportunity that promises to

strengthen Bangladeshs position urther is related to the new

rules o EUs Generalized System o Preerences (GSP), in particular

the changed Rules o Origin, which are in place since the 1st o

January 2011. In the rst two months o 2011 this has already

resulted in a rise o exports o garment products.

3

In addition,Japan is also planning to adjust its trade rules in avor o least

developed countries (including Bangladesh) rom April 2011.

The shit towards Bangladesh could have been much larger were it not or the energy

crisis in particular the inability o the grid to meet the demand. As a result o the regular

power outages potential new ventures are being deerred and private sector job creation is

stalled; in addition, some reports indicate that Chinese, Taiwanese and Korean investors are

delaying concrete plans to build actories in Bangladesh, especially in Export Processing

Zones (EPZs), until the energy crisis is being solved, although the energy situation in EPZs

is better than elsewhere.4 The government has announced plans to deal with the energy

shortage on a priority basis, but progress seems slow. The political situation is currently quitestable, although the image o the country as an investment destination could be damaged

i labor unrest and hartals are up once too oten.

Favorable Conditions,

Constraints and NicheMarkets in Bangladesh

1. Data rom Export Promotion Bureau, EPB (c. The Daily Star 8 February 2011). Total export earnings were 12.2 billionUS$ in the period July 2010-January 2010, and grew by 40 % compared to the same period a year earlier.

2. Sources: Interviews with Dutch Textiles buyers in Bangladesh (c. EKN 2010: Opportunities and Constraints or DutchEntrepreneurs in Bangladesh; A Work Plan or EKN), and EPB: The Daily Star (20/02/2011): Garment exports to go big.

3. Compared to the same period in 2010, the earnings rom EU countries have doubled, the number o GSP certi-cates issued by EPB has risen by 20%, and the pieces o garment items exported has also risen by 20% (The Daily Star03/04/2011).

4. C. EKN (2010): op. cit.; and The Daily Star (7 December 2010): Power crunch stalls top houses hiring.

Bangladeshs

exports have grown

with 40% in thesecond hal o

2010.


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Bangladesh as an emerging market oers a number o avorable conditions to Dutch and

other rms or doing business: it has a series o cost competitive advantages, it oers a large

domestic market and it has a strategic location near to the astest growing economies o

the world. At the same time, the main constraints will also be identied. This chapter will be

concluded with a brie indication o selected niche markets which deserve special mention.

Favorable Conditions

Bangladesh is a cost competitive investment destination in several respects. Firstly, it

oers a young, industrious workorce with the lowest wages in the region, and English is the

second language ater Bengla. Secondly, industrial estates, oces and housing or oreigners

in the country are oten cheaper than in other South and South East Asian countries. Thirdly,

Bangladesh enjoys tari-ree access to the European Union (through EUs Generalized System o

Preerences, GSP), Canada, Australia and Japan. Fourthly, it has a proven export competitiveness

that can be illustrated as ollows:

Bangladesh oers some o the worlds most competitive scal and non-scal

investment incentives.

Bangladesh oers the most liberal FDI regime in South Asia, allowing 100% oreign

equity with unrestricted exit policy, easy remittance o royalty, and repatriation o

prots and incomes.

Bangladesh oers export-oriented industrial enclaves, Export Processing Zones (EPZ)

with inrastructural acilities and logistical support or oreign investors. Bangladesh has

recently embraced a more exible and competitive economic zones regime with the

enactment o the Economic Zones Act 2010 which paves the way or private economic

zones (c. Annex 1).

The Foreign Private Investment (Promotion & Protection) Act 1980 provides protection

or investments made in Bangladesh.

Lastly, in itsel the energy prices in Bangladesh are the most competitive in the region;

however, currently there is a shortage o electricity and gas supply (and a stop on new

connections) which the government is trying to counter on a priority basis.

Recent international ratings are generally quite

positive on Bangladeshs economic potential (c.

Box 1.1). Also rather positive are the national indices

and rankings concerning governance, gender and

wellbeing, but the rankings or Dhaka on livability,people risk and social networking are extremely

low (c. Annex 9).

With about 160 million inhabitants and a middle

class that is rapidly growing in size compared to

the other classes, there is an increasing domestic

demand or example or consumer goods.

Bangladesh is strategically located near the emerg-

ing economic giants, India and China, and near to

the ASEAN markets.

Box 1.1: International ratings:

WB Doing Business Rank 2011: Bangladesh occupies the107th place among 183 countries, well above India andIndonesia (c. Annex 9).

Goldman Sachs s Next 11: Bangladesh was indicated as one

o eleven emerging markets in 2005 indicating its potentialo becoming one the worlds larger economies.

JP Morgan s Frontier Five: Bangladesh was listed in 2007,just as Vietnam, as one o ve countries with impressiveeconomic and investment potential.

Standard & Poors and Moodys sovereign credit ratings:Bangladesh received its credit ratings (BB- and Ba3) in 2010(reconrmed in April 2011). Moodys rating putsBangladesh on par with Vietnam.

The ADB list of Asian growth drivers: Bangladesh has ailedto manage a place on the list o eight Asian countries (incl.Malaysia and Vietnam), which are projected toaccount or 95 % o Asias growth between 2010 and 2050(The Daily Star 21/03/2011).


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A Guide or New Investors in Bangladesh 3

01

At the same time, some economic data prompt a cautious outlook. Firstly, Bangladesh has

the lowest FDI inow in South Asia (0.8% o GDP). Secondly, the country continues to add

2 million people to its labor orce every year and unemployment is currently at 8% while

underemployment is much higher.

Constraints: High Risk, High Prot

The main challenges or the country remain in the areas o energy, transport inrastructure, and

governance. More specic risks could also be mentioned, such as the recent increases in ood

prices, possible disruptions o Chittagong Port and the maintenance o general industrial

harmony, but below only the rst three challenges will be discussed.

Bangladesh is currently conronted with an energy crisis, especially due to a shortage

o gas or electricity generation; load shedding could aect business and investment

decisions. However, the government has declared power supply as a priority. Contracts are

being signed or rental power supply inrastructure in order to relieve short-term shortages,

and longer term expansion o capacity is being reviewed (or example, contracts have been

concluded with Russia in the area o nuclear energy).

The transport inrastructure o the country requires improvements in dierent areas, which in

turn can be translated into increasing business opportunities. Cases in point are the supervision

and construction o the Padma Bridge, the Dhaka Elevated highway (the contract was awarded

in December 2010 to an Italian-Thai consortium), the Dhaka Chittagong Highway, the Dhaka

Mymensing highway, and the plans to upgrade railroads and inland waterways. This shows that

the Government is committed to tackle these constraints with priority.

In terms o Governance it is signicant to mention

that Bangladesh has gradually improved its ranking

on the Corruption Perceptions Index (CPI) composed

by Transparency International rom the very bottom

o the list in 2005 (158th, jointly with Chad) to the

134th place out o 178 countries in 2010. In addition,

Bangladeshs ranking is on par with the Philippines

(same rank), higher than Pakistan (143), but lower

than Vietnam (116) and Indonesia (110). These indices

are discussed in more detail in Annex 9. Corruption can sometimes be a barrier or doing

business in Bangladesh, and although the Anti-Corruption Commission (ACC), installed by

the Caretaker Government, started its task with high prole cases, its independence seems

currently to be challenged. A weak and slow legal system can be another impediment to

investment in Bangladesh resulting in uncertain enorceability o contracts (See also Box1.2). The judicial system does not provide or interest to be charged in tort judgments, and

hence there is no penalty or delaying proceedings. While the Supreme Court and High

Court (appellate level courts) are independent, the lower courts are part o the executive

branch o government. In some cases the Bangladesh Export Promotion Bureau (EPB) could be

helpul in assisting in dispute settlement o export-related transactions. Major Bangladeshi trade

and business associations can also be helpul in assisting in transaction disputes.5

Box 1.2: Doing Business Rank 2011

In the World Bank Doing Business Rank 2011 Bangladesh

occupies the 107th rank among 183 countries; it not onlyimproved its ranking but it also leaves countries like India andIndonesia behind. O the nine indicators Bangladesh rankshighest on protecting investors (20th) and lowest on enorc-ing contracts (179th); the most improvement was made instarting a business; or details see Annex 9.

Source: World Bank Group (2010): Doing Business Rank 2011.

5. C. the US Department o State (2006): Chapter 5 at:http://www.manuacturebd.com/images/doing_business_in_bangladesh-a_country_guide.pd


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In sum, the avorable conditions mentioned above in combination with the constraints

mentioned here lead to a situation that can be characterized as High Risk, High Prot in

particular in certain niche markets discussed below.

Niche Markets

The key sectors o the Bangladesh economy are thriving, uelled by the vision ointernational companies that recognize the unique opportunities that the country has to

oer. Over 100 companies have invested in the country in the last three years, but FDI has

remained relatively low: US$ 3.1 billion in 2009-2010 o which about 60% is in the service

sector (esp. telecom). The Board o Investment (BOI) has identied ten key sectors, to which

we can add Pharmaceuticals and Shipbuilding:

Power Industry Agribusiness Light Engineering

ICT & Business Services Frozen Foods Leather and Leather Goods

Garments and Textiles Ceramics Pharmaceuticals

Lie Sciences Electronics Shipbuilding

Source: http://www.boi.gov.bd/key-sectors

Inormation on export products can be ound on the website o the Export Promotion

Bureau (EPB) o the Ministry o Commerce (http://www.epb.gov.bd/). Reerence is also made

to the picture page in the present brochure beore Chapter 6.

In Annex 8 we present an example o a Sector Study which provides more detailed

inormation on specic niche markets which are promising or Foreign Investors. It concerns a

Market Scan on the Bangladesh Water Sector,commissioned by the Embassy o the Kingdom

o the Netherlands in Dhaka, Bangladesh, in 2010.


Vegetable Market in Bangladesh


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Geography

Bangladesh with over 160 million inhabitants on

a landmass o 147,570 square kilometers is one o

the most densely-populated countries in the world.

Despite articulate ambitions o the Government o

Bangladesh to become a middle-income country

by 2021, at present it remains a low-income country

with 31.5 percent o its population living below the

poverty line, and a per capita income o US$ 750.6

Geography is a strong determinant o Bangladeshs development. The country is bordered

by India on the west, north, and north-east, by Myanmar on the south-east, and by the Bay

o Bengal on the south. Eighty percent o its area consists o loodplains created by

more than 300 rivers and channels, including three major rivers: the Ganges, the

Brah maputra, and the Meghna. It has a 710 km long coastal belt that is home to nearly 35

million people. Bangladeshs geographical position and very high population density make

it extremely vulnerable to natural disasters including oods, droughts and cyclones. Global

climate change has increased these vulnerabilities substantially.

The two most important cities in Bangladesh are

Dhaka, which is the capital, and Chittagong, the

main harbor city. The transport networks o the

country are discussed in Chapter 7, while more

details on the harbor o Chittagong are provided in

Annex 2.

Climate

Weather in Dhaka can be described as ollows:

Hottest month, July, 23-35C (average daily

minimum and maximum);

coldest month, January, 11-28C (average daily

minimum and maximum);

driest months, December and January, 5 mm

average monthly rainall;

02

Introduction to Bangladesh,

its Geography andits Economy

6. C. Sources: a) Bangladesh Sixth Five Year Plan: FY2011-FY2015: Accelerating Growth and Reducing Poverty. DratMarch 2011,Planning Commission, Ministry o Planning, GoB; and b) Household Income and Expenditure Survey (HIES)2010, Bangladesh Bureau o Statistics (Dhaka).

Fishing in the Floodplains o Bangladesh

Source: Bangladesh Bureau o Statistics (BBS): Statistical Pocket Book2009. http://www.bbs.gov.bd/Home.aspx

Katalyst


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wettest month, July, 567 mm average monthly rainall.

Further details are given in Annex 3.

Facts and Figures

The main language spoken is Bengali or Bangla, while Urdu and Hindi are minority

languages; English is used oten as a second language. The religion o the large majorityo inhabitants is Muslim (89.7% in 2001 census); other religions are Hindu (9.2%); Buddhist

(0.7%); and Christian (0.3%).

Numbers are commonly expressed in crores and lakhs; 1 crore = 10 million, written

1,00,00,000; 1 lakh = 100,000, written 1,00,000 (see Annex 7 or a translation o selected

Bangla words).

The Bangladesh Time is 6 hours ahead o GMT.

Currency: Bangladesh Taka (BDT)7

The currency is the Taka (BDT) being divided in 100 paisa. The exchange rate in January 2011was: BDT 70 = US$1; BDT 93 = Euro1. The Dhaka Stock Exchange (DSE) Index was on 28th

November, 2010 as ollows: DSE Index was 7215.78, and General was 8698.94. However, on 11

January 2011 the Securities and Exchange Commission (SEC) stopped trading in the midst o

the biggest crash in the countrys capital market history. The general index o Dhaka Stock

Exchange (DSE) went down and dropped 660 points or 9.25% within just 40 minutes o trading.

In February and March 2011 the index remained volatile. A Commission has been installed to

investigate the main actors involved, the reasons behind the crash and its atermath.

Export/Import

The main export and import products and countries are summarized in the table below.

For more inormation on economic data, see: http://www.boi.gov.bd/about-bangladesh/

bangladesh-at-a-glance

Major Exports 2009/10* % o Total Major Imports 2009/10* % o Total

Readymade Garments 69.0 Capital Goods 20.9

Fish & Prawns 3.2 Textiles 19.1

Jute Products 2.4 Petroleum & Petroleum Products 11.5

Leather & Hides 2.0 Iron & Steel 6.7

Leading Markets 2009 % o total Leading Suppliers 2009 % o Total

US 20.2 China 16.2Germany 12.7 India 12.6

UK 8.6 Kuwait 7.6

France 6.5 Singapore 4.6

*The Fiscal Year (FY) runs rom July 1st to June 30thSource: Economist Intelligence Unit: http://country.eiu.com/article.aspx?articleid=507601435&Country=Bangladesh

7. C. Economist Intelligence Unit: http://country.eiu.com/article.aspx?articleid=1487600733&Country=Bangladesh


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02

Digital Bangladesh

The vision o the present Government is to make Bangladesh Digital by 2021. The

philosophy o Digital Bangladesh comprises:

Ensuring peoples democracy and rights,

transparency, accountability, establishing justiceand ensuring delivery o government services in each

door through maximum use o technology-with the

ultimate goal to improve the daily liestyle o general

people.8

This includes or example E-Registry, E-Commerce

and Online Service Tracking. Currently these

services are being developed, and oten

documents are not yet available as downloads (or

only in Bangla); instead one has to collect them

rom various oces. BOI Online Service Track-ing (BOST) is an online interactive e-governance

solution that acilitates the investors to track their

service requests made to BOI. 9

Media

There are good English language newspapers,

such as The Daily Star, The Independent, New Age

and Daily Sun. There is also an excellent website

with the latest news items: http://www.bdnews24.

com/.

State-run television channel BTV airs

English news every night. Other privately owned

satellite channels such as ATN NEWS, ATN

BANGLA, Boishakhi, Diganta TV and

Banglavision air daily news bulletins in English

(mainly evening hours). Besides, these local

news channels, the international channels such

as BBC, CNN and Al-jazeera are also aired in

Bangladesh. In order to get access to these local

and international channels (except the state

television channel BTV) one has to subscribe

or a package with an area based local provider

(contact with employer or house owner to nd

out the company in your area).

8. C. http://www.boi.gov.bd/about-bangladesh/government-and-policies/digital-bangladesh-overview9. C. http://www.boi.gov.bd/boi-interactive/online-service-tracking

Digital Bangladesh:Visit the website:

http://www.digitalbangladesh.gov.bd/

An ICT Centre providing inormation on agriculture

Bangladesh has a high density o mobile phone users with over 70million users rom January 2011

MiriamOtto

MiriamOtto


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The characteristics o the national government o Bangladesh are as ollows (October 2010):

Ocial Name Peoples Republic o Bangladesh

Form o GovernmentBangladesh has been a parliamentary democracy since a

constitutional amendment in 1991

The Executive

The Prime Minister is chie executive and head o theCouncil o Ministers (the cabinet), which she selects; the

presidency is a largely ceremonial role, although the

president appoints members o the cabinet and the

judiciary and has the power to dissolve parliament.

National Legislature

A unicameral parliament, consisting o 300 members

directly elected rom geographical constituencies or

ve-year terms, plus 45 seats reserved or women elected

by sitting lawmakers.

National Elections

The most recent election was held on December 29th 2008.

A caretaker government will be appointed in January 2014

to supervise the next election, which must then be held

within 90 days.

National Government

An alliance headed by the Awami League (AL) won more

than two-thirds o the seats in parliament at the

December 2008 election, which was overseen by a non-

partisan caretaker government. The AL dominates the

alliance, with a two-thirds majority in parliament in its own

right. Four other parties in the alliance also won seats: the

Jatiya Party, the Jatiya Samajtantrik Dal (JSD), the Workers

Party o Bangladesh and the Liberal Democratic Party (LDP).

Main Political

Organizations

AL; Jatiya Party; JSD; Workers Party o Bangladesh; LDP;Bangladesh Nationalist Party (BNP); Jamaat-e-Islami;

Bangladesh Jatiya Party (BJP)

President President Zillur Rahman

Prime Minister Prime Minister Sheikh Hasina

03Structure o the Governmento Bangladesh

Source: Economist Intelligence Unit: Country Report Bangladesh (October 2010).


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Key Ministers:

Agriculture Begum Motia Chowdhury

Civil Aviation & Tourism G M Quader

Commerce Lt. Col. (Retd.) Faruq Khan

Communication Syed Abul Hossain

Education Nurul Islam Nahid

Finance Abdul Maal Abdul Muhit

Fisheries & Livestock Abdul Lati Biswash

Food & Disaster Management Dr. Abdur Razzak

Foreign Aairs Dr. Dipu Moni

Home Aairs Advocate Sahara Khatun

Industries Dilip Barua

Labour & Employment Engineer Khandaker Mosharra Hossain

Law, Justice & Parliamentary Aairs Barrister Shaq Ahmed

Local Government & Rural Development Syed Ashraul Islam

Planning Ari Vice Marshal (Retd.) A K Khandaker

Shipping & Inland Water Transport Shahjahan Khan

Textile & Jute Industry Abdul Lati Siddiqui

Water Resources Ramesh Chandra Sen

Central Bank Governor Atiur Rahman

Source: Economist Intelligence Unit: Country Report Bangladesh (October 2010).

Tiers o Government

The dierent tiers o national, regional and local governments vary in part or rural and or

urban areas. The ollowing tiers can be distinguished: 10

Tiers o Government Head o Government No. o Units * Status

National Government Prime Minister 1 Elected

Divisions (Province)DivisionalCommissioner

6 Not elected

Zila Parishad (District) Deputy Commissioner 64 Not elected

Rural:

Upazila Parishad(Sub-District) (ex: Thana)

Chairman 482 Elected

Union Parishads Chairman 4,223 Elected

Gram (Palli) Sarkar/Parishad Village Head About 40,000 Selected bodies

Urban:

City Corporations Mayor 6 Elected

Municipalities(Pourashavas)

Chairman 310 Elected

Zones, Wards & Mahallas ---Determined by

the Government---

* Numbers are approximate since it changes according to the joining and/or separation o units.

03

10. Based on: Kamal Siddiqui (2005): Local Government in Bangladesh; Revised Third Edition. Dhaka: UPL. CGS/BRAC(2006): The State o Governance in Bangladesh 2006. Knowledge, Perceptions, Reality. Dhaka: BRAC. Various articles in

Daily Newspapers, including: The Daily Star (4 December 2010): Municipality Polls next month.


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The rst elections in 2011 were the Municipal elections in January, and they were held

in 257 out o 310 Municipalities. These were mainly peaceul, and held in a democratic

way; the main opposition party, BNP, won just a ew more mayoral posts than the ruling

Awami League party (each about 40%), while AL-rebel candidates won more posts than the

BNP-rebel candidates (about 9% and 5% respectively). This should be ollowed later in the

year by the elections or the Union Parishads and the Dhaka City Corporation which havebeen postponed several times or various reasons.

Policies & Protection

The Bangladesh economy is managed within the ramework o a market economy with

.. government interventions intended to correct market distortions, to ensure equality

o opportunities and to ensure equity and social

justice or all. as it is indicated in the drat Sixth Five

Year Plan.11 While trade protection has come down

sharply rom its very high levels in the early 1990s,

the drat Plan indicates that Bangladesh remains

amongst the most heavily protected countries in the

world.

Useul websites on Laws

Regarding legislation and specic laws, several websites can be consulted or the most

up-to-date inormation:

Government o Bangladesh: http://www.bangladesh.gov.bd/

Bangladesh Election Commission: http://www.ecs.gov.bd/English/index.php

The website or the Ministry o Law, Justice and Parliamentary Aairs:

http://www.minlaw.gov.bd/indexin.htm

The web site or the codied laws:

o Alphabetically: http://bdlaws.minlaw.gov.bd/alp_index_update.php

o Chronologically: http://bdlaws.minlaw.gov.bd/chro_ind

11. c. Bangladesh Sixth Five Year Plan: FY2011-FY2015: Accelerating Growth and Reducing Poverty. Drat March 2011,Planning Commission, Ministry o Planning, GoB.

Important websites on policies:

EconomicRelationsDivision(ERD):http://www.erd.gov.bd/

Planning Commission (PC): http://www.plan-comm.gov.bd/about.asp


PeterBeninger

House o the People (Jatiya Sangsad)


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There are several preliminary steps which are advisable to take beore continuing to

establish the company itsel.

In the Home Country

Beore going to Bangladesh one should make sure to have all the required documents,

which may well include a certied translation in English o the Memorandum o Associationand/or the Articles o Association o the company or mother company.

For Dutch companies up-to-date inormation can be obtained by contacting the ollowing

organisations:

1) The Economic Inormation Service (EVD) o the Ministry o Economic Aairs, Agriculture

and Innovation (ELI) in the Hague: http://www.evd.nl/home/index.asp

2) The Embassy o the Peoples Republic o Bangladesh in the Hague:

http://www.bangladeshembassy.nl/

3) De Bangla Dutch Chamber o Commerce (BDCC) in Groningen: http://www.bdcc.eu/

Local Agent/Partner

The registration o a company in Bangladesh can

be time-consuming because o the relatively

large number o rules and regulations. Thereore,

it is advisable to secure onesel o local assistance,

or example a good local partner or consultant

who is experienced in these matters. According

to most o the experienced oreign entrepreneurs

in Bangladesh this investment will pay itsel back

easily. A Power o Attorney may be necessary or

the local agent/partner. At the same time, it is oten

strongly advised to screen careully any potential

agents working on your behal. For example, the

U.S. Embassys experience suggests that a signicant

proportion o local agents do not adhere to U.S. standards o business ethics, and that continuing

monitoring is required (c. Box 4.1). The Netherlands Embassy can also be requested or advice

in such matters.

04

Steps or Establishing a

Company in Bangladesh:Preliminaries

Box 4.1: Screen Local partner

Many local agents admit to having paid bribes and usingundue inuence to get a contract awarded in public procure-ments. Although local agents routinely s ign documents agree-ing to comply with the Foreign Corrupt Practices Act, many othem continue to conduct under-the-table deals without theU.S. companies knowledge or approval. Companies need toexercise signicant caution when hiring local agents and thor-oughly educate the agent about acceptable business prac-tices. Companies also should monitor local agents activities asclosely as possible. Personal interviews are useul in discussing

a business proposal with a potential agent or distributor.Source: US Dept. o State (2006): Chapter 3 at: http://www.manuacturebd.com/images/doing_business_in_bangladesh-a_country_guide.pd068.


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Board o Investment (BOI)

The rst point o contact in Bangladesh or a oreign investor is usually the Board o

Investment (BOI), which is part o the Prime Ministers Oce (PMO). BOI provides

inormation on the investment opportunities in Bangladesh and the incentive packages on

oer. Other services are:

Assistance can be obtained in completing application orms and reerring investors to

the relevant department within the BOI.

I the investor is to locate in an export processing zone then BOI will introduce the

company to the Bangladesh Export Processing Zones Authority, who will acilitate the

early start up processes.

BOI can provide inormation on the procedures required to establish a company in

Bangladesh and the time that registering and establishing a company will typically take.

Inormation is provided on the types o companies that can be ormed, the general

costs o doing business in Bangladesh, how to obtain the necessary work permits or

you and your sta, remitting unds to Bangladesh, and so on.

Once you decide that you want to set up a company in Bangladesh your registration

with BOI can be managed electronically, through the BOI Online Registration process

(http://www.boi.gov.bd/)

Type o Business

You will need to set up an appropriate company structure. By this stage you will need to

know:

ifyouintendtooperateasabranch/liaisonrepresentativeoce(orBuyingHouse)or

ifyouintendtoestablishanindustrialproject.

This is relevant to the type o business structure you will then need to orm.

Business in Bangladesh can be carried out by a company ormed and incorporated locally

or by a company incorporated abroadbut registered in Bangladesh. The incorporation or

registration is done by the Registrar o Joint Stock Companies and Firms (RJSC&F) which will

be discussed in the next chapter.

Companies may be private or public limited companies or unlimited companies. In

establishing a place o business o a oreign company, the company has to be registeredwith the RJSC&F as the place o business. Such registration is required in respect o capital

issue and obtaining clearance rom the Bangladesh Bank.

To open or extend a branch/liaison representative oce o a oreign company, the company

has to apply to the BOI. Ater starting commercial operations BOI will be ollowing up with

what you need subsequently. Investors need to submit a hal-yearly perormance report to

the BOI on production and employment in their projects. Any changes to the inormation

provided in the registration should be indicated to the BOI.

Check this website or the help that can be provided regarding investments:

http://www.boi.gov.bd/how-to-invest/roadmap-to-investment


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04

EU Investors

All EU investors are also invited to visit the website o the EU Delegation in Dhaka,

Bangladesh, as a local reerence point or rules related to trade and investment in this

country, and two related websites:

EU Delegation in Dhaka:

http://www.eudelbangladesh.org/en/index.htm

Bangladesh - European Community Country Strategy paper

(CSP) 2007-2013:

http://www.eudelbangladesh.org/en/eu_and_country/

Bangladesh_CSP_en_2007-2013.pd

The EU Export Helpdesk:

http://exporthelp.europa.eu/index_en.html

Another very useul website (though not updated since 2006) is entitled Doing Business InBangladesh: A Country Commercial Guide or U.S. Companies by the U.S. & Foreign Commer-

cial Service and U.S. Department o State (2006): http://www.manuacturebd.com/images/

doing_business_in_bangladesh-a_country_guide.pd. Throughout the present Brochure

reerences will be made to the relevant pages o this website.

The ollowing ow-chart provides an overview o the steps needed or company

registration and the institutions involved (the numbers reer to the respective sections in

Chapters 4 and 5).


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4.1 Find and Screen a Local Partner Partner

4.2 Contact the BOI BOI

4.3 Select Appropriate Company Structure BOI Website

4.4 Check with EU Trade Section and Websites EU

5.1 Clearance of Company Name RJSRF

5.2 Opening a Bank Account Bank

RJSRF5.3 Certicate of Incorporation (Investment Permit)

5.4 Business Registration BOI

NBR

5.6 Value Added Tax (VAT) Number NBR

5.7 Trade License DCC

5.8 Industrial Registration Application BOI

5.9 Tax Privileges NBR

BOI & CCI&E

CCI&E

5.12 BOI Recommendation Letter (for visa) BOI

5.13 Visa ApplicationEmbassy

5.14 Work Permit BOI

5.15 (optional) Acquisition of Land BOI

BOI & DOE

5.17 Social Compliance CIFE

5.18 Driving License BRTA

Preparations in the Home Country Home C.

STEPS IN THE REGISTRATION PROCESS



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The steps oreign entrepreneurs have to take in order to register their companies properly in

Bangladesh are discussed in this chapter. An overview o these steps has been given in the

ow-chart in Chapter 4.

5.1 Clearance o Company Name

The company name selected should not be identical with or closely resemble the name o

an existing company. An application in plain paper along with required nominal ees is to

be submitted to the Registrar o Joint Stock Companies and Firms (RJSR&F) or verication

and clearance o the proposed name. According to RJSC&F, the Name Clearance procedure

or a Joint Venture includes the ollowing: Sponsors o the Companies are requested to

ollow the ollowing procedure: or Joint venture companies, the entire equity o the oreign

sponsors is required to be paid in oreign exchange; as such the 5% pre-registration deposit must

also be made in oreign currency. The bank shall specically mention this FOREX transaction in its

certicate with the names o the sponsors.

5.2 Opening a Bank Account

With the name clearance certicate one has to open a bank account, which according to

the Foreign Exchange (ForEX) Guidelines o the Bangladesh Bank is stipulated as ollows:

Authorised Dealers (ADs) in oreign exchange, such as commercial banks, may open

Non-Resident Taka Account (NRTA) in the name o the proposed company/enterprise

o oreign investors contemplating to invest in Bangladesh without prior approval o

Bangladesh Bank. Such accounts may be credited with inward remittances received rom

abroad only. Upon registration/commencement o the business, a new account in the name

o the company may be opened ollowing usual procedure. However account opened

previously should be closed immediately and balances lying therein shall be transerred to

the new account.13

Foreign Exchange (ForEX) Guidelines o the Bangladesh Bank:

http://www.bangladesh-bank.org/regulationguideline/oreignexchange/eguidevol1all.pd

05

Getting the Required Documents:

Steps or Establishing a Companyin Bangladesh12

12. This chapter has beneted greatly rom the inormation received rom Mr. Maarten Verbruggen en Mr. Rob Jongkeeso DeltaDesh, and thereore we would like to thank them sincerely.13. Bangladesh Bank, 31st May 2009, page number 59, Chapter 9, Article 2C in ForEX Guidelines:http://www.bangladesh-bank.org/regulationguideline/oreignexchange/eguidevol1all.pd


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This leads to the ollowing implications and advice:

a. One has to open a temporary Bank Account ater the name clearance where the

oreign investor(s) will send their equity requirement. The documents required to open

this NRTA are:

i. Name clearance copy

ii. Drat MOA

iii. Drat AOA

iv. Board minutes o meeting with reerence to JV agreement

b. The equity o the local partner can only be deposited ater incorporation o the

company.

c. Select a local bank branch that is nearby (a avorable attitude at this branch towards the

specic project can also be helpul).

Transer equity rom abroad: ater receiving the oreign remittance rom the oreign

investor(s) in the bank, the bank will issue an encashment certicate in the personal name othe oreign investor (required in order to be able to transer parts o the invested amount

out o Bangladesh at a later stage).

Ater receiving the Certicate o Incorporation (see Section 5.3 below), the NRTA in the bank

has to be changed to normal current account. Documents required:

a. Final MOA

b. Final AOA

c. Incorporation Certicate

The bank will now open a current account (A/C) in the name o the company with signatories

authority according to the Board minutes o meeting and/or JV agreement. At this point thelocal partner in the joint venture has to transer his/her equity contribution into the Bank

account. More inormation on nance and banking is included in Chapter 8.

5.3 Certicate o Incorporation (Investment Permit)

All the required documents now need to be submitted to the RJSCF in order to complete

and nalize the incorporation o the company and to acquire a Certicate o Incorporation

(c. Annex 5, Nr. 3). The documents required are:

a. Encashment certicates or the oreigners

b. Income Tax Certicates or the Local investors

c. Final MOA

d. Final AOA

e. JV agreement

. Board minutes o meeting with reerence to JV agreement


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05

5.4 Business Registration

Application to the BOI or Registration o Joint Venture Investment (c. Annex 5, nr. 8). The

BOI registration makes the company eligible to avail the incentives and acilities provided by

the government. Required documents are:

a. Application Forms

b. Certicate o Incorporation

c. MOA

d. AOA

e. Joint Venture Agreement

. Attested copy o deed agreement or rental premises

g. Project Prole

h. Background o the promoters (shareholders)

i. List o Machineries indicating quantity and price

j. Copy o the relevant Loan documents

k. Pay Order/Bank drat or the ee

In case a dierent type o company than a joint venture is being registered, other

requirements are among others the ollowing:

Factory: Approval o Factory Plan (c. Annex 5, nr. 1);

Bonded Warehouse License (c. Annex 5, nr. 2);

Registration o Local Investment Project (c. Annex 5, nr. 9).

5.5 Tax Identication Number (TIN)

The application or a Tax Identication Number (TIN) has to be submitted to the National

Board o Revenue (NBR) with the ollowing supporting documents (c. Annex 5, nr. 11):

a. Copy o AOA

b. Copy o MOA

c. Copy o Incorporation certicate

d. Prescribed government orms

e. Deposit the receipt (challan) o the bank or the application ee

For the Tax Holiday Certicate one also needs to contact the NBR (see Annex 5, nr. 10).

5.6 Value Added Tax (VAT) Number

The Value Added Tax (VAT) number can be acquired as well rom the NBR, whereby the

ollowing documents are required (c. Annex 5, nr. 15):

a. Trade License

b. TIN

c. MOA

d. AOA

e. Rental agreement o the actory premises


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Owing to the narrowness o the tax base, revenue is generated largely by customs and

excise. Personal income is subject to a progressive tax, and corporation tax varies between

25% and 45%. (c. EIU 2010). For more details on taxation reerence is made to Chapter 6.

5.7 Trade License

Trade License application or the new company has to be made with the Dhaka City

Corporation. Required are:

a. TIN certicate copy

b. VAT registration copy

c. Bank introduction letter

d. Copy o the MOA

e. Copy o the AOA

. Prescribed orms o the government

g. Oce rent agreement paper copy

There are two types o trade licenses, one or commercial and one or manuacturing rms:

see Annex 5, nrs. 12 and 13). For the Trade Marks Registration, see Annex 5 (nr. 14).

5.8 Industrial Registration Application

Application or BOI Industrial Registration with ollowing supporting documents:

a. Project Prole

b. MOA

c. AOA

d. Land Inormation & Document

e. Machinery Details

. Financing sources

g. TIN

BOI will issue an Industrial License and register oreign investment.

5.9 Tax Privileges

Apply to the National Board o Revenue (NBR) or tax exemption on the import o the capital

machinery. Documents required:

a. Project Proleb. AOA

c. MOA

d. Incorporation certicate

e. List o Machineries and costs to be imported

. Industrial License

For more detailed inormation on the broader investment incentives, see Annex 6.


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05

5.10 Import Registration Certicate (IRC)

For the Import Registration Certicate (IRC) one needs to register with the BOI and the

Chie Controller o Imports & Exports, CCI&E (c. Annex 5, nr. 7). The ollowing supporting

documents are needed:

a. Trade License photocopy

b. Valid membership o association (e.g. DBCCI)

c. Attested copy o:

i. AOA

ii. MOA

iii. Incorporation certicate

d. Passport photocopy o the Managing Director

e. Bank solvency certicate (original)

. Original receipt (challan) o bank deposit or the ees

The orms or the Import and Export Registration Certicates (IRC and ERC) are on thewebsite only available in the Bangla language (c. http://www.ccie.gov.bd/). Both Forms

in English have to be collected rom the oce o the Chie Controller Import and Export

(CCI&E) o the Ministry o Commerce.

5.11 Export Registration Certicate (ERC)

For the Export Registration Certicate (ERC) the ollowing documents are needed (c. Annex

5, nr. 5):

a. Attested copy o:

i. Trade License

ii. Valid membership o association or chamber (e.g. DBCCI)

iii. AOA

iv. MOA

v. Incorporation certicate

b. Original o Bank receipt (challan) or deposit o the ees

For any inormation required on Exports, check out the website o the Export Promotion

Bureau (EPB), Bangladesh, o the Ministry o Commerce (http://www.epb.gov.bd/).

5.12 BOI Recommendation Letter (or Visa)Two types o Visa exist: the PI-type or a Private investor, and the E-type or an Employee.

An application has to be made to the BOI or a PI Visa or oreign investors. The documents

required are:

a. Business introduction letter

b. Forwarding letter

c. Passport photocopies


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5.13 Visa Application

Foreign Nationals have to apply or Visa in any oreign mission o GoB, e.g. in the

Netherlands, along with:

a. BOI recommendation letter

b. Company letter introducing the business

This Visa must be renewed yearly or bi-yearly depending on various actors (e.g. country o

origin). The orm required can be downloaded (see Annex 4, nr. 7).

5.14 Work Permit

A work permit or oreign nationals is a prerequisite or employment in Bangladesh. Private

sector industrial enterprises desiring to employ oreign nationals are required to apply in

advance to the BOI in the prescribed rom. For expatriate employment the guidelines are as

ollows:

1. Nationals o countries recognized by Bangladesh are considered or employment.2. Employment o expatriate personnel will be considered only in industrial

establishments which are registered by the appropriate authority.

3. Employment o oreign nationals is normally considered or the job or which local

experts/technicians are not available.

4. Persons below 18 years o age are not eligible or employment.

5. A decision o the board o directors o the concerned company or new employment/

employment extension is to be urnished in each case.

6. The number o oreign employees should not exceed 5% o the total employees,

including top management personnel.

7. Initially employment o any oreign national is considered or a term o two years,

which may be extended on the basis o merit o the case.

8. Necessary security clearance has to be obtained rom the Ministry o Home Aairs.

BOI Form: See Website: http://www.boi.gov.bd/how-to-invest/orms-a-procedures/

obtaining-a-work-permit:

Residence permit:

No evidence can be ound that a residence permit is required in addition to this work permit

(and the Visa mentioned in the previous section).

5.15 Acquisition o Land

Being one o the most densely populated countries in the world, it is not surprising that land

has become the scarcest actor o production in Bangladesh. This is reected in galloping

land prices especially in the large cities.14

Entrepreneurs requiring industrial land or setting up a acility in any industrial area/estate

apart rom those o Bangladesh Export Processing Zones Authority (BEPZA) and Bangladesh

Small and Cottage Industry Corporation (BSCIC), should approach the BOI, and provide

them with the plot size required, copies o the sanction/registration letter and the industrial

layout plan. Ater receiving the application BOI provides assistance to get the industrial plot.


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05

Rules and regulations or land registration do change regularly, and at the time o writing

these were considered to be quite strict; or example, one has to come up with attested

photographs o both the buyer and the seller (or updated inormation the Bangla-Dutch

Chamber o Commerce or any o the other chambers can be contacted; see Chapter 10 or

their contact details). A word o caution is necessary at this point: the Acquisition o land

beyond government-owned land (khans land) could ace long-term litigation.

Export Processing Zones (EPZs) are export oriented industrial enclaves which provide

the inrastructures, the acilities, administrative and support services or a wide variety o

enterprises. Bangladeshs highly successul EPZs in Dhaka and Chittagong are now

complemented by new EPZ developments and other valuable real estate developments

around the country. The primary objective o an EPZ is to provide special areas where

potential investors would nd a congenial investment climate, and a location ree rom

cumbersome procedures. Businesses rom 32 countries have so ar invested in the existing

zones. For urther inormation reerence is made to Annex 1.

In addition to the Export Processing Zones, there are also 67 Industrial Estates spread

throughout the country and administered mainly by the BSCIC. These have no special

regulatory regime, and all are welcome to locate there, but only a ew o them oer

attractive locations and adequate inrastructure to the investor, and investor services are

minimal. Most o the industrial areas/estates are owned/controlled by city development

authorities in three divisional headquarters: RAJUK (Rajdhani Unnayan Kartripakkha) in

Dhaka, Chittagong Development Authority (CDA) in Chittagong and Khulna Development

Authority (KDA) in Khulna. Besides these, there are a ew industrial estates owned and

controlled by some other government agencies, namely (a) Public Works Department and

(b) Housing and Settlement Directorate.15

5.16 Environmental Clearance Certicate

The company has to apply to the BOI Utility Service Cell (USC) or Environmental

Clearance Certicate (c. Annex 5, nr. 4). BOI USC will obtain the necessary clearance rom the

Department o Environment (DOE) who will visit the actory or inspection.

5.17 Social Compliance

The registration or Social Compliance can be acquired rom the Chie Inspector o

Factories and Establishments (CIFE). Any manuacturing company employing ten or more

workers is required to be registered under the Factories Act 1965 at the oce o CIFE. This

act is primarily intended to regulate working conditions and to ensure saety in the actory.

The prescribed Application Form has to be collected rom the oce o CIFE, lled in and

submitted with all requirements. The CIFE oce issues registration within the stipulated

period. A dierent example concerns the acquisition o the Fire License (c. Annex 5, nr. 6).

14. c. Bangladesh Sixth Five Year Plan: FY2011-FY2015: Accelerating Growth and Reducing Poverty. Drat, March 2011,Planning Commission, Ministry o Planning, GoB. http://www.plancomm.gov.bd/about.asp15. Source: http://boi.gov.bd/how-to-invest/obtaining-industrial-plot


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5.18 Driving License

The driving license can be acquired rom the Bangladesh Road Transport Authority (BRTA)

which has the ollowing web address: http://www.brta.gov.bd/. The various types o driving

licenses, the orms to be downloaded and the costs are mentioned at the ollowing website:

http://www.brta.gov.bd/app_orm_next.php

In practice, however, most expatriates living in Dhaka employ a driver, which is useul or

their knowledge o local conditions, the language, parking and saety. Salaries range rom

BDT 8.000 to 15,000 per month and are negotiated with the driver, according to previous

experience and the length o the working week.

5.19 Overview o Costs o Registration

Listed below is a detailed summary o the bureaucratic and legal hurdles an

entrepreneur must overcome in order to incorporate and register a new rm, along with their

associated time and costs. Specically, it examines the procedures, time and cost involved in

launching a commercial or industrial rm with up to 50 employees and start-up capital o 10times the economys per-capita gross national income (GNI). The inormation provided here was

collected as part o the Doing Business project o The World Bank Group, which measures

and compares regulations relevant to the lie cycle o a small to medium-sized domestic

business in 183 economies. The most recent round o data collection or the project was

completed in June 2010. In total it took a period o 19 days (since step 6 is simultaneous with

Step 5), and 11,300 Taka. The example concerns a standardized Company, a Private Limited

Liability Company, located in Dhaka, as ollows:

No. ProcedureTime to

CompleteAssociated Costs

1

Veriy online the uniqueness o the

proposed company name with

RJSC&F

1 day BDT 100

2Pay adhesive stamp ees at a desig-

nated bank1 day BDT 2,000

3File documents with the RJSC&F or

registration1 day

BDT 2,925 registration ees +

BDT 1,200 registration ling ees

4 Make a company seal 1 day BDT 30-50

5 Register with the tax authority 9 days no charge

6 Register or VAT

7 days, simultane-

ously with procedure5

no charge

7 Obtain a trade license 6 days BDT 5,000

Source: http://www.doingbusiness.org/data/exploreeconomies/bangladesh/starting-a-business


33/80


Tea

* Source: http://www.epb.gov.bd/index.php?NoParameter&Theme=deault&Script=exportproductshow

Shrimps

Handicrats

Vegetable

Fruits

Potteries

Food Products

Woven Garments

Jute Products

Leather

Ceramics Products

Bicycle

Knitwear

ICT Products

Garments

Ship Building

Home Textiles

ICT Products

Pharmaceuticals

Exportable Products

as presented, orexample, by the

Export PromotionBureau, Bangladesh

(EPB) o the Ministryo Commerce*


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The cost o doing business in Bangladesh is in general highly competitive in comparison

to other economies in the region. The ollowing table based on inormation rom BOI

summarizes the relevant costs typically incurred by businesses. As prices change on a

regular basis it is advisable to check the website o the BOI mentioned below the table to

view the latest prices and/or check with one o the employers organizations (c. Chapter 10).

Regarding the tax structure mentioned, this depends o course on the country o origin andthe individual situation, but in general expatriates are not obliged to pay personal income

tax in Bangladesh.

Summary o Business Costs

Land US$

Average price o developed land in the dierent industrial belts

varies depending on location (price per square meter).10.0-15.0

Construction

Average per square meter 100-125

Gas Tarif

Average per 000 meter 64

Power Tarif

Average per kw/h 0.07

Human Resources: Labor Force

Average per month depending on skill level 50-100

Human Resources : Management Salaries

Mid-level: average US$ per month depending on the skills and

experience400-500

Top-level: average US$ per month depending on the experience 1000-2500

Sea Freight (in US$ approx. per FCL, Full Container Load):

Destinations *20FCL 40FCL

Rotterdam, Netherlands 1,625 2,970

New York, USA 3,050 3,750Sydney, Australia 1,250 2,100

Hong Kong, China 550 870

Jebel Ali, United Arab Emirates 850 1,420

Tax Structure

Personal income:

On the rst Tk. 165,000 Nil

On the next Tk. 275,000 10%



On the balance 25%

06Indicative Costs o DoingBusiness


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06

Corporate Income:

Publicly traded company 27.5%

Non-publicly traded company 37.5%

Bank, insurance and nancial company 45%

Mobile phone operator company 45%

Source: http://www.boi.gov.bd/about-bangladesh/costs-o-doing-business, with the exception o:

* : Inormation obtained rom Hap International Movers, Dhaka, Bangladesh (April 2011).

The above costs are or reerence purposes only. For specic and detailed inormation, youmay contact relevant service agencies, business consultants, employers organisations (c.Chapter 10), etc.


36/80


Transport and energy are two crucial elements in any investment decision.

Transport Network16

The transport sector o Bangladesh consists o a variety o modes. As the country is

essentially a at plain all three modes o surace transport, i.e. road, railway and water, are

widely used in carrying both passengers and cargo. The airline network is also extensive andeective. These dierent types o transport are summarized in Map 2.

1) Road

In Bangladesh, among the various modes o transport, road transport system has been

playing a signicant role in transporting passengers and goods. The Roads and Highways

Department (RHD) manage several categories o road. RHD has total length o 20,948 km

o roads under its control. RHD also controls a total number o 4,659 bridges and 6,122

culverts. RHD are currently operating about 161 erry boats in 81 crossings (13 on national

highways, 11 on regional highways and 57 on eeder roads) on its road network throughout

the country. As o January 2010, the Local Government Engineering Department (LGED) has

so ar constructed a total o 133,514 km o upazila and union roads (approximately hal dirtroad and hal paved roads) and 971,498 bridges/culverts.

The 4.8 km long Bangabandhu Bridge

(ormerly known as Jamuna Bridge) was opened

to trac in 1998, and currently is the eleventh

longest in the world. It has established a strategic link

between the East and the West o Bangladesh. It

is generating multiaceted benets to the people

and promoting inter-regional trade. Apart rom

quick movement o goods and passenger trac, it

is acilitating transmission o electricity and natural

gas and has integrated the telecommunication links.

The planned Padma Multipurpose Bridge Project is

intended to serve similar purposes in particular in

opening up the south-western region. It also includes a railway level. The costs are estimated

at $2.9 billion to be provided by contributions o World Bank, ADB, IDB & JICA.

07Transport and EnergyInrastructure in Bangladesh

16. This section is mainly based on: http://www.boi.gov.bd/about-bangladesh/transport-inrastructures

The planned Padma Multipurpose Bridge Project


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Map 2: Transport Network o Bangladesh

Source: http://www.boi.gov.bd/about-bangladesh/transport-inrastructures


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2) Air

The Civil Aviation Authority is a public sector entity entrusted to construct, maintain and

supervise airports and regulate air trac. The national ag carrier Biman ies to 26

international and eight domestic destinations. There are now 13 operational airports and

Short Take-o and Landing (STOL) ports in Bangladesh. These are Dhaka, Barisal, Chittagong,

Comilla, Coxs Bazar, Iswayrdi, Jessore, Rajshahi, Syedpur, Sylhet and Thakurgaon. O these,

the airports at Dhaka, Chittagong and Sylhet serve international routes.

Air cargo and Short Take-o and Landing (STOL) services have been handed over to the

private sector by the government. Bangladesh can be reached by air rom any part o the

world. Several international carriers y to and rom Dhaka (e.g. Emirates, Singapore Airlines,

Qatar Airways, Thai Air and Malaysian Airlines). Biman Bangladesh airlines connects Dhaka

with 27 major cities o the world. Within the region and within the country several private

airlines are operating such GMG, United and Regent airways.

3) Rail

The Bangladesh Railway provides service to places o interest such as Chittagong, Sylhet,

Khulna, Mymensingh, Bogra, Rajshahi & Dinajpur, starting rom Dhaka. The inter-city Express

Service is available to and rom important cities at cheap ares. About 32% o the total area

o Bangladesh is eectively covered by railways. Bangladesh Railway had a total network

o 2,835.04 km (Broad Gauge 659.33 km, Dual Gauge 374.83 km and Meter Gauge-1,800.88

km) and a total o 440 stations at the end o the year 2008-2009. Train services

between Dhaka-Kolkata have been commenced on 14 April 2008 in order to establish

communication between Bangladesh and India. Ater inclusion o a railway track over the

Bangabandhu Bridge, a railway link between east and west zone has been established.

4) WaterwaysCountry-made crats are the most widely used carriers on the rivers. These carry

passengers and merchandise on a large scale. The landscape o Bangladesh is dominated by

about 250 major rivers which ow essentially north-south.The alluvial ood plain ormed by these

rivers covers most o the country. Wherever there is a river and a village, a launch or

steamer will ply or trade. Bangladesh Inland Water Transport Authority (BIWTA) has been

established by the government or maintenance o navigability o ports and channels while

Inland water transport

[email protected]


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the state-owned corporation (BIWTC) provides passenger, and cargo services in inland

waterways and coastal areas o the country. Selected inormation on waterways is

summarized in the ollowing table:

Length o inland waterways 24,000 km

Length o navigable waterways:Monsoon 5,968 km

Dry season 3,865 km

Least available depth range 3.90 to 1.50 meter

Annual water discharge 1,400 bn cubic meter

Annual quantum o silt 2.5 bn tons

No. o passenger carried/year 87.80 m

Quantum o cargo carried/year 0.58 m tons

Source: Bangladesh Inland Water Transport Authority (BIWTA):

http://www.biwta.gov.bd/

The entire coast along the Bay o Bengal is 710 km long. There are two major ports in

the country. Chittagong, the oldest port, has been an entry-port or at least 1,000 years (c.

Annex 2). The Mongla port in Khulna region serves the western part o Bangladesh, and in

uture is planned to serve India (especially in the West and North o Bangladesh) as well as

Bhutan and Nepal. Recently the Government has indicated its desire to develop a third port,

Pathuakali, in between Chittagong and Mongla.

Energy

As indicated in Chapter 1 the energy crunch is currently a crucial constraint to doing

business in Bangladesh. This applies especially to electricity and gas. A moratorium on new

electricity and gas connections severely hampers the establishment o new businesses.

In addition the requent power outings result in interruptions in the production and/or in

increased production costs through the use o (diesel) generators. Renewable energy (e.g.

solar power) is receiving increased attention, or example the Solar Home Systems (SHS) but

cannot make up or the lack o energy as such. More background inormation on the Power

Industry in Bangladesh can be ound at: http://www.boi.gov.bd/key-sectors/power-industry

Inland waterways

MiriamOtto


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Finance and Banking System: Overview

The nancial sector in Bangladesh is continuously evolving towards a more modern and ecient

system o nance which is supportive o greater investment and inclusive economic growth. The

nancial system o Bangladesh consists o The Bangladesh Bank, scheduled banks, non-bank

nancial institutions, micro nance institutions, insurance companies, co-operative banks, credit

rating agencies and stock exchange.

The Banking inrastructure (March 2010) o the country can be summarized as ollows:

Type o bank No. No. o branches

State owned 4 3,391

Specialized 4 1,365

Private 30 2,387

Foreign 9 58

Total 47 7,201

For more details, see BOIs website: http://www.boi.gov.bd/about-bangladesh/nance-and-banking

The Foreign Investment Act o 1980 guarantees the right o repatriation o invested

capital, prots, capital gains, post-tax dividends, and approved royalties and ees. Although the

repatriation o unds is indeed guaranteed in practice it takes sometimes substantial time to

materialize. Foreign investors are ree to make investments in Bangladesh in the industrial

enterprises except or a ew reserved sectors. A bilateral (investment) treaty between the

Netherlands and Bangladesh on Double Taxation Avoidance exists since 1993.17

An industrial venture may be set up in collaboration with local investors or may even

be wholly owned by the oreign investors. Similarly, there is no restriction under theForeign Exchange Regulations Act on the import o securities into Bangladesh. However, no

securities can be exported or taken out o Bangladesh without general or special permission

rom Bangladesh Bank (the central bank). The Guidelines or Foreign Exchange Transactions

regarding oreign direct and portolio investment are issued by the Bangladesh Bank (BB),

and can be downloaded at these two websites:

http://www.bangladesh-bank.org/regulationguideline/oreignexchange/

eguidevol1all.pd

http://www.boi.gov.bd/how-to-invest/orms-a-procedures/guideline-or-oreign-

direct-and-portolio-investments

08Financial System and LoanFacilities in Bangladesh

17. Date o Signing: 13/07/1993; Statutory Regulatory Order, SRO No: 267-L/94 dated 14/9/1994, NBR, Min. o Finance.


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For more details on selected nancial subjects reerence is made to the relevant websites in

the ollowing table.

Subjects Relevant Website

Exchange Control and

Remittances

http://www.boi.gov.bd/how-to-invest/orms-a-procedures/

exchange-control-a-remittance

Foreign Loans, Suppliers

Credit, PAYE Scheme etc.

http://www.boi.gov.bd/how-to-invest/orms-a-procedures/

registrationapproval-or-oreign-loan-suppliers-credit-

paye-scheme-etc

Letters o Credit/Due

Diligence

http://www.manuacturebd.com/images/doing_business_

in_bangladesh-a_country_guide.pd

Finance and Bankinghttp://www.boi.gov.bd/about-bangladesh/inance-and-

banking

The Role o the Bangladesh Bank

As a oreign entrepreneur/investor the role o the Bangladesh Bank is at least indirectlyo importance (c. or example Section 5.2). Below background inormation is provided

concerning the broader role o this Bank. The core unctions o the Bangladesh Bank (BB) are:

1. BB as the central bank o Bangladesh executes all the unctions that a central bank

traditionally perorms as elsewhere in the world. The core unctions o BB are briey

discussed as ollows:

2. BB ormulates and implements monetary policy aiming at stabilizing domestic

monetary value and maintaining competitive external per value o taka or

ostering growth and development o countrys productive resources in the best

national interest. BB ormulates and implements intervention policies in the domesticmoney market and oreign exchange market. BB intervenes in the money market with

some policy instruments such as:

a. Open market operation (treasury bills/bonds, repo, reverse repo auctions)

b. Variations in reserve ratios such as Cash Reserve Requirements (CRR) and Statutory

Liquidity Ratio (SLR)

c. Secondary trading

d. Discounting rate/bank rate and

e. Moral suasion

3. BB monitors and supervises scheduled banks and non-bank nancial instructions

(NBFIs) that include o-site supervision and on-site supervision in order to enhance

the saety, soundness, and stability o the banking system to ensure banking discipline,

protect depositors interest and retain condence in the banking system.

4. BB holds sole responsibility o the management o international reserve representing

aggregate o BBs holding o gold, oreign exchange SDR and reserve position in the IMF.

5. BB, as the central bank o Bangladesh reserves sole responsibility to issue bank note


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6. BB perorms as a clearing house or the scheduled banks to clear and settle inter-bank

payment arising through drawing cheque, drats, bills, etc. to one another.

7. BB acts as a banker to the government

8. BB unctions as a lender o the last resort or the government as well as or the countrys

scheduled banks

9. BB acts as an advisor to the government

10. BB directs the growth expediting programs or the national interest.

Additionally, BBs unctions include some other promotional activities such as

development o new instruments, guidelines or money and nancial market participants,

providing training to the banks and NBFIs, monitoring and encouraging corporate social

responsibilities (CSR) executed by banks and NBFIs and so on ( Source: http://www.bangla-

desh-bank.org/)

The Mission o the BB includes separate elements or the business community and orBangladeshis abroad:

For the business community: We shall maintain liquidity conditions and credit

policies ensuring adequate credit ows at market driven exible interest rates or all

productive economic activities, including in sectors like agriculture and SMEs where

markets have not been very responsive. We shall oster macroeconomic stability through

monetary and external sector management. We shall promote and support development

o new nancial products, services and instruments. We shall maintain a secure and quick

payment system or settlement o claims.

For Bangladeshis abroad: We shall acilitate remittances rom your earnings abroadto Bangladesh through legitimate banking channels ree o involvement o money

launderers or terrorism nanciers. We shall support and promote development o new

investment opportunities or your remittances to Bangladesh.

Loan Facilities in Bangladesh

In order to establish the dierent kinds o development credits (short, medium or

long-term) that are provided by nancial institutions in Bangladesh, and to nd out or which

purpose, at what interest rates, or how many years, and which documents are required,

one is advised to consult the website o the BOI (http://www.boi.gov.bd/about-bangladesh/

nance-and-banking) and the Bangladesh Bank(http://www.bangladesh-bank.org/).

Specically or renewable energy projects nancing can be acquired rom the

Inrastructure Development Company Limited (IDCOL), which was established in 1997 by

the GOB. The Company was licensed by Bangladesh Bank as a non-bank nancial institution

(NBFI) in 1998. Since its inception, IDCOL is playing a major role in bridging the nancing

gap or developing medium and large-scale inrastructure and renewable energy projects

in Bangladesh. For more inormation see: http://www.idcol.org/


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Supporting Programs rom the Dutch Government

We strongly suggest that potential investors check the webpage o the Embassy (http://

www.netherlandsembassydhaka.org/), and that o the EVD (www.evd.nl) or the ollowing

support programs:

Supporting Programs rom the Dutch Government

PSI: Private Sector Investment FMO

ORIO CBI

Publicatie Investing in Bangladesh

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