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Bangladesh is gradually becoming an economically strong and financially settled nation. Many foreign investors are becoming interested in investing in the business sector of the country. Many companies and investors all over the world have chosen Bangladesh for investment purpose. The main reason behind this is the incentives and policies provided by the government. The Government of Bangladesh provides excellent facilities and incentives to the foreign investors. This is why foreign corporations are nowadays interested in business in Bangladesh. However, before entering Bangladesh for business, there are few techniques, or tips, that must be followed. These mere behavior manners must be strictly maintained in order to improve one's personality and personal expressions. Community and trade customs are sternly observed part in Bangladesh. It is very necessary to build a good relation with others like during lunch period or free time. A soft tone while communication is always welcoming to others. Therefore, one should speak softly but enthusiastically, without the words sounding like a murmur. A handshake is an extremely common gesture in doing business in Bangladesh, but there are a few rules for this. Men should not offer theirs hand to a woman unless she offers first. Again, the use of right hand is preferable as well as compulsory. It is always important to keep a good stock of one's visiting cards in one's pocket while attaining any party. The people of Bangladesh prefer the exchange of visiting cards during a conversation. While attending any party, one's attire should be clean and proper. Firstly, it is necessary to know whether the host has decided on any theme. If not, the men should wear trouser or an extended or short-sleeved type of shirt. Combination of jacket and tie are preferred in the more formal parties. The female population of Bangladesh wears the traditional 'Sari' and visitors from abroad prefer trousers and a formal blouse. Most Bangladeshi business persons have a fair communication skill and basic knowledge of English, but they prefer to communicate in the national language, which is Bangla. Bangladeshis are generally punctual. Therefore, one should not be late in attending any parties or formal functions. Exchanging of gifts is a common exercise in Bangladesh, but in business parties, corporate gifts are more used. Bangladeshis are very fond of receiving gifts and returning the favor. Shoes worn to a party must not be noisy. Most of the times, noisy shoes causes disturbances in business parties. In this case, small sole shoes must be preferred. The people of Bangladesh are formal, strict and more official than others. Therefore, one's behavior should be proper and precise.
Bangladesh is the second largest readymade garment and knitwear exporting country of the world. Due to the uprising of synthetic products. Pride Group. such as shoes.All the tips suggested above must be followed in order to improve relationship with the residents of Bangladesh. They are simply formal about business and follow certain rules. Shrimp farming and processing. Market leader of this industry is Aftab Group. Bangladeshis may be a little strict but they are neither rudely nor unfriendly. jute has lost its popularity in the world. The garment products manufactured in these zones are entirely dedicated for exporting. belts. the above mentioned points must be followed. Last but not the least. Top Business Sectors of Bangladesh There are several profitable sectors in Bangladesh where one can invest in. Leather Footwear is the fastest growing segment of the leather industry. bags. Once. it is not difficult to maintain a business in Bangladesh as the people here are welcoming and friendly. Bangladesh meets the demand for about 10% of the world’s total leather market. Foreign Direct Investment in the textile sector is extremely encouraged by the Government. Noman Group and Beximco. before planning to do business in Bangladesh. Leather and Leather Products: Bangladesh has a large leather industry. and jackets. and fish processing are rapidly growing industries in Bangladesh. They are punctual and soft-spoken. Frozen Food: The frozen food sector of Bangladesh is the second largest export of the country. Bangladesh is the largest exporter of readymade garment and knitwear to the USA and a number of European countries. These products are sold both in the domestic and foreign markets. Here are some potential investing sectors of Bangladesh: Textile: The textile industry of Bangladesh is well reputed all over the world. These industries make leather based products. In all. the now defunct Adamjee Jute Mill. she had the biggest jute mill in the world. Therefore. However. The main advantage of investing in Bangladesh is the cheap labor force and the low manufacturing cost. The main benefit of the leather industry of Bangladesh is the ample supply of raw materials. The leading companies of this sector are KDS Group. There are several Export Processing Zones (EPZ) in the country. jute still has a high . Jute and Jute Products: Bangladesh is the second largest jute producing country in the world. There are numerous hatcheries by the sea-shores of the country.
86 million in the form of sacking hessian.32 million and jute goods worth US$ 317. Oil and Gas: Bangladesh has a reserve of about 23 TCF gas reserved. International air & cargo transport in the private sector is now allowed for operation in Bangladesh. in which about 14 TCF is accessible. the demand for electronic goods is budding with it. small tools and paper products for the domestic market. carpet & carpet backing cloth. Light engineering industries Light industries in Bangladesh produce a multitude of labour intensive goods including toys. consumer items. Therefore. Electronics: As the population of the country is growing. Bangladesh is one of the leading producers of jute in the world. . The government has asked foreign companies to help in producing electricity. Power: The scarcity of electricity in Bangladesh is a major problem for the country. At present the annual production is 890. the government has given provisional domestic air transport operating licenses to six private companies for STOL Services. Fifty-seven wells have been drilled so far. This is one of the very prospective areas for investment with higher technology. European and Asian electronic firms have established technical collaboration with their Bangladeshi counterparts to produce some electronic goods at competitive prices. Top players of this industry are Grameen Shakti and Rahimafrooz. Electronics Bangladesh's experience in basic electronics spans over two decades. Marker leader of this sector is Summit Power. jute yarn/twine etc. Several quick rental companies have started working in Bangladesh.demand in making carpets. This has tremendous potentiality for expansion. The oil and gas sector of Bangladesh has a lot of potential and the government is open to foreign companies to invest in drilling and recovering this natural resources.000 MT. In 1996-97 Bangladesh exported raw jute worth US$ 116. Further development of these industries offers various investment opportunities. Currently. the Government is negotiating with Russia and a few other countries about establishing a nuclear energy plant. investing in the electronic industry has no chance of backfiring. In recent years. Seven airports have been refurnished to cater to their needs. Air Transportation In air transport. sacks etc.
Cost of some key production factors in textile sector Labor costs incurred in the textile industry is the lowest compared to its competitors Thailand India Sri Lanka Vietnam Indonesia Pakistan China Bangladesh $ 1. Bangladesh has the largest sea beach and the largest mangrove forest in the world. Singapore. traditionally known for jute and tea exports.45/Hour $ 0. such as pharmaceuticals.Export oriented production in light industries has gained momentum in the past few years.07/KwH . India. Presently. has recently attracted attention for readymade garments and leather exports. etc. Korea.25/Hour Energy cost in Bangladesh is lower compared to India and Pakistan India Pakistan Bangladesh $ 0. Bangladesh has started promoting the tourism industry more than ever. Again. about 85%-90% of this demand is met by import from countries like China. Taiwan. Indonesia. real estate and shipbuilding. Textile Bangladesh is best placed in the region for textiles and garments industry due to cheap labor and favorable trade status with the EU. Bangladeshi corporate houses are doing well these days which indicates that the market economy is in full force. Thus the potential for backward linkage industry is enormous Prospect for a huge textile industry capable to supply over 3 billion yards of fabrics a year to the export oriented garment industry has also been developed by the industry. Government incentives for the spinning and weaving industries in the form of cash subsidy of the fabric cost to exporters sourcing fabrics locally. There is huge yarn and fabric demand supply gap in the RMG industries which is presently met by imports. Japan and Korea have taken advantage of Bangladesh's cheap and easily trainable labour and its infrastructure facilities to manufacture products for the export market.40/Hour $ 0.60/Hour $ 0. Bangladesh. there are few other options available in Bangladesh for investors to put their money in.00/Hour $ 0. Entrepreneurs from Hong Kong.35/Hour $ 0. This offers a tremendous opportunity for further investment.40/Hour $ 0. Rangamati and Khagrachhari.095/KwH $ 0. Tourism: In recent years.40/Hour $ 0. There are beautiful hill stations. Investing in the tourism industry of Bangladesh is like picking up a ripe apple ready to be eaten. Thailand. such as Bandarban. Hong Kong.08/KwH $ 0. Apart from these sectors. IT and software. Fabric requirement is increasing at 20% per annum.
Reconstruction and Expansion maximum Tk. Frozen food. Computer software development. Management. Sanctioning/Registration Authorities Board of Investment Registration of all industrial projects in the private sector outside the authorities of BSCIC and BEPZA. 30.00 million). Coal. Power. Air Transportation. data entry & data processing. 45. the government has adopted an Open Door Policy to attract foreign investment to Bangladesh. Tourism. Jute goods. free from cumbersome procedures. Export Processing Zone (EPZ) In order to stimulate rapid economic growth of the country. The annual estimated export target from this EPZ is 500 million US dollars. Followings are the six EPZs of Bangladesh which are in operation now: Dhaka EPZ Chittagong EPZ Comilla EPZ Mongla EPZ Ishwardi EPZ Uttara EPZ (at Nilphamari) Proposed Adamjee EPZ will have 200 industrial plots for 70 industrial units with an investment of about 250 million US dollars.Other potential investment sectors Leather goods.00 million (For Build. Telecommunication. particularly through industrialization. Oil and Gas. . Following this. EPZs have been created to provide complete infrastructural facilities including communication and utility connection where potential investors would find a congenial investment climate. Bangladesh Export Processing Zones Authority (BEPZA) Approval of all projects to be located in the EPZs. The Bangladesh Private Export Processing Act allows establishment in private EPZs entirely through foreign investment or through joint ventures or local initiative. Bangladesh Small and Cottage Industries Corporation (BSCIC) Registration of industrial projects having capital investment not exceeding Tk. Agro based industries. Agriculture. Electronics. Light engineering industries.
Facilities for full repatriation of invested capital. Published in January 2005 . Exit: An investor can wind up on investment either through a decision of the AGM or EGM. Import duty at 7. exemption of income tax on interest on borrowed capital. 2003. For other industry it is at 5% ad valorem. profit and divided.5% is secured in the form of a bank guarantee or an indemnity bond to be returned after installation of the machinery. and some other facilities which are not enjoyed by industries outside EPZs. Double taxation can be avoided in case of foreign investors on the basis of bilateral agreements. Investment Incentives (Major) Tax Exemptions Duty Tax Law Generally 5 to 7 years No import duty for 100% export oriented industry. Foreign investor can set up ventures either wholly owned on in joint collaboration with local partner. Once a foreign investor completes the formalities to exit the country. They will enjoy facilities similar to those of foreign investors. Exemption of income tax up to 3 years for the expatriate employees in industries specified in the relevant schedule of Income Tax ordinance. he or she can repatriate the sales proceeds after securing proper authorization from the Central Bank. Remittance Ownership Concessionary duty on imported No import duty is charged in case of capital machinery capital machinery and spares listed in NBR’s relevant notification. freedom from national import policy restrictions.Bangladesh Map showing EPZs Industries in the EPZs enjoy tax holiday for 10 years. Incentives to non-resident Bangladeshis Special incentives are provided to encourage nonresident Bangladeshis for investment in the country.Statistical Pocket of Bangladesh. Source .
However. . he or she can repatriate the net proceeds after securing proper authorization from the central bank (Bangladesh Bank). Major incentives to stimulate private sector direct investment are listed below. Income Tax Double taxation can be avoided in most cases as the country (Bangladesh) benefits from many bilateral investment agreements. Duty No import duty is applicable for export oriented industry.Investment Incentives In order to encourage the inflows of FDI the government of Bangladesh offers one of the most liberal investment policies and attractive packages of fiscal. Investing in The Stock Market Foreign investors are allowed to participate in initial primary offerings (IPOs) without any regulatory restrictions. Also. Ownership Foreign investors can set up ventures. financial and other incentives to foreign entrepreneurs in South Asia. profits and dividends are the norm in most situations Exit An investor can wind up an investment either through a decision of an annual or extraordinary general meeting. For other industries it is 5% ad valorem. with local partners. Exemptions of income tax up to three years for the expatriate employees in industries are specified in the relevant schedules of the income tax ordinance. either wholly owned or in joint collaboration. Once a foreign investor completes the formalities to exit the country. Remittances Facilities for full repatriation of invested capital. for electric power generation tax exemptions are provided for up to 15 years. Tax Exemptions Generally five to seven years' tax exemptions are available for many business investments. incomes from dividends are tax-exempt for investors.
Import duty at 5% is charged in case of capital machinery and spares listed in NBR's relevant notification. may enjoy a further concession of the import duty in the following manner: No import duty is charged in case of capital machinery and spares listed in NBR's* relevant notification. 3% rate of duty payable. Additional duty at 5% is secured in the form of a bank guarantee or cash deposit to be returned after installation of the machinery. 100% export oriented industries: Minimum 70% export oriented industries in developed areas: Minimum 70% export oriented industries in developed areas: Other industries outside developed areas: Othe industries in developed areas: . Additional import duty at 2. exceed 10% of the total cost and freight value of the machinery. The value of spare parts should not.5% is secured in the norm of a bank guarantee or cash deposit to be returned after installation of the machinery. The rate of depreciation is 100% for years specified by the NBR. The period of tax holiday is calculated from the month of commencement of commercial production or operation of the industrial undertaking.Incentives and Facilities for the Investors Industries are eligible for tax holidays for the following periods according to the location of the establishment. export-oriented industries and industries in the under developed areas. Concessionary Duty on Imported Capital Machinery Import duty at the rate of 3% ad valorem is payable on capital machinery and spares imported for initial installation or BMR/BMRE* of the existing industries. The eligibility of a tax holiday is to be determined by the National Board of Revenue (NBR). However. 2012. The tax holiday facility is applicable to industries set up in Bangladesh before June 30. Accelerated depreciation in lieu of a tax holiday is allowed at the rate of 80% of actual cost of machinery or plant for the year in which the unit starts commercial production and 20% for the following years. Import duty at 3% is charged in case of capital machinery and spares listed in NBR's relevant notification. import duty at 3% is secured in the form of a bank guarantee or an indemnity bond to be returned after installation of the machinery. Import duty at 2. Out of this. Import duty at 5% is charged in case of capital machinery and spares listed in NBR's relevant notification.5% is secured in the form of a bank guarantee or cash deposit to be returned after installation of the machinery. however. Additional import duty at 2.5% is charged in case of capital machinery and spares listed in NBR's relevant notification.
Avoidance of double taxation in case of foreign investors on the basis of bilateral agreements.000 to any recognized financial institution (non repatriable).000 (non-repatriable). Citizenship by investing a minimum of US$ 500. firm.000 or by transferring US$ 1.000. Tax exemption on the interest on foreign loans under certain conditions. Tax exemption on income of private sector power generation company for 15 years from the date of commercial production. Non-Resident Bangladeshis (NRBs) Special incentives are provided to encourage non-resident Bangladeshis for investment in the country. they can buy newly issued shares/debentures of Bangladeshi companies. A quota of 10% has been fixed for non -resident Bangladeshis in primary shares. Exemption of income tax up of to three years for the foreign technicians employed in industries specified in the relevant schedule of the income tax ordinance. Moreover. Six months multiple entry visa for investors.Value Added Tax (VAT) is not payable for imported capital machinery and spares. Permanent residency by investing a minimum of US$ 75. profits and dividends. Facilities for repatriation of invested capital. technical know-how fees received by any foreign collaborator. company and expert. Nonresident Bangladeshi investors will enjoy facilities similar to those of foreign investors. Other Incentives Tax exemptions on royalties. . Furthermore. they can maintain foreign currency deposits in the Non -resident Foreign Currency Deposit (NFCD) account. Duties and taxes on import of goods which are produced locally will be higher than those applicable to import of raw materials for producing such goods.
. are given additional facilities and benefits at prescribed rates. and as such the government ensures all support and co-operation to the exporter as per the export policy. processing zone and also after the expiry of tax exemption period if the dividend is re investment in the same project. the list of export products and the rate of export performance benefit (XPB) are reviewed from time to time. of up to 90% if the value against irrevocable and confirmed letters of credit/sales agreement. Similar incentives are extended to the suppliers of raw materials to export-oriented industries. The exporter will be able to get back the duty draw-back directly from the concerned commercial bank. Some of the facilities and incentives offered are as follows: Concessionary duty as per SRO* is allowed on the import of capital machinery and spare parts for setting up export-oriented industries or BMRE of existing industries. are available. Exemption of tax on income from industrial undertakings set up in export processing zone for ten years from the date of start of commercial production. Bank loans. System for duty drawback is being simplified and concise. export-oriented industries including export-oriented ready made garment industries using indigenous raw materials instead of imported materials. Tax exemption on dividend income of non-resilient shareholders during tax exemption period of an industry set up in export. Tax exemption on capital gains from the transfer of shares of public limited companies listed with a stock exchange. Facilities such as special bonded warehouse against back-to-back letters of credit or notional import duty and non payment of Value Added Tax (VAT) facilities are available as per SRO of the government. Additional Incentives to Export Oriented and Export Linkage Industries Encouraging export oriented industries is one of the major objectives of the Industrial Policy in place. For granting export performance benefits. For 100% export-oriented industries no import duty is payable. With the intention of encouraging backward linkages.
stationery goods. jewellery. luggage and fashion articles. vegetable processing and engineering consultancy services identified by the government as thrust sectors are provided special facilities in the form of cash incentives. Import of specified quantities of duty-free samples for manufacturing exportable products is allowed. Local products supplied to local projects against foreign exchange under international tender are treated as indirect exports and the producer is entitled to avail of all export facilities. In case of other industries. grey. Export oriented industries like toys. silk cloth. printed. hand loom. Leather industries exporting at least 80% manufactured products will be treated as 100% export oriented industries. Export oriented industries are exempted from paying local taxes (such as municipal taxes). garment check. diamond cutting and polishing. hosiery. Industries which export 100% of their products are given tax exemption up to 100%. venture capital and other facilities. other facilities as announced and provided in the export policy are also applicable for export-oriented and export-linkage industries. The quantity and value of samples is determined jointly by the concerned sponsoring agency and the NBR. dyed. Export-oriented industries are allocated foreign exchange for publicity campaigns and for opening offices abroad. electronic goods. Entire export earnings from handicrafts and cottage industries are exempted from income tax. Manufactures of indigenous fabrics (such as woven. leather goods. gift items. Facilities for importing raw materials are given for manufacturing exportable commodities under banned/restricted list. proportional income tax rebates on export earnings is given between 30% and 100%. Apart from the above mentioned facilities. silk and specialized fabrics) supplying their products to 100% export oriented garment industries are entitled to avail a cash subsidy equivalent to 25% of the value of the fabrics provided the manufacturers of the fabrics do not enjoy duty draw back or duty free bonded warehouse facility. knit. Tax exemption on dividend income of non-resident shareholders during tax exemption period of an industry set up in an export processing zone and also after the expiry of tax exemption period if the dividend is re invested in the same project. cut and artificial flowers and orchid. .
Exemption of tax on income from industrial undertakings set up in an export pro cessing zone for ten years from the date of commercial production. Modernisation. Rehabiliation and Expansion . Tax exemption on capital gains from the transfer of shares of public limited companies listed with a stock exchange. *SRO=Special revenue order *NBR=National Board of Revenue BMR/BMRE=Balancing.
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