Foreign Direct Investment in Bangladesh-FDI


Foreign Direct Investment in Bangladesh-FDI

FOREIGN INVESTMENT
 
  • Investment in Bangladesh:

With the exception of a few reserved sectors, foreign investors are free to make investments in Bangladesh in industrial enterprise. An industrial entity may be set up in collaboration with local investors or may even be wholly owned by the foreign investors. No permission is needed to set up such enterprises if the entrepreneurs use their own funds. However, to avail of facilities and institutional suport provided by the government, entrepreneurs/sponsors are advised to apply for registration with the Board of Investment (BOI). For items in the control list, the office of the Chief Controller of Imports & Exports (CCI & E) prescribes the basis and conditions of import entitlement.
Shares may be issued in favour of foreign investors against capital machinery brought into Bangladesh. For issuance of shares against foreign investment in the form of capital machinery, the exchange control copy of bill of entry evidencing clearance of the capital machinery from the Custom Authorities, copies of the relative import permit, invoice and bill of lading are required.

 
  •   Investment in shares/securities by non-residents:
a) Non-residents are free to invest in shares / securities quoted in the stock exchanges, with foreign exchange sent or brought into Bangladesh.
b) They may also invest in new, yet-to-be-listed public issues of Bangladeshi shares/securities. In such cases investors are not required to transact through any registered broker/member of stock exchange.
5% shares of Initial Public Offering (IPO) of a company is reserved for Non-Resident Bangladeshi (NRB). Non-Resident Bangladeshi (NRB) can purchase/subscribe securities in foreign currency through “Foreign Currency Account for IPO” opened for the purpose only by the issuing company. Over subscription can be repatriated after completion of formalities.
c) Permission of Bangladesh Bank is not required for issue and transfer of shares in favour of non-residents against their investments in joint ventures in Bangladesh.
d) Non-resident share holders can freely transfer their shares to other non-residents.
2.3 Remittance of profits:
Branches of foreign firms/companies including foreign banks, insurance companies and financial institutions are free to remit their post-tax profits to their head offices through banks authorized to deal in foreign exchange (Authorized Dealers) without prior approval of Bangladesh Bank.
  • Remittance of dividend/capital gain:

Prior permission of Bangladesh Bank is not required for :

– remittance of dividend income to non-residents in respect to their investments in Bangladesh;
– remittance of dividend declared out of previous year’s accumulated reserves; and
– dividend and sale proceeds (including capital gains) of shares of companies listed in a Stock Exchange in Bangladesh. Such remittance may be effected prior to actual payment of taxes provided that the amount payable to the tax authorities at the applicable tax rate is withheld by the company. Remittance of sale proceeds of shares of companies not listed in Stock Exchange requires prior Bangladesh Bank permission, which is accorded for amounts not exceeding the net asset values of the shares.
  1. Remittance of salaries and savings by expatriates:

Expatriates working in Bangladesh with the approval of the Government may remit through an Authorized Dealer (AD) 50% of salary and 100% of leave salary as also actual savings and admissible pension benefits. No prior Bangladesh Bank approval is necessary for such remittances.

  • Remittanceof royalty/technical fees:

Industrial enterprises may enter into agreements for payment of royalties, technical know-how/technical assistance fees abroad without prior permission if the total fees and other expenses connected with technology transfer do not exceed (a) 6% of the previous year’s sales of the enterprises as declared in their tax returns, or (b) 6% of the cost of imported machinery in the case of new projects. These agreements, however, need to be registered with the Board of Investment (BOI). Agreements not in conformity with these general guidelines require prior permission of the BOI. ADs may remit the royalties, technical know-how/technical assistance fees payable as per agreements registered with/approved by BOI, without prior approval of Bangladesh Bank.

  • Remittance on account of training and consultancy:

Industrial enterprises producing for the local market may remit through ADs up to 1% of their sales as declared in their previous year’s tax returns for the purpose of training and consultancy services without prior approval of Bangladesh Bank.

  • Remittance by shipping lines, airlines, courier service companies:

Foreign shipping lines, airlines and courier service companies may send abroad, through an AD, funds collected in Bangladesh towards freight and passage, after adjustment of local costs and taxes, if any.

  • FOREIGN AND LOCAL BORROWINGS
  • Foreign loans:

Industrial enterprises in Bangladesh (local, foreign or joint venture) may borrow abroad with prior Board of Investment (BOI) approval. Remittances towards payment of interest and repayment of principal as per terms of BOI approved borrowing may be made through ADs without prior Bangladesh Bank approval.

  • Local borrowings:

Banks in Bangladesh may extend working capital loans or term loans in local currency to foreign-controlled or foreign-owned firms/companies (manufacturing or non-manufacturing) operating in Bangladesh on the basis of normal banker-customer relationship, without reference to Bangladesh Bank
Banks in Bangladesh are free to grant local currency loans to joint venture industries in EPZ up to the amount of short term foreign currency loans obtained from abroad.

 
  • CONVERTIBILITY ON TRADE ACCOUNT

Bangladesh Taka is fully convertible for settlements of trade related transactions. Import licence is not required for import of items not in the control list. An importer has automatic access to foreign exchange for import of all items outside the control list, and also for import of control list items as per general or specific authorization of the office of the Chief Controller of Imports and Exports.

 
  • EXCHANGE FACILITIES FOR EXPORTERS
  • New Exporters : Annual foreign exchange quota for business travel abroad for new exporters has been set at US $ 6000. Bonafide requirement beyond US $ 6000 is accommodated by Bangladesh Bank upon written request submitted with supporting documentation.
  • Retention Quota for merchandise exporters:Merchandise exporters may retain up to 50% of realised FOB value of their exports in foreign currency accounts in US$, Euro, Japanese Yen. For export items with high import contents (such as naptha, furnace oil, bitumen, readymade garments etc.), the retention quota is 10%. The computer software and data entry/processing service exporters may also retain up to 50% of realised export proceeds in foreign currency accounts. Funds from these accounts may be used to meet bonafide business expenses, such as business visits abroad, participation in export fairs and seminars, import of raw materials, machineries and spares etc. Funds from these accounts may also be used to set up offices abroad without prior permission of Bangladesh Bank. Exporters may, at their option, retain the foreign currency in interest bearing renewable term deposit accounts in Bangladesh with a minimum amount of USD 2,000 or Pound Sterling 1,500 equivalent.
FAQ:
1. Why Foreign Investors is needed to deposit (USD) $ 50,000 ? Because this is rules of government , all foreign investors have to deposit the said amount for inward remittance, official expense & others.
2. Why encashment certificate is needed for foreign investors? Beasuse this is rules of government body to show as prove deposit amount to bank .
3. What is PI Visa? PI visa is for the investors visa will be given recommendation from BOI.
4. What is EI Visa ? EI Visa is for the foreign employees Visa is given recommendation from Board of Investment-BOI.
Foreign Company Registration, Joint Venture, Branch Office, BOI permission, Work Permit, Visa, Factory set up, Legal, Tax, Office rent, so on.
S & F CONSULTING FIRM LIMITED is an international business consultancy firm incorporated as private limited company in Bangladesh.
Corporate Office:
http://www.sfconsultingbd.com
Email: contact@sfconsultingbd.com
Mobile: +880 01790220729 or, +880 01790220728
Dhaka, Bangladesh
Skype: forhadhossain79 , sfconsultingbd
 
Service area:

 

  • Foreign company registration ( 100 % foreign owned share, Joint Venture, Branch/ Liason/ Virtual office)
  • Legal
  • Accounts Audit
  • Income Tax
  • Company Secretarial
  • Management Consultancy

We are in all countries in Asia, Europe, USA, Canada, Australia & Africa

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