Bangladesh achieved sales of $38.75 billion from exports in 2020-21 and it is projected to be 24th largest economy by 2033.
As per the tradingeconomics.com foreign direct investment was $2.65 billion dollar in 2019 and which falls to around $1.5 billion dollar in 2020 due to COVID-19 and it is expected to reach at $2.5 billion dollar by the end of the 2021. As per data available on statista.com inflation is 5.56% and it will remain around near about for the next 5 years. Un employment rate is 5.1% in 2020 as per World Bank data, which is highest over two decades due to COVID.
Post Covid – Economy Recovery:
During the COVID-19, Bangladesh economy is supported through the digital sector, comprises of use of E-Commerce delivery channels, formation of online medical services and increase in IT exports. Recently Automobile and FMGCs has increased its investments in digital economy and companies like FMCG and Procter and Gamble enhance its digital sector.
Economic performance in post covid period is remarkable. Bangladesh manages to increase its exports by 15% and achieve second highest growth rate globally.
Government initiatives for Foreign Investment:
To promote foreign investments and make it simple and one window solution for the investors Government has formed Bangladesh Investment Development Authority which helps the businesses from initial stage of getting license and to ensure their smooth operations.
Reasons for Investments in Bangladesh:
Incentives to invest in Bangladesh: Stable economy and political situation, consistent economic growth, Skilled and Young workforce, Ease of doing business for Foreign Investors, competitive labour cost, tend towards digital economy, establishment of free zones. Bangladesh economy is providing high return to the investors. There are few benefits given which will be attractive for the foreign investors.
- Double taxation avoidance treaty with more than 35 companies
- Lower income tax rates for the labour intensive and export-oriented industries
- Cash and other Incentives for the export-oriented companies
- Several tax incentive industries for investments
Income tax exemption up to 10 years and dividend tax exemption for the same period
Establishment of Export Processing Zones:
To boost exports, Bangladesh has established Export Processing Zones authority to boost industrialisation and export sector. To boost the investment in Export Processing zones, government has initiated the following incentives:
- Up to 5 and 7 years corporation tax exemptions
- Tax exemptions on Dividend for the same period of Corporation tax exemptions
- Tariff exemptions on imported raw material which will be used for exports
- 100% foreign investment is allowed
- Medium / Long-term borrowing facilities available
Establishment of Economy Zones:
Economic zones have been established by the Bangladesh Economic Zones Authority. Bangladesh has offered certain incentives to encourage rapid economic development through increase and diversification of industry, employment, and production in the under-developed areas. Fiscal incentive includes following major incentives:
- Income tax exemption up to 10 years and dividend tax exemption for the same period
- No Capital gain tax on transfer of shares within 10 years
- Three-year salary tax exemptions for expatriates
- Exemption of VAT on all utility services
- Tax exemption on royalties, technical know-how and technical assistance fees, etc. for 10 years
- Duty free import of goods to be used for the development of Zones
- 100% foreign investment is permissible
- Medium/long term foreign borrowing facilities
Licensed Industries:
There are certain industries which are required pre-license to invest in these industries, main of industries includes Fishing in deep sea, Bank, Insurance and financial institutions, Power, supply and distribution, Exploration, extraction and supply of natural resources, large scale infrastructure project, Crude oil refinery, telecommunications.
Investment Structure:
Mainly Bangladesh permits 100% foreign ownership with few exceptional industries included: freight/cargo, courier services, real estate, advertising agent, shipping agent, private educational institutions.
Companies can invest in the country through the incorporation of a foreign company and through a subsidiary and subsidiary can be 100% foreign owned and locally jointly owned companies. Companies can be public limited companies and private limited companies. Public limited companies can have minimum 7 members and private companies can have 2 to 50 members.