Bangladesh: Investing

FDI in Figures

Foreign direct investment in Bangladesh remains structurally weak (1% of the GDP).

Foreign investors often find that administrative procedures are too weighty and useless (licenses, several authorizations). Added to these difficulties, there are problems caused by the incertitude related to criminality, poor infrastructures, inadequate commercial laws and courts, not honoring contracts and policy instability (decisions taken by previous governments are overturned when a new government comes into power). Bangladesh is also a victim of a very negative reputation, the country is seen as being extremely poor, under-developed and subject to devastating natural disasters.

Bangladesh has, however, the advantage of being located in a strategical geographical position between South and South-East Asia. In addition, it has the potential of its domestic market and the richness of its natural resources, which makes the country a good candidate for investors.

Most of the FDI is oriented towards the sectors of telecommunications, textile and energy. By far, the main investors in the country are Egypt, the United Kingdom, the United Arab Emirates and Malaysia.

Country Comparison For the Protection of Investors

	Bangladesh	South Asia	United States	Germany
Index of Transaction Transparency*	6.0	4.4	7.0	5.0
Index of Manager’s Responsibility**	7.0	4.4	9.0	5.0
Index of Shareholders’ Power***	7.0	6.3	9.0	5.0
Index of Investor Protection****	6.7	5.0	8.3	5.0

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

Foreign Direct Investment	2008	2009	2010
FDI Inward Flow (million USD)	1,086	700	913
FDI Stock (million USD)	4,816.0	5,279.0	6,072.1
Performance Index*, Ranking on 141 Economies	115	121	-
Potential Index**, Ranking on 141 Economies	120	-	-
Number of Greenfield Investments***	13.0	17.0	-
FDI Inwards (in % of GFCF****)	5.7	3.0	-
FDI Stock (in % of GDP)	6.1	5.8	-

Source: UNCTAD - Last Available Data

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

Tax Rates

VAT: 15%
Company Tax: 27.5%
Withholding Taxes: Dividends: 15%, Interests: 10%, Royalties: 10%, Import of goods: 3%
Bilateral Agreement: Bangladesh and Lebanon are not bound by a Double Taxation Agreement.
Social Security Contributions Paid By Employers: 8.3% of the basic salary.

Country Comparison For Corporate Taxation

	Bangladesh	South Asia	United States	Germany
Number of Payments of Taxes per Year	21.0	31.1	11.0	16.0
Time Taken For Administrative Formalities (Hours)	302.0	282.9	187.0	215.0
Total Share of Taxes (% of Profit)	35.0	39.9	46.8	48.2

Source: Doing Business - Last Available Data.

Investment Opportunities

Tenders, Projects and Public Procurement: DgMarket, Tenders Worldwide
Asian Developement Bank, Proposed Projects in Asia
Setting Up a Company: Consult Doing Business Website, to know about procedures to start a Business in Bangladesh.
Useful Resources: Board of Investment Bangladesh (BOI)

Business Setup Procedures

Setting Up a Company	Bangladesh	South Asia
Procedures (number)	7.00	7.10
Time (days)	19.00	24.60

Source: Doing Business.

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