Best of times … Worst of times … Investment in Bangladesh
Syed Nasir Ershad
It is a well-recognized fact that Bangladesh has made strong progress over recent years, halving poverty and growing the economy by more than 6 percent each year on an average. But, like every country, a number challenges remain to be tackled. But what should be the top priorities for policy makers, international donors, NGOs and businesses? With limited resources and time, it is crucial that focus is informed by what will do the most good for each taka spent. There should be close work with relevant stakeholders across Bangladesh to find, analyze, rank and disseminate the best solutions for the country. Bangladeshis from all parts of society, through readers of newspapers, listeners to radio and TV viewers, along with NGOs, decision makers, sector experts and businesses should be engaged to identify the best solutions. Economists of Bangladesh should work to calculate the social, environmental and economic costs and benefits of the suitable proposals to develop Bangladesh further.
Bangladesh Investment Development Authority (BIDA) has been established under Bangladesh Investment Development Authority (BIDA) Act 2016. It is the principal private investment promotion and facilitation agency of Bangladesh. The relevant law was enacted on September 01, 2016. The act mandated BIDA for providing diversified promotional services and also to facilitating the potential investors with a view to accelerated industrial development of the country. In addition, the government also entrusted BIDA with some more functions in its service list. Combining all, BIDA’s present functions can be classified in a number of categories.
Firstly they are engaged in Investment Promotion. They are doing it by way of promoting the Country as well as upholding various sectors and industries. Publications on business processes are being done by BIDA to highlight the important sectors and areas where the investors could be interested in. Secondly, BIDA is also doing the investment facilitation service. They provide pre-investment information and counseling service. Afterwards they also extend to the investors welcome service by way of helping faster immigration for the foreigners. BIDA does the registration/approval of foreign, joint-venture and local project. They also do the registration and approval of branch, liaison, and representative offices of the investors. Other services include approval of work permit for the foreign nationals, facilitation of utility connections (electricity, gas, water & sewerage, telecom etc.), assistance in obtaining industrial plots, approval of remittance of royalty, technical know-how and technical assistance fees, facilitation of import of capital machinery & raw materials; and approval of foreign loan suppliers’ credit, etc. Advocating policy suggestions to the government is an important task. Assisting the government in framing new policies for private sector development and assisting the National Taskforce on investment climate facilitation are also done by BIDA.
Bangladesh offers some of the world’s most competitive fiscal and non-fiscal incentives, such as remittance of royalty, technical know-how and technical assistance fees; repatriation facilities of dividend and capital at exit, etc. Permanent resident permits are given to the foreign investors on investing US$ 75,000 and citizenship are given on investing US$ 500,000. Tax holidays are also a big incentive. In the Dhaka & Chittagong Divisions 100% tax is waived in the first two years; 50% in the 3rd and 4th years, and 25% in the year five. In Rajshahi, Khulna, Sylhet and Barisal Divisions and three Chittagong Hill Districts 100% tax is waived for the first three years, 50% for next three years, 25% for year seven.
Accelerated depreciation for new industries is available at the rate of 50%, 30% and 20% for the first, second and third years respectively, on the cost of plant and machinery. Businesses exporting 80% or more of goods or services qualify for duty free import of machinery and spares, bonded warehousing, etc. Ninety percent loan is available against letters of credit and funds for export promotion. Export credit guarantee scheme is also obtainable. Domestic market sales of up to 20% is allowed to export oriented business located outside an EPZ on payment of relevant duties. Cash incentives and export subsidies are granted on the FOB value of selected exports ranging from 5% to 20% on selected products.