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Business Opportunity in Bangladesh |
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Investment Sectors |
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Private investment is welcome in all areas of the economy with the exception of the four reserved sectors: |
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Arms and ammunition and other defense equipment and machinery |
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Forest Plantation and mechanized extraction within the bounds of reserved forests |
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Production of Nuclear Energy |
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Security Printing and Mining |
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Potential Investment Sectors in Bangladesh |
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Bangladesh, traditionally known for jute and tea exports, has recently attracted attention for readymade garments and leather exports. |
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Textile |
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Bangladesh is best placed in the region for textiles and garments industry due to cheap labor and favorable trade status with the EU. Again, 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. 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. Presently, about 85%-90% of this demand is met by import from countries like China, India, Hong Kong, Singapore, Thailand, Korea, Indonesia, Taiwan, etc. Fabric requirement is increasing at 20% per annum. This offers a tremendous opportunity for further investment. |
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Cost of some key production factors in textile sector |
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| Labor costs incurred in the textile industry is the lowest compared to its competitors |
| Thailand |
$ 1.00/Hour |
| India |
$ 0.60/Hour |
| Sri Lanka |
$ 0.45/Hour |
| Vietnam |
$ 0.40/Hour |
| Indonesia |
$ 0.40/Hour |
| Pakistan |
$ 0.40/Hour |
| China |
$ 0.35/Hour |
| Bangladesh |
$ 0.25/Hour |
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| Energy cost in Bangladesh is lower compared to India and Pakistan |
| India |
$ 0.095/KwH |
| Pakistan |
$ 0.08/KwH |
| Bangladesh |
$ 0.07/KwH |
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Other potential investment sectors |
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Leather goods, Frozen food, Jute goods, Oil and Gas, Coal, Power, Telecommunication, Air Transportation, Electronics, Light engineering industries, Tourism, Agriculture, Agro based industries, Computer software development, data entry & data processing. |
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Sanctioning/Registration Authorities |
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| Board of Investment |
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Registration of all industrial projects in the private sector outside the authorities of BSCIC and BEPZA. |
| Bangladesh Small and Cottage Industries Corporation (BSCIC) |
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Registration of industrial projects having capital investment not exceeding Tk. 30.00 million (For Build, Management, Reconstruction and Expansion maximum Tk. 45.00 million). |
| Bangladesh Export Processing Zones Authority (BEPZA) |
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Approval of all projects to be located in the EPZs. |
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Export Processing Zone (EPZ) |
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In order to stimulate rapid economic growth of the country, particularly through industrialization, the government has adopted an Open Door Policy to attract foreign investment to Bangladesh. 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, free from cumbersome procedures. The Bangladesh Private Export Processing Act allows establishment in private EPZs entirely through foreign investment or through joint ventures or local initiative. Followings are the six EPZs of Bangladesh which are in operation now: |
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Dhaka EPZ |
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Chittagong EPZ |
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Comilla EPZ |
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Mongla EPZ |
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Ishwardi EPZ |
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Uttara EPZ (at Nilphamari) |
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Proposed Adamjee EPZ will have 200 industrial plots for 70 industrial units with an investment of about 250 million US dollars. The annual estimated export target from this EPZ is 500 million US dollars. |
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| Bangladesh Map showing EPZs |
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Industries in the EPZs enjoy tax holiday for 10 years, exemption of income tax on interest on borrowed capital, freedom from national import policy restrictions, and some other facilities which are not enjoyed by industries outside EPZs. |
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Investment Incentives (Major) |
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| Tax Exemptions |
Generally 5 to 7 years |
| Duty |
No import duty for 100% export oriented industry. For other industry it is at 5% ad valorem. |
| Tax Law |
Double taxation can be avoided in case of foreign investors on the basis of bilateral agreements. Exemption of income tax up to 3 years for the expatriate employees in industries specified in the relevant schedule of Income Tax ordinance. |
| Remittance |
Facilities for full repatriation of invested capital, profit and divided. Exit: An investor can wind up on investment either through a decision of the AGM or EGM. Once a foreign investor completes the formalities to exit the country, he or she can repatriate the sales proceeds after securing proper authorization from the Central Bank. |
| Ownership |
Foreign investor can set up ventures either wholly owned on in joint collaboration with local partner. |
| Concessionary duty on imported capital machinery |
No import duty is charged in case of capital machinery and spares listed in NBR’s relevant notification. Import duty at 7.5% is secured in the form of a bank guarantee or an indemnity bond to be returned after installation of the machinery. |
| Incentives to non-resident Bangladeshis |
Special incentives are provided to encourage non-resident Bangladeshis for investment in the country. They will enjoy facilities similar to those of foreign investors. |
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Source - Statistical Pocket of Bangladesh, 2003, Published in January 2005 |
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