Bangladesh has emerged as a compelling investment destination, offering a highly competitive environment for foreign direct investment (FDI) in South Asia. The country has successfully nurtured a robust and liberal investment climate, providing investors with significant incentives, a skilled workforce, and a strategic location. The government's commitment to fostering economic growth is evident through its consistent efforts to improve the business environment and attract foreign capital.

One of the key highlights of Bangladesh's investment climate is its liberal FDI regime. Foreign investors can fully own their ventures in most sectors, and the country offers an unrestricted exit policy. This flexibility ensures that businesses are able to operate with autonomy and confidence. Bangladesh’s competitive wages and low energy costs further enhance its appeal, allowing companies to significantly reduce production costs compared to neighboring countries. This cost advantage, combined with a range of attractive incentives, makes Bangladesh a highly competitive location for investment.

The country's incentive packages are among the most generous in South Asia. Foreign investors benefit from reduced import duties on capital machinery (1%) and spare parts (3%), as well as a bonded warehousing facility for export-oriented industries. In addition, the government offers cash incentives and export subsidies ranging from 5% to 20% of the Free on Board (FOB) value for selected products, alongside a corporate tax holiday of 5 to 10 years for certain sectors. These incentives, combined with an accelerated depreciation allowance on machinery, are designed to provide long-term value for investors. Furthermore, Bangladesh’s membership in bilateral tax treaties ensures the avoidance of double taxation, while tariff concessions on raw materials support the competitiveness of export-oriented industries.

Strategically located at the crossroads of South Asia, Bangladesh offers unrivaled access to a market of 3 billion consumers across neighboring countries, with reduced tariff barriers facilitating trade. Its proximity to key global markets, including the North America and European Union, enhances the country's attractiveness as a regional hub for trade and investment. The strong local market and steady economic growth provide a solid foundation for businesses to thrive, while macroeconomic stability, backed by consistent policy reforms, offers a predictable environment for investment.

Among the key sectors attracting foreign investment in Bangladesh are agro-based industries, textiles and garments, plastics, jute and jute products, information and communication technology (ICT), pharmaceuticals, light engineering, medical equipment, healthcare, and leather goods. These sectors not only align with global demand trends but also leverage Bangladesh’s abundant natural resources and skilled labour force, further enhancing the country’s competitive edge.

The government has undertaken significant reform activities to improve the business climate, with the Bangladesh Investment Development Authority (BIDA) playing a pivotal role. The introduction of the One Stop Service (OSS) portal has simplified the investment process by allowing investors to access 133 services from 44 organizations through a single window. This initiative streamlines regulatory procedures, making it easier for both foreign and local investors to establish and operate businesses in Bangladesh. In addition, the Bangladesh Investment Climate Improvement Program (BICIP), a home-grown reform model, focuses on key areas such as business entry and exit, industrial infrastructure, cross-border trade, dispute resolution, tax regime, and access to finance. With the implementation of 44 reforms in fiscal year 2023-24, and more planned for the next fiscal year, Bangladesh is continuously enhancing its investment attractiveness.

In conclusion, Bangladesh offers a dynamic and investor-friendly environment, characterised by its competitive incentives, low operational costs, and a wealth of opportunities across diverse sectors. The country’s ongoing reforms and commitment to improving the ease of doing business make it an ideal destination for both long-term investment and strategic regional expansion.

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Writer: Dr. Khandoker Azizul Islam

Executive Member, Foreign Investment Wing, Bida