Guide to Invstment in Bangladesh Foreign Private Investment (Promotion and Protection) Act, 1980


ACT, NO. XI OF 1980

An Act to provide for the promotion and protection of foreign private investment in Bangladesh.

WHEREAS it is expedient to provide for the promotion and protection of foreign private investment in Bangladesh;

It is hereby enacted as follows:-


1. Short title – This act may be called the Foreign Private investment (Promotion and Protection) Act, 1980.

2. Definitions. – (1) In this Act, unless there is anything repugnant in the subject or context,-

(a)  “foreign capital” means capital invested in Bangladesh in any industrial undertaking by a citizen of any foreign country or by a company incorporated outside Bangladesh, in the form of foreign exchange, imported machinery and equipment, or in such other form as the Government may approve for the purpose of such investment;

(b)  “foreign private Investment” means investment of foreign capital by a person who is not a citizen of Bangladesh or by a company incorporated outside Bangladesh, but does not include investment by a foreign Government or an agency of foreign Government;

(c)  “industrial undertaking” means an industry, establishment or other undertaking engaged in the production or processing of any goods, or in the development and extraction of such mineral resources or products, or in the providing of such services, as may be specified in this behalf by the Government.

(2)  Words and expressions used but not defined in this act shall have the same meaning as in the Companies Act, 1913 (VII of 1913).

3 Foreign private investment.-(1) The Government may, for the promotion of foreign private investment, sanction establishment with foreign capital of any industrial undertaking-

(a)  Which does not exist in Bangladesh and the establishment whereof, in the opinion of the Government, is desirable; or

(b)  Which is not being carried on in Bangladesh on a scale adequate to the economic and social needs of the country; or

(c)  Which is likely to contribute to-

(I)  the development of capital, technical and managerial resources of Bangladesh ; or

(ii)  the discovery mobilization or better utilization of the natural resources ; or

(iii)  the strengthening or the balance of payment of Bangladesh ; or

(iv)  increasing employment opportunities in Bangladesh ; or

(v)  the economic development of the country in any other manner.

(2)  Sanction of the establishment with foreign capital of an industrial undertaking under sub-section (1) may be subject to such condition as the Government may deem fit to impose.

4.  Protection and equitable treatment.-

The Government shall accord fair and equitable treatment to foreign private investment which shall enjoy full protection and security in Bangladesh.

5.  Terms of sanction, etc.-The terms of sanction, permission or licence granted by Government to an industrial undertaking having foreign private investment shall not be unilaterally changed so as to adversely alter the conditions under which the establishment of such undertaking was sanctioned; nor shall foreign private investment be accorded a less favourable treat-ment than what is accorded to similar private investment by the citizens of Bangladesh in the application of relevant rules and regulations.

6.  Indemnification, etc.-In the event of losses of foreign investment owing to civil commotion, insurrection, or riot, foreign private investment shall be accorded the same treatment with regard to indemnification, compensation, restitution, or other settlement as is accorded to investment by the citizens of Bangladesh.

7.  Expropriation and nationalisation.-

(1) Foreign private investment shall not be expropriated or nationalised or be subject to any measures having effect of expropriation or nationalisation except for a public purpose against adequate compensation which shall be paid expeditiously and be freely transferable.

2.  Adequate compensation for the purpose of sub-section (1) shall be an amount equivalent to the market value of investment expropriated or nationalised immediately before the expropriation or nationalisation.

8.  Repatriation of investment.-

(1)  In respect of foreign private investment, the transfer of capital and the returns from it and, in the event of liquidation of industrial undertaking having such investment, of the proceeds from such liquidation is guaranteed.

(2)  The guarantee under sub-section (1) shall be subject to the right which, in circumstances of exceptional financial and economic difficulties, the Government may exercise in accordance with the applicable laws and regulations in such circumstances.

9.  Removal of difficulty.-If any difficulty arises in giving effect to any provision of this Act, the Government may make such order, not inconsistent with the provisions of this Act, as may appear to it to be necessary for the purpose of removing the difficulty.


The Industrial Policy 1991 (revised in 1992) has clearly emphasized  importance on the role of the private sector in industrial development. The role of the government has been changed from regulatory to promotional. As a result of this policy, sanctioning and other procedures for obtaining different facilities and services have been simplified.

Industrial Policy ensures equal treatment for local and foreign investment. According to the policy no formal permission of the government is required to set up industries and for BMR/BMRE of the existing industries with the entrepreneurs’ own fund or with the fund from private banks or private financing institutions. Industries set up under foreign loan, suppliers’ credit, Pay-As-You-Earn (PAYE) scheme and non-repatriable foreign exchange are deemed to have been set up with own fund.

However, for availing institutional facilities such as, import entitlement for raw materials under restricted list, infrastructure facilities (industrial plot, electric, gas, telephone, water & sewerage
connection, etc.) industries are required to be registered with the concerned sponsoring agency.

To avail of the facilities and services provided by the BOI for setting up of industries the procedures mentioned below are to be followed by the entrepreneurs.

Registration of joint venture/100% foreign investment proposals in the private sector

No prior approval or No-Objection Certificate is required for setting up of a joint venture/100% foreign direct investment.

To avail of facilities and the institutional support services provided by the govt. entrepreneurs/investors are advised to apply for registration to BOI in a simple prescribed form.

(Specimen of application form for registration at Appendix-B)

Registration of self financed local investment proposals including industries sanctioned/financed by financial institutions or commercial banks

The entrepreneurs of such projects are to fill up a simple prescribed application form and submit to BOI for registration. After a first hand scrutiny of the information, BOI issues registration letter.

Permission for setting up joint venture industrial units with the public sector corporations

An entrepreneur, either local or foreign, can set up an industry with public sector corporation. Such joint venture is required to be registered with the BOI if the private sector’s contribution is more than 50% of the project cost and in such case it is treated as private sector project. For any public sector which makes contribution out of their own fund needs approval of the concerned ministry. If the contribution of the corporation is 50% or above, it is treated as a public sector project. The public sector project is processed by the concerned ministry for approval of the Planning Commission.

Procedure for import of raw & packing materials and spare parts by industrial units

No permission is required for import of free list items. For items in the restricted list, BOI, BEPZA and BSCIC are responsible for issuance of import entitlement. Import Registration Certificate (IRC) will be
issued by the concerned authority in favour of the industrial enterprises within 30 days of receiving applications.

Items included in the banned list cannot be imported unless otherwise specified.

(Banned and Restricted list items are at Appendix-C & Appendix-D)

In case of import of raw and packing materials of the pharmaceutical industry, the Drugs Administration Directorate under Ministry of Health & Family Welfare prepares Block Lists on half yearly basis. BOI/BEPZA/BSCIC provides all other assistance relating to imports in the private sector in their respective jurisdictions. In this connection procedure followed by BOI is as under:

On receipt of application in the prescribed form along with copies of (1) TIN certificate, (2) Trade Licence, (3) Membership Certificate of relevant trade association/chamber, (4) Certificate from the nominated bank regarding opening of account, (5) Incorporation Certificate, in case of limited companies and (6) Letter of registration with BOI, necessary field inspection is done to determine annual production capacity and half yearly/yearly import entitlement of raw & packing materials.

The entrepreneur is then advised to deposit IRC fees (on the basis of annual import entitlement) by Treasury Challan to the Bangladesh Bank/Treasury. On receipt of the copy of treasury challan, recommendation is referred to the office of the Chief Controller of Imports & Exports (CCI&E) for issuance of ad-hoc IRC.

The entrepreneur will then approach nominated bank for opening Letters of Credit for import. After starting commercial production the entrepreneur may apply to BOI for regularisation of the ad-hoc import entitlement. On receipt of application for regularisation of the entitlement, utilization of ad-hoc import entitlement is verified through field inspection and if found satisfactory BOI  recommends to CCI&E for regularisation. Import entitlement may, however, be refixed on verification of the actual requirement.

Guide-lines for registration/approval of Foreign Loan, Suppliers’ Credit, PAYE Scheme, etc.

Entrepreneurs in the private industrial sector arranging foreign credit in the form of loan, suppliers’ credit, PAYE scheme etc. falling within the following guide-lines are not required to obtain prior approval from BOI for contracting such credit:

. The effective rate of interest should not exceed LIBOR+4% (effective   interest is the sum of the stated annual rate of interest and the   annualized fees such as commitment fee, syndication fee, front-end   fee, project appraisal fee etc.).

. The down payment, if any, in case of suppliers’ credit should not   exceed 10% of the credit amount.

. Repayment period should not be less than 7 years.

A copy of the foreign loan agreement signed by both parties should be submitted to BOI for registration.

Prior approval of BOI is required for the proposals which do not fall within the aforesaid guide-lines.

Remittance of royalty, technical know-how and technical assistance fees  Royalty: Royalty is a fee paid by the local manufacturer to its foreign collaborator in consideration of

. Licence to use the brand name and trade mark of the foreign manufacturer on the local product (s) and/or;

. Assignment of rights under inventions by the foreign company as well  as current manufacturing experience.

Technical know-how and technical assistance fees: 

Technical know-how and technical assistance fee is a fee paid by the local unit to its foreign collaborator in consideration of preparation of factory
layout, engineering specifications of the project, assistance in selecting machine, supervision of civil construction and installation of machinery and equipment, know-how and assistance in production, testing, safety and quality control, assistance by way of making available patented process and/or know-how and right to avail of the technical information resulting from research and development, training of local personnel, technical assistance in management and marketing in deserving cases and assistance in other technical matters etc.

No prior permission of BOI is required for entering into agreements for remitting fees for the purpose of royalty, technical know-how and technical assistance if the total fees and other expenses connected
with technology transfer (service fee, marketing commission etc.) are within the following prescribed limits:

a. For new projects such fees and other expenses should not exceed an aggregate limit of 6% of the C&F value of imported machinery.

b. Recurrent annual fees for royalties and other expenses such as fees   for technical know-how, technical assistance, operational services,   marketing of products etc. should not exceed an aggregate limit of   6% of the previous year’s sales of the firms as declared in the tax   return.

Once the technology transfer agreements falling within the above limits are signed, these are required to be furnished to BOI for registration.

Proposals which are not covered under the prescribed limits will require prior approval of BOI for which application have to be submitted along with necessary documents and copy of the relevant
draft agreement.
Procedure for obtaining work permit

Work permit for foreign nationals is a pre-requisite for employment in Bangladesh. Private sector industrial enterprises desiring to employ foreign nationals are required to apply in advance in the prescribed form of BOI. For expatriate employment the guide-lines followed are:

a. Nationals of the countries recognized by Bangladesh are considered  for employment.

b. Employment of expatriate personnel be considered only in industrial  establishments which are sanctioned/registered by the appropriate authority.

c. Employment of foreign nationals is normally considered for the job  for which local experts/technicians are not available and persons below 18 years of age are not eligible for employment.

d. Decision of the Board of Directors of the concerned company for new employment/extension is to be furnished.

e. Number of foreign employees should not exceed 5% of the total employees including top management personnel.

f. Initially employment of any foreign national is considered for a term of 2 years which is extensible on the basis of merit of the  case.

g. Necessary security clearance by the Ministry of Home Affairs.

Procedure for obtaining industrial plot

Entrepreneurs requiring industrial plot for setting up of an industry in any industrial areas/estates apart from BEPZA and BSCIC, may approach BOI mentioning the size of plot required by them along with copies of sanction/registration letter and industrial layout plan for justifying actual requirement. After receiving the application BOI provides assistance to get the industrial plot.

Most of the industrial areas/estates are owned/controlled by city development authorities in three divisional head quarters, RAJUK in Dhaka, CDA in Chittagong and KDA in Khulna. Besides these, there are a few industrial estates owned and controlled by some other government agencies namely, (a) Public Works Department and (b) Housing and Settlement Directorate.

BOI also recommends for acquisition of land to the concerned authorities if required by the industrial units. In such cases the entrepreneurs are required to submit relevant papers and information in connection with the land to be acquired by the Deputy Commissioners (D.C.) concerned.

Procedure of obtaining electricity, gas, water, sewerage & telephone connection for industries

Entrepreneurs may apply either directly to the concerned authority for obtaining utility services or approach BOI for assistance along with copy of registration/sanction letter.


Tax holiday: Tax holiday is allowed to industries for the following periods according to the location of the establishment:

. Dhaka, Sylhet and Chittagong Division:              5 Years
(excluding 3 hill districts)

. Other Division:                                               7 Years

. 3 Hill districts of Chittagong Division:                 7 Years

The period of tax holiday is calculated from the month of commencement of commercial production or operation of the industrial undertaking. The eligibility of tax holiday is to be determined by the NBR.

Tax holiday facility can be availed by industries set up in Bangladesh within June 30, 2000 A.D.

Accelerated depreciation: Accelerated depreciation in lieu of tax holiday is allowed at the rate of 80% of actual cost of machinery or plant for the year in which the unit starts commercial production and 20% for the following years. The rate of depreciation is 100% for areas specified by the NBR.

Concessionary duty on imported capital machinery:

Import duty at the rate of 7.5 percent ad valorem is payable on capital machinery and spares imported for initial installation or BMR/BMRE of the existing industries. The value of spare parts should not, however, exceed 10 percent of the total C & F value of the machinery. Out of this 7.5 percent rate of duty payable, export – oriented industries and industries located in the under developed areas, may enjoy a further concession of the import duty in the following manner:

100 per cent export oriented industries: No import duty is charged in case of capital machinery and spares listed in NBR’s relevant notification. However, import duty @ 7.5% is secured in the form of a bank guarantee or an indemnity bond to be returned after installation of the machinery.
Minimum 70 per cent export oriented industries outside developed areas: Import duty @ 2.5% is charged in case of of capital machinery and spares listed in NBR’s relevant notification. Additional import duty @ 5% is secured in the form of a bank guarantee or cash deposit to be returned after installation of the machinery.
Minimum 70 per cent export oriented industries in developed areas: Import duty @ 5% is charged in case of
capital machinery and spares listed in NBR’s relevant notification. Additional import duty @ 2.5% is secured in the form of a bank guarantee or cash deposit to be returned after installation of the machinery.
Other industries outside developed areas:  Import duty @ 5% is charged in case of
capital machinery and spares listed in NBR’s relevant notification. Additional  import duty @ 2.5% is secured in the  form of a bank guarantee or cash deposit to be returned after installation of the machinery.
Other industries in developed areas:  Import duty @ 7.5% is charged in case of
capital machinery and spares listed in NBR’s relevant notification.

Value Added Tax (VAT) is not payable for imported capital machinery and spares. Please see at Appendix – E for list of different areas (developed/under developed).

Rationalisation of import duty: Duties and taxes on import of goods which are produced locally will be higher than those applicable to import of raw materials for producing such goods.

Incentives to non-resident Bangladeshis: Special incentives are provided to encourage non-resident Bangladeshis for investment in the country. Non-resident Bangladeshi investors will enjoy facilities similar to those of foreign investors. Moreover, they can buy newly issued shares/debentures of Bangladeshi companies. A quota of 10 % has been fixed for non-resident Bangladeshis in primary public shares. Furthermore, they can maintain foreign currency deposits in the Non-resident Foreign Currency Deposit (NFCD) Account.


. Tax exemption on royalties, technical know – how fees received by any foreign collaborator, firm, company and expert.

. Tax exemption on the interest on foreign loans under certain conditions.

. Avoidance of double taxation in case of foreign investors on the basis of bilateral agreements.

. Exemption of income tax up to 3 years for the foreign technicians employed in industries specified in the relevant schedule of income tax ordinance.

. Tax exemption on income of the private sector power generation company for 15 years from the date of commercial production.

. Facilities for repatriation of invested capital, profit & dividend.

. Six months’ multiple entry visa for the investors.

Re-investment of repatriable dividend treated as new investment.

. Citizenship by investing a minimum of US$ 5,00,000 or by transferring US$ 10,00,000 to any recognized financial institution (non repatriable).

. Permanent resident ship by investing a minimum of US$ 75,000 (non-repatriable)

. Tax exemption on dividend income of non – resilient shareholders during tax exemption period of an industry set up in export processing zone and also after the expiry of tax exemption period if the dividend is re-investment in the same project.

. Exemption of tax on income from industrial undertaking set up in export processing zone for 10 years from the date of commercial  production.

. Tax exemption on capital gains from the transfer of shares of public limited companies listed with a stock exchange.


Encouraging export oriented industries is one of the major objectives of the Industrial Policy, 1991 and as such the government ensures allsupport and co-operation to the exporters as per Export Policy. Some of the facilities and incentives offered are as follows :

. Concessionary duty as per SRO is allowed on the import of capital machinery and spare parts for setting up export-oriented industries or BMRE of existing industries. For 100% export-oriented industriesno import duty is payable.

. Facilities such as special bonded warehouse against back-to-back letters of credit or notional import duty and non payment of Value Added Tax (VAT) facilities are available as per SRO of the government.

. System for duty drawback is being simplified and concised. The exporter will be able to get back the duty draw-back directly from the concerned commercial bank.

. Bank loan up to 90 percent of the value against irrevocable and confirmed letters of credit/sales agreement is available.

. For granting export performance benefit, the list of export products and the rate of Export Performance Benefit (XPB) is reviewed from time to time.

. With a view to ensuring backward linkage, export-oriented industries including export-oriented ready-made garment industries using indigenous raw materials instead of imported one are given additional facilities and benefits at prescribed rates. Similar incentives are extended to the suppliers of raw materials to export-oriented industries.

. Export-oriented industries are allocated foreign exchange for publicity campaign and for opening offices abroad.

. Entire export earning from handicrafts and cottage industries is exempted from income tax. In case of all other industries, proportional income tax rebate on export earnings is given between 30 and 100 percent. Industries which export 100 percent of their products are given tax exemption up to 100 percent.

. Facility for importing raw materials is given for manufacturing exportable commodities under banned/restricted list.

. Import of specified quantities of duty-free samples for manufacturing exportable products is allowed. The quantity and value of samples is determined jointly by the concerned sponsoring agency and the National Board of Revenue (NBR).

. Local products supplied to local projects against foreign exchange under international tender are treated as indirect exports and the producer is entitled to avail all export facilities.

. Export oriented industries like toys, luggage & fashion articles, electronic goods, leather goods, diamond cutting & polishing, jewellery, stationery goods, silk cloth, gift items, cut & artificial
flowers & orchid, vegetable processing and engineering consultancy services identified by the government as thrust sectors are provided special facilities in the form of cash incentives, venture capital and other facilities.

. Export oriented industries are exempted from paying local taxes (such as municipal taxes.

. Leather industries exporting at least 80% manufactured products will be treated as 100% export oriented industries.

. Manufacturers of indigenous fabrics (such as woven, knit, hosiery, grey, printed, dyed, grament check, handloom, silk and other specialized fabrics) supplying their products to 100% export oriented garment industries are entitled to avail a cash subsidy equivalent to 25% of the value of the fabrics provided the manufacturers of the fabrics do not enjoy duty draw back or duty free bonded ware house facility.

Apart from the above mentioned facilities, other facilities as announced and provided in the Export Policy are also applicable for export-oriented and export-linkage industries.


On March 24, 1994 Bangladesh `Taka’ was declared convertible for current external transactions. Consequently, individuals/firms resident in Bangladesh may conduct all current external transactions, including trade and investment through banks authorised to deal in foreign exchange (Authorised Dealers) without prior approval of Bangladesh Bank. Non-resident direct investment in industrial enterprises and non-resident portfolio investment through stock exchanges also do not require prior approval of Bangladesh Bank. Remittance of post-tax dividends/profits on non-resident direct or portfolio investments do not require prior approval, sale proceeds, including capital gains on non-resident portfolio investments may also be remitted abroad without prior approval. Investors may obtainrelevant procedural details by contacting any Authorised Dealer bank in Bangladesh. The salient points on liberalisation measures intendedfor investment facilitation and for encouragement of exports are as below.

To facilitate investment: 

Prior approval of the Bangladesh Bank is no longer required for :

. Remittance of profits to their head offices by foreign firms and companies operating in Bangladesh.

. Issuance of shares to non-residents against investments for setting up industries in Bangladesh.

. Remittance of dividends on such shares to the non-resident investors.

. Portfolio investment by non-residents including foreign individuals/enterprises in shares and securities through stock exchanges in Bangladesh.

. Remittance of dividend on portfolio investment by non-residents through stock exchanges in Bangladesh.

. Remittance of sale proceeds including capital gains of portfolio investments of non-residents through stock exchanges in Bangladesh.

. Opening of letters of credit by banks against suppliers’ credit and other foreign borrowings contracted by industrial enterprises in the private sector in accordance with general guidelines prescribed by BOI (subject to a maximum effective rate of interest of LIBOR + 4%,repayment period not less than 7 years) or with specific approval of BOI.

. Remittance in repayment of principal and payment of interest of such loans.

. Remittance of technical fees and royalties against technical assistance/royalty agreements in conformity with BOI guidelines.

. Remittance of savings of expatriate personnel at the time of their leaving Bangladesh out of the salaries and benefits stated in their employment contracts as approved by BOI.

.Extension of term loans by banks on normal banking considerations to foreign firms operating in Bangladesh.

. Extension of working capital loans to all foreign owned/controlled industrial and trading firms/companies by banks on the basis of banker customer relationship and normal banking practice.

. Obtaining of interest free repatriable short terms foreign currency loans by foreign firms investing in Bangladesh from their head officesor any other sources through any authorised dealer.

To Encourage Export:

. Annual foreign exchange retention quota of exporters in general has been refixed at 40% of FOB export earnings.

. For exports of items with high import content (such as naphtha, furnace oil and bitumen, ready made garments, electronic goods etc.) the retention quota is 7.5% of FOB export earnings. Service
exporters are allowed to retain in foreign exchange 5% of their earnings.

. Exporters may keep their foreign exchange quota in foreign currency accounts in US Dollar, Pound Sterling, Duetch Mark or Japanese Yen with a bank in Bangladesh dealing in foreign exchange. Balances in these foreign currency accounts can be used by the exporters for bonafide business purposes such as business visits abroad, participation in export fairs and seminars, import of raw materials,
machinery and spares etc. Funds from these accounts may also be used to set up offices abroad without prior permission of Bangladesh Bank.


Legal protection : The Foreign Private Investment (Promotion &Protection) Act, 1980 ensures legal protection to foreign investment in Bangladesh against nationalisation and expropriation. It also
guarantees repatriation of capital & dividend and equitable treatment with local investors at (Appendix – F).

Bilateral agreements for avoidance of double taxation : Bilateralagreements have been concluded by the Government of the People’s Republic of Bangladesh with the following countries for avoidance of double taxation :

Belgium   Pakistan
Canada  Poland
China  Romania
Denmark Singapore
France South Korea
Germany Sri Lanka
India Sweden
Italy Thailand
Japan The Netherlands
Malaysia United Kingdom  (Including Northern Ireland)

Negotiations are going on with U.S.A., Iran, Philippines, Qatar, Australia, Nepal, Turkey, Indonesia, Cyprus, Norway, Finland and Spain.


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