The Economic Wing is endeavors to strengthen and to promot business relations between Bangladesh and Saudi Arabia by enhancing bilateral trade, investment and other commercial exchanges. It also interacts with the Saudi Government, Chambers of Commerce and business community with regard to economic and commercial issues of mutual interest such as trade policies, agreements, investment etc.

Investment in Bangladesh

Promoting Foreign Investment in Bangladesh is a priority agenda of the Government aimed to achieve national economic and development objectives. The Government and the private sector have started working hand-in-hand to attract substantial amount of foreign investment in the growing manufacturing and service sectors. Conducive investor-friendly policy regime and regulatory framework have already been established.

As the prime national Investment Promotion Agency (IPA), the Board of Investment (BOI) has been offering comprehensive investor services from initial counseling even to product marketing assistance.

Governance and Policies

Bangladesh is a moderate, democratic and homogeneous country. It is a constitutional republic with a multi-party parliamentary democracy. Elections are held on the basis of universal suffrage. The President is the head of Sate elected by the members of the Parliament for a five year term. Executive power is exercised by the cabinet headed by the Prime Minister

Economy and Business

Economic Performance: Bangladesh is in the process of transition from predominantly agrarian economy to an industrial and service economy. The private sector is playing an increasingly active role in the economic field of the country, while the public sector concentrates more on the physical and social infrastructure.

Macro Economic Highlights

•         A steady average annual GDP growth of 5% over the last decade.

•         Inflation has been kept in low single-digit.

•         Exports have been gradually shifted from traditional goods to more profitable items.

•         Emphasis has been put on manufacturing section.

TRADE AND INVESTMENT

Exports from Bangladesh have both grown and changed substantially. To simulate and boost the export earnings, promotional campaigns and industry assistance are being given under export diversification program. Export Processing Zones (EPZs) are being made more equipped and liberal.

Bangladesh offers the most liberal FDI regime in South Asia, with no prior approval requirements or limits on equity participation and repatriation of profits and income.

PRIVATE SECTOR INVESTMENT SCENARIO 

Private investors initially register investment proposals with BOI expressing their intent to invest in the respective projects. Practically registration is a commitment of investment over a period of time. To avoid confusion in registration and actual investment, data on private investment have been presented in the following categories:

            a.         Investment Registration Statistics

            b.         Actual Investment Statistics

Investment Registration Statistics

2003-04 shows a distinctive growth scenario of overall investment situation in the country. Manufacturing is getting increasingly vibrant having a significant share in the total investment. The following  table presents time-series data of projects registered with BOI since FY 1991-92. In FY 1991-92, total private investment registered amounted US $ 116 million which grew to US $ 2,395 million in 2002-03.

INVESTMENT CLIMATE

1. GENERAL FEATURE

Bangladesh offers an unparalleled conducive investment climate compared to the other South Asian Countries.

•         Bangladesh is a largely homogenous society with no major internal or external tensions and a population with great resilience in the face of adversity (e. g. natural calamities).

•         Bangladesh is a liberal democracy and mostly a one race and one religion country. The population of this country irrespective of race and religion have been living in total harmony and understanding for thousands of years.

•         It enjoys broad non-partisan political support for market-oriented reform and offers investor-friendly regulatory regime in South-Asia.  

•         Bangladesh owns a trainable, enthusiastic, hardworking and low-cost (even by regional standards) labor force suitable for any labor-intensive industry.

•         Geographic location of the country is ideal for global trades with very convenient access to international sea and air route. Bangladesh is the bridge between ASEAN and SAARC nations.

•         Bangladesh is endowed with abundant supply of natural gas, water and its soil is very fertile.

2. REGULATORY LEGAL FRAMEWORK

Investment in Bangladesh is well protected by law and by practice. Major laws affecting foreign investment are:

•         The Foreign Private Investment (Promotion and Protection) Act of 1980

•         The Bangladesh Export Processing Zones Authority Act of 1980

•         The Investment Board Act of 1989

•         The Companies Act 1994 etc.

In addition, foreign investors are also required to follow the regulations of the Bangladesh Bank-central bank of the country and the National Board of Revenue for taxation and customs matters.

3. BILATERAL INVESTMENT AGREEMENTS

The Foreign Private Investment (Promotion and Protection) Act 1980 includes a guarantee of fair and equitable treatment to foreign private investment. Such national treatment is also provided in bilateral investment treaties (BITs) for the promotion and protection of foreign investment which have been concluded with 24 countries.

Negotiations on concluding BITs have also been going on with some countries; separate bilateral agreements for avoidance of double taxation (DITs) have also signed with 20 countries, while negotiations on DITs are also being held with other countries including KSA.

In addition, Bangladesh is a signatory to Mutual Investment Guarantee Agency (MIGA), Overseas Private Investment Corporation (OPIC) of USA, International Center for Settlement of Investment Disputes (ICSID) and a member of World Intellectual Property Organization (WIPO) permanent committee on development cooperation related to industrial property. Bangladesh ensures adequate protection for intellectual property rights, such as patents, designs & trademarks and copyright.

INDUSTRIAL POLICY REFORMS

No limitations pertaining to equity participation i.e. up to 100 per cent foreign private investment allowed. Except five reserved sectors, all industries are open for private investment are included in the reserved sector namely: (i) arms, ammunition and other defence equipment and machinery (ii) production of nuclear energy, (iii) forest plantation and mechanized extraction within the bounds of reserved forests, (iv) security printing (currency notes) & minting, and (v) railways & air transportation (except certain domestic routes and air procurement of land, electricity, gas and sewerage connection, importation of capital machinery, tax rebate, duty drawback facilities etc., industries need only to be registered with the Board of Revenue (BOI) in a simple prescribed form.

•       FACILITIES AND INCENTIVES Tax holiday from 5-10 years depending on location of industries

•        15 years’ tax holiday for private power generation companies facilities for repatriation of investment capital, profit & dividend exemption of tax on interest

•        foreign loan

•      Tax exemption on royalties, technical know-how & technical assistance fees

•      Avoidance of double taxation on the basis of bilateral agreements

•        Six months’ multiple entry visa for the investors

•      TAKA, the nation’s currency, is convertible for international payments in the current account

•      Re-investment of repatriable dividend treated as new investment working capital loan, as well as, term loan, from local commercial banks allowed to the industries set up with foreign capital.

THOSE WHO CHOSE BANGLADESH AS INVESTMENT DESTINATION

Economic liberalization and investment policies of Bangladesh have encouraged some of the biggest names in the business to set up operations in Bangladesh. Names like AES, Akzo Nobel, Basf, Bata, British American Tobacco, British Oxygen, Coca Cola, Cemex, Cairns, Daewoo, GEC, Glaxo Welcome, James Finlay, La Farge, Marubeni, Nestle, Newzealand Milk, Novartis, Reckitt & Coleman, Rhone Poulenc-rorer, Singer Shell, Siemens, Scancem, Sumitoo, Tootal, Telenor, Unilever, Unocal, Mobil, Occidental are just a few of them.  Last one year there was a proposal of investment around 12 b US $ from different investors namely Tata, Dhabi, AC, Hitech, Existing Telecom, Taiwan Textile, Global Vulcon, MCC Resource & Kingdom Group.

EXPORT PROCESSING ZONES

The Bangladesh Export Processing Zones Authority (BEPZA) was created in 1980. Two EPZs are currently in operation: one in the port of Chittagong and the other in Savar near Dhaka. BEPZA has come up with more EPZs in the country’s Northern and Southern Regions and these are located in Mongla, Comilla, Ishwardi and Nilphamari (Uttara). EPZs are fully equipped with infrastructure facilities like water, electricity, gas, roads, telecommunication etc. The incentive packages offered for these EPZs are very competitive and the rate for utilities services are very attractive. Private EPZs are also allowed and the first private EPZ, operated by the Youngone Corporation of the Republic of Korea, began its operation in end-2001.  

FUNCTIONS AND FACILITIES

Broadly, BOI is responsible to facilitate private investment in the country. It’s functions include:

1. Providing necessary facilities and assistance in the establishment of industries;
2. Implementing investment related GOB policies;
3. Preparing investment schedule;
4. Registering private sector industrial projects ; and
5. Identifying competitive investment sectors and facilitating investment by providing information and services.

FACILITIES AVAILABLE FROM BOI

 STAGE 1: Pre-investment Information and Counseling

 At this stage, BOI provides all sorts of information required by an investor to undertake initial investment move. Professional Investment & Business Counselors provide cordial assistance upon visit to the BOI office, over phone, by e-mail & fax and express mailing. It also assists in company formation.

STAGE 2: Special Welcome Service to Foreign Investors

BOI has a welcome Service Desk at Zia International Airport (ZIA) operating round-the clock. It assists in obtaining necessary immigration and Visa on Arrival/ Landing permit, hotel accommodation and counseling arrangement.

STAGE 3: Investment Implementation and Commercial Operation

Once the investor decides to invest and forms a company, BOI provides following specific facilities and comprehensive services upon confirmation of the first one i.e. registration of the company with BOI.

      a.    Registration of the company

      b.    Obtaining Industrial Plot

      c.    Obtaining Utility Connections

      d.    Registration/Approval for Foreign Loan, Suppliers’ Credit, PAYE Scheme etc.

      e.      Import of Machinery & Raw Materials

      f.       Obtaining Work Permit

      g.      Remittance of Royalty, Technical Know-How and Technical Assistance Fees   

BUSINESS SET UP AT A GLANCE

Implementing a 100% foreign-owned or joint venture industrial project in Bangladesh is a rather simplified process. The entire process is provided into 5 major  steps as presented the following diagram. BOI supports are available in Step 1 through 4.

MAJOR STEPS TO SET UP A PLAN IN  BANGLADESH & BOI ASSISTANCE

FUNCTIONS AND FACILITIES

Broadly, BOI is responsible to facilitate private investment in the country. It’s functions include:

1. Providing necessary facilities and assistance in the establishment of industries;
2. Implementing investment related GOB policies;
3. Preparing investment schedule;
4. Registering private sector industrial projects ; and
5. Identifying competitive investment sectors and facilitating investment by providing information and services.

FACILITIES AVAILABLE FROM BOI

 STAGE 1: Pre-investment Information and Counseling

At this stage, BOI provides all sorts of information required by an investor to undertake initial investment move. Professional Investment & Business Counselors provide cordial assistance upon visit to the BOI office, over phone, by e-mail & fax and express mailing. It also assists in company formation.

STAGE 2: Special Welcome Service to Foreign Investors

BOI has a welcome Service Desk at Zia International Airport (ZIA) operating round-the clock. It assists in obtaining necessary immigration and Visa on Arrival/ Landing permit, hotel accommodation and counseling arrangement.

STAGE 3: Investment Implementation and Commercial Operation

Once the investor decides to invest and forms a company, BOI provides following specific facilities and comprehensive services upon confirmation of the first one i.e. registration of the company with BOI.

      a.         Registration of the company

      b.         Obtaining Industrial Plot

      c.         Obtaining Utility Connections

      d.         Registration/Approval for Foreign Loan, Suppliers’ Credit, PAYE Scheme etc.

      e.         Import of Machinery & Raw Materials

      f.          Obtaining Work Permit

      g.         Remittance of Royalty, Technical Know-How and Technical Assistance Fees               

MAJOR STEPS TO SET UP A PLAN IN BANGLADESH & BOI ASSISTANCE

Once an investor intends to do business in Bangladesh, the first thing is to have sufficient and reliable information on the investment and business climate, opportunities, competitive strengths etc. of the country. This could be collected from a number of agencies like:

PHYSICAL VERIFICATION

Upon analysis of the collected information and initial decision to move forward, the investors requires to visit Bangladesh to have physical verification. He could either visit independently or ask BOI to arrange the visit.

1. IMMIGRATION PROCEDURES:

Business travelers may request for visas with a year duration and multiple entries. Bangladesh issues following categories of business visas:

i)                    Single-entry for three months, ii) Single-entry for six months, iii) Multiple-entry for six months/one or five year & iv) Multiple-entry for work period.

LANDING PERMIT (LP)/VISA ON ARRIVAL (VOA)

The foreign investors and businesspersons could avail LP/VOA from ZIA for at best 30 days under the following conditions:

      i) The foreign investors are identified on the basis of certification from Board of Investment (BOI)/BEPZA/ Ministry of Industries. Officials from BOI are on duty round-the-clock to facilitate certification of the relevant documents to get VOAs/LPs.

      ii) The foreign businesspersons who are directly associated with the import of Bangladeshi products are identified on the basis of the certificate by the relevant associations of export-oriented commercial/industrial organizations or the FBCCI or the BGMEA.

iii) Bangladesh Embassy also help to facilitate the visit.

2. BOI COUNSELING:

On arrival of Bangladesh, investors could avail in depth BOI counseling. Professional Investment and Business Counselors provide cordial assistance through Over-the Desk-Meeting at BOI office, attending phone, by email and fax and express mailing. They also assist in company formation.

GETTING STRUCTURED

INCORPORATING A COMPANY IN BANGLADESH

 Various Types of Company: Business in Bangladesh may be carried on by a company formed and incorporated locally or by a company incorporated abroad but registered in Bangladesh. The incorporation or registration is done by the Registrar of Joint Stock Companies and Firms (RJSC&F) under the provisions of the Company’s Act 1994. Companies could be classified in the following categories:

1.   Limited Companies:

                  a. Company Limited by Shares

                      i) Public Limited Company and

                     ii) Private Limited Company

                  b. Company Limited by Guarantees.

      2.         Unlimited Companies

INCORPORATION OPTIONS FOR FOREIGN INVESTOR:

Incorporation options to a foreign investor include:

      a. Setting up a 100% foreign-owned company in Bangladesh

      b. Setting up a Joint Venture with Bangladeshi company/ investor

      c. Establishing the Company’s Place of Business in Bangladesh

      d. Setting up a branch or a subsidiary of a foreign company in Bangladesh

      e. Setting up a Bangladeshi Company or participate in a Bangladeshi Company already formed

COMPANY FORMATION PROCEDURE

To register a company with the Register of Joint Stock Companies and Firms (RJSCF), promoter have to undertake activities in following steps:

1.   STEP 1: SELECTION OF THE COMPANY NAME. The name should not be identical with or closely resemble to the name of an existing company. An application in plain paper along with nominal required fees is be submitted to the RJSRF for verification and clearance of the proposed name.

2. STEP 2: MEMORANDUM OF ASSOCIATION (MOA).   MOA states the name of the company, whether it is public or private limited and the location of the registered office at the company. The MOA should clearly spell out the main objectives, the authorized capital, the divisions of this capital into shares of fixed amount and liability of its members.

3. STEP 3: ARTICLES OF ASSOCITAION (AOA). The AOA are the regulations governing the internal management of the affairs of the company and the conduct of its business. These articles are subordinate to and controlled by MOA.

4. STEP 4: REGISTRATION APPLICATION.  Prescribed Application Form for registration has to be filled in, signed and submitted to the Registrar of the Joint Stock Companies and Firms.

OPERATIONAL SET UP

1. REGISTERING WITH BOI

1. Joint venture and 100% foreign investment proposals in the private sector
2. Self financed local investment proposals including industries sanctioned/financed by financial institutions or commercial banks
3. Permission for setting up joint venture industrial units with the public sector corporations

2. OBTAINING INDUSTRIAL PLOT
3. REGISTRATION/ APPROVAL FOR FOREIGN LOAN, SUPPLIERS’ CREDIT, PAYE SCHEME ETC.
4. OBTAINING UTILITY CONNECTIONS
5. IMPORT OF SPARE PARTS AND RAW & PACKAGING MATERIALS
6. OBTAINING WORK PERMIT
7. REGISTERING WITH FACTORIES ACT
8. REGISTERING WITH ENVIORNMENTAL LEGISLATION
9. REMMITANCE OF ROYALITY, TECHNICAL KNOW-HOW AND TECHNICAL ASSISTANCE FEES

Exchange Control

Bangladesh Bank (BB) is the central Bank of the country and is responsible for issuing Bangladeshi currency and maintaining its value. BB administers the foreign exchange regulations. It has been continuing to liberalize foreign exchange regulations inconformity to the government’s reform agenda in macro economic policies with a view to create an environment conducive to investment and productivity.

The major aspects of exchange control include:

a.                   Convertibility of Bangladesh Taka

The Taka is fully convertible for current account transactions. All current transactions including trade and investment & investment related transactions may be conducted by individuals/ firms through authorized dealers (banks) without prior permission of BB.

b.                  Opening of Bank Account by a Foreign Investor

A non-resident may open with any Authorized Dealer (AD) branch of a bank Foreign Currency (FC) accounts and Non-resident Foreign Currency Deposit (NFCD) acoounts with foreign exchange brought in form outside. Balances of these accounts are freely transferable abroad. A foreign investor may also open and operate a Taka account freely with any bank  while he is a resident. A non-resident can open a Non-Resident Investor’s Taka Account (NITA) with any AD in Bangladesh with foreign exchange remitted from abroad through normal banking channel or by transfer of funds from the non-resident investor’s foreign currency account for portfolio investment in Bangladesh.

c.          Bringing in Cash from Abroad by a Foreign Investor

A foreigner can bring exchange in any form including cash without limit. But for amounts, in excess of $ 5000 a declaration on FMJ form is required to be made to the Customs Authorities at the time of entry.

d.          Transfer of Capital and Capital Gains

Foreign Investors are free to make investment in Bangladesh in industrial enterprises excepting a few reserved sectors. An industrial entity may be set up in collaboration with local investors or may even be wholly owned by the foreign investors.

The repatriation of sale proceeds (including capital gains) of shares of companies listed in a Stock Exchange in Bangladesh may be made through an AD if such investment takes place through NITA operation. Remittance of sale proceeds of shares of companies not listed in a Stock Exchange requires prior BB permission, which is accorded to for amounts not exceeding the net asset value of the shares. Transfer of shares and securities from non-resident loc quires no prior BB approval.

e.         Remittance of proceeds from liquidation of industrial under staking

 Remittance of proceeds arising out of liquidation of industrial undertaking requires prior BB approvals.

f.          Remittance of royality, technical know-how & technical assistance fees

 Industrial enterprises may enter into agreements for payment of royality, technical know-how/technical assistance fees abroad if the total fees and other expenses connected with technology transfer do not exceed (a) 6% of the previous year’s sales of the enterprise as declared in their tax returns, or (b) 6% of the cost of imported machinery in case of new projects. These agreements need however be registered with the Board of Investment (BOI). Agreements not in conformity with these general guidelines require prior permission of BOI. ADs may remit royalities, technical know-how/ technical assistance fees payable as per agreements registered with/approval by BOI.

g.         Transfer of profit and dividend accuring to a foreign investor

i)                   Profits: Branches of foreign firms/companies including foreign banks, insurance companies financial institutions are free to remit their post-tax profits to their head offices through ADs.

ii)                   Dividends: Remittance of dividend income to non-residents in respect of their investments in Bangladesh are may be made through an AD.

h.      Repatriation of savings, retirement benefits & salary of foreigners employed in Bangladesh

Foreigners employed in Bangladesh with the approval of the Government may remit 50% of salary, actual savings and admissible retirement benefits through an AD. Net salary of foreign nationals payable for the period of leave admissible to them as per their service contract duly approved by the Government will be remittable.

i.         Local Borrowings

 Banks may extend working capital loans or term loans in local currency to foreign controlled or foreign owned firms/companies (manufacturing or non-manufacturing) operating in Bangladesh on the basis of normal banker-customer relationship. Banks are free to grant local currency loans to joint venture industries in Export Processing Zone (EPZ) up to the amount of short-term foreign currency loans obtained from abroad.

j.        Borrowing Abroad

Borrowing abroad in foreign currency requires prior BOI approval. Repayment of principal and interest of approved foreign currency borrowing may be made through ADs as per agreed terms. 100% foreign owned and joint venture units in EPZs may, however, obtains short-term foreign currency loans from overseas in EPZ cannot, however, create change on their assets favoring non-residents.

k.       Investment Facilitating Measures:

Prior approval of BB is no longer required for: 

1. Remittance of profits to the head office of foreign investors
2. Issuance of shares to non-residents against investment in industrial set up in Bangladesh
3. Remittance of dividends on such shares the non-resident investors
4. Portfolio investment by non-residents including foreign individuals / enterprises in shares and securities through stock exchanges of Bangladesh
5. Remittance of dividends on portfolio investment by non-residents securities  through stock exchanges of Bangladesh
6. Remittance of sale proceeds including capital gains
7. Remittance of principal and interest installments on loan supplier’s credit obtained by industrial units from foreign lenders with approval of BOI
8. Remittance in repayment of principal and payment of interest on such loans
9. Remittance of royality, technical know-how and technical assistance fees in conformity to the BOI guidelines
10. Remittance of savings of expatriate personnel, out of salaries and benefits stated in BOI approved contract, at the time of their leaving Banglade

    l.       Export Encouragement Measures

     

    1. Annual foreign exchange quota retention for exporter has been refixed to at 40% of FOB exporting
    2. Retention quota for high import content exporters is 7.5% of FOB export earnings
    3. Exporters are allowed to keep foreign exchange quota in foreign currency accounts in a bank in Bangladesh dealing with foreign currency
    4. Usage of funds of the retention quota of Exporters in setting up offices abroad keeping the bank informed

    Competitive Sectors for Investment

    Ready Made Garments . Textiles. Composite Textiles

    a.    Sector Highlights

    • Bangladesh is the twelfth largest garment-manufacturing nation in the world.
    • The fastest growing industry in Bangladesh with Ready Made Garments (RMG) accounting for more than 76% of total exports.
    • Bangladesh is best placed in the region for textiles and garments because of cheap labour, preferential trade status and advantageous global market access.
    • Government incentives for the spinning and weaving industries include a 15% cash subsidy of the fabric cost to exporters sourcing fabrics locally.
    • There is a huge fabric demand supply gap in the RMG industry which is being met by imports. Thus, the potential for backward linkage industry is enormous.

    b.    Industry Background and Status

    The phenomenal growth in RMG was experienced in the last decade. With about 2,600 factories and a workforce of 1.4 million, RMG jointly with knitwear accounted for more than 70% of total investments in the manufacturing sector during the first half of 1990’s. At present, number of RMG factories exceeded 3,000, employing over 50% of the industrial workforce and having 76% of the total exports earning of the country.

    c.    Industry Outlook

    Multi-Fibre Agreement (MFA) and Generalised System of Performance (GSP) of the EU are the main actors behind acquainting Bangladesh RMG products to global market ensuring assured market access. Bangladesh is now a significant RMG supplier to North America and Europe. Meantime, Bangladesh RMG industry has earned strong competitiveness as a global RMG source. Marketing network has been spread over  the economics of the continents. End users could well recognize and differentiate the products confidently.

    d.     Presence and Opportunities for the Foreign Investors

    Asian countries top the list of majority investors in textile sector in Bangladesh. About 38% of the investments in EPZs come from Korea, followed by 19% from Japan, 14% from Hong Kong and minor investments from Europe. Options available to the foreign investors are:

    • Establishment of new textile/ RMG mill in the private sector.
    • Joint ventures with the existing textile/ RMG mill.
    • Acquisition of public sector textile mills that are being privatized.
    • Indirect investment through financial services and/ or leasing.

    Frozen Foods

    Frozen Shrimp. Frozen Fish. Other Items

    a.         Sector Highlights

    • Government is promoting semi-intensive shrimp farming.
    • Prawn and Fish exports registered a modest growth in the past decade.
    • Shrimp processing and export industry is largely dominated by the smaller unorganizd sector.
    • 15% cash incentive is given to shrimp export amount.

    b.         Industry Situation

    The frozen foods export is the second largest export sector of the country. After some initial difficulties in terms of quality achievement, exporters have earned credibility and trustworthiness in the global market. Assurance of reliable and continued product quality is a major challenge in this sector. Technology orientation, marketing perceptions, and quality improvement aspects invite foreign investment in this sector.

    c.          Industry Outlook

    Frozen food sub-sector has credible opportunities in Middle-East, EU and North American countries. This export-oriented industry includes the following sub-sectors, which need proper attention for augmentation of production and export earnings:

    • Hatcheries
    • Sustainable aqua-culture technology
    • Feed meals plants
    • Processing unit for value-added products

    Investment in frozen food sector with new technology and equipment has a vast potential for growth.

    Leather

    Finished Leather. Leather Goods

    a.   Sector Highlights

    • The labour-intensive leather industry is well suited to Bangladesh having low-cost and abundant labour.
    • Bangladesh has a domestic supply of good quality raw material, as hides and skins are a by-product of large livestock industry.
    • Adequate government support in the form of tax holidays, duty free imports of raw materials and machinery for export-oriented leather market.
    • The industry lacks domestic technology and expertise and local support industries such as chemicals are still under-developed.

    b.  Investment Incentive 

    • Present Government is in the process of setting up of separate Leather Park relocating the existing industry sites to a well-organised place.
    • Leather exporters have been given 15% Duty drawback of cash incentive.

    c.   Industry Outlook

    Provision of newly announced infrastructural facilities through establishment of an integrated Leather Park and simultaneously, growth in the global demand, opportunities for investing in and setting up export-oriented leather industry in Bangladesh is definitely attractive. Foreign investors are welcome to capitalize on this opportunity.

    Electronics

    Home Appliances. Telecommunication Equipment. Semi-Conductor

    a.         Sector Highlights

    • Rapid urbinazation, migrations to urban centers and emergence of a consuming middle class have resulted in a modest growth in home appliance usage in Bangladesh.
    • Global market of semi-conductor amounting about US $ 200 billion is clearly dominated by the Asian Newly Industrialized Economies (NIE)s.
    • Manufacturing of semi-conductors could be established as a potential cottage industry.
    • Since 1996, phenomenal growth in cellular phone usage in Bangladesh has been registered and today, the number of customers reached at nearly one million.
    • The labour-incentiveness nature of electronic industry highly matches with Bangladesh’s competitiveness and invites foreign investment in this sector.

    b.        Industry Background

    The electronics industry in Bangladesh mostly produces consumer items. Home appliances like television, radio, VCD and CD players, refrigerator, air-conditioners, oven, electronic fan, blenders etc. are being assembled to a large extent. To assistance and proper technology orientation of the industry.

    c.         Industry Outlook and Opportunities

    Skilled, easily trainable and low-cost human resources are the main cost advantage of setting up electronic industry in Bangladesh. Growing domestic demand and international market access are some key attractive issues to the investors. In the economies like Malaysia, Korea and Thailand, electronics contribute a major portion in the GDP. They are encouraging electronic industry to shift from low-end assembly operations with high import content of inputs to upstream higher-value-added activities. In this context, relocation, outward investment and joint venture with Bangladeshi companies could be gainful strategies. To capitalize on the comparative advantages, substantial foreign investment from those countries is highly encouraged.

    Agro-based Industry

    Fresh Fruits & Vegetables. Cooked/ Semi Cooked Food Items. Canned Juice. Dairy and Poultry. Livestock and Fisheries

    a.         Sector Highlights

    • Bangladesh has a huge supply of raw materials for the agro-based industry.
    • Fruits and vegetable production has increased significantly in recent years.
    • Government and NGOs have been conducting regular training programs in developing a skilled manpower for agro-based industry.
    • There is a substantial demand supply gap in the agro-based industry both in the domestic and international market.

    b.   Industry Incentives

     

    • Specially arranged Equity Entrepreneurship Fund for development of agro-based industry.
    • Special loan facilities available to set up an agro-based industry.
    • Agro-based industry enjoys tax holiday.
    • Any investment in this sector will enjoy similar tax ammensty as available in other sectors.
    • Imposition of supplementary duty on mango, orange, grape, apples, dates and others to utilize the high quality and cheaper local resources.
    • Cash incentives to the exporters ranges from 15% to 20% in various sub-sectors.

    c.         Industry Outlook

    To avail the competitive and comparative advantages, Bangladesh invites progressive agricultural practices, improved marketing technique and modern processing facilities. The Government emphasizes development of the agricultural sector through appropriate measures to increase crop sector productivity and production of non-crop agriculture by providing increased credit, and facilitating greater access to inputs and modern technology. Investment interests in setting up agro-based industries in Bangladesh are highly encouraged.

    Information Technology

    Data Processing. Software Development. Hardware Manufacturing

    a.         Sector Highlights

    • To instigate the IT industry robustly, deregulation of the telephone has been decided and be executed by mid 2003.
    • To extensive growth of mobile telephony resulted in significant opportunities.
    • The industry is at its introductory stage and has opportunity of capitalizing the potential.
    • Bangladesh has a well-educated, skilled, dedicated and growing IT workforce.
    • There is a fast growing domestic market and export demand.
    • Strong research assistance from the universities and research institutions are available.
    • Government is keen in establishing IT related infrastructure for the development of the industry.

    b.   Industry Incentives

     

    • IT is declared as of the thrust sector for development. Soft loan facilities from the Equity and Entrepreneurship Fund is available.
    • Tax holiday for software and IT services companies.
    • All other facilities and incentives applicable in general to a foreign investor.

    Ceramic

    Tableware. Sanitary ware. Insulator

    a.         Sector Highlights

     

    • Global market of ceramic tableware is about US $ 10 billion.
    • Bangladesh Ceramic tableware has a good reputation to the international market like North America and EU markets.
    • Bangladesh has achieved technical expertise on ceramic tableware manufacturing.
    • Historically, tableware industry is labour-intensive and Bangladesh has a skilled manpower in ceramic industry.
    • Sanitary ware and insulator has also a domestic and international demand.
    • The clean gas reserve required for firing is a great competitive advantage for Bangladesh.

    b.   Industry Outlook

    Global ceramic tableware industry is currently going through a phase of acquisition and consolidation as smaller industries in the developed countries are becoming uncompetitive and bankrupt. As a result, the big names like Noritake, Wedgewood, Lenox, Villory & Boch and Royal Doultan are all individually becoming billion-dollar operations.

    Bangladesh, being a gas-rich and low-labour-cost economy, offers to be strategic partners in production and supply of ceramic products. Investment interests in this sector are strongly encouraged.