Russel & Partners regularly assists and represents FDI matters, 100% Foreign Company incorporation, Branch office, Liaison office, Joint Venture and so on. Our lawyers with success also gained particular expertise in dealing with all legal issues relating to foreign investments in Bangladesh. In addition to, dealing with all relevant issues, we also provide the following services concerning foreign investments:
Amalgamation of foreign joint venture companies & industries, such as setting up of Liaison Office, Branch office, Incorporation of 100% foreign company, Franchising etc. We also assist the clients with Investment-related matters, Obtaining a work permit with all immigration support in Bangladesh etc.
Bangladesh is currently experiencing impressive progress in terms of economic growth, which is accelerated to a great extent by foreign investments from all over the globe.
Foreign direct investment
Foreign Direct Invest (FDI) is often known as long-term capital. It is a long chain of the economic procedures between two countries, where one nation’s individual or business participates into investing in another nation.
It involves participation in joint ventures, investment, transfer of property, management of any of the country. A foreign investor generally evaluates a country based on its ease of doing business ranking and overall economic climate.
Major policies of FDI:
Bangladesh has the most systematic investment regime in South Asia, with the Bangladesh Investment Development Authority (BIDA) that promotes and facilitates investment effectively. Foreign direct investment is encouraged in all industrial activities in Bangladesh excluding those on the list of reserved industries such as production of arms and ammunitions; forest plantation and mechanized extraction within the bounds of a reserved forest, production of nuclear energy and printing and minting fresh currency notes. Such investments may be undertaken either independently or through joint ventures, either with the local, private or public sector. The capital market also remains open for portfolio investment. The policy framework for foreign investment in Bangladesh is based on the Foreign Private Investment (Promotion and Protection) Act, 1980, which provides measures for the non-discriminatory treatment and protection of foreign investment.
Current State of Bangladesh:
As a developing country with an accelerating economic growth; attracting foreign direct investment (FDI) into Bangladesh has been a very successful strategy. FDI has played an important role in terms of the economic transaction, business liberalization and macro-economic growth story in Bangladesh throughout the last decade.
The government has implemented several policies and reforms designed to create a more open and competitive environment for private investment, both foreign and local. An increasing flow of FDI was supposed to supplement domestic investment in the country, thereby inducing employment generation, income growth and enhancement of prosperity.
In our country both domestic and international laws govern FDI. Domestic investment generally includes provisions to attract FDI and safeguard direct investors, such as promises of national treatment, most-favored-nation treatment, tax incentives, security measures, dispute resolution settlements, equity transfer, profit repatriation etc.
Sources of international laws which governs FDI includes inter alia, multilateral treaties, bilateral investment treaties, customary international law, and judicial decisions. Multilateral treaties, such as the Agreement on Trade-Related Investment, the Agreement on Trade-Related Aspects of Intellectual Property etc. Per capita
Laws governing FDI:
Bangladesh conducted Bilateral Investment Agreement, Double Taxation, Treaties etc. to protect the interest of foreign investors. The investors will also enjoy the following incentives investing in Bangladesh. Most of the laws specifically addressing foreign investments are relatively new and so they have not been tested out before courts. However, a strong infrastructure has been built which helps foreign investors prefer to take their arbitration outside the country. Some FDI relating laws are foreign exchange, loan recovery, money laundering, company act, arbitration is also pertinent in this context and should be properly implemented. Such as-
Under section 18B (1) of the Foreign Exchange Regulation Act 1947 (FERA) and amended in 2015 , all entities including branches of foreign firms and companies established in Bangladesh with permission from competent authorities for business/profit motive and operating in compliance with reporting are allowed to remit profits to their head offices abroad through their nominated ADs without prior approval of Bangladesh Bank in terms of paragraph 28 of chapter 10 of the Foreign Exchange Guideline
The section 4 of the provision states, “the government shall accord fair and equitable treatment to foreign private investment which shall enjoy full protection and security in Bangladesh.
Section 7 states that foreign private investment shall not be expropriated or nationalized or be subject to any measures having the effect of expropriation or nationalization except for a public purpose against adequate compensation which shall be paid expeditiously and be freely transferable. This law guarantees the transfer of capital returns from foreign investment and the proceeds of liquidation.
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- Also, foreign banks and financial institutions operating in Bangladesh may also remit profits to their head offices abroad through their nominated ADs without Bangladesh Bank‘s prior approval. Foreign insurance companies operating in Bangladesh may likewise remit the shareholders’ portion of profits through their nominated ADs without Bangladesh Bank’s prior approval. Bangladesh Bank’s prior approval is also not required in respect of sale proceeds of non-resident equity investment in public limited companies not listed with the stock exchanges and private limited companies.
- Bangladesh has executed Avoidance of Double Taxation Agreements (DTA) with many countries including China.
- Under section 378 to 392, The Company Act 1994 covers these foreign companies provisions.
- Under the Company Act 1994, foreign capital is allowed for formation & companies creation in Bangladesh. There are no restrictions for foreign investment and capital and profit repatriation.
- Under the National Board of Revenue, Income Tax Manual 1984, Schedule Seven Foreign tax is described and maintained.
Some more relevant laws which follows, such as – Aartho Rin Adalat Ain 1997, The Customs Act 1969, Foreign Private Investment (Promotion and Protection) Act 1980, The Import Export (Control) Act 1950. The Foreign Exchange Regulation Act 2015
Bangladesh Investment Development Authority (BIDA) is the principal authority tasked with supervising and promoting private investment. In addition to BIDA, Bangladesh Export Processing Zone and Bangladesh Economic Zone Authority are also vested with the same roles and authorities, within their Export Processing Zone and Economic Zone. Bangladesh has signed Bilateral Investment Treaties (BIT) and Trade Agreements (TA) with many nations. Such as – the International Centre for Settlement of Investment Disputes (ICSID), the United Nations Commission on International Trade Law (UNCITRAL) and the International Chamber of Commerce (ICC).