Hassan and Associates

Current Investment Environment in Bangladesh

The Least Developed Country (LDC) status of Bangladesh enables the country to benefit from preferential trade and investment policies sanctioned by European and North American markets. Low cost of labour and lower overhead cost compared to regional peers have enabled the country to operate at a cost advantage and the apparel sector has been the main thrust sector benefitting in the global market, which has catapulted Bangladesh as the second largest apparel manufacturer in the world, next to China. Leather and leather goods, jute products, agro-processing to frozen fish are some of the sectors that have been similarly contributing to the growth of the country.

The Future of Foreign Investment in Bangladesh

Jan 28, 2020

Although, in the recent World Bank report, Bangladesh has seen minor improvement in providing electricity (ranked 179 from last year’s 185), for paying taxes (from 152 to 151 in 2019) and for registering property (183 from a previous 185), the country’s ranking saw a fall in key indicators such as getting credit, starting a business, protecting minority investors, dealing with construction permits, and trading across borders. The World Bank recommends regulatory reforms and the prime minister has given a mandate to the chairman of BIDA to bring the position of Bangladesh to the top 100 countries in terms of ease of doing business. Based on this, a lot of new initiatives by BIDA is specifically directed towards improving the ease of doing business ranking in Bangladesh.

Foreign Direct Investment Trend

Jan 22, 2020

In Bangladesh, FY 2016-17 and FY 2017-18 were the first two years when the gross investment of Bangladesh was higher than the gross savings of the country. The public investments in terms of GDP have risen from 7% to 9.1% in the recent years while the national public savings stand at around 2.3% and the private public savings is around 27%. The private investment in the country has been stagnant at around 23% over the past few years.

Special Economic Zones in Bangladesh

Jan 18, 2020

The Bangladesh Export Processing Zones Act of 1980 was aimed at boosting industrialization and higher employment rate through promotion of trade and investment. While it was successful in terms of contributing $24.17 billion in export earnings from July to January of FY 2018-2019 and also creating more than 450,000 jobs in the process, EPZ, however, provides weaker domestic linkages and hence the government tried to move towards economic zones that cater to both domestic and export markets. With the aim of more private participation in developing and operating zones, the Bangladesh Economic Zones Authority Act and the Bangladesh Hi-Tech Park Authority Act were both formulated in 2010. Now, like BEPZA, there are two other agencies that have overlapping mandates.

Institutions Facilitating Investments

Jan 14, 2020

The country’s central bank, Bangladesh Bank (BB), and Bangladesh Investment Development Authority (BIDA) are the two main regulatory institutions that facilitate and guide investment for most sectors. Bangladesh Investment Development Authority (BIDA), was formed by merging Board of Investment (BOI) and Bangladesh Privatization Commission. BIDA was established for dealing with matters relating to local and foreign investments. Currently, all incoming investments need to be approved beforehand by BIDA. The regulatory body aims to promote domestic and foreign investments by simplifying the bureaucratic challenges for entering the Bangladesh market.

Legal Compliance and Regulations

Jan 10, 2020

Bangladesh has a common law-based judicial system. The country’s basic laws such as penal code, civil and criminal procedural codes, contract laws and company law are used to absolve local disputes. In cases of disputes, alternative dispute resolutions are viable under the Arbitration Act of 2001 and 2004. Bangladesh is a signatory of the International Convention for the Recognition and Enforcement of Foreign Arbitral Awards and a member of International Centre for Settlement of Investment Disputes (ICSID). Bangladeshi law allows contracts to refer dispute settlement to third country forums (e.g. in Singapore) for resolution. Bangladesh is also a party to the South Asia Association for Regional Cooperation (SAARC) Agreement for the Establishment of an Arbitration Council since November 2005. This association aims to establish a permanent center for alternative dispute resolution in one of the SAARC member countries.

Institutional bottlenecks and doing business ranking

Jan 8, 2020

A deeper analysis of the country’s investment climate reveals some fault-lines, which are proving a dampener for investor optimism. The country’s low rankings in the annual investment climate assessment reports reveal some stark challenges potentially damaging for the country’s medium term growth prospects. The World Bank’s publication Doing Business 2020: Training for Reform—Bangladesh ranked 168 out of 190 countries in terms of operating businesses in Bangladesh. The ranking went eight steps up from the previous ranking in 2018-19. According to a recent World Bank report, Bangladesh carried out three business reforms since the last publication and would need to accelerate the reform pace to further improve its regional and global competitiveness.

Winding up of a Company in Bangladesh

Jan 8, 2020

The winding up or liquidation of a company is the process by which a company’s assets are collected and sold in order to pay its debts. Any monies remaining after all debts, expenses and costs have been paid off are distributed amongst the shareholders of the company. When the winding up has been completed, the company is formally dissolved and it ceases to exist. In Bangladesh, the winding up of a company may be either – (1) Voluntary; or (2) By the court; or (3) Subject to the supervision of the court. Voluntary winding up is usually undertaken by solvent companies, except in the case of creditor’s voluntary winding up. Now we have described the process of voluntary winding up by passing a special resolution.