WCAG DestinationBangladesh 2023

Destination
Bangladesh
Table of contents
Foreword ........................................................................................................................................3
Chapter 1: Doing business in Bangladesh – expanding gateways ...............................................4
Chapter 2: Entering the Bangladesh market, funding opportunities and incentives

to draw foreign investments ........................................................................................29
Chapter 3: Regulations for operating in Bangladesh ....................................................................36
Chapter 4: Tax incentives for encouraging investments ...............................................................44
Chapter 5: Steps to set up business operations ...........................................................................47
Chapter 6: The way forward ..........................................................................................................52
2 PwC | Destination Bangladesh

Foreword
Bangladesh as an investment destination
Bangladesh’s gross domestic product (GDP) grew by 6.9% the population covered by 4G mobile broadband networks.
in fiscal year 2021, recovering from a drop to 3.4% in 2020 The telecom operators are key to the growth of internet
as a result of COVID -19. The economy is poised to grow penetration across the country.
at an average rate of 6% till 2040 according to various
The rise in digitisation not only enables a greater consumer
estimates by the World Bank and ADB.
market but is also expected to increase the productivity
Despite COVID -19 negatively affecting businesses and and boost the economic growth. The startup ecosystem
demand, the economic growth bounced back in 2021 in Bangladesh has also grown rapidly with over 200
as a result of a series of stimulus measures taken by startups being launched each year. The funding is led by
the government. Consumer demand has continued to international players as 96% of funds in the startup space
grow with a burgeoning middle class and the growth in have come from abroad.
investment led by the public sector. The growing demand
The complexities of investment in Bangladesh revolve
has made it easier for Bangladesh to cope with the impact
around both entry into and exit from Bangladesh. Many
of the rising global inflation and the slowing growth rates.
investors find the regulations surrounding setting up
Private consumption has also risen consistently over the
a business or investing in local companies as well
last 10 years with a growing disposable income.
as the myriad regulations surrounding repatriation of
Recently completed infrastructure projects such as the profits complex. One of the most important resources
Padma Bridge and the soon to be completed Karnaphuli for investors are partners with a local presence who
Tunnel are expected to boost economic growth by understand the pulse of Bangladesh and the unique
providing easy access to the southwest of the country challenges and opportunities in the market.
from the key markets in Dhaka and Chittagong. Other
This comprehensive report is a study of Bangladesh as
megaprojects as part of the 8th Five Year Plan (FYP)
an investment destination. The first chapter focuses on an
are also expected to boost development. The country’s
overview of Bangladesh focusing on the demographics,
FDI grew by 12.9% in 2021 led by investment in the
financial and economic indicators and an overview of key
manufacturing sector followed by trade and commerce.
economic sectors that highlight the potential of Bangladesh
Increased focus on bilateral and multilateral trade
as an investment destination. The second chapter focuses
agreements are expected to enhance the FDI which is still
on the processes and opportunities available to companies
low compared to the economies of the peer countries.
investing in Bangladesh from remittance regulations to the
Private investment makes up over 70% of the total
key nuances of the market here. The subsequent chapters
investment in the country and is expected to grow steadily.
explain the key regulations to succeed in the Bangladesh
The emphasis on export-led economic growth has market and steps required to set up operations.
resulted in exports reaching a peak of USD 52 billion in
Using PwC’s unparalleled experience of operating across
FY22 with the USA as the top destination for exports. The
sectors in the Bangladesh market and supporting the
government’s focus on digitisation is expected to drive the
growth of our partners, we hope that this report can serve
growth in the next few decades. Internet usage has grown
as a guide to investment in Bangladesh.
at a CAGR of 3% over the past 5 years with close to 95% of
Mamun Rashid
Managing Director, PwC Bangladesh
Destination Bangladesh | PwC 3

Chapter 1: Doing business in Bangladesh –
expanding gateways
Bangladesh is among the Next 11 (N–11) emerging markets. dependency ratio; thereby, lessening the expense burden
In the last decade, Bangladesh’s economy has grown on the productive population. Projections suggest that
at an annual rate of around 6–8% and delivered positive Bangladesh is forecasted to reach the 34th place in 2026
growth during 2020 despite the pandemic. Bangladesh’s and will rise to the 24th position in 2036. This represents
macroeconomic stability during the pandemic illustrates an economic boom during the ongoing as well as the next
the economy’s resilience. The country has reflected both in the decade.1 Recommended to graduate from the Least
social and economic growth. The level of poverty dropped Developed Country (LDC) status in 2026, Bangladesh has
accompanied by increased life expectancy, literacy and undertaken massive infrastructure development projects
per-capita food intake. to sustain economic development. The resilience that
was exhibited by the recovery and handling efforts of the
Sustained economic growth in recent years has
COVID-19 pandemic shows the potential of the country to
generated higher demand for electricity, transport and
stay strong despite most odds. The preparation for LDC
telecommunication services. While the growth rate of the
graduation that the country is undertaking in terms of trade
population has declined, the labour force is growing rapidly
relations also shows potential for continued growth, even
and is indicative of Bangladesh moving towards a lower
as a developing nation.
Resilient strength
Bangladesh is one of the Next 11 (N11) countries and a Fig. 1.1: GDP growth rates of Bangladesh and regional
frontier market. The country’s economy grew at a robust economies
6-8% annually during 2015-2019 period. Supported by
50
a demographic dividend, Bangladesh has thrived on
readymade garments (RMG) exports, remittances and 40
favourable macroeconomic conditions. Bangladesh 30

achieved a positive GDP growth of 3.4% in 2020, despite 20
the COVID-19 pandemic while the world grew at -3.3% due
10
to the impact of the pandemic.2 The country has bounced
0
back to the pre-pandemic growth trajectory in 2021 with
6.9% GDP growth, the highest in South Asia. The country -10
has bounced back to the pre-pandemic growth trajectory -20
in 2021 with 6.9% GDP growth, the highest in South Asia. -30
Strong consumption and public investment, RMG exports
-40
and remittance growth have been the main drivers of 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
economic growth. Remittance flows reached USD 21 Bangladesh Afghanistan Bhutan
billion (5.04% of the GDP in 2020) and USD 22 billion in Maldives Pakistan India
2021, making Bangladesh the seventh highest remittance Nepal Sri Lanka
recipient in the world. In the Center for Economics and
Business Report (CEBR) 2022 report, Bangladesh ranked
Source: World Bank, National Statistics Bureau
as the 42nd largest economy among 191 nations ranked in the report for the 2021 period and is estimated to ascend
to 24th rank in 2036, a place held by Sweden in 2021. Approved to graduate from the LDC status in 2026, Bangladesh
has achieved its target far before the expectations of the World Bank benchmarks. The GDP of Bangladesh is poised to
increase by 6–7% annually between 2022 and 2027, according to a forecast by the International Monetary Fund (IMF).3
According to United Nations Conference on Trade and Development’s (UNCTAD) Least Developed Countries Report
2021,4 Bangladesh will need at least an annual investment of USD 119.9 million to sustain a GDP growth rate of 7%, as
1 Bangladesh to become 24th largest economy by 2036: https://cebr.com/reports/bangladesh-to-become-24th-largest-economy-by-2036/
2 World Bank Data Indicator, Accessed on 13th December, 2022: https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=BD-1W
3 Real GDP Growth, IMF, Accessed on 16th November 2022: https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/BGD
4 The Least Developed Countries Report 2021: https://unctad.org/webflyer/least-developed-countries-report-2021

targeted in SDG 8.1. Bangladesh Bureau of Statistics says that in FY 2020–21, total investment stood at USD 106.24
million USD in 2021, of which USD 75.45 million was private, and the rest USD 30.79 million was public.5
Rising consumption and increased government investment are two examples of the main contributors to the economic
growth of the country. Substantial infrastructural developments such as the recently inaugurated Padma Bridge and the
soon-to-be complete Karnaphuli Tunnel are predicted to further boost economic growth. Commerce and real estate
projects have already gone far ahead on their progress along the highways of Padma Bridge. Additionally, the market
for consumer durables and other value-added products is also on the rise, bolstered by the rising per capita income
and growth of the middle-class and affluent population. Moreover, Bangladesh is pursuing stronger multilateral ties with
India, Bhutan and Nepal while collaborating with China on the regional Asian Highway and ‘One Belt-One Road’ initiative.
Bangladesh’s initiative to establish international ties will facilitate more investment and global collaboration.
Steady sovereign rating and strong FX reserve

Consistent growth during pre-pandemic years and sound economic growth in face of heightened external pressure have
contributed to steady and positive sovereign ratings for Bangladesh. Both Moody’s6 and S&P7 have rated the country as a
mobile economy on the verge of moving up the economic ladder.
Country sovereign rating by S&P and Moody’s
S&P Sovereign Ratings Moody’s Sovereign Rating
Year Rating Outlook Year Rating Outlook
2022 BB-/ B Stable 2022 Ba3 Stable
Improved standard of living

Bangladesh has seen a 6%+ GDP growth rate since 2015 except for the pandemic year (2020), which the country has
also been resilient in tackling, getting right back up to 6.9% in 2021, with total GDP reaching USD 416.26 billion. The
growth has been driven by the favourable demographic dividend supported by growing infrastructure projects, facilitating
commerce and businesses, and creating employment. The resultant GDP per capita and consumption expenditure
growth trends reflect improving standard of living for Bangladeshis.
Fig. 1.2: GDP per capita and consumption expenditure Fig. 1.3: Private consumption patterns and final
growth (%) consumption (% of GDP)
79.7 79.4
14.08 78
per capita growth (annual %)
77.8
expenditure (current USD)
Final consumption expenditure
74.7
7.5 73.1
Final consumption
6.5 72.9 72.9

5.1 6 5.3
4.3
2.5 311
257 273
214
2270 2500
2150 152
1840 117
1500 102
841 1030 1180 82
2009 2011 2013 2015 2017 2019 2020 2021 2009 2011 2013 2015 2017 2019 2020 2021
GDP per capita (USD)

Consumption expenditure (Current USD)
Final consumption expenditure growth (%) Final consumption expenditure per capita (% of GDP)
Source: GDP per capita, current prices, IMF October 2022 Source: World Bank Open Data
5 Annual Investment needed to sustain GDP Growth Rate: Annual Investment needed to sustain GDP Growth rate
6 Moody’s affirms Bangladesh’s Ba3 ratings maintains stable outlook: https://www.moodys.com/research/Moodys-affirms-Bangladeshs-Ba3-ratings-maintains-stable-outlook--

PR_463658?cy=can&lang=en
7 S&P affirms sovereign ratings for Bangladesh; outlook remains stable: https://www.business-standard.com/article/international/s-p-affirms-sovereign-ratings-for-bangladesh-outlook-
remains-stable-122082600029_1.html

With growth in GDP, consumer income and private consumption have risen in the last 10 years. A self-perpetuating cycle
can be observed where markets face sufficient consumer demand and producers meet the demand. This increases the
overall GDP and generates more employment opportunities which further improves income for individuals.
Although COVID-19 has brought about a wave of damage to the macroeconomic conditions, Bangladesh has proved
to be quite resilient on all fronts. On top of the vaccination drive, the country has managed to restabilise RMG exports,
bring up employment rates, and invest in the healthcare sector, making it more robust than ever. Within three weeks of
the first case, the World Bank had authorised USD 100 million as a countermeasure to boost the healthcare sector to
combat the onset of the pandemic. Since June 2020, the World Bank has deployed a total of USD 1.7 billion to help the
country on multiple avenues. The programs include the Private Investment and Digital Entrepreneurship (PRIDE) Project
that helped bring in USD 2 billion direct private investments, create 1.5 lakh jobs, and develop economic zones (EZs) and
software technology parks,8 the USD 250 million Second Programmatic Jobs Development Policy Credit that helped the
government better its fiscal space and the economic resilience, among others. The Government of Bangladesh has also
invested heavily into many of the core economic pillars of the nation to go digital, in an effort for them to remain functional
especially in the face of travel restrictions. These efforts were directed mainly at education, telemedicine, government
offices, etc.9
The trends in current consumption and estimates for the future suggest that consumption demand will be a key driver
of economic growth, while the pattern of consumption is expected to reflect a preference for high-quality products as
witnessed with many countries experiencing an economic boom.
Demographic dividend
Population growth rate has been stable at 1.0–1.08% since 2017 and below 1% in 2021. The total population stood at
166.3 million in 2021. The population structure has also been the same for the last 5–6 years, with the 15–64 age group
accounting for more than 67% of the population. The median age for the total population is 27.9 years (27.1 for males,
28.6 for females) in 2020 (estimate).10
Fig. 1.4: Age structure of the population (% of total Fig. 1.6: Population by age
population) and sex (millions)
68.0%
68.0%
68.0%
67.0%
67.0%
1942
2023
1936
1861
1866
1797
28.0%
28.0%
27.0%
27.0%
26.0%
690
794
581
501
671
582
5.0%
5.0%
5.0%
5.0%
5.0%
338
353
322
302
317
331
2017 2018 2019 2020 2021 5-9 15–49 55+ 5-9 15–49 55+ 5-9 15–49 55+
Population age 0 – 14 (%of total) 2010 2015 2021
Population age 15– 64 (% of total)
Population age 65 and above (% of total) Female Male
Source: World Bank Open Data Source: 2022 Revision of World Population Prospects
Fig. 1.5: Total population in Bangladesh Fig. 1.7: Labour force participation by age,
group and sex
170
94.7%
80.5%
166.3
66.7%
164.7
47.1%
165 163
42.3%
161.4
36.6%
32.3%
159.7
160
8.7%
155
2017 2018 2019 2020 2021 15-29 30-64 65+ Total
Male Female
Source: World Bank Open Data Source: Labor Force Survey 2016–17
8 Bangladesh: Private Investment and Digital Entrepreneurship Project: https://www.worldbank.org/en/news/loans-credits/2020/06/19/bangladesh-private-investment-and-digital-

entrepreneurship-project
9 The World Bank in Bangladesh: https://www.worldbank.org/en/country/bangladesh/coronavirus#:~:text=The%20Bangladesh%20government%20responded%20fast,resumed%20

on%20a%20limited%20scale
10 Central Intelligence Agency (CIA). 2022. The World Factbook. Accessed on 16 November 2022: https://www.cia.gov/the-world-factbook/field/median-age/

Fig. 1.8: Monthly minimum wage in apparel
manufacturing in 2021 (in USD)
Pakistan 104
Bangladesh 95
Cambodia 190
Vietnam 162
India 145
China 358
0 100 200 300 400
Source: World Bank, Statista, Trading Economics, Business Human Rights
The minimum monthly wage for workers in the apparel manufacturing sector in Bangladesh is 74% and 35% less than the
minimum wages in China and India respectively. This continues to provide a substantial manufacturing cost advantage as
compared to its regional peers.
Over the past decade, the country has witnessed a sharp rise in the working age population owing to the ‘demographic
dividend’. According to the United Nations (UN) population division forecast, the median age of the population will
increase to 29.5 in 2025 and 31.6 in 2030. The economy is projected to witness a stable, population structure and growth
rate, with a growing demand for consumer durables in the future. Investors may view this phenomenon as a mitigation
to the dependency ratio (46 for Bangladesh in 2021) burden for the productive population. 63.5 million people out of
Bangladesh’s working age group (15 and above) population, which is 2/3rd of the total population, are participating in the
labour force. The labour force participation rate was estimated at 58.2% as of FY16–17. 2.2 million people enter the job
market every year, and as per Economist Intelligence Unit’s report11 the graduate unemployment rate in Bangladesh is
estimated at 47%. This surplus skilled labour force along with science, technology, engineering and mathematics (STEM)
focused education policies provides a substantial potential for a skilled and motivated labour force.
Bangladesh’s bright future as an outsourcing destination
Bangladesh’s attractiveness as an outsourcing destination for services (following in the paths of India and Philippines)
continues to grow due to its capable working-age population. It is demonstrated in its improved ranking by two places
to 35th in AT Kearney’s Global Services Location Index 2021. Bangladesh is looking to create over 200,000 direct and
50,000 indirect jobs and earn USD 5 billion a year in the next decade through outsourcing.12
With a high proportion of university educated youth under 25 years of age, the outsourcing opportunity is attractive
for growth of ICT/outsourcing-tech-savvy sector.13 Apart from call centers (which only form 10% of the outsourcing in
Bangladesh), the business processing outsourcing (BPO) services are a key attractiveness segment for growth.
11 High university enrolment, low graduate employment: https://www.britishcouncil.in/sites/default/files/british_council_report_2014_jan.pdf
12 Bangladesh: next hotspot for outsourcing business: https://www.thedailystar.net/news-detail-225145
13 Bangladesh, the new kid in the world of outsourcing: https://www.thedailystar.net/news-detail-261591

Inflation rate to return towards stability Fig. 1.9: Inflation rate (%) - average consumer prices
from 2017 to 2027
Maintaining a stable inflation rate has been challenging but
Bangladesh achieved a less than 6% annual inflation rate 12%
(average consumer prices) from 2016 till 2021.14 Low food
10%
production and weak management caused food inflation to
rise from 5.2% in January 2021, to 8.5% in October 2022.15 8%
The non-food inflation has remained elevated in 2022 as
6%
well.
4%
Since 2020, managing inflation has proved to be much
more difficult owing to the long and complicated results of 2%
the pandemic, the conflict in Ukraine, price-volatility of the 0%

fuel market, power crisis in the country and surges in the 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
value of the dollar.
Bangladesh Advanced economies
Though the IMF forecasts an elevated inflation rate of 9.1% Emerging market World
for 2023 for Bangladesh, it expects the inflation rate to
return to 6% by 2025 and then continue to be under 6% in Source: International Monetary Fund (IMF). 2022 Inflation rate, average
2026 and 2027. consumer prices. October
Export-led sectors and remittances continue to support resilience
The country reached a peak in exports worth USD 52.08 billion in FY 2021–2022 (34% increase over USD 38.76 billion
exports in FY 2020–2021). The economy exported USD 10.42 billion worth of goods to the US market in 2021–2022
making it the top export destination for Bangladesh, followed by Germany and the UK. Readymade garments and frozen
foods were the major items exported to these markets.16
Fig. 1.10: Top 10 export destinations (in %)
20.00
14.57
9.27
6.08
5.21
4.11 3.82 3.41 3.27 2.92
United States Germany Great Britain Spain France Poland India Netherlands Italy Canada
Source: Country Wise Export (Goods) For The Month of July-Oct 2022-23, Bangladesh Export Promotion Bureau
14 International Monetary Fund (IMF). 2022, Inflation rate, average consumer prices. Accessed 16 November 2022: https://www.imf.org/external/datamapper/PCPIPCH@WEO/OEMDC
15 Bangladesh Food Inflation: https://tradingeconomics.com/bangladesh/food-inflation
16 Export Promotion Bureau. Statistics Data FY 2021–22

Once again, after the pandemic, Bangladesh managed to
be an exemplar of resilience in terms of economic recovery.
The economy recorded a 6.9% growth in FY 2020 –21 and
7.2% in FY 2021–22. The country is striving to enhance
its export on all fronts of production. The very first 100%
environment-friendly private economic zone is now ready
for investments and exports. Bangladesh Economic Zones
Authority (BEZA) has undertaken a 100 EZs plan, many of
which are already operational.
Bangladesh has immense potential to become the next

outsourcing destination. The Government of Bangladesh
is heavily investing into avenues of export, namely, 100%
tax exemption for the IT and IT-enabled service (ITES)
companies until 2024 and possibly up to 2030; provision
of 100% profit repatriation and 10% cash incentive for
IT/ITES export.17 ICT infrastructure also encompasses
a plan to develop IT professionals through 35 thousand
Sheikh Russel Digital Labs, and 39 hi-tech/IT parks for the
investors.
The demand for intermediate goods is expected to

continue to rise in the future, which may be justified by the
government’s undertaking of mega infrastructure projects
such as the Padma Bridge, metro-rail and the Karnaphuli
tunnel.18 Bangladesh’s export basket primarily comprises
RMG and textiles, with three-fourth of the entire export
basket. The efforts to diversify the export basket by
promoting other manufacturing industries and ICT have
been pushed by the government as dependence on one
export product (RMG) makes the economy vulnerable.
The manufacturing sectors constitute 35% of the foreign
investment and the government has put thrust on light
engineering, agro-processing and ICT.
Remittances are the key foreign currency earner in

services. The 2022 World Bank report ranked Bangladesh
as the seventh-highest recipient of remittances in the
world, with USD 21 billion remittance inflow as of FY 2021–
22. Bangladesh has third position in South Asia, where
the first and second positions were held by India (USD
83.2 billion) and Pakistan (USD 26 billion) respectively. The
remittances boost has been supported by government
incentives and support from migrants for their families back
home. The government has continued encouragement
in the forms of cash-incentives through mobile financial
services and other banking services.
17 The Daily Star, Jan 2022: https://www.thedailystar.net/business/economy/news/

bangladesh-your-next- outsourcing- destination-2937426
18 Bangladesh: your next outsourcing destination: https://www.thedailystar.net/

business/economy/news/bangladesh-your-next- outsourcing- destination-2937426

Investment in Bangladesh
Foreign currency reserve
There are challenges to grow the FX reserve in the coming Fig. 1.11: Foreign currency reserve
days, but the current account deficit is expected to narrow
46.4
to 3.0% of GDP in 2023 and 2.3% in 2024, from 4.0% in 41.8
2022. The FX reserve is expected to reach an average 36.0 35.8
33.7
of USD 34 billion in 2023–24.19 The pandemic and the 32.9 32.7
30.4
geo-political events have had an adverse impact on the
25.0
country’s import bill for essential commodities – food and 21.5
fuel and capital machinery for vital infrastructure projects,
resulting in a more negative current balance over the last
2 years. The balance of payments (BOP) continues to be
challenged by geo-political events and an almost total
dependence on import of fuels and other raw materials for
production. To keep the reserves stable, the central bank
3
devalued the local currency against USD. This weakening
-1
-1
-1
-1
-1
-1
-2
-2
-2
-2
13
14
15
16
17
18
19
20
21
22
of BDT increased the cost of imports and was primarily
20
20
20
20
20
20
20
20
20
20
meant to discourage imports and incentivise exports. Source: Foreign Exchange Reserve, Bangladesh Bank
Fig. 1.12: FDI inflow (USD billion) in the last 5 years FDI inflow
3.61 The foreign direct investment (FDI) inflow of USD 3.61

2.87 2.89 billion at the end of 2018 dropped to USD 2.89 billion
2.56 though it has increased by 12.9% at the end of 2020 to
2.23 2.33 USD 2.56 billion. Although FDI growth has been impacted
2.15
1.59 1.55 due to the pandemic, geopolitical tensions, and sanctions,
the data exhibits a recovery effort on this front. FDI
development continues to face a few challenges such as
rigid tax regimes (e.g. profit repatriation), lack of incentives
(e.g. tax breaks for new/scaling/priority industries) and
2013 2014 2015 2016 2017 2018 2019 2020 2021 additional responsibilities for foreign investors.
Source: FDI Survey, 2021, Bangladesh Bank
Trends in foreign investment
In CY 2021, 35% of the foreign investment came into the manufacturing sector. The country experienced a remarkable
35% YoY growth in this sector in 2021 which industry experts seem confident is sustainable in the coming years.
Manufacturing is followed by the trade, and commerce sector in second place (22% of FDI inflows).
Power, gas and petroleum, accounted for 25% of the foreign investment. The power sector has been consistently
attracting foreign investments over the years owing to favourable tax incentives and ensured cash flows provided by the
government. Agriculture and fishing, and services have lower inflows.
Fig. 1.13: Top sectors for foreign investment (CY 2021)
35% 22% 15% 10% 8% 5% 5%

Manufacturing Trade and Power, gas and Gas and Service Construction Others
commerce petroleum petroleum
Source: FDI Survey, 2021, Bangladesh Bank
19 Fitch Affirms Bangladesh at ‘BB-’; Outlook Stable: https://www.fitchratings.com/research/sovereigns/fitch-affirms-bangladesh-at-bb-outlook-stable-29-09-2022

FDI inflow challenges
Historically, Bangladesh’s mega projects have been primarily funded by the government and multilateral agencies. Even
today, essential infrastructure developments like Rooppur Nuclear Power Plant, Padma Bridge and Mongla Port rely on
government funding. As per World Bank’s estimates there is a requirement of USD 100 billion in infrastructure investments
over the next 10 years and as per IFC’s estimates the requirements are higher at USD 320 billion. These investments
require significant support in addition to government funding.
To bridge this gap, private sector participation is essential. However, Bangladesh struggles to bring foreign direct
investments (FDI) into the country in comparison to its peers – FDI inflow into Bangladesh was the lowest for Bangladesh
that constituted only 0.41% of GDP, while Vietnam received the largest FDI of 4.6% of GDP. In order to sustain the
projected prolonged economic growth rate, Bangladesh needs to improve trade competitiveness, streamline urbanisation
processes and address financial sector vulnerabilities. Trade agreements covering tariff modernisation, increased trade
facilitation, and services with the European Union (EU) and India can boost Bangladesh’s GDP by 0.4% and investment
reforms by 0.5%. These trade agreements and invest exports also have the potential to boost exports by 1.4 and 3.9%
respectively.20
Private investment is the way to financial infrastructural development. The capital market needs to be leveraged to
achieve this aim. The investments from the capital market are equipped with the potential to address this gap of financing
in cottage, micro, small and medium enterprises (CMSME) and businesses that will be better off with long-term equity
investments rather than traditional debt investments.
Fig 1.14: FDI inflow country comparison (% of GDP)
4.93 4.90 5.01 5.02 4.88

4.60
4.16
3.94
2.82
2.55 2.41
2.30 2.23
2.09 1.94 2.02
1.74 1.70 1.81 1.79 1.81
1.52 1.47 1.45 1.51 1.56
0.88 0.75
0.62 0.70 0.68
0.49
0.77 0.82 0.74 0.54 0.41

0.58 0.62 0.49
2013 2014 2015 2016 2017 2018 2019 2020
Bangladesh India Indonesia Vietnam Pakistan
Source: Bangladesh Foreign Direct Investment, CEIC Data
20 Strong Trade Competitiveness, Financial Sector, and Well-functioning Cities are Critical for Sustained Growth in Bangladesh: https://www.worldbank.org/en/news/press-
release/2022/09/29/strong-trade-competitiveness-financial-sector-and-well-functioning-cities-are-critical-for-sustained-growth-in-banglades

Fig 1.15: FDI net inflow classified by major countries – 2020 (in USD billion)
253.10
171.37
148.91 142.78
117.45
102.27
74.75
China Hungary USA Germany Hong Kong, SAR, Luxembourg Singapore

China
Source: World Bank Open Data
Bangladesh has been lagging in the PEVC industry while its neighbouring countries have been thriving off this industry for
quite some time. In a family-oriented business tradition, intricacies in financial policies and regulations, and unwelcoming
condition of the tax policies still make the PEVC-backed growth of economy, capital and infrastructure an uphill journey
for Bangladesh.
The standard operating procedure of PEVC makes it a favourable scenario for the investment recipients, providing active
management through CXO boards, network benefits, and the obvious access to capital, helping the recipients gain
advantages over their non-PEVC backed competitors.
FDI in Bangladesh is lowest in South Asia at USD 1.59 billion compared to USD 58.8 billion in India, USD 12.8 billion in
Vietnam, and USD 24.3 billion in Singapore. The way forward for Bangladesh in terms of capital market development and
attracting FDIs would be policy and regulation reformation. A look at India’s strategy in this regard sheds a lot of clarity
on how this can be achieved. For instance, a policy move in Indian financial regulation in 1999 allowed banks to invest
5% of their surplus funds in VC funds. A similar move could potentially change the Bangladeshi market, considering that
the country has over 100 banks and financial institutions. Current policies set in place have also been seen to turn away
foreign investment on several occasions. Regulations dictate foreign investors to a minimum three-year post-IPO lock-in,
whereas the period for local firms is one year. While preferential treatments for local businesses seem understandable,
this removes Bangladesh from the consideration of a lot of potential investors.

Energy, utility and power play
Economic growth and industrialisation has led to an Rooppur Power Plant, country’s first nuclear plant, is
increase in the energy demand. Primary energy demand scheduled to be operational from 2023.
increased by about 1.5 times over 2000 –2017 (IEA
Japan International Cooperation Agency (JICA) is preparing
2017). Undisrupted power supply and increasing power
the next master plan, the Integrated Energy and Power
generation capacity to 30,000 MW by 2030 have been
Master Plan Project (IEPMP), with the goal of a low/zero-
the twin aims of the country’s Power System Master
carbon energy demand/supply system to be established
Plan (PSMP). The country is looking away from coal and
based on the premise of ensuring energy security and
heavy fuel oil-based power production, and more towards
economic viability. The project is expected to conclude by
renewable energy to meet the promises of the different
Dec 2022 and provide:
eco-friendly accords. Bangladesh has been relying on
domestic natural gas for about 60% of its primary energy • a plan for primary energy and power supply for target
sources. Currently, 50% of power is being generated from years 2030, 2041 and 2050
gas while <10% is from coal and about 30% is generated
• formulation of IEPMP
from imported liquid fuel. Bangladesh started importing
liquified natural gas (LNG) in 2018 due to rapid depletion of • formulation of action plans for realising a low-carbon/
its gas reserves to meet the increasing energy demand for carbon-neutral society.
the growing economy.
Fig 1.16: Engagement of private sector in power Fig 1.17: Forecasted power generation and
generation (in thousand MKwH) demand (MW)
44.70 57,000
35.43 36.10 51,000
31.60
30.68
29.61
24.73 30,000
20.24 22.55 24,000 27,000
20,443
31.08 34.42
19.65 22.59
35.11 31.92
17.99 21.10 26.60
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2030 2041
Private generation Public generation Total demand forecasted Total energy generation capacity
Source: Annual Report, 2020-21, BPDB Source: Annual Report, 2020-21, BPDB

Infrastructure, the way forward
The connection from the port city of Chittagong to the capital city Dhaka – Dhaka-Chittagong highway – has been
renovated and now has four lanes to improve connectivity. Cargo delivery is being supported through additional routes of
the inland waterway via construction of container terminals (ICT). New Payra port has also become operational.
Activities Mongla Port Chittagong Port
% growth
growth from
from % growth
growth from
from
FY 2021–22 FY 2021–22
previous
previous year previous
previous year
No. of ships handled 886 -8.66% 4231 4.16%
Total cargo
cargo handled (MT) 11,392,000 -4.63% 109,823,840 3.02%
Import cargo
cargo (MT)* 10,615,308* -10.23%* 101,854,474 2.63%
Export cargo
cargo (MT)* 119,775* -0.38%* 7,969,366 8.16%
No. of containers
32269 -26.59% 3,255,358 5.11%
handled
Source: Chattogram Port Authority, and Mongla Port Authority websites
Note: *Import Cargo and Export Cargo values for Mongla port are available till May 2022
The ongoing 8th Five-Year Plan (8FYP) which represents the first phase of the country’s Perspective Plan 2041 (PP2041)
aims to bring Bangladesh closer to the goals of attaining upper middle-income country (UMIC) status, attaining major
Sustainable Development Goal (SDG) targets, and eliminating extreme poverty by FY 2031. The primary focus of the
plan is on renewable energy, agriculture and water, rural development, health, population and nutrition, and public-
private partnerships. The strategic focus is on having a generation pipeline and ensuring better quality of power supply.
Bangladesh has also secured an agreement with the IMF to borrow USD 4.5 billion and the first installment (USD 447.48
million) of a total of 7 installments of this loan is expected to be disbursed in February 2023. This is to preserve the
macroeconomic stability with strong, inclusive, green growth while protecting the vulnerable.
Classification Number of roads Total length (km)
National highways 96 3,813
Regional highways 126 4,247
Zilla highways 654 13,242
Total 876 21,302
Source: Source: Roads and Highway, Ministry of Road Transport and Bridges16

Digitisation
Bangladesh’s rising economic and social progress has Mobile and internet usage will also significantly contribute
been driven by improvement in several economic and to implement the objectives of Digital Bangladesh and the
human development factors. Its rapid economic growth UN Sustainable Development Goals (SDGs) and help the
and societal development is influenced by a key factor country in recovering economically after the pandemic.
– digitisation. Bangladesh’s digitisation is led by mobile The mobile industry is also key in enabling digital inclusion
usage as it is the primary means of internet access and the in Bangladesh, which is a fundamental step in maximising
core form of digital technology used by a large share of its the impact of digitisation. Among the total internet users
population. in the country, the larger portion of the population are
mobile internet users as the CAGR of broadband internet
The total mobile connections in the country reached
(ISP+PTSN) is only 1.41% whereas the CAGR for mobile
170 million as of 2021 and 90 million of these are unique
internet users is 3.09%.
mobile connections. In 2021, internet usage grew with total
internet subscribers reaching 126.6 million in November 95% of the population is already covered by 4G mobile
2021 from 112.713 million in January 2021. The mobile broadband networks. However, there is a usage gap
industry has been a significant contributor during the of 67% which means that a significant amount of the
pandemic as mobile phones became an essential part of population is living within the footprint of a mobile
social and economic well-being. Internet and mobile usage broadband network but is not using mobile internet. 28%
have enabled the provision of essential services while also subscribed to a mobile internet service while the remaining
engaging the citizens and the government to help alleviate 5% did not live within the footprint of a mobile broadband
the impact of the COVID-19 pandemic. network. Moreover, only one third of the users under the
umbrella of mobile internet services are using 4G services.
Fig.1.18: Total number of internet users in Bangladesh, Fig. 1.19: Number of mobile phone users in
2021 (in millions) Bangladesh, 2021 (in millions)
123.7 126.6
112.7 115.4 113.7 116.5
105.6 82.48 84.04
103.2 79.758 80.51
51.122 51.65 51.81 53.72
35.555 36.19 36.57 37.21
9.5 9.8 10.1 10.1 5.419 6.09 6.56

5.75
Jan Apr Jul Nov Jan Apr Jul Nov

Total Mobile Internet ISP+PTSN GP Robi Banglalink Teletalk
Source: Bangladesh Telecommunication Regulatory Commission Source: Bangladesh Telecommunication Regulatory Commission
Fig. 1.20: 4G users in Bangladesh 2021 (% of Fig. 1.21: Internet users in Bangladesh 2021 (% of
population) population)
67%
54%
47%
28% 28%
25%
20% 20%
5% 6%
Coverage Gap Mobile Internet Users Usage Gap 2020 2025 (F)
2G 3G 4G 5G
Source: USB Asset Research, Ericsson Mobility Report Source: USB Asset Research, GSMA Intelligence Country Overview

Mobile phone ownership and internet usage
Despite Bangladesh meeting the UN target of 1 for 2, with Apart from affordability, there is a significant gap in the
a 1 GB basket costing 0.84% of income, the high cost mobile phone, smartphone and internet usage among men
of smartphones remains a major challenge in accessing and women in Bangladesh. 39% of men own a smartphone
mobile internet for the general masses. Although the in comparison to 21% of women. 36% of men in the
country has one of the highest 4G population coverages country use mobile internet against 19% of the women
in South Asia, the adoption of smartphones is relatively leaving a gender gap of 48%. Despite this gap, internet
low. This further slows down internet penetration as awareness among women is at 71% which is almost at par
smartphone ownership is essential to expand the with men at 73%. There continues to be a disparity in the
opportunities and benefits of internet use. awareness of internet usage among the population living in
the urban and rural areas as people living the urban areas
With the cheapest smartphone priced at USD 30 in
are more aware of internet usage.
the country, it is very difficult for a large portion of the
population to afford smartphones, particularly for those The inconsistencies between internet usage and
in the lowest incomes brackets. Bangladesh also has the awareness suggest the presence of other impediments
highest level of sector-specific consumer taxes (as a share that prevent women, especially in the rural region, from
of the total cost of mobile ownership (TCMO) in which adopting the internet. These barriers often include social,
smartphones account for a significant share.21 The high economic and cultural factors, and indicate the need
cost of smartphones along with additional charges such to increase the access of the internet among women to
as taxes, VAT (15%), customs duty (25%) and SIM card enable the benefits of digitisation to play out.
prices further raise the cost of owning a smartphone and
using the internet, creating a significant gap in the digital
inclusion of the disadvantaged and vulnerable groups.
Fig.1.22: Gender-wise distribution of mobile and Fig.1.23: Mobile data traffic in Bangladesh, India, Africa
internet usage (% of population) and Latin America
84% 73%
71% 20
65%
13.4
39%
36%
7.9
21% 6
19%
3.6 3
2 2
Mobile Smartphone Internet Internet

Bangladesh India Africa Latin America
ownership ownership awareness usage
Male Female 2020 2021
Source: GSMA Consumer Survey 2021, GSMA Mobile Gender Gap Report 2022 Source: USB Asset Research, Ericsson Mobility Report
Digital financial services
The digital payment landscape in Bangladesh looks the transaction values in internet banking have increased
quite promising. Bangladesh’s financial landscape has by 59%. The MFS transactions rose from USD 45 billion in
undergone a significant change in the past decade. With 2020 to USD 66.1 billion in 2021.
the increasing internet usage, consumer behaviour is
However, the use of credit cards in Bangladesh is
changing and the financial services landscape is going
comparatively lower than that of its peers. The cards
digital. COVID-19 has been the primary reason for the
market in Bangladesh is dominated by debit cards with a
growth in digital payments in Bangladesh in the last two
total of 243.1 million cards issued and a total transaction
years.
amounting to approximately USD 19.5 billion since 2019.
More than 90% of the consumers paid in cash before the Credit cards, on the other hand, amounted to about USD
pandemic but digital payments have grown multifold during 1.53 billion with a total of 26.7 million cards being issued
and post the pandemic. Within two years, mobile financial since 2019.
services (MFS) transactions grew more than 46% while
21 Bangladesh yet to utilise 67% 4G infrastructure: https://www.tbsnews.net/bangladesh/telecom/bangladesh-yet-utilise-67-4g-infrastructure-224293

Mobile financial services
Mobile financial services (MFS) in Bangladesh have enabled millions of citizens with access to easy and safe methods
of transferring money. MFS has made it possible to make contactless payments in innovative ways by consolidating
several services into a single platform. Such platforms have previously concentrated on promoting their applications by
introducing digital payments utilising QR codes, interoperable payments facilities for e-commerce services and money
transfers from financial institutions.
Bangladesh has the perfect environment for MFS to embark on the growth trajectory: lack of reach of formal banking
sectors, widespread mobile phone penetration, universal mobile network coverage, and a cash-based economy. It has
allowed for the unbanked bottom-of-the-pyramid population to engage in economic activities. By bridging the financial
inclusion gap, MFS has provided formal financial services to the unbanked and underbanked. As customers became
more accustomed to using digital payments, MFS providers like bKash have teamed up with banks and non-bank to offer
their clients nano-lending and micro-savings options. Customers can now use their mobile wallet for purposes other than
making payments, giving them access to formal finance with reasonable interest rates.
Through MFS, a wide range of services thrived, namely, education through edtech platforms, telemedicine and other
online health services, delivery, and ecommerce and online businesses. MFS has also generated employment through
merchants, and agents. These services have also worked as a mechanism for boosting foreign exchange reserves of
Bangladesh by facilitating intercountry money transfer. Over 10 million Bangladeshis live abroad and send remittances to
their families. bKash, one of the most popular MFS, has introduced a 1% cash incentive on top of a government incentive
of 2.5%. This has encouraged remittance flow and boosted foreign exchange reserves.
As of August 2022, a total of 13 banks have been providing MFS services to the consumers (183 million registered MFS
clients (up from 67 million in 2019) through 1.5 million MFS agents. There have been 67 million active MFS accounts as of
August 2022. There were 3 million average daily transactions in August 2022 with an average daily transaction value of
BDT 28 billion.
More MFS accounts are created in the rural areas in comparison to the urban regions with a higher number of male users
(59.2 million) than the number of female users (48.6 million). This difference is reflected in the gap in mobile ownership
among the genders as only 65% of the female population own a mobile phone whereas 84% of the male population own
a cell phone.22
Fig.1.24: MFS agents in Bangladesh (in thousands) Fig.1.25: MFS accountholders in Bangladesh (in millions)
758 734 764 764 732

723
659 667
594 599 616 751 768
554 574
503 529 701
654 653 678
607 627
555 561 574
494 496 499 524
Sept'19
Sept'20
Sept'21
Sept'22
Mar'19
Mar'20
Mar'21
Mar'22
Dec'19
Dec'20
Dec'21
Jun'19
Jun'20
Jun'21
Jun'22
Mar'19
Mar'20
Mar'21
Mar'22
Sep'19
Dec'19
Sep'20
Dec'20
Sep'21
Dec'21
Sep'22
Jun'19
Jun'20
Jun'21
Jun'22
Urban Rural Urban Rural Urban Rural
Source: Bangladesh Bank Source: Bangladesh Bank
Fig.1.26: Nature of MFS usage in Bangladesh (till Aug 2022)
0% 3% Cash in
0% 3%
4% 4% Cash out
P2P
31%
Merchant payment
G2P
28%
Salary disbursement
Others
27% Inward remittance
Utility bill payment

22 Bangladesh Bank: https://www.bb.org.bd/
Source: Bangladesh Bank
Agent banking
After the COVID-19 pandemic, digital financial services (DFS) have emerged and developed in Bangladesh. As a result,
banks have developed alternative digital channels for financial inclusion. Agent banking is a core pillar (in addition to
regulators, financial service provider (FSP), technology solution provider and customer) in catalysing financial inclusion
and strengthening DFS in emerging economies. Agent banking is the practice of engaging agents under a legally binding
agency agreement to provide financial services outside of regular bank branches. Bangladesh bank introduced agent
banking in 2013 with the objective of providing formal financial services to the underbanked and underserved. There are
16.78 million bank accounts related to agency banking as of September 2022, an increase of 30% from September 2021.
As of September 2022, Bangladesh has 31 banks with agent banking licenses. There are a total of 14,663 agents and
20,177 outlets, with 84.72% of agents and 86.16% of outlets being in the rural areas. Agent banking is widely practiced
in the rural regions, which positively fulfils the goal of boosting financial inclusion. The agents and outlets have increased
by 2.55% and 2.23% in September 2022, respectively, over the previous quarter. This growth not only ensures formal
financial services for the rural population but also creates employment opportunities for them as agents deploy skilled
and semi-skilled human resources living in the respective areas.
Fig.1.27: Agent banking transaction volume in Fig. 1.28: Number of agents and outlets in Bangladesh
Bangladesh (in millions) (in thousands)
25
25
20
20
15
15
10 10
5 5
0 0
Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Aug Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep
'19 '19 '19 '19 '20 '20 '20 '20 '21 '21 '21 '21 '22 '22 '22 '19 '19 '19 '19 '20 '20 '20 '20 '21 '21 '21 '21 '22 '22 '22
Agent Outlet

Note: Data is available till August 2022
Fig.1.29: Number of agent-led bank accounts by area Fig.1.30: Number of agent-led bank accounts by
(in millions) gender (in millions)
16
14 10
12
8
10
8 6
6
4 4
2 2
-
Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep 0
Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep
'19 '19 '19 '19 '20 '20 '20 '20 '21 '21 '21 '21 '22 '22 '22 '19 '19 '19 '19 '20 '20 '20 '20 '21 '21 '21 '21 '22 '22 '22
Urban Rural Male Female Others

The continued expansion of agent banking accounts during the COVID-19 outbreak and after the pandemic reflects the
persistent demand for agent banking services across the different segments of the population. Accounts held with male
and female consumers grew by 5.40% and 3.25% in the Jul-Sep 2022 quarter, respectively over the last quarter. This
signifies a relative increase in the participation of females in the financial system as the gap between male and female
accounts is gradually narrowing down. The volume of savings accounts is growing faster than other accounts, which
could mean an increased access to households and smallholders to agent banking than businesses.
The total amount of deposits made through agent banking reached BDT 307 billion for Jun-Sep 2022 quarter, 37% year
on year (YOY) and 9% quarter on quarter (QOQ) increase. In terms of deposits, rural areas have contributed the majority
(78.95%). Deposit held by male customers (58.50%) is much higher than female customers (34.27%). Additionally, savings
accounts comprise 44.68% of the total deposit, while other types of deposit accounts comprise 47.41% of the total
deposits. Through agent banking, deposits in rural areas have increased by 9.82% over the previous quarter (11% growth
in previous quarter) whereas deposits in urban areas have only increased by 6.82% (2.92% growth in previous quarter).
As of September 2022, lending and inward remittances through agent banking have shown growth. The volume of
lending has increased by 16.16% in the September 2022 quarter compared to Jun 2022 quarter. Additionally, inward
remittance has increased by 9.87% as the number of inward remittances through agent banking rose to BDT 1066 billion
as of September 2022. This rise in inward remittances through agent banking is a possible result of an initiative by the
government to offer a 2.5 % cash incentive on inward transfers remittances. Additionally, several banks are providing an
additional 1% in cash incentives to promote the remittance inflow using a formal banking channel. A major share of the
remittances is going to the rural areas which is expected to rejuvenate the rural economy.
The startup ecosystem

The Bangladesh startup ecosystem has been developed in the last decade and comprises more than 1200 active startups
with 200 new startups coming up every year. This ecosystem further creates over 1.5 million employment opportunities
and provides solutions to more than 750,000 SMEs that enables their business environment. Over the past decade, the
ecosystem has grown tremendously in industries such as FinTech, logistics, transportation and e-commerce.
Total startups 1200+
New startups 200+
Startup investments (USD million), 2013–2021 800+ in last decade across 230+ deals
Startup investments (USD million), 2021 415 across 60 deals
Alternative investment funds (USD million) registered USD 80+ million
Foreign investment >95%
Accelerators and incubators 30+
Total employment created (million) 1.5+ (direct and indirect)
SMEs benefitted by digital startups 750+K
Active angels 200+
Total startups 1200+
Source: Bangladesh Angels Network Pitch Deck, LightCastle Partners

With the emergence of ecosystem builders such as angel investments networks, accelerator programs and incubators,
the private sector has further boosted the landscape. As of 2021, there are more than 30 accelerators and incubators and
more than 200 active angels in the angels network.
The startup ecosystem has generated tremendous impact in terms of providing consumer benefits and employment
creation and has positioned itself as a maturing startup hub that is attractive for global investors. More than 96% of the
startup investments are generated from foreign investment. In 2021, the largest mobile financial service platform, bKash,
received investment of USD 250 million from Softbank which raised its valuation to around USD 2 billion, making bKash
the country’s first unicorn.23
Major sectors of startup activity:
• FinTech
• E-commerce/retail
• Logistics and mobility
Peer comparison
Bangladesh’s startup ecosystem is only 0.10% of the current GDP (startup investment as % of GDP), which is quite low
in comparison to its peers (Singapore 28.2%, India 1.3%, Vietnam 0.4%). However, between 2020 and 2021, Bangladesh
has experienced about a ten-fold increase in startup investments, which is the largest increase among its peers.
Fig.1.31: Startups investments, 2021 (in USD billion) Fig.1.32: Startup investment growth
112 28.21%
104
0.59% 1.32% 0.26% 0.37% 0.10% 0.10%
940%
42
435%
265% 330%
180% 218%
1 1 0.42 0.34 49%
sh
es
e
an
m
a
na
sh
es
an
m
e
na
a
or
di
or
na
de
in
di
st
na
hi
in
de
st
ap
hi
In
pp
ap
In
ki
et
C
la
pp
ki
et
C
la
ng
Pa
ng
Vi
ng
ili
Pa
Vi
ng
ili
Ph
Si
Ba
Ph
Si
Ba
Increase in startup investment

Startup investment as a % of GDP
Source: Startup Bangladesh publicly hosted report titled Bangladesh Startup Ecosystem Update Q’3 2022 published on November 7, 2022
23 Bangladesh Startup Ecosystem 20-21: https://www.startupbangladesh.vc/wp-content/uploads/2022/07/Bangladesh-Startup-Ecosystem-2021-22.pdf

Funding landscape
Over the last decade, startups have attracted more than seed and pre-seed rounds. Since 2013, USD 660 million
USD 804 million in investments across 232 deals. As of (82% of USD 804 million) of the total investments has been
2021 and the second quarter of 2022, the ecosystem contributed by venture funds.
has attracted a total investment of USD 505 million.
The larger investments have been contributed by venture
Besides the support from private and public sectors, the
funds and corporate investors in the series A or series B
landscape has attracted investments dominantly from the
or venture rounds with an average ticket size of USD 3.99
international arena as USD 412 million out of a total of USD
million while smaller tickets are contributed by angels and
415 million investments raised in the past decade came
accelerators in pre-seed and seed stages.
from global sources. In 2021, nearly USD 415 million was
raised in investments across 62 deals with 98% of the total In the past decade, the local investments stood at USD
investments being injected by global investors. 36 million in pre-seed, seed or pre-series A rounds across
101 deals. The global investments, on the other hand,
The highest investments have been made through venture
contributed across 132 deals with a total investment of
funds and angel investments as they constitute 70% of
USD 773 million.
the deals, and more than 75% of those deals have been in
Fig.1.33: Startup investment percentage by local and global investors in Bangladesh (%)
120%
5% 4% 3% 11% 11% 2% 4%
100%
80%
70%
60%
100% 100% 95% 96% 97% 98% 96%
89% 89%
40%
20%
30%
0%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Local Global
Startup statistics
Fig.1.34: Total investments raised in Bangladesh (USD Fig.1.35: Total number of deals in Bangladesh
million)
415.4 62
58
37
32
107.4 16
84.4 89.8
7 7 8
10.3 15 19.3 6.9 15.7 10 2 3
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
(up to (upto
Q2) Q2)
Source: Startup Bangladesh publicly hosted report titled Bangladesh Startup Source: Startup Bangladesh publicly hosted report titled Bangladesh Startup
Ecosystem Update Q’3 2022 published on November 7, 2022 Ecosystem Update Q’3 2022 published on November 7, 2022

Fig.1.36: Sector-wise investment in startups (%) Fig.1.37: Sector-wise investment value in the
last decade (USD million)
Others 2.00% Software and technology 14

Education 1.15%
Consumer services 18
Food and agriculture 1.22%
Software and technology 2.00% Healthcare 20
Consumer services 2.24%
E-commerce and retail 48
Healthcare 2.50%
E-commerce and retail 5.90% Logistics and mobility 101
Logistics and mobility 12.83% FinTech 566
FinTech 70.43%
Fig. 1.38: Deals by funding stages in Bangladeshi Fig. 1.39: Investments by funding stages in
startups (%) Bangladeshi startups (%)
7% 8% 3%
5%
Grant Venture round

31%
10% Pre-seed 36% Seed
Seed
38% Series A
Series A
Series B+
32% Series B+
12%
Others (Series C,
Others (series C and Seed, Pre-Seed)
venture round) 18%

Investor participation trends over 2011–2021 in startups
Angel investment
Bangladesh has received an annual average of USD 292,000 investment from angel investors, a total of USD 26 million
over a total of 88 deals. In the last decade, 95% of the deals were made in the pre-seed state of companies. Few key
companies are Bangladesh Angels Network, SBK Tech Ventures, BYLC Venture, GP Accelerator and YY Ventures.24
Fig.1.40: Angel investment
25
23
22
20 19
15
11
10
7.67 8
5.09
5 3.46
2.7 2.62
1.5 1 2
1 1 1 1.38
0.3 0 0
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (Q2)
Amount invested (million USD) Number of deals (absolute unit)
Corporate investment
Corporate investors have funded USD 3.5+ billion over 28 deals, in 2013–2022. Most of them were made as series A, and
seed stage investments. This area was mostly dominated by global players Ecom Express, Go-Jek, and SEEK. Key active
local investors include BRAC, ACI, and Robi.25
Fig.1.41: Corporate investment
35 30.58
30
25 22.14
20 15.22
13
15 10.3 11
10 5 5 5
3 3.1 2
5 0 0 1 0 0 0 0 1
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (Q2)
24 https://www.startupbangladesh.vc/wp-content/uploads/2022/07/Bangladesh-Startup-Ecosystem-2021-22.pdf

Investor participation trends over the decade in startups
Accelerator and incubator Investment
Accelerator and incubator investment has averaged at USD 500,000+ in 20 deals between 2011–2021. Except 5% of
the investments which were made in the pre-seed stages, the rest were made in the seed stage. Global investors in this
space include Surge, Accelerating Asia, and ODX Flexport.26
Fig.1.42: Accelerator and incubator investment
6
5
5 4.5
4 4
4
2.84
3
2 2
2 1.53
1 1 1 0.94
1
0 0 0.12 0.12 0 0 0.05 0.18
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (Q2)
Venture capital fund investments
Except the bKash-Softbank deal of USD 250 million in 2021, venture capital investments count up to 74 out of the total
231 deals since 2013, totaling up to USD 5.58 million. Most of these were made in Series A and B+ rounds dominated by
investors such as Anchorless Bangladesh, SBK Tech Ventures, Softbank, Valar Ventures, and Wavemaker Partners.27
Fig.1.43: Venture capital fund investment
450
384.5
400
350
300
250
200
150
84.22
100
44.12
50 18.17 5 12 15 27.46 19
10 1 10 1 5.35 5 2.6 2 9 7.4 5
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (Q2)

Impact of COVID-19
The COVID-19 outbreak arrived late in Bangladesh Due to the global economic shutdown, Bangladesh also
compared to most of the countries and the first case was faced a major economic downturn in most sectors and
identified in March 2020. Following the steps taken by industries. Since the country heavily relies on the global
most of the other countries, the Government of Bangladesh supply chains, especially for RMG and foreign remittance,
quickly responded to shut down the economy. The the global shutdown severely affected these sectors.
simultaneous responses of shutting the economies of With the closing of local and international businesses,
almost all nations resulted in a partial shutdown of the most companies faced negative profits which resulted
global economy. As a result, organisations such as the in layoffs and business shutdowns. However, certain
World Bank and Asian Development Bank (ADB) predicted industries have been able to profit from this crisis due to
the potential of a global recession. The World Bank the necessity of their products or services to cope with
predicted the major and developing economies to contract the current circumstances. Such industries include online
by 7% and 2.5% respectively which were the steepest grocery stores, retail chain stores, mobile financial service
growth projections predicted since the 1990s. On the providers, and IT firms.
other hand, ADB predicted that the global economy would
reduce by about 0.25% of its GDP.
Impact on businesses and exports
Bangladesh has seen a 6%+ GDP growth rate since 2014 except for the pandemic year 2020, which the country has also
been resilient in tackling, getting right back up to 6.9% in 2021, with total GDP being USD 416.26 billion. This positive
trajectory may be attributed to a favourable demographic dividend and growing infrastructure projects, facilitating
commerce and businesses, and creating employment. Overall, both GDP per capita and consumption expenditure have
been increasing.
Fig.1.44: Exports of goods and services (% of GDP) According to the impact assessment survey by United
and growth Nations Industrial Development Organization (UNIDO), one
of the biggest challenges for businesses in Bangladesh
70 was the shortage of cash flow. This was mainly caused by
60 the countrywide shutdown and the consequent decline in
50 sales and obtaining financing. With the roads and borders
40 being closed, movements of supply chains and logistics
30 went on halt and the businesses further faced a shortage
20 of inputs. This in turn lowered their output and further
10 created employee and worker layoffs.
0
The exports basket of Bangladesh is heavily reliant on a
Bangladesh
Indonesia
India
Cambodia
LDC
Sri Lanka
Myanmar
Philippines
LDCs
limited range of products and is more concentrated than

most of the other developing and low-income nations.
RMG comprises more than 81% of the 98 categories (two-
2018 2019 2020 2021 digit level products) in Bangladesh’s export basket as of
FY 2021. This puts Bangladesh at a disadvantage in terms
Source: World Bank
of comparative advantage. As per UNCTAD, the export
concentration index of Bangladesh in 2021 was 0.38,
which is the highest among its main competitors in South
Asia and South-east Asia (India, Vietnam, Cambodia, and
Indonesia) in the exports market.

According to the IMF, a concentrated export market and Fig.1.45 : Export concentration index (USD)
export basket increases an economy’s susceptibility to
outside shocks. With a concentrated export system, which 0.45
is significantly higher than most of its peers, Bangladesh’s
0.4
vulnerability to this external shock was confirmed during
0.35
the COVID-19 shutdown. Due to weak external demand, the
0.3
pandemic outbreak significantly decreased global export.
0.25
In 2020, global exports declined by 8.98%, but Bangladesh
experienced an even sharper decline of 16.23% in its 0.2
export revenues. During the pandemic, Bangladesh’s 0.15

export loss was significantly more than the average export 0.1
loss for LDCs (4.32%), according to Bangladesh Bank. 0.05
0
According to Bangladesh Bank, it has been observed that
India
Bangladesh
Cambodia
Indonesia
Philippines
Singapore
Viet Nam
LDCs
countries with a higher export concentration index have
faced more adverse effects in their overall exports.28 Both
Bangladesh and Philippines have a higher export basket
concentration and consequently faced a larger decline in 2018 2019 2020 2021
their exports while India faced a relatively smaller loss in
exports due to its less concentrated exports basket. Source: UNCTAD statistics
The pandemic and its impact on employment
The COVID-19 pandemic had severely affected the labour market because of different factors such as the repercussions
relating to the country-wide lockdown and the global economic recession. According to the Organisation for Economic
Co-operation and Development (OECD), the COVID-19 pandemic resulted in one of the biggest job crises since the Great
Depression. It can further increase poverty and widen inequalities, and its impact is likely to be felt for years to come.
In 2020, the unemployment rate increased to 5.4%, which was 0.98% more than 2019. According to the World Bank 29,
around 68% of the people working in Bangladesh’s urban areas (Dhaka and Chittagong) were estimated to have lost their
jobs in the early impact of pandemic in 2020. The job losses in Dhaka were estimated at 76% and Chittagong at 59%.
The Bangladesh government implemented various measures to help protect the jobs of its citizens. It announced
incentives and stimulus packages of USD 22.1 billion (equivalent to 6.2% of the GDP in FY 2021).30 These programmes
and the assistance of development organisations (e.g. the World Bank provided USD 1.7 billion support for employment-
related areas in the pandemic response for Bangladesh30) supported the additional expenditures and stimulated the
economy to reduce unemployment.
Fig.1.46: Unemployment rate in Bangladesh (% of total labour force)
6 5.413
5.229
5 4.43 4.384 4.366 4.37 4.413 4.438
4.35
4.119
3.771
4 3.38
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: World Bank
28 Export Performance of Bangladesh during the Pandemic: the Impact of Export Concentration: https://www.bb.org.bd/pub/research/policynote/pn2201.pdf
29 Losing Livelihoods - The Labor Market Impacts of COVID-19 in Bangladesh, World Bank Group 2021: https://documents1.worldbank.org/curated/en/475551600152674960/pdf/Losing-
Livelihoods-The-Labor-Market-Impacts-of-COVID-19-in-Bangladesh.pd
30 The World Bank in Bangladesh: https://www.worldbank.org/en/country/bangladesh/coronavirus#:~:text=The%20Bangladesh%20government%20responded%20fast,resumed%20

on%20a%20limited%20scale

Post-lockdown scenario
In 2021, Bangladesh displayed strong economic recovery Recovery in the manufacturing and service sectors
amidst the global pandemic. By increasing vaccinations propelled the GDP growth. As both domestic and
and limiting movement restrictions, the country was able international demand bounced back, the Quantum Index
to gradually restore its economic stability, despite the for large and medium scale manufacturing increased
onset of the Delta and the Omicron waves in August 2021 by 14.6% (YoY) in FY 2021 and by 27.8% (YoY) in July–
and January 2022, respectively. Household income also October of FY 2022. As movement restrictions were
increased in FY 2021, decreasing the estimated poverty relaxed, the service sector saw a revival in retail sales,
rate. According to the World Bank, the estimated poverty hotel and restaurant activity. Food output increased by
declined to 11.9% in FY 2021 from 12.5% in FY 2020 based 2.8% in FY 2021 as a result of a good rice harvest.31
on the international poverty line of USD 1.9 a day in 2011
Meanwhile, exports and private consumption accelerated
PPP.
on the demand side. After a decline in FY 2020, exports
As of FY 2021, the GDP of Bangladesh rebounded to increased by 9.2% in FY 2021 and 28.4% in the first
6.9% and is expected to continue further growth in FY quarter of FY 2022 as a result of a revival in demand for
2022 based on the high frequency indicators of industrial RMG globally. Bangladesh increased its market share
activities and trade, according to the World Bank. in Europe and the US as consumers diversified their
Bangladesh continued to experience a robust post- purchases throughout global supply chains. Along with
lockdown recovery in FY 2021 the first quarter of FY 2022. RMG, there was a significant increase in the export
of goods for the home, medicines, engineering and
However, there is a rise in global commodity prices
agricultural products.
induced inflation in FY 2022 after remaining consistent in
FY 2021. In the second half of 2021, global energy prices A substantial recovery in private consumption was
started to increase as demand rose, but supply remained observed due to a 55.8% increase in consumer goods
tight, especially for coal and natural gas. Due to the imports in the first quarter of FY 2022. As government
geo-political situation and its impact, commodity prices infrastructure megaproject implementation advanced,
increased across the world and as a result the prices of public investment increased by 9% (YoY) in FY 2021.
oil, food, and agricultural goods hiked even further in the However, early statistics from FY 2022 suggest a slower
first quarter of 2022. Energy commodity prices increased rate of expenditure growth. The gradual growth in private
by 66.4% (YoY) by February 2022, while non-energy sector credit and the increase in capital goods import
commodity prices increased by 22.7%. indicates the improvement of private investments.32
Fig.1.47 : GDP contribution sectors (%) Fig.1.48 : Balance of payments (% of GDP)
5 20
4
3 10
2
0
1 FY15 FY16 FY17 FY18 FY19 FY20 FY21
0 -10
FY15 FY16 FY17 FY18 FY19 FY20 FY21
-1
Resource balance
-2 Exports of goods and services
Industry Services Agriculture Import duty Imports of goods and services
Source: Bangladesh Bureau of Statistics (BBS) public information Source: World Bank Open Data
31 Ministry of Finance: https://mof.portal.gov.bd/sites/default/files/files/mof.portal.gov.bd/page/ed9e8b19_ccba_4cca_94b1_c40013f7a760/

MTMPS&sa=D&source=docs&ust=1671036761148091&usg=AOvVaw163OEAm_sM6Tl_-IS-eLqB
32 Ministry of Finance: https://mof.portal.gov.bd/sites/default/files/files/mof.portal.gov.bd/page/ed9e8b19_ccba_4cca_94b1_c40013f7a760/

MTMPS&sa=D&source=docs&ust=1671036761148091&usg=AOvVaw163OEAm_sM6Tl_-IS-eLqB

Fig.1.49 : Contribution of expenditure components (%
of GDP)
0
Total consumption Private consumption
Public consumption
Source: Bangladesh Bureau of Statistics (BBS)
Fig.1.50 : Contribution of investment components

(% of GDP)
0
Total investment Private investment
Public investment
Source: Bangladesh Bureau of Statistics (BBS)

Chapter 2: Entering the Bangladesh
market, funding opportunities and
incentives to draw foreign investments
Companies operating in Bangladesh enjoy preferential Over the last decade, the domestic market has undergone
trade benefits and friendly investment policies, many of rapid transformation, with sharply rising per capita income,
which are due to the country’s status as an LDC. rapid urbanisation, evolving nuclear family structure and
greater involvement of women in the workforce. In 2005,
Due to inexpensive labour and overhead costs,
26.8% of the total population lived in urban areas, which
manufacturers of low-cost products have been
increased to 34.3% in 2015. By 2025, it is estimated that
able to earn more revenue. The apparel sector has
over 42% of the population will be living in urban areas.33
successfully harnessed this competitive advantage and
Urbanisation level is expected to grow further in the next
made Bangladesh the second largest global apparel
ten years with a growing middle and affluent class (MAC)
manufacturer after China. Other sectors – leather and
population. Additionally, there are bright opportunities
leather goods, jute products, agro processing and frozen
for investors in both export-oriented sectors and sectors
fish – have also been growing at a noteworthy pace.
which cater to the burgeoning domestic demand.
Entering the Bangladesh market

Foreign investors can either form a fully/partially-owned subsidiary or set up a branch or liaison office for operating in
Bangladesh. The type of entity formed would depend on the investor’s medium and long-term strategy for penetrating the
market.
Wholly-owned subsidiaries
Foreign companies are permitted to establish wholly-owned subsidiaries in Bangladesh under the Companies Act 1994
for establishing either a private limited or a public limited company, subject to limitation in certain sectors.
Company registration documentation and its approval is handled by the Registrar of Joint Stock Companies and Firms
(RJSC) and foreign entities can incorporate a new company complying with the requirements of the RJSC. Foreign
entities can also fully acquire an existing Bangladeshi company, subject to limitation in certain sectors.
Joint ventures
Like wholly-owned subsidiaries, foreign companies can incorporate a joint venture company with Bangladeshi partner(s).
The equity ownership of the foreign company will vary depending on the amount invested by each party.
Limited liability by purchasing shares in an existing Bangladeshi company
Foreign investors are free to invest in local companies (subject to limitation in certain sectors). There are no restrictions
on the transfer of shares to non-residents. Foreign investors may sell their shares, irrespective of their percentage of
shareholding.
For details on company registration process, please refer to Chapter 5.
33 2018 Revision of World Urbanization Prospects. United Nations 2018.

Operating as a foreign entity
Branch or Liaison Office: Foreign companies can also set two months from the date of setup for meeting the
up a presence in Bangladesh through a branch office or a establishment and regular operational costs. Such offices
liaison office. The activities of the branch office or liaison require security clearance from the Ministry of Home
office should be approved by the Bangladesh Investment Affairs, Government of Bangladesh.
Development Authority (BIDA).
The documentation requirements for setting up an
A branch office is generally permitted by the BIDA to office are fairly simple and require documents such
represent the parent/group companies and undertake as Memorandum of Association (MOA) and Articles of
specific activities such as export/import of goods, Association (AOA) and certificate of incorporation of the
rendering of professional or consultancy services. It is principal or parent company, details of directors of the
not, however, permitted to carry out any manufacturing parent company, details of the activities which will be
activities. performed through the proposed branch or liaison office.
A government fee of BDT 25,000 is to be deposited. Upon
A liaison office is allowed to be set up for limited activities
submission of all requisite documents along with the
and can serve only as a communication channel for the
application for approval, documents are placed before the
parent entity and quality control activities. A liaison office
inter-ministerial committee of BIDA for necessary approval.
in Bangladesh cannot engage in any income generating
For any queries raised by the committee the same has to
activity.
be responded to by the applicant or their representatives in
Generally, for branch and liaison offices, outward Bangladesh. The requirements of BIDA may change from
remittance from Bangladesh is permitted only if specifically time to time based on the dynamic business environment
permitted by BIDA and aligned to the regulations and hence it is advisable to check the latest requirements
of Bangladesh Bank. These offices are required to prior to applying for the approval.
bring inward remittance of at least USD 50,000 within
Funding opportunities in Bangladesh

Foreign entities can conveniently get access to funding Fig. 2.1: Capital markets in Bangladesh (November
from local financial institutions for short- and long- 2022)
term capital needs, including loans for working capital,
syndication and trade financing. Alongside this, some of
the local and international foreign institutions have access
to on-shore and off-shore funding facilities.
Debt
securities:
Currently, the financial sector has 61 scheduled
41%
commercial banks as well as a host of nonbank financial
institutions (NBFIs) and specialised financial institutions.
Apart from raising debt-based funding, investors may

also consider securing equity-based financing from the Equity:
58%
country’s capital market. Bangladesh currently has two
stock exchanges, which are growing in tandem with the
country’s growth. The Bangladesh Securities Exchange
Commission (BSEC) has also activated the trading of
treasury bonds from October 2022. The government has Mutual fund:1%
preferential policies for encouraging companies to list in
the country’s bourses. Primary benefits include tax breaks
for sector-specific companies. Source: Dhaka Stock Exchange

Capital markets in Asia
Month-end indices Listed One-year change

Name of capital market Indices name
(Oct 2022) companies (as of Oct 2022)
Colombo Stock
CSE All Share 8,602.2 294 -27.73%
Exchange
Dhaka Stock Exchange DSEX 6,307.3 625 -10.77%
Pakistan Stock
KSE 100 41,264.7 100 -6.16%
Exchange
Philippines PSEi Composite 6,153.4 281 -11.71%
Source: Bangladesh Bank, CEIC Data, Bangladesh Dhaka Stock Exchange, Investing.com
Formal sectors
Fig. 2.2: Formal sectors in Bangladesh
Commercial Non-bank financial Insurance Micro finance

banks institutions companies institutions
Total: 61 Scheduled Total: 35 Total: 62 Total: 599
• 6 state-owned commercial • 2 State-owned • 18 life insurance (1 state- • Geared toward rural

banks • 1 Subsidiary of state- owned, 1 foreign) financial markets
• 3 specialised banks owned commercial bank • 44 general insurance (1 • 87% of total savings
• 43 private commercial • 19 domestic private state-owned) and 81% of total loan
banks (10 Islamic • Listed: 55 outstanding captured by
• 13 joint ventures
shariah-based) the top 10
• 9 foreign commercial banks
Other sectors
Fig. 2.3: Other sectors in Bangladesh
Capital market • Dhaka Stock Exchange (DSE) – 658 Specialised • Karmashangosthan Bank
intermediaries listed securities Financial • Palli Karma-Sahayak Foundation
• Chittagong Stock Exchange (CSE) Institution and PKSF (rural cooperative)
– 370 listed securities Cooperatives • Jubilee bank
• Stock dealers and brokers – 291 • Grameen bank
under DSE and 158 under CSE
• Ansar VDP development bank
• 58 asset management companies
• 67 merchant banks
• 8 credit agencies
• 8 alternative investment funds

Major regulatory authorities
The National Board of Revenue (NBR) is the apex authority for tax administration in Bangladesh. The NBR is
responsible for formulation of tax policies and tax laws, negotiating tax treaties with foreign governments on economic
issues, and collecting tax revenues.
Bangladesh Bank is the country’s central bank. The central bank must be formally notified while bringing in any
international investments, including portfolio investments brought into the capital market. All incoming investments must
be reported to Bangladesh Bank through commercial banks.
Bangladesh Securities and Exchange Commission (BSEC) is operating as the regulator of the capital market of
Bangladesh under the provisions of Bangladesh Securities and Exchange Commission Act, 1999. The capital market in
Bangladesh comprises two stock exchanges – DSE and CSE. The Commission is a regulatory authority associated with
the Ministry of Finance.
Insurance Development and Regulatory Authority (IDRA) is the government body for regulating and developing the
insurance sector of Bangladesh since 2010.
The chief authority for supervising and monitoring microfinance operations of non-government organisations (NGO) in
Bangladesh, is the Microcredit Regulatory Authority (MRA) which was established by the Microcredit Regulatory
Authority Act, 2006. A licence from the MRA is required for NGOs for carrying out microcredit operations.34
Funding options
Equity capital Debt capital from local commercial banks
Foreign-owned companies can start raising capital Foreign investors have access to local debt funding.
from the equity market, subject to compliance with the Trade finance, term loans and working capital are readily
applicable regulations. The government is eager to increase available, especially to major foreign investors. Bangladesh
the number of listed companies in the local bourse and is has a high number of state and commercial banks (as
providing regulatory incentives for encouraging profitable mentioned in the previous section), and bank loans may be
companies. obtained against a secured collateral.
For listed companies, the fund-raising process from Private foreign commercial borrowing
the public would require clearance from the BSEC.
Private foreign commercial borrowing can be availed for
Companies can proceed using either the fixed price or
installing new capacity or upgrading/expanding existing
the book-building process. Under the fixed price method,
capacity for production of goods/services. For securing
the appointed merchant bank and auditor help prepare a
long-term foreign currency loans, private sector industrial
prospectus, valuing the company based on existing assets
enterprises must apply to BIDA, which subsequently
and future growth potential. The indicative price of the
forwards the application to Bangladesh Bank for further
stock is estimated and requires approval from the regulator.
assessment. To secure the funding, the application must
The book-building method requires an appointed merchant
include a business case justifying the loan requirement.
bank to prepare a prospectus with indicative pricing. The
The application along with the business case is submitted
company in contention then hosts a series of roadshows
to a committee chaired by the governor of Bangladesh
where institutional investors are invited for bidding on their
Bank including members from BIDA, the Prime Minister’s
stocks. IPO share price is set based on the feedback and
Office and the Ministry of Finance for assessment and
interests of other institutional investors. The requirements
decisions.
of listing in the DSE have a mandatory requirement of hiring
or appointing an issue manager (approved by the DSE). Bridge financing for working capital may be availed by
The method of deciding IPOs requires assistance from the manufacturing as well as service entities from their foreign
approved issue manager. The draft prospectus must be parent/shareholders, subject to conditions. It can be
prepared in line with an issue manager and the Securities availed/renewed within six years from the date of inception
and Exchange Commission (Public Issue) Rules, 2015. of manufacturing/services output activities by the borrower.
Interest on such funding is capped at 3% p.a. and is
repatriable on deduction of due taxes.
Bonds
The bond market is at a nascent stage with only a few

bonds available for investors. Policymakers are pushing to
promote the market.
34 Microcredit Regulatory Authority: http://www.mra.gov.bd/site/page/e5502593-c19d-4893-af38-30b685971741/-

Institutions facilitating investments
Regulatory institutions Major trade bodies and chambers

The investment route depends on the sector targeted Federation of Bangladesh Chambers of Commerce
for investment and the FDI policy implemented by the and Industry (FBCCI) 35 is a trade organisation which
Government of Bangladesh. The following government and plays an essential role in safeguarding the interest of the
trade institutions will regulate and facilitate investment for private sector in Bangladesh, in a consultative and advisory
most sectors: capacity. The FBCCI maintains close relations with trade
and industrial associations abroad. It is a member of
Bangladesh Investment Development Authority
international bodies such as International Chamber of
(BIDA), previously known as Board of Investment (BOI),
Commerce (ICC), Islamic Chamber of Commerce and
was established for dealing with matters relating to local
Industry, Confederation of Asia-Pacific Chambers of
and foreign investments. Incoming investments need to
Commerce and Industry (CACCI), and SAARC Chamber of
be approved beforehand by BIDA. The regulatory body
Commerce and Industry (SAARC CCI).
aims to promote domestic and foreign investments by
simplifying the bureaucratic challenges for entering the Dhaka Chamber of Commerce and Industry (DCCI) 36 is
Bangladesh market. a non-profit organisation focused on providing services for
the development of business and industry in Bangladesh. It
Bangladesh Bank (BB) must be formally notified while
acts as the initial point of contact for SMEs. DCCI provides
bringing in any international investments, including portfolio
market-oriented inputs during the government’s policy
investments brought into the capital market. All incoming
formulation process with respect to import, export and
investments must be reported to BB through commercial
investments. The chamber regularly publishes guidebooks
banks.
to facilitate trade and commerce. It also has a dedicated
Bangladesh Economic Zones Authority (BEZA) plans training facility for supporting capacity development of
to establish economic zones across potential areas in professionals working with the member organisations.
Bangladesh including backward and underdeveloped
Foreign Investment Chamber of Commerce and
regions of the country to spur economic development
Industries (FICCI) 37, established in 1963, comprises over
through the expansion and diversification of industry,
200 members across industry, service and manufacturing
employment opportunities, production and export.
sectors. Classified as a Class ‘A’ chamber of commerce,
Bangladesh Export Processing Zone Authority FCCI is affiliated with FBCCI, International Trade Center
(BEPZA) has been established by the Bangladesh (Geneva) and World Trade Organisation (Paris).
Government to promote, attract and facilitate foreign
Large local and international firms are members of the
investment in an Export Processing Zone (EPZ). The
Metropolitan Chamber of Commerce and Industry
primary objective of an EPZ is to provide special
(MCCI) 38, a leading chamber organisation, the oldest
areas where potential investors would find a congenial
and the pre-eminent trade organisation of Bangladesh.
investment climate free from cumbersome procedures.
Its membership comprises leading commercial and large
Bangladesh Hi-Tech Park Authority (BHTPA) is industrial organisations of the country, including public
established with the objective of creating an investment- sector corporations as well as local and multinational
friendly environment and creating employment through companies.
the development and growth of high-tech industries
in the country. The BHTPA works for socio-economic
development by establishing Hi-Tech parks/software
technology parks/ IT training and incubation centres in
different parts of the country to encourage employment for
the country’s youth and develop skilled human resources.
35 http://fbcci.org/?page_id=2418]
36 https://www.dhakachamber.com/about-us
37 https://ficci.org.bd/page/About-FICCI
38 https://mccibd.org/brief-history-of-the-chamber/

Online portals
The following online portals will be crucial for both domestic and foreign investors:
Purpose Entity Website Link
Foreign direct investment (FDI) BIDA www.bida.gov.bd
Investing in economic zones BEZA www.beza.gov.bd
Investing in export processing zone BEPZA https://www.bepza.gov.bd/
Investing in Hi-Tech Park BHTPA http://bhtpa.gov.bd/
Trade-related Information Bangladesh Government https://www.bangladeshtradeportal.gov.bd/
Registration of company Office of the Registrar of Joint Stock http://www.roc.gov.bd/

Companies and Farm (RJSC)
VAT registration National Board of Revenue https://vat.gov.bd/
Issuance of certificate for using standard Bangladesh Standards and Testing http://www.bsti.gov.bd
mark Institution (BSTI)
Comprehensive list of licences Bangladesh Government http://www.forms.gov.bd/
For import and export related policies, Chief Controller of Import and Export http://www.ccie.gov.bd/
documents, licences https://olm.ccie.gov.bd/
For IP registration, renewal Department of Patent, Design and Trade http://www.dpdt.gov.bd/
Marks under Ministry of Industries
For issuing environmental clearance Department of Environment http://ecc.doe.gov.bd/login/
One Stop Solution (OSS)

The investment promotion agencies (BIDA, BEZA, BEPZA and BHTPA) have introduced a web-based One Stop Service
(OSS) for assistance with necessary licences and permits required for international investment in Bangladesh, depending
on the location and operations of the business entity.
Trade licence
Depending on the location of place of business, local city corporation or municipal corporation or union parishad are the
competent authorities for issuance of trade license.

National Industrial Policy
The Ministry of Industries has recently notified the National Industry Policy (NIP), 2022 with the main objectives of
creation of entrepreneurship, diversification of exports and accelerating local and foreign investments.
The NIP designates the following priority sectors with the intention of encouraging more investments for further
development of these sectors which have the potential to generate even greater export revenues:
Priority sectors
1. Foreign employment (Manpower supply) 10. Seed industry
2. Environment-friendly ship recycling industry 11. Cosmetics and toiletries
3. Tourism industry 12. Cement industry
4. Home textile industry 13. Logistics industry sector
5. Windmill 14. Hi-tech industry
6. Herbal medicine industry 15. Medical equipment and device industry sector
7. Hospital and clinic 16. Agricultural machinery manufacturing industry
8. Manufacturing of LED, CFL bulbs 17. Rice bran oil industry sector
9. Tea industry
The NIP has also identified certain special development industries which would require further growth and
development through investment in order to realise their export-revenue generating potential in the future. The
current list of special development industries is as follows:
Special development industries under NIP, 2022
Electric and electronic Paper and paper Solar energy Halal meat and meat
industry products products and other halal
products
Cashew nuts (raw and

Ceramic industry Rubber industry Recycled products
processed)
Activities suitable for the

Fishing industry Silk industry Live and processed crabs Fourth Industrial Revolution
such as artificial intelligence
(AI), blockchain, the internet
Printing and packaging of things (IoT), big data
Handicrafts and crafts Toy industry
industry
analytics, quantum computing,
cloud computing, advanced
Printing and packaging robotics, 3D printing,
Handloom industry Agar industry
industry augmented reality (AR)

Chapter 3: Regulations for operating in
Bangladesh
Investment friendly FDI policies
The interests of international investors are protected by government policies. Successive governments since the country’s
independence in the 1970s have continued with the preferential policy treatment to international investors. The policy
framework for foreign investment in Bangladesh is based on the Foreign Private Investment (Promotion and Protection)
Act, 1980, which ensures legal protection for foreign investments in Bangladesh. The law guarantees non-discriminatory
treatment between foreign and local investments, and permission for freely repatriating proceeds of profits and
divestments. In addition, there are several bilateral investment treaties in place which also provide additional safeguards
to investments from such countries.
Some of the benefits for foreign investors are as follows:
• Foreign investors can fully own companies (excluding certain sectors) within the country and invest in the domestic
bourse without restrictions.
• Full repatriation of investments and dividend are permitted, subject to relevant taxes, and reinvestment of profit is
considered as new investment.
• Multiple entry visas, i.e. E1 visa and E visa are issued to expatriates for up to one year and can be extended through
the appropriate application process. Business visas are issued to foreigners for travel to Bangladesh for limited
purposes only, i.e. business meetings (but not for income generating activities).
• Exemption from capital gains on sale of listed securities may be claimed by foreign investors in case similar
exemption is available in their home country.
• Exemption from income tax on interest with respect to certain government securities.
• Multiple layer taxation on dividends has been removed to eliminate the cascading impact of dividends
taxed at first level.
Capital repatriation
Profit and capital repatriation are subject to reporting requirements or authorisation by Bangladesh Bank. Proceeds from
the sales of securities (equity) of publicly listed companies may be repatriated without prior approval for an amount not
exceeding the market value of the shares as listed in the stock exchange on the date of sale. Other capital repatriations
(i.e. private limited companies and unlisted public limited companies) are generally subject to clearance by the
Bangladesh Bank. Exception from prior approval is provided in certain special cases based on the value of transaction,
valuation methodology used, etc. Market valuation of the company is necessary to determine the fair market value of the
company on the date of the transaction. It is examined on a case-to-case basis depending on factors such as company
profile, market dynamics and transaction model.
Other
Other repatriation
repatriations
Generally, BIDA approval is required for outward remittance of royalty, fees for technical services, franchise fees, payment
to EPC contractors, etc., by private sector industrial enterprises registered with them. However, according to a recent
BIDA circular, if contracts are pre-endorsed by BIDA then remittances up to certain thresholds (e.g. 6% of revenue for
royalty and technical fees) may be repatriated without having to obtain BIDA’s permission on each instance. Payments
exceeding such thresholds would require specific approval from BIDA. Where outward remittances to foreign group
entities are involved, the private sector industrial enterprises are mandatorily required to conduct an arm’s length analysis
of such payments irrespective of their quantum of remittance. Therefore, it is imperative for the applicants to substantiate
the arm’s length price of such transactions/payouts for repatriation of outward remittance.
Entities not falling under the scope of private sector industrial enterprises may approach the Bangladesh Bank for
clearances on account of such repatriation.

Taxation in Bangladesh
Financial Year:
The generally acceptable tax year in Bangladesh for companies is from 1 July of one year to 30 June of the following year.
An application can be filed before the Tax Authorities requesting for a change in the fiscal year.
The Union Budget in Bangladesh is generally announced in the first week of June.
Major types of taxes in Bangladesh¸
Direct taxes Indirect taxes
Tax on income Import duties
Branch Profit Tax on Repatriation Value Added Tax
Excise duty for banks/airlines
Supplementary duty
Direct tax rates - corporate
Description Tax rates
Publicly traded company (>10% of paid-up capital issued publicly) 20%
Publicly traded company (<=10% of paid-up capital issued publicly)* 22.5%
Non-publicly traded company* 27.5%
One person company* 22.5%
AOP, artificial juridical person, other taxable entities* 27.5%
Publicly traded bank, insurance or financial institution, merchant bank 37.5%
Non-publicly traded bank, insurance or financial institution 40%
Tobacco including cigarette, bidi, chewing tobacco, gul manufacturing companies 45%
Publicly traded mobile operator company 40%
Non-publicly traded mobile operator company 45%
Specific SRO- Export of goods/services** 12%/10%

*All receipts and income must be transacted through bank transfer, and all expenses and investments over BDT 0.5 m individually (BDT 3.6m, if aggregated
annually) must be made through bank transfer. The tax rates would increase by 2.5% if these conditions are not met.
**As per the last circular - SRO 158/2022 the exemption covers the period 01 July 2022 to 30 June 2028.
Note: surcharge @ 2.5% of income to be levied on income from business of manufacturing cigarette, bidi, zarda, gul and all types of tobacco products.
Income from business or profession
Income from business or profession is computed in accordance with the method of accounting regularly followed and
subject to the adjustments/deductions as prescribed in the Income Tax Ordinance, 1984. The income is subject to tax at
the rates as mentioned above.
Capital gains
For Company applicable rates for resident/non-resident individual

Companies are liable to pay 15% on the capital gain b. Transfer of capital assets held for more than 5 years:
generated from transfer of capital assets. Lower of -
For a person other than Company i. Tax payable as per applicable rates for resident/non-
The following paragraph to be inserted after ‘resident’ resident individual
Capital Gains: ii. Tax payable on capital gains @15%
a. Transfer of capital assets held for 5 years or less: As per

Personal income tax
Taxability of individual
Resident Non-resident
Taxed on global income earned Taxed at the rate of 30% only on income
during the year earned in Bangladesh during the year
Total income Tax rate

(Bangladesh Taka)
First 300,000 0
Next 100,000 5%
Next 300,000 10%
Next 400,000 15%
Next 500,000 20%
Balance 25%
The first threshold of BDT 3,00,000 is extended for:
• women, senior citizen (aged 65 years and above) and third-gender taxpayers to BDT 3,50,000;
• people with disability to BDT 4,50,000;
• gazetted war-wounded freedom fighter to BDT 4,75,000.”
Resident:
• presence for 182 days or more in a fiscal year, or

• presence for 90 days or more in the current year +365 days in the preceding four years
Rates of surcharge applicable to individuals
Net wealth Rate
Up to BDT 30m Nil
(a) Above BDT 30m to BDT 100m; or

(b) Ownership of more than one motor car; or
10% of tax payable
(c) Ownership of house property having an aggregate area of more than 8,000
sq. ft. in a city corporation
Above BDT 100m to BDT 200m 20% of tax payable
Above BDT 200m to BDT 500m 30% of tax payable
Above BDT 500m 35% of tax payable

Bilateral Double Taxation Avoidance Agreements (DTAA)
For foreign investors, double taxation may be avoided on the basis of DTAA. NBR is authorised to negotiate DTAA with
foreign countries to promote foreign direct investment (FDIs) in Bangladesh. The DTAA is an agreement between two
countries seeking to avoid double taxation by defining the taxing rights of each country with regard to cross-border flows
of income and providing for tax credits or exemptions to eliminate double taxation. DTAAs enable exchange of information
between treaty partners regarding evasion of tax. The list of bilateral signatories of DTAA are presented below:
Bangladesh’s DTAA
Sl Country Sl. Country
1 Belgium (effective 1 July 1997) 21 Poland (effective 1 July 2000)
2 Canada (effective 1 July 1982) 22 Romania (effective 1 July 1989)
3 China (effective 1 July 1998) 23 Saudi Arabia (effective 1 July 1012)
4 Denmark (effective 1 January 1997) 24 Singapore (effective 1 January 1980)
5 France (effective 1 January 1988) 25 Sri Lanka (effective 1 July 1989)
6 Germany (effective 1 January 1990) 26 Sweden (effective 1 July 1984)
7 India (effective 1 July 1993) 27 Switzerland (effective 1 July 2009)
8 Indonesia (effective 1 July 2007) 28 Thailand (effective 1 July 1998)
9 Italy (effective 1 July 1980) 29 Turkey (effective 1 July 2004)
10 Japan (effective 1 July 1992) 30 The United Arab Emirates (effective 1 July 2012)
11 Korea (effective 1 July 1983) 31 The United Kingdom (effective 1 July 1978)
The United States of America (effective 1 October

12 Malaysia (effective 1 January 1982) 32
2006; withholding tax 1 January 2007 – other taxes)
13 Mauritius (effective 1 July 2011) 33 Vietnam (effective 19 August 2005)
14 Netherlands (effective 1 July 1995) 34 Belarus (effective 1 June 2014)
15 Norway (effective 1 July 2006) 35 Kuwait (effective 25 December 2018)
16 Pakistan (effective 1 January 1980) 36 Bahrain (effective 9 October 2017)
17 Philippines (effective 1 July 2004) 37 Czech Republic (effective 1 July 2021)
18 Bhutan (effective 28 November 2017) 38 Nepal (effective 05 March 2019)
19 Myanmar (effective 01 July 2012) 39 Morocco (effective 01 July 2021)
20 Maldives (effective 01 July 2022) 40 Iran (effective 1 July 2023)

Transfer pricing in Bangladesh
Transfer pricing (TP) in Bangladesh

The National Board of Revenue, the apex tax policy making body in Bangladesh, has adopted transfer pricing regulations/
rules, in line with OECD regulations, by incorporating a chapter on transfer pricing in its Income Tax Ordinance, 1984
(Chapter XIA) through Finance Act 2012. The aim of the provisions is to ensure that all transactions undertaken between
group entities (associated enterprises) will have to follow the arm’s length principle, adjudged through the methods stated
in the rules.
Transfer pricing regulations in Bangladesh have been made effective from 1 July 2014 by SRO 161-Law/Income Tax/2014.
As per the provisions, any international transaction is required to reported in statement of international transactions
and filed along with the return of income. Further, any international transaction exceeding BDT three crore is required to
maintain TP documentation and file a report from a chartered accountant. Not maintaining the proper documentation or
filing the required documents would lead to the imposition of a penalty by the NBR.
The NBR has simultaneously established a transfer pricing cell to start TP audit and it is expected that the TP cell will
start audit proceedings soon. In case the TP cell finds that the transactions are not at arm’s length, they can reject the
transaction value and impute an estimated value for levying tax .
The penalties for not complying with the provisions are given below:
Default Nature of penalty
Failure to keep, maintain or furnish documents as prescribed in the Up to 1% of the value of the international
Income Tax Ordinance transaction(s)
Failure to comply with the notice or requisition issued by the Deputy Up to 1% of the value of international
Commissioner of Taxes transaction(s)
Failure to furnish report from Chartered Accountant as prescribed by the
Up to 300,000 Taka
Ordinance
Failure to furnish Statement of International transaction as prescribed by 2% of the value of international
the Ordinance transaction(s)
New draft Income Tax Act issued by the National Board of Revenue (NBR)
NBR has issued Draft Income Tax Act 2022 with the aim of aligning the tax laws with the present market dynamics. The
NBR invited views of various stakeholders on the draft law and the same is under deliberation.
How to file tax returns

The process of submitting the return of income involves filling out prescribed information in the prescribed format and
submission of the same before the jurisdictional income tax officer, generally in the rank of Deputy Commissioner of
Taxes (DCT) in the prescribed format . Each income tax payer or person required to file tax return is entitled to get the
income tax return form, free of cost from tax offices or NBR’s website (www.nbr-bd.org). After calculating the amount
of income tax, every assessee shall deposit the amount to the government exchequer through a pay order or a treasury
challan and submit duly signed and verified return form along with the necessary documents to relevant tax circle. Non-
resident companies, irrespective of having a permanent establishment in Bangladesh is required to file an income tax
return.
Below the above line, a separate heading is to be created as below:
e-TIN registration
Tax Identification Number (e-TIN) may be considered as a prerequisite for filing of income tax return in Bangladesh.
A company or individual must submit income tax return by Tax Day following the income year. The last date for the
submission of return may be extended by the DCT by up to two months and further extended for two months with
approval of the Inspecting Joint Commissioner.
Tax Day in case of company is the 15th day of the 7th month following end of income or 15 September following the
income year when the due date of filing falls prior to the said date. Tax Day for an individual is 30 of November following
the end of the income year. The timeline for filing return of income for an individual who is a first-time filer of return of
income is 30 June following the end of the income year.
Indirect taxes
Value Added Tax (VAT) Import duties

A standard VAT rate of 15% is applicable on supply of The following import duties are generally levied on import
both goods and services in Bangladesh. For certain of goods in Bangladesh: customs duty, supplementary
prescribed goods and services, the VAT rate is 5%, 7.5% duty, regulatory duty, VAT, advance income tax and
and 10%. VAT is imposed on goods and services at each advance tax.
stage of import, manufacturing, supply and trading. Input
The harmonised tariff system is used for imposing import
tax credit is available at each stage where goods and
duties on import of goods. Different rate of import duties
services are supplied with standard VAT rate of 15%.
are notified in the customs tariff schedule based on HS
Recipient of service is liable to pay VAT under reverse
code of the products imported into Bangladesh.
charge in respect of import of service.
The present custom regime is governed under the
Customs Act, 1969. Thereafter various issues have
Types VAT registration
been settled through litigations and representations and
Prescribed goods and Mandatory numerous circulars has been issued to cater the changing
services business dynamics. In order to bring all such aspects
into the legislation with the objectives to bring certainty
Other business units: Mandatory for investors, the legislation has issued a draft of the
• Annual turnover • VAT registration is new Customs Act with the expectation to have the same
more than 30 million not mandatory but implemented in due course.
• Annual turnover ‘Enlistment’ for turnover
between 5 million to tax is mandatory
Supplementary duty (SD)
30 million (Turnover tax rate is 4%)
• Annual turnover less • No VAT/no turnover Supplementary duty ranging from 10% to 500% is
than 5 million levied on luxury and non-essential goods imported into
Bangladesh.
In terms of Section 26 of the Value Added Tax and Supplementary duty ranging from 5% to 65% is imposed
Supplementary Duty Act, 2012, goods and services on non-essential or demerit goods produced and supplied
notified in 1st Schedule to the Act are exempt from in the country. The rates vary depending on the nature of
payment of VAT. the goods.
VAT is payable on a monthly basis within 15th of next
month and monthly VAT return is also required to be filed Introduction of national single window (NSW)
within 15th of next month. The VAT return is filed manually
or in the online portal. NBR is in the process of rolling out a national single
window in Bangladesh to facilitate all foreign trade related
VAT payable on electronics service customs procedures through a single interface. This is
a World bank funded project aimed at facilitating ease
Non-resident electronic service provider providing service
of doing business by transforming international trading
to B2C customers are required to obtain VAT registration
operations through the adoption of a user-friendly system.
and discharge VAT in Bangladesh by appointing a VAT
agent.

Merger and Acquisition (M&A) framework for • Bangladesh is a signatory of the International Centre
Bangladesh for Settlement of Investment Disputes (ICSID), an
organisation that settles investment disputes between
M&A of companies can be undertaken as per the specific states and nationals of different countries. The ICSID
provisions of the Companies Act, 1994. Generally, approval seeks to encourage greater flow of international
from the court is required for such transactions. investment by providing facilities for the conciliation
and arbitration of disputes between governments and
Preferential trade policies foreign investors.
Bangladesh has bilateral agreements and investment Multilateral trade agreement

treaties with the following countries:
Preferential import duty exemption is available under the
• Bilateral free trade agreements: Bangladesh has
following trade agreements:
signed a preferential trade agreement with Bhutan
which has taken effect from 1 July 2022. • South Asian Free Trade Area (SAFTA): Member
countries are Afghanistan, Bangladesh, Bhutan, India,
• Ongoing negotiations for bilateral/multilateral FTAs:
Maldives, Nepal, Pakistan and Sri Lanka
Brazil, Sri Lanka, Turkey, China, India, Thailand,
Malaysia, Pakistan; Bay of Bengal Initiative for Multi- • Asia-Pacific Trade Agreement (APTA): Member
Sectoral Technical and Economic Cooperation countries are Bangladesh, China, India, Republic of
(BIMSTEC); Trade Preferential System of the Korea, Lao People’s Democratic Republic and Sri
Organization of the Islamic Conference (signed but not Lanka
in effect),39 Nepal
• Investment treaties in force: Belgium-Luxembourg

Economic Union, France, Germany, Iran, Italy, Japan,
Malaysia, Philippines, Poland, Republic of Korea,
Romania, Switzerland, Thailand, the Netherlands,
Turkey, the UK, the US, Indonesia, Denmark, India,
Singapore, Austria, Uzbekistan, China
• Investment treaties signed but not yet in force:

Cambodia, the UAE, Vietnam, the Democratic People’s
Republic of North Korea, Pakistan40
Additional policies for protecting foreign investments
• Bangladesh is a signatory to the Multilateral

Investment Guarantee Agency (MIGA) which insures
investors against political risks. MIGA is an investment Preferential trade benefits
guarantee agency of the World Bank that guarantees
foreign investors against losses incurred due to Bangladesh enjoys several trade benefits, which
non-commercial risks and encourages FDI. MIGA’s provide significant cost advantages while competing
guarantee protects investors from the risks of currency in international markets. However, the country is
transfer, exploitation, war and civil disturbances. predominantly benefitting from exporting to the EU, which
MIGA is only restricted to de-risking new investments, has provided free entry to all kinds of goods and services.
privatisation and financial restructuring.
• Overseas Private Investment Corporation (OPIC),

a US-based organisation, insures incoming US
investments to frontier markets like Bangladesh. OPIC
provides the necessary guarantee for foreign investors
in case of unforeseen major events such as civil war,
expropriation and natural calamities.
39 https://aric.adb.org/fta-country
40 https://investmentpolicy.unctad.org/international-investment-agreements/countries/16/Bangladesh as on 14 November 2022)

The European Union
Bangladesh benefits, being an LDC from the EU’s

Generalised Scheme of Preferences (GSP), namely the
Everything but Arms (EBA) arrangement, which grants
duty and quota-free access for all items, except arms and
ammunition. Under the framework of the Cooperation
Agreement between the European Community and the
People’s Republic of Bangladesh concluded in 2001,
engagements between the two regions can include a
variety of activities from trade and economic development
to good governance and environment regulation.
Bangladesh’s exports to the EU are dominated by apparel,
which contributes 90% of the total exports. The benefit
under the EBA scheme will be available for Bangladesh
till 2029, i.e. for three years after its graduation to the
developing country status.
The United States
The US is the single largest export destination for

Bangladesh and in FY 2021–22, the latter exported
goods worth USD 10.41 billion. Bangladesh used to enjoy
Generalised System of Preferences (GSP) in the US market
till 2013. In response to the US’s cancellation of GSP,
Bangladesh is currently negotiating a new trade agreement
with the US, under the Trade and Investment Facilitation
Agreement (TIFA) arrangement. The agreement provides a
platform for discussing trade and investment-related issues
and other areas of common interest.
43 PwC | Destination Bangladesh Destination Bangladesh | PwC 43

Chapter 4: Tax incentives for encouraging
investments
Manufacturing /trading/service sector
Exporter of goods/services
Corporate tax:
• Reduced corporate tax rate of 12% for export of goods and services
• Tax rate of 10% applicable, in case of Leadership in Energy and Environmental Design (LEED) certified factories for
export of goods
• Above benefit is applicable subject to fulfillment of specified conditions.
Automobile
Corporate tax: Indirect tax:
• 100% tax exemption for 10 years on manufacture of • Exemption for local manufacture of certain vehicles up
three and four wheelers to 2500cc on:
• Reduced tax rate of 10% for 10 subsequent years - 0% to 5% Output VAT
• Benefits are subject to conditions and specified - VAT, SD and AT on import/local procurement of RM
percentage of value addition in Bangladesh. and spares
• Import duties on raw material imported by motorcycle

manufacturers
Light engineering/Home and kitchen appliances
• 100% tax exemption for 10 subsequent years on • VAT incentives on local manufacture and supply of
manufacture. Benefits are subject to conditions and home appliances
specified percentage of value addition in Bangladesh.
• An exemption on VAT, SD and AT on import/local
procurement of raw materials and spares by home
appliances manufacturers.
Infra and services sector
Power sector/PPP projects
• Income-tax exemption for power producers • Specified services supplied to PPP projects exempt
from VAT
• Additional benefits applicable for non-coal-based
power producers • Import duty exempt on import of equipment and
spares for power plants
• Exemption from income of expats for three years
• Electricity generation exempt from VAT
• Interest, royalty, fees for technical services (FTS),
capital gains exempt

ITES services/ICT manufacturing
• 100% income tax exemption on a host of ITES services • Reduced VAT rate of 5% applicable on ITES services
• 10-year tax exemption of 100% on manufacture of • Exemption of output VAT and import duty on raw
specified ICT hardware material for manufacture of:
• Benefits are subject to conditions and specified - computer and computer related equipment,
percentage of value addition in Bangladesh.
- cellular mobile phones.
Healthcare/educational services
Corporate tax: • Import duty exemption on import of medical equipment
• 10-year tax exemption of 100% on income of hospital/ • Private medical institutions and private university are
vocational training. exempt from VAT.
• Benefits are subject to specified conditions.

Indirect tax: Location specific tax incentives are also available for
various sectors
• Medical services exempt from payment of VAT
Economic Zone – BEZA
• 10-year graded tax exemption for companies/units in • VAT exempt on specified services locally procured by
EZs engaged in: EZ units
- Manufacturing (except edible oil, sugar, wheat, flour, • Import duty exempt on raw material imported under
cement, Iron and Iron related products); bonded warehouse facility
- Services • Import duty exemption on import of capital

machineries, vehicles
• Tax exemption on dividends, capital gains and
payment of royalty, service fees for 10 years
• Expatriates working for a company incorporated in

BEZA to get 50% tax exemption for prescribed years.
Economic Zone – BEPZA
• 5/7-year graded tax exemption for companies in EPZs, • VAT exempt on specified services locally procured by
based on location EPZ units
• Import duty exempt on raw material imported under

bonded warehouse facility
• Import of capital machineries, vehicles
Specified industrial undertakings
• Tax exemption to specified industrial undertakings (covering varied sectors) established between 1 July 2019 and 30
June 2024
• Set-up in Dhaka, Mymensingh and Chattogram: 5 years at reducing rate of 90% to 20%
• Other specified areas: 10 years at reducing rate of 90% to 10%
• NBR and BIDA approval required

Specified infrastructure projects
• Tax exemption to specified infrastructure projects established between 1 July 2019 and 30 June 2024 for 10 years at
a reducing rate of 90% to 10%
• NBR and BIDA approval required
Startups
Tax benefits given to newly set up start-ups for 5 years (subject to certain conditions) :
• Disallowances of specified expenditure will not be applicable during growth years
• Losses incurred during growth years may be carried forward up to nine assessment years
• Minimum tax rate is 0.1% (instead of 0.6%) of gross receipts in growth years
• No reporting (other than return filing), if permanent access to systems/ books allowed
46
46 PwC
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Chapter 5: Steps to set up business
operations
There are several steps involved in setting up business operations in Bangladesh. Given below is a brief
overview of the steps:
Company registration documents
A foreign investor planning to operate in Bangladesh would of the directors of the company, Deed of Rent for the
need to register the company with the Registrar of Joint Bangladesh office address, etc. The e-TIN is generally
Stock Companies and Firms (RJSC). While other company allotted within 4–5 working days, subject to submission
documents such as Tax Identification Number (TIN) and of all relevant documents.
VAT certificates and trade licences are equally important
• A trade licence is issued by the respective city
for business operations, company incorporation is the first
corporation/municipal corporation for conducting
step of the process.
business. A prescribed form along with the necessary
The company incorporation process requires obtaining documents such as a copy of the rental deed for the
a name clearance application with the RJSC for the office in Bangladesh, photograph and copy of passport
proposed name of the new company and is generally of the applicant in whose name the licence will be
allotted within 2–3 days of making the application. With issued, company incorporation documents, copy of
effect from 1 October 2021, the requirement of obtaining e-TIN, etc. Trade licence is generally issued within a
a name clearance certificate for private companies has period of 10–15 working days subject to submission of
been withdrawn and the incorporation process has all relevant documents.
been simplified by introducing a one-step application
• BIN is the VAT registration number obtained from the
mechanism, where at the time of filing the incorporation
NBR. An online application needs to be filed with NBR
application the name of preference would be approved
through the VAT online portal along with supporting
based on the availability. Hence, prior name clearance
documents/details like bank account details, director
is now required only for the incorporation of public
details, copy of passport/national ID of the authorised
companies.
signatory along with the necessary details, copy
It may be noted that the share application money for the of e-TIN of the company, copy of trade licence of
initial capital investment is required to be remitted to a the company, estimated annual turnover, details
temporary bank account (e.g. provisional or local lawyer’s of machineries (if applicable), etc. VAT registration
bank account) in Bangladesh by the investing/holding certificate is generally provided within a period of 7–15
company prior to making the application with the RJSC. days, subject to submission of all relevant documents.
The encashment certificate issued by the local bank
• The Import Registration Certificate (IRC)/Export
certifying the receipt of funds is a mandatory supporting
Registration Certificate (ERC) is required for
document for filing the application for incorporation.
undertaking imports or exports, respectively, is
Once the funds are received, other necessary documents obtained from the Office of the Chief Controller
(e.g. copy of board resolution of the parent company, of Imports and Exports by filing separate online
incorporation documents of the parent company, copy applications on the Office of Chief Controller of Imports
of passports of proposed directors of the new company, and Exports (CCI&E) website. Documents required
copy of encashment certificate, copy of name clearance generally include bank solvency certificate (to be issued
certificate, receipt of payment of RJSC fees, draft MoA and by the concerned banker in Bangladesh), copy of
AoA of the new company, etc.) are required to be submitted trade licence, copy of e-TIN of company, copy of MOA
to the RJSC along with the application of incorporation of and AOA along with incorporation certificate of the
the new company. It takes around 6–8 weeks for preparing company, membership certificate from a recognised
and arranging all the required documents and another chamber/trade association, copy of updated Form XII,
10–15 working days after filing of the application form to Form X, etc. An IRC is generally issued within a period
obtain the incorporation certificate. of 3–4 weeks subject to submission of all relevant
documents.
Thereafter, the new company is required to proceed
with applications for the following: Note: The timelines provided above are practical estimates subject
to notarisation/attestations/sign off and receipt of all necessary
• e-TIN which is the income tax registration with the NBR. and relevant documents, and submission of the same with relevant
The documents required generally include copy of MOA regulatory/government authorities in Bangladesh.
and AOA along with the Certificate of Incorporation It is also advisable to check the latest requirements prior to
of the company, photographs and other particulars application.
Fees for company registration
Fee for name clearance (NC)

i. NC for company: BDT 200 for each of the proposed names.
Registration fees
Private company
Stamp fees
i For the Memorandum of Association: BDT 1,000.00
ii For the Articles of Association:
For authorised capital Fee (BDT)
Up to 10,00,000.00 2,000.00
> 10,00,000.00 up to 3,00,00,000.00 4,000.00
> 3,00,00,000.00 10,000.00
Registration fees
i. For filing 6 documents (5 filled in forms plus 1 memorandum and articles of association, with a fee of BDT 200.00 per
document): BDT 1,200.00
ii For authorised share capital:
For authorised share capital Fee (BDT)
Up to 10,00,000.00 0.00
Additional for every 1,00,000.00 or part after first 10,00,000.00 up to 50,00,000.00 50.00
Additional for every 1,00,000.00 or part after first 50,00,000.00 80.00
Note: The fees provided herein are as per the RJSC website (http://app.roc.gov.bd:7781/psp/RJSC_Fees) are as on 11 November 2022 and are exclusive of
applicable VAT. It is advisable to check the latest requirements prior to application.
Fees for trade licence

For limited company
Paid up capital Annual fees (BDT)
Up to 1,00,000.00 1,500
1,00,000.00 to 5,00,000.00 2,000
5,00,000.00 to 10,00,000.00 3,500
10,00,000.00 to 25,00,000.00 4,500
25,00,000.00 to 50,00,000.00 5,500
50,00,000.00 to 1,00,00,000.00 7,500
1,00,00,000.00 to 5,00,00,000.00 10,000
More than 1 crore 12,000
Please note that the fees mentioned above are exclusive of VAT @15% or any other statutory dues that may be applicable in Bangladesh. In addition to the above,
AIT of BDT 3,000 and applicable signboard tax are payable at the time of obtaining trade license.
Source: The fees provided herein are as per the “City Corporation Ideal tax Schedule, 2016” It is advisable to check the latest requirements prior to application.

Registration with the Bangladesh Investment Development Authority (BIDA)
The documents generally required include the application duly filled in the prescribed form, copy of trade licence, copy
of certificate of incorporation along with the MOA/partnership deeds, copy of deeds of the proposed land, background of
the proprietors in official letterhead pads, pay order/bank order for applicable registration fee in favour of BIDA, copy of
e-TIN certificate.
Registration fee for foreign Investment
Investment amount (BDT) Required fee (BDT)
Up to 10,00,00,000.00 5,000.00
10,00,00,001.00 to 25,00,00,000.00 10,000.00
25,00,00,001.00 to 50,00,00,000.00 25,000.00
50,00,00,001.00 to 1,00,00,00,000.00 50,000.00
More than 1,00,00,00,000.00 100,000.00

Note: The fees provided herein are as per the BIDA website (https://bidaquickserv.org/) as on 11 November 2022 and are exclusive of applicable VAT. It is
advisable to check the latest requirements prior to application.
Fees for Import Registration Certificate (IRC)
Registration fee for IRC
Category Ceiling value of annual import Registration fee (BDT) Renewal fee (BDT)
First BDT 5,00,000 5,000 3,000
Second BDT 25,00,000 10,000 6,000
Third BDT 50,00,000 24,000 10,000
Fourth BDT 1,00,00,000 40,000 15,000
Fifth BDT 5,00,00,000 50,000 22,000
Sixth BDT 20,00,00,000 60,000 24,000
Seventh¸ BDT 50,00,00,000 70,000 28,000
Eight Above BDT 50,00,00,000 80,000 32,000
The IRC is to be renewed within 30 June of each year. In addition to the above fee, 15% VAT is payable at the time of application for IRC.
Source: The fees provided herein are as per the CCIE website (https://www.ccie.gov.bd/site/page/7cca82fe-393f-4f40-a7e1-8e814c656fd1/%E0%A6%
A8%E0%A6%BF%E0%A6%AC%E0%A6%A8%E0%A7%8D%E0%A6%A7%E0%A6%A8-%E0%A6%93-%E0%A6%A8%E0%A6%AC%E0%A6%BE%E-
0%A7%9F%E0%A6%A8-%E0%A6%B8%E0%A6%82%E0%A6%95%E0%A7%8D%E0%A6%B0%E0%A6%BE%E0%A6%A8%E0%A7%8D%E0%A6%A4) as on 9
January and are exclusive of applicable VAT. It is advisable to check the latest requirements prior to application.
Fees for export registration certificate

Export Registration Certificate is to be applied upon payment of BDT 7,000 and 15% VAT on such fees. ERC is to be re-
newed within 30 June of each year upon payment of renewal fees of BDT 5,000 and 15% VAT on such fees.
Fees for tax and VAT registration certificate
No fees are payable for obtaining Tax Identification Number (TIN) and VAT registration certificate (BIN).

Land
• Foreign individuals or entities are not allowed to own real estate

properties in Bangladesh but may procure land under special
arrangements.
• Foreign investors may acquire a local company with 100% foreign

ownership and use the company as a vehicle for real estate acquisition.
• Foreign investors can establish joint venture-based companies for

purchasing real estate.
• Foreign investors may purchase shares of a local company that owns real
estate.
• Investors can lease land in certain specialised areas such as export

processing zones (EPZs) and Economic Zones (EZ).
Commercial leasing
The primary step for executing a leasing contract involves conducting a title
verification to determine the existence of any material or title defect of the
land to be leased. Once the title clearance is obtained, the terms of the lease
need to be ascertained. Certain clauses must be considered carefully by
both parties:
• Rent free period
• Sole renewal option for lessee
• Lock-in period
• Force majeure
• Termination
Machinery import
An entity willing to import equipment and machinery to Bangladesh must

obtain an import registration certificate (IRC) from the Office of Chief
Controller of Import and Exports (CCI&E).
Documents required for import:
• Letter of credit authorisation form
• Bill of lading or airway bill
• Commercial invoice or packing list
• Certificate of origin
Note: For certain imported items, additional certifications or import permits relating
to health security or other relevant matters have been made mandatory. Companies
established in EZs and EPZs have separate guidelines for import.
Types of importers
• Direct commercial importers: Import of goods for sale without further

value addition.
• Industrial undertaking: These entities import raw materials and

machineries to produce goods and services for sale in both the local and
domestic markets. IRC specifies the maximum value for each product
that the industrial consumer may import each year.
• Industrial undertaking located at EZ and EPZ: These entities are eligible

to import plant & machineries without payment of import duties. IRC is
not required for units located in EZ or EPZ.
Handling contract related legal dispute
Commercial disputes are either legally handled by the court or through an

arbitration body.
Dispute related to land
Any dispute in relation to land rights is normally resolved by the courts. The
government assures foreign investors protection against nationalisation and
exploitation through the Foreign Private Investment Act of 1980.
Legislation to ensure legal compliance
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,
alternate 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 centre for alternative dispute
resolution in one of the SAARC member countries.
Other regulations
• Bangladesh is a signatory of the New York Convention and recognises

the enforcement of international arbitration awards.
• Domestic arbitration is under the authority of the district judge court

bench, and foreign arbitration is under the authority of the relevant high
court bench.
• The Bangladesh Arbitration Act of 2001 and amendments in 2004

reformed alternative dispute resolution in Bangladesh. The Act
consolidated the law relating to both domestic and international
commercial arbitration.
• The Bangladesh International Arbitration Centre (BIAC) is available for

dispute resolution. The Centre operates under the Bangladesh Arbitration
Act of 2001. BIAC is an independent arbitration centre established by
prominent local business leaders in April 2011 for commercial dispute
resolution. The council committee is headed by the President of
International Chamber of Commerce Bangladesh (ICCB) and includes
the presidents of other prominent chambers including DCCI) and MCCI.
Chapter 6: The way forward
In 2021, the GDP of Bangladesh increased by 6.9%. The nation has persisted in making progress towards achieving its
social development goals for its 167 million citizens. The private sector, which benefited from the demographic dividend
and the increasing middle and affluent class population, has been at the forefront of the nation’s historic growth.
Bangladesh has benefited from an increasing population of young people since it has created a large labour force
to facilitate industrialisation and contributed towards a rapid shift in the consumption pattern. It is expected that this
demographic dividend will continue till 2045 which will enable more businesses and rapid expansion of industrialisation.
The government has also significantly strengthened its efforts to ease some of the impediments to business operations to
facilitate the country’s objectives of becoming a developed nation.
Transitioning to a developing middle-income economy
In March 2018, Bangladesh got the nod from the UN and graduated to the status of a developing country upon meeting
the three graduation criteria – gross national income (GNI) of USD 1,272 (required USD 1,230), human assets index (HAI)
of 72.8 (required greater than 66) and economic vulnerability index (EVI) of 25.2 (required 32 or below). The country must
maintain the required threshold till 2024 in order to graduate to the middle-income status.
The incremental growth of the economy will be beneficial for the country in terms of its global economic standing.
Investment in higher education, training, and healthcare from both the public and private sectors will rise as a result of this
graduation. The government has already started working on many mega projects, including the construction of high-tech
parks and special economic zones which will enable further facilities for foreign entrepreneurs.
The construction of the new terminal at the international airport will aid in attracting more international players and
investors, enabling competitive trade across borders after graduating to middle income status. Besides, the sovereign
rating is also expected to lower risk premiums while making investments in debt and equity-based instruments.
Bangladesh will have until 2027 to build the necessary infrastructure to remain competitive following the withdrawal
of duty-free and quota-free (DFQF) market access. Significant progress has been made in terms of infrastructure
development after the launch of the Padma Bridge in June 2022. The Padma Bridge is expected to increase the GDP
growth of the southwestern part of the country by 2.5%, along with an annual overall GDP increase of 1.23%.41
The country is already undertaking different policy reforms and pursuing bilateral and multilateral trade agreements to
develop the platform to compete in the global marketplace.
41 Economic impact of Padma Bridge: https://www.thedailystar.net/business/economy/news/economic-impact-padma-bridge -3092311

The road ahead
Bangladesh has the vision of reaching upper middle- based investments and more power and natural gas
income status by 2031. In order to achieve the vision, the import. Incentives provided to foreign investors in the
country needs to focus on creating a competitive business energy sector include:
environment, increasing human capital and skilled labour
• Tax exemptions on royalties, interest paid on foreign
force, building effective infrastructure, and creating a policy
loans, and capital gains of foreign investors
environment that encourages private investments.
• Exemptions from double taxation for foreign investors
Diversifying exports beyond the RMG sector, deepening
based on bilateral agreements
the financial sector, enhancing the sustainability of
urbanisation, and bolstering governmental institutions are • Exemption to expatriate personnel employed in
among the top development priorities of the country. By approved industries on tax payments for up to three
addressing its vulnerability to natural disasters and climate years
change, Bangladesh can continue to develop its resistance • Relaxed restrictions on the issuance of work permits
to such contingencies. Making the switch to green growth for project-related foreign nationals and employees
will help ensure the long-term viability of development for
• Facilities for repatriation of invested capital, profits,
future generations.
and dividends.
The government investment in the power sector resulted in
The infrastructure development of the country has been
the rise in electricity access that has gone up from 5 GW
driven by both national and international (G2G and
in 2009 to around 25.5 GW in 2022, and the government
multilateral agencies) funding. China has invested USD
claimed in March 2022 that 100% of the population had
465 million in FDI as of FY22 while India invested USD 107
access to electricity, although the quality and reliability of
million.42 These investments have been mainly designed for
the electricity supply requires major improvements.
road, rail, and port infrastructure development.43 Further
Given the rapid expansion of the Bangladesh economy, investments are in the pipeline to build and repair new
continuous investments are required for meeting the highways, expand existing port capacities, build a deep-
energy demand of 50,000 MW by 2040. Greater private sea port and establish new power plants in Bangladesh.
sector participation is imperative for scaling up the power
sector, apart from the government-to-government (G2G)
The digital edge

The government intends to digitise the investment process the country. Bangladesh’s robust economic growth, rising
by making government services more accessible. As part young population, and progress in human and social
of the process, the Government of Bangladesh has already development are propelling its domestic consumption and
digitised the tax payment procedure introducing e-TINs for private investments. The market for both imported and
simplifying the payment cycle. locally manufactured consumer durables is expanding
at a rapid pace. Moreover, the government’s incentives
Bangladesh’s graduation to the middle-income status
to attract investments, such as setting up economic
would negate existing preferential trade benefits currently
zones with robust infrastructure and fiscal incentives are
enjoyed by the country. However, the government has
supplementing Bangladesh’s promising GDP forecast. The
proactively started engaging in bilateral trade agreements
existing tax regime, bureaucratic processes, and business
with major trading partners, namely signing memorandums
environment for foreign businesses and investors are
of cooperation (MoCs) with high-interest groups such as
areas that require major reforms, which the government
Japan, to expedite FTAAs. The economic impact of the
recognises and is working towards.
government’s initiatives to establish diplomatic ties will
bear fruit in the coming years. Bangladesh has opportunities emerging across sectors
and investor classes. Understanding the logistics and
The rapid growth of emerging sectors such as RMG,
regulations for operating in Bangladesh would ease
consumer staples and durables, and ICT in Bangladesh
the process for the potential investors and then the
is indicative of the dynamic investment opportunities in
opportunities would be ripe for the picking.
42 Foreign Direct Investment and External Debt, Bangladesh Bank: https://www.bb.org.bd//pub/halfyearly/fdisurvey/fdisurveyjanjun2022.pdf
43 Bangladesh Bank: https://www.bb.org.bd/pub/research/policynote/pn0805.pdf

Works cited
• 2018 Revision of World Urbanization Prospects, United Nations 2018
• Asian Development Bank (ADB) Basic Statistics (2018): https://data.adb.org/dashboard/bangladesh-numbers
• Bangladesh Bank Data: https://www.bb.org.bd/econdata/fdi.pdf
• Bangladesh Bank: https://www.bb.org.bd/econdata/intreserve.php
• Central Intelligence Agency (CIA), 2018. The World Factbook. Accessed January 30, 2019. https://www.cia.gov/library/publications/
resources/the-world-factbook/geos/bg.html.
• Export Promotion Bureau: http://www.epb.gov.bd/site/files/51916ae6 -a9a3-462e -a6bd-9ef074d835af/Statistic- Data-2017-2018
• Export Promotion Bureau. Statistics Data 2017-18. Accessed January 29 2019
• Countryeconomy.com: https://countryeconomy.com/ratings
• CEIC: https://www.ceicdata.com/en/indicator/bangladesh/private-consumption-expenditure
• IMF 2017. Report for Selected Country Groups and Subjects (PPP valuation of country GDP)
• International Monetary Fund (IMF) 2018. Inflation rate, average consumer prices. October. Accessed January 30 2019.
https://www. imf.org/external/datamapper/PCPIPCH@WEO/OEMDC/ADVEC/WEOWORLD/BGD.
• The Long View: How will the global economic order change by 2050. Accessed at https://www.pwc.com/gx/en/issues/economy/the-
world-in-2050.html
• The World Bank (2018), Bangladesh Development Update
• World Bank Data: http://datatopics.worldbank.org/consumption/
• World Bank Data: https://data.worldbank.org/country/bangladesh
• International Trade Administration: https://www.trade.gov/country-commercial-guides/bangladesh-power-and-energy

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© 2023 PwC. All rights reserved.
Contributors
This report was prepared by Mamun Rashid, Manpreet Kaur Dhanoa, Shamsul Nawed Nafees, Ashraful
Rashid Roman, Fairuz Sadaf Joyeeta and Hironmay Paul. Sushmita Basu, Kapil Basu and Prabir Mitra have
contributed commentaries in the tax and regulatory sections of the report.
Editorial support: Rubina Malhotra

Design: Shipra Gupta and Faaiz Gul
Special thanks are also due to Bangladesh Investment Development Authority and National Board of
Revenue for their guidance.
Contact us
Mamun Rashid Sushmita Basu
Managing Director Member of the Board of Directors
PwC Bangladesh Leader - Bangladesh Tax and Regulatory Services
Email: [email protected] PwC Bangladesh
Email: [email protected]
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Director, Managing Director, Tax and Regulatory Services,
PwC India PwC India
Email: [email protected] Email: [email protected]
Ashish Chaturvedi Arijit Chakraborti

Executive Director, Director and Office Managing Partner,
Deals - Transaction Services PwC Bangladesh
PwC India Email: [email protected]
Email: [email protected]
For macroeconomic insights and transaction related queries, please contact:
Sanjeev Krishan Dinesh Arora

Chairperson, Leader, Deals,
PwC India and Bangladesh PwC India
Email: [email protected] Email: [email protected]
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Destination

Chapter 1: Doing business in Bangladesh – expanding gateways ...............................................4

Chapter 2: Entering the Bangladesh market, funding opportunities and incentives

Chapter 3: Regulations for operating in Bangladesh ....................................................................36

Chapter 4: Tax incentives for encouraging investments ...............................................................44

Chapter 5: Steps to set up business operations ...........................................................................47

Chapter 6: The way forward ..........................................................................................................52

2 PwC | Destination Bangladesh

Destination Bangladesh | PwC 3

favourable macroeconomic conditions. Bangladesh 30

1 Bangladesh to become 24th largest economy by 2036: https://cebr.com/reports/bangladesh-to-become-24th-largest-economy-by-2036/

2 World Bank Data Indicator, Accessed on 13th December, 2022: https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=BD-1W

3 Real GDP Growth, IMF, Accessed on 16th November 2022: https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/BGD

4 The Least Developed Countries Report 2021: https://unctad.org/webflyer/least-developed-countries-report-2021

4 PwC | Destination Bangladesh

Steady sovereign rating and strong FX reserve

Country sovereign rating by S&P and Moody’s

S&P Sovereign Ratings Moody’s Sovereign Rating

Year Rating Outlook Year Rating Outlook

2022 BB-/ B Stable 2022 Ba3 Stable

2020 BB-/ B Stable 2020 Ba3 Stable

2018 BB-/ B Stable 2018 Ba3 Stable

Improved standard of living

Final consumption expenditure

6.5 72.9 72.9

GDP per capita (USD)

6 Moody’s affirms Bangladesh’s Ba3 ratings maintains stable outlook: https://www.moodys.com/research/Moodys-affirms-Bangladeshs-Ba3-ratings-maintains-stable-outlook--

Destination Bangladesh | PwC 5

8 Bangladesh: Private Investment and Digital Entrepreneurship Project: https://www.worldbank.org/en/news/loans-credits/2020/06/19/bangladesh-private-investment-and-digital-

9 The World Bank in Bangladesh: https://www.worldbank.org/en/country/bangladesh/coronavirus#:~:text=The%20Bangladesh%20government%20responded%20fast,resumed%20

6 PwC | Destination Bangladesh

0 100 200 300 400

Source: World Bank, Statista, Trading Economics, Business Human Rights

Bangladesh’s bright future as an outsourcing destination

11 High university enrolment, low graduate employment: https://www.britishcouncil.in/sites/default/files/british_council_report_2014_jan.pdf

12 Bangladesh: next hotspot for outsourcing business: https://www.thedailystar.net/news-detail-225145

13 Bangladesh, the new kid in the world of outsourcing: https://www.thedailystar.net/news-detail-261591

Destination Bangladesh | PwC 7

the pandemic, the conflict in Ukraine, price-volatility of the 0%

Export-led sectors and remittances continue to support resilience

Fig. 1.10: Top 10 export destinations (in %)

15 Bangladesh Food Inflation: https://tradingeconomics.com/bangladesh/food-inflation

16 Export Promotion Bureau. Statistics Data FY 2021–22

8 PwC | Destination Bangladesh

Bangladesh has immense potential to become the next

The demand for intermediate goods is expected to

Remittances are the key foreign currency earner in

17 The Daily Star, Jan 2022: https://www.thedailystar.net/business/economy/news/

18 Bangladesh: your next outsourcing destination: https://www.thedailystar.net/

Destination Bangladesh | PwC 9

Foreign currency reserve

3.61 The foreign direct investment (FDI) inflow of USD 3.61

Trends in foreign investment

Fig. 1.13: Top sectors for foreign investment (CY 2021)

35% 22% 15% 10% 8% 5% 5%

Source: FDI Survey, 2021, Bangladesh Bank

19 Fitch Affirms Bangladesh at ‘BB-’; Outlook Stable: https://www.fitchratings.com/research/sovereigns/fitch-affirms-bangladesh-at-bb-outlook-stable-29-09-2022

10 PwC | Destination Bangladesh

Fig 1.14: FDI inflow country comparison (% of GDP)

4.93 4.90 5.01 5.02 4.88