Direct Foreign Investment

Foreign Direct Investment in Bangladesh

The Growth and Challenges of Foreign Direct Investment in Bangladesh

Foreign Direct Investment (FDI) in Bangladesh has seen significant growth over the past few years, reflecting the country’s evolving economic landscape. According to the UNCTAD’s World Investment Report 2023, FDI inflows to Bangladesh increased by 20.2% to USD 3.48 billion in 2022, compared to USD 2.89 billion in 20211. This growth is indicative of the increasing confidence of foreign investors in Bangladesh’s market potential and economic stability.

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Investing directly in Bangladesh as a foreign entity involves several steps and procedures. Here’s a general overview:

  1. Choosing the Investment Structure:
    • Wholly Owned Subsidiary: Foreign investors can establish a wholly owned subsidiary under the Companies Act, 1994. This can be a private or public limited company with up to 100% foreign ownership.
    • Joint Venture: Foreign companies can form joint ventures with local or other foreign companies.
    • Branch or Liaison Office: Foreign entities can set up branch or liaison offices, which require specific approvals from the Bangladesh Investment Development Authority (BIDA).
  2. Obtaining Name Clearance:
    • The first step in incorporating a company is to obtain name clearance from the Registrar of Joint Stock Companies and Firms (RJSC).
  3. Incorporation Process:
    • Filing Documents: Submit the necessary documents to RJSC, including the Memorandum of Association (MoA) and Articles of Association (AoA), along with the required fees.
    • Certificate of Incorporation: Once the documents are approved, RJSC issues a Certificate of Incorporation, officially recognizing the company.
  4. Registration with BIDA:
    • For branch and liaison offices, obtain approval from BIDA. This involves submitting an application detailing the business activities, along with other required documents.
    • Liaison Office: Acts as a communication channel and cannot engage in commercial activities.
    • Branch Office: Can engage in commercial activities but must adhere to specific regulations.
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Notable Foreign Investments in Bangladesh

Some notable foreign companies and the size of their investments in Bangladesh:

  1. Grameenphone (Telenor, Norway): Over $4.12 billion.
  2. Unilever (United Kingdom): Over BDT 430 million in sustainability initiatives in 2021.
  3. Chevron (United States): Over $3.6 billion.
  4. HSBC (United Kingdom): Significant investments, but specific figures not disclosed.
  5. Standard Chartered Bank (United Kingdom): Investments in treasury bonds, bills, and sukuk totaling Tk 21,236 crore.
  6. Nestlé (Switzerland): Around Tk 250 million for setting up a factory.
  7. Siemens (Germany): Various projects including a Rs. 187.4 crore contract with the Bangladesh Rural Electrification Board.
  8. Samsung (South Korea): Significant investments in local manufacturing, including a 30-acre plant.
  9. Huawei (China): Plans to invest $150 million in digital talent development.
  10. China National Machinery Import and Export Corporation (CMC) (China): Estimated $2 billion.
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BIDA’s Role in Facilitating Foreign Direct Investment in Bangladesh

The Bangladesh Investment Development Authority (BIDA) plays a crucial role in attracting and facilitating Foreign Direct Investment (FDI) in Bangladesh. Here are some key highlights from their website:

Key Initiatives and Services

  1. One Stop Service (OSS) Portal: BIDA has established an online OSS portal to provide time-bound and transparent investor services. This platform currently offers 124 services from 41 organizations, making it easier for investors to navigate the regulatory environment.
  2. Ease of Doing Business Reforms: BIDA has implemented 44 reforms under the Ease of Doing Business program, aiming to improve the business climate in Bangladesh. These reforms are part of the broader Business Investment Climate Improvement (BICI) program.
  3. International Investment Summit: BIDA organized a hybrid International Investment Summit in 2021, which attracted 3,070 participants and resulted in over USD 3 billion in investment deals and commitments. This summit is planned to be a biennial event to promote investment opportunities in Bangladesh.

Investment Opportunities

BIDA highlights several sectors with significant investment potential, including:

  • Plastics
  • Automobile and motorcycle parts
  • Shipbuilding
  • Construction materials
  • Ceramics
  • Healthcare
  • Information Technology
  • Readymade garments
  • Pharmaceuticals
  • Medical equipment
  • Agribusiness
  • Jute and jute products
  • Leather and footwear
  • Light engineering
  • Electronics equipment

Recent Achievements

  • Foreign and Domestic Companies: BIDA has registered 214+ foreign and domestic companies, creating over 22,040 employment opportunities.
  • Proposed Investments: There are 174+ domestic companies with proposed investments worth $4.85 billion and 25+ foreign companies with proposed investments worth $2.26 billion.

Policy and Support

  • 100% Foreign Ownership: Bangladesh generally permits 100% foreign ownership in most sectors, following a non-discrimination principle.
  • Investment Promotion: BIDA is at the forefront of national efforts to attract FDI, aiming to boost productivity, enhance competitiveness, and support sustainable economic growth.

These initiatives and policies reflect BIDA’s commitment to creating a favorable investment climate in Bangladesh.

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Bikroy.com: A Success Story in Bangladesh with Support from Legalsteps

Legalsteps has assisted Bikroy.com, a subsidiary of  Saltside Technology Ltd, a Swedish company, from start to end in setting up their company in Bangladesh, opening their bank account, and registering with the Joint Stock RJSC.

Bikroy.com is a leading online marketplace in Bangladesh, launched in June 2012. It operates as a classified advertisement website, available in both Bengali and English. The platform allows users to buy and sell a wide range of products, including electronics, cars, property, and even job listings1.

Saltside Technology Ltd, the parent company of Bikroy.com, is a global tech firm based in Sweden. Saltside also operates other successful online marketplaces such as ikman.lk in Sri Lanka and Tonaton.com in Ghana1.

Investment in Bangladesh

Saltside Technology Ltd has made significant investments in Bikroy.com to establish and grow its presence in Bangladesh. While specific investment figures are not publicly disclosed, the impact of these investments is evident in the platform’s rapid growth and widespread popularity.

Achievements of Bikroy.com

  1. User Base: Bikroy.com has an average of 3.5 million monthly users and over 1 million app users every month2.
  2. Ad Listings: Nearly 200,000 ads are published per month by more than 100,000 sellers, with over 600,000 interested buyers finding their favorite deals2.
  3. Website Ranking: Within a year of its launch, Bikroy.com became the highest visited classified ad site in Bangladesh and was ranked among the top 5 most popular websites in the country2.
  4. Innovative Services: Bikroy.com introduced several innovative services, including premium listings (Top Ad and Bump Up), online sale of sacrificial animals, and the Bikroy App for Android and iOS devices2.
  5. Awards and Recognition: Bikroy.com has received multiple awards, including the “Best Brand Award” by Bangladesh Brand Forum and recognition in the Top of Mind survey by Millward Brown2.
  6. Corporate Social Responsibility: Bikroy.com has been actively involved in social initiatives, such as increasing the proportion of female employees and participating in the United Nations’ #HeforShe campaign2.

These achievements highlight Bikroy.com significant role in transforming the online marketplace landscape in Bangladesh.

 

Foreign Direct Investment
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