Transcript Board of Investment

Investment opportunities
In
Bangladesh
Nabhash Chandra Mandal
Executive Member, Board of Investment
March 29, 2014
© Board of Investment  2013
www.boi.gov.bd
Bangladesh at a Glance
CHINA
INDIA
INDIA
SYLHET
RAJSHAHI
INDIA
 Currency
 Major Cities
BARISAL
KHULNA
Official Name
Political System
Population
Area
Time Zone
GDP total
GDP Per Capita
Total Exports
Total Imports
Total FDI
Forex. Reserve
 Major Maritime Ports
DHAKA
INDIA
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CHITTAGONG
People’s Republic of Bangladesh
Parliamentary Democracy
152.7 million (Census, 2011)
147,570 km2
GMT+6 Hours
USD 128.81 bill (FY2012-13)
USD 1044 (FY 2013)
USD 27.03 billion (FY2012-13)
USD 33.97 billon (FY2012-13)
USD 1.73 billion (Y 2013)
USD USD19.15 billion (28 Feb.’14)
Chittagong, Mongla
BDT (1 BDT = USD 0.0128)
(Avg FY September, 2012)
: Dhaka, Chittagong, Khulna
Rajshahi, Sylhet, Barisal, Rangpur
 Major Maritime Ports: Chittagong, Mongla
 Dialing Code
200 miles
500 km
:
:
:
:
:
:
:
:
:
:
:
:
:
: +880
Source: Bangladesh Economic Review, 2013, BBS, EPB, Bangladesh Bank
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03. Vision 2021: In Quest of a Happy, Prosperous
and Inclusive Bangladesh
Medium Term Economic Targets (2013)
• Raising economic growth rate to 8%
• Reducing poverty rate to 25% from 45%
• Enhancing electricity supply to 7,000 MW
Long Term Economic Targets (2021)
• Boosting economic growth rate to 10% in 2017 and sustaining it till 2021
• Reducing poverty rate to 15%
• Enhancing electricity supply to 20,000 MW
• Raising the economy to the level of a middle-income country
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04. Road to Middle Income Country by 2021
To achieve the status of a middle income country by 2021:
 Required growth rate
: 7.5%- 8% every year
 Per Capita Income
: US$ 1,300 (World Bank Report)
: US$ 1,100 (current)
[Bangladesh Bureau of Statistics (BBS)]
 Share of Investment
: 30% instead of 26.84%
(FY 2013)
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05. Present status of the country:
 Bangladesh maintains a very promising economy with stable
growth rate 6%+
 Per Capita Income US$ 1044
 BD reduced MDG targeted poverty rate to 25% in 2012, before the
targeted yr. (2013)
 Generated electricity 10,000 MW in December, 2013
 BD is one of the top exporters of RMG to US & European countries
 Has never posted negative economic growth rate during the past 30 yrs.
 Maintains a open, market based economy
 Leasing & buying a private land by foreign investors in BD is easier than
India, Pakistan and Srilanka (World Bank Report)
 Bangladesh is an emerging country for FDI and (World Bank Report)
‘‘… a peaceful society and stable .. .. ..’’
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06. Sectoral Contribution to GDP:
Sectoral Contribution to GDP since 1947:
Sector wise GDP change (%)
Duration
Before Liberation in 1950-
Agriculture
Industry
Service
Total
70~55
4~10
26~35
100
44~18
11~30
45~52
100
19
32
49
100
18.1
26.3
55.6
100
1970
After Liberation in 1971
At present in FY 2013
SAARC Country (India)
Year Wise Electricity Generation
Year
Generation
Actual
2008-09
2009-10
2010-11
2011-12
2012-13
Capacity (MW)
Production (MW)
5166
5271
6639
8100
8525
4162
4606
4890
6066
6350
Planning for Electricity
Generation (2015- 2030)
Year
MW
2015
2020
2025
2030
13,300
22,500
30,000
39,000
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07. What is told about Bangladesh
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Citi Investment Research & Analysis termed Bangladesh, China, Egypt,
India, Indonesia, Iraq, Mongolia, Nigeria, Philippines, Sri Lanka and Vietnam
have the most promising (per capita) growth prospects .
Goldman Sachs branded as Bangladesh is in ‘Next 11’ list after the BRICS
nations
The International Monetary Fund (IMF) commented on the economy of
Bangladesh as Resilient export and remittance flows have bolstered growth
and external stability
The Wall Street Journal (WSJ) dismissed the previous branding of
Bangladesh as commented Bangladesh, 'Basket Case' No More - with a
higher growth rate, a lower birth rate, and a more internationally competitive
economy,
JPMorganChase commented Bangladesh The country ranks fourth in growth
in economically active population.
Morgan Stanley has commented Bangladesh is at the very early stages of an
investment boom…
New York Times has termed Bangladesh as “an unlikely corner of Asia,
strong promise of growth”…
COFACE (Economic & Insurance Institution of France) termed among the 10 countries
including Bangladesh have promising growth prospects, business friendly environmentafter Goldman Sachs ‘Next 11’ list like the BRICS nations
COFACE countries: 1st 5: Peru, Philippine, Indonesia, Colambia & Srilanka , 2nd 5: Kenya, Tanzania, Zambia,
Bangladesh & Ethiopia
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08. World Bank Assessment
World Bank on Bangladesh as an FDI destination:
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Bangladesh has scored higher than the average rating of around 100 developing
countries in the CPIA of the World Bank that assesses four broad areas including
economic & public sector management
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The areas are a) economic management, b) structural policies, c) policies for social
inclusion and d) public sector management and institutions
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Bangladesh scores 3.5 out of a maximum 6 points
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Developing countries average point is 3.3 (BD score 0.2% higher)
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Basic requirements for sound investment are a) good macroeconomic statistics,
b) accurate financial statements, c) stable regulatory framework and d) clear
understanding of corporate governance structure

Bangladesh possesses all of the above at the present time and the quality of
macroeconomic statistics is improving gradually.
Bangladesh is the most convenient destinations for FDI for its investment friendly
facilities & regulations
Leasing & buying a private land in BD by foreign investors is much easier than India,
Pakistan and Srilanka
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”World Bank’s latest report on Investing Across Boarder 2010 covering 87 countries lists BD as one of the most
convenient destinations for FDI”..
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09. World Bank Assessment
World Bank on Bangladesh as an FDI destination:(contd..)
According to the World Bank’s New Business report2013:
 Bangladesh is ranked 74 for ease in doing a new business
instead of previous yrs rank 132
 Bangladesh has undertaken significant & continuous
reforms in business registration, process simplification and
automation in service delivery
Source: World Bank’s New Business Report- 2013
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10. FDI Policy Framework
The National Industrial Policy- 2010 of Bangladesh is one of the
best and liberal policies in South Asia. The main features of
the policy are:
a) Private sector is treated as the engine of growth
b) 100% foreign equity is allowed along with unrestricted exit.
c) All industrial sectors are open for foreign investors for investment except
4 *reserve sectors for the government.
c) No upper ceiling for foreign investors
d) Equal treatment for both local and foreign investment
e) Export oriented industries are given top priority
f) J/V with local partner either private or public is allowed but not mandatory.
g) Foreign private investment in Bangladesh is secured by law.
Reserve Sectors: 1. Defense and defense production, 2. nuclear energy, 3. extraction from
reserved forests, 4. security printing and mint and air transportation (some domestic routes and
international air cargo already opened for private investment.) and railways.
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11. FDI Policy Framework (contd…)
The broader FDI policy & regulatory framework include, among others, the
following:
Business Stage
Policy & Regulation
1. General
- Bangladesh Industrial Policy (as undertaken from time to time)
1. Business start-up
- The Companies Act, 1994
- Securities and Exchange Commission Act, 1993
1. Protection
- The Foreign Private Investment (Promotion & Protection) Act, 1980
1. Export Zones
- Bangladesh Export Processing Zones Authority Act, 1980
- Bangladesh Private Export Processing Zones Authority Act, 1996
1. Facilitation
- The Investment Board Act, 1989
1. Corporate / Personal
Taxation and
incentives
- Income Tax Ordinance 1984 and related rules and SROs
- National Budget
- The Finance Act/Bill
1. International Trade
(Export & Import)
- Bangladesh Export Policy (as undertaken from time to time)
- Bangladesh Import Order (as undertaken from time to time)
1. Sectoral
- Bangladesh Energy Regulatory Commission Act, 2003 (BERC)
- Bangladesh Telecommunication Regulatory Commission Act, 2001 (BTRC)
- The National Drug Policy, 2005
1. Foreign Exchange
- Bangladesh Foreign Exchange Guidelines (issued from time to time)
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12. Investment Opportunities
 Industrious low cost workforce
 Strategic location, regional connectivity and worldwide access
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Strong local market and growth
Low cost of energy
Proven export competitiveness
Competitive incentives, Tax holiday
Export & economic zones
 Bangladesh is the bridge between ASIAN & SAARC nations
 Bangladesh ensures adequate protection of intellectual
property rights such as patents, designs & trademarks
and copy right.
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13. Investment
Environment - tax and policies
 Bangladesh in global context
 Duty and quota free access
 Duty and quota free access to EU
plus Japan, US, Canada, Australia
and most other developed countries
 Tariff-free access to selected SAFTA markets
 Bilateral Investment treaties (BITs)
 32 countries and in process with another 08
 Double taxation treaties (DTTs) and other
guarantees and bilateral agreements with 28
countries plus 21 in process
“…Bangladesh foreign trade policy provides duty and quota free
access to many of the world’s major markets, for most products…”
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14. Investment Opportunities - incentives
 Financial incentives
 Tax holidays (Industries set up within 2015 for 17 industrial sectors):
In Dhaka & Chittagong Divisions (excluding city and adjacent ): 5 years
100% first 2 years : 50% next 2 years: last 1 year 25%.
In Rajshahi, Khulna, Sylhet, Barisal, Rangpur Divisions
and 3 Chittagong Hilly Districts : 7 years
100% for 1st 3 years: 50% for next 3 years: 25% for last 1 year .
For Infrastructural Sectors: 10 yrs. (all over the Country)
 Depreciation allowances:
Accelerated depreciation allowed for new industries:
50%, 30% and 20% for 1st, 2nd, 3rd years on cost of plant & machinery
(“…very competitive range of financial incentives makes the cost of
doing business in Bangladesh even more attractive.…”)
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15. Investment Opportunities - incentives
• Financial incentives
• Businesses exporting 80% or more of goods or services
• Reduced import duty on machinery & spares
• (1% for export oriented industries and 3% for other industries)
• Export credit guarantee scheme
• Domestic market sales up to 20% allowed to export-oriented companies outside
EPZ (relevant duties apply)
• Cash incentives and export subsidies granted on the FOB value:
•
•
•
•
•
•
• 5% for local textiles , 10% for jute products, light engineering products, 12.5%
frozen fish, potato, 15% for leather products, and 17.5% for bicycles.
Remittances facilities:
Up to 75% of of the salaries of the foreigner employed in Bangladesh
Saving and retirement benefits at the time of return
Remittance of royally, technical-know how and technical assistance fees are
allowed:
a. For new industry such fees should not exceed an aggregate limit of 6% of C& F
value of imported machinery
b. For other projects, such fees should not exceed an aggregate limit of 6% of
previous years sale.
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16. Promotion and Protection of
Investment in Bangladesh
 Foreign investment in Bangladesh is secured by law against
nationalization and expropriation.
 Foreign Private Investment (Promotion and Protection) Law,
1980
 Bangladesh is a signatory to ICSID, UNCITRAL, OPIC, MIGA,
WAIPA, WIPO and WTO.
 Intellectual Property right is protected by Law.
 Bilateral investment treaty with India signed in 6 May, 2009
 The avoidance of double taxation treaty with India was signed
 Active presence of Bangladesh India Bangladesh Chamber of
Commerce and Industry.
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Bangladesh at a Glance
17. A sustained economic growth
“…constant unbroken GDP growth…”
Source: Ministry of Finance, others
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18. Economic Performance - growth
 Exports US$bn
 Manufacturing growth % of
GDP
“…export driven growth in manufacturing…”
10.8
9.7
9.5
27.0
9.8
8.2
24.3
22.0
6.8
6.7
15.6
9.8
5.5
16.2
7.1
7.4
6.7
5.9
4.8
14.1
12.2
10.5
5.8
6.5
6.0
6.5
7.6
8.7
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Bangladesh Bureau of Statistics Bangladesh Economic Review 2013
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. 19. FDI inflow…
 FDI by major sectors
Sector wise FDI Inflows from 2009 to June 2013*
(US$ Million)
Sector
Agriculture & fishing
2009
2010
2011
2012
2013*
11.79
13.63
5.59
60.85
14.86
51.15
92.06
238.21
126.65
55.12
211.29
238.78
425.50
515.21
384.76
Power, Gas &
Petroleum
Manufacturing
Construction
Trade & Commerce
Transport, Storage &
Communication
Services
Others
0.74
0.21
0.45
2.90
4.79
161.59
186.63
360.31
263.39
182.78
163.72
375.64
248.8
186.66
13.45
21.7
20.45
47.69
37.97
0
0.49
1.79
0.03
0.13
Total
700.16
913.32 1136.38
1292.56
933.09
250.14
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20. FDI Inflow: Distribution by Sources/Countries (US$ Mill)
Source
Country
Egypt
USA
Netherlands
UK
South Korea
Hong Kong
Australia
Pakistan
2010
3.01
56.95
64.92
105.68
40.00
63.84
13.95
18.88
Japan
Malaysia
India
UAE
Others
21.79
43.19
Total FDI
2011
152.30
117.74
116.75
116.32
113.06
104.84
72.80
70.54
46.55
2012
126.6
43.80
79.82
136.94
97.59
54.12
39.81
9.17
2013*
40.37
52.83
38.52
104.84
73.69
48.93
77.12
30.08
Singapore
25.74
28.43
97.73
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36.41
481.11
199.74
646.2
913.32
1136.38
1292.56
In CY
2013*Jan.-June
FDI inflow has
increased by
88% from 2012
(Jan. June)
Malaysia, British
Virgin Islands,
and Thailand has
shown their
interest
933.09
* Data till June 2013
Source: Enterprise Survey, Bangladesh
21. Investment Opportunities
Sectoral Opportunitiesortunities
• Infrastructure
projects
(Power
Generation, Gas and Oil Exploration,
High-tech Parks, etc.)
• Composite Textiles and Ready Made
Garments with backward linkages
• Steel and Engineering
• Infocomm Services (IT and IT enabled
services);
• Textile and other Industrial Machinery
and Parts thereof
• Frozen Shrimp, Frozen Fish for export
• Finished Leather and Leather goods
• Home Appliances
• Telecommunication equipment SemiConductor
• Fresh Fruits & Vegetables, Cooked/Semi
Cooked Food items, Canned Juice, Dairy
and Poultry, Livestock and Fisheries
• Automobile
• Central
Effluent Treatment Plants in
Industrial Areas
• Paper from green jute and Allied Products
• Hotel & Motel
• Manufacturing of bicycle and two wheeler
for export
• Jute products
• Tourism
• Shipbuilding
• New forms of social capital with mass
transit networks, urban sewerage
system, river reclamation, forestry and
clean energy projects.
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22. Prospective areas for Investment
(as per the National Industrial Policy- 2010)
1. Agro-based & agro-processing
industry
2. Jute & jute-mixed goods
3. Flower cultivation
5. Commercial plantation
6. Horticulture
7. Silkworm & silk industry
8. Furniture
9.Handicrafts
10. Home Textiles
11. Textiles industry
12. Readymade garments
industry
13. High value added RMG
14. Computer software & ICT goods
15. Electronics
16. Light engineering incl. automobiles
18. Pharmaceutical goods
19. Leather and leather products.
20. Herbal medicines
21. Ceramics
22. Frozen Food
23. Integrated shrimp cultivation
24. Infrastructure
25. Jewellery and diamond cutting polishing
26. Oil and gas
27. Tourism industry
28. Basic chemicals/raw materials used in
industries.
29. Dye and chemicals used in textiles industry.
30. Cosmetics and toiletries.
31. Information & Communication Technology
32. Health care
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23. BOI Role / Functions
BOI Functions are broadly categorized into three areas:
1. Investment promotion;
2. Investment facilitation (Registration, permission, recommendations
etc. including investment aftercare) and
3. Policy advocacy
4. Investment after care
For easy entry of investment in Bangladesh from BOI end• All process & procedures are simplified for investment registration
• Online Registration & Service Tracking system are introduced in BOI
• Investor can register his project within a day.
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24. BOI services
BOI Service Category
1. Investment Counseling
2. Visa on Arrival
3. Foreign/JV / Local Investment Facilitation
a. Registration of New Industries
b. Visa Recommendation
c. Work Permit Issue
d. Recommendation for IP, Machinery Clearance Certificate
e. Recommendation for IRC, Bonded Warehouse
f. Approval of Royalty and Technical Assistance Fees
g. Processing and approval of Foreign Borrowing
h. Liaison/Branch Office Permission
IP = Import Permit; IRC= Import Registration Certificate
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25. Private Public Partnership (PPP) Policy
Promulgated by Govt. in 2010
The objectives of this Policy and Strategy are to:

Spell out the principles of partnership with private sector for
undertaking various projects related to infrastructure as
well as public service delivery;

Define an institutional framework, which is conducive and
efficient in handling the PPP projects as well as effective to
protect public interest; and
Ensure balance between risk and reward for both the
government and private partners while aiming to keep the
undertaking attractive for the private sector.

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26. Economic Zones:

Govt has promulgated Economic
Zones Act in 2010 to build EZ in the
country
 Key Features:
• Comprehensive industrial
Infrastructure
• Development under PPP (Private
Public Partnership) model
• Owned and regulated by the
government, but managed by the
private sector
• Encompasses multiple business
sectors within each zone
• Combines both bonded and nonbonded area
• EZ includes non processing &
domestic area
Economic Zones under
implementation…
Mongla,
Sirajganj,
Anowara,
Mirershorai
Maulvibazar
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Bangladesh-India Business Relations
Key Features:
 Bilateral investment treaty with India signed in 6 May, 2009
 The avoidance of double taxation treaty with India was signed
 Active presence of Bangladesh India Bangladesh Chamber of
Commerce and Industry.
 BOI arranged road show in major cities of India such as
Mumbai, Chennai, Kolkata last year with active support from CII
and IBCCI
 Indian corporate houses like CEAT, TATA, BAJAJ, MARICO,
AsianPaints, ACI Godrej, Emami, Sun Pharma, Mundi
Pharma, Jyothi kallol, TVS Auto etc are actively present in
Bangladesh.
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Bangladesh- india Business Relations
Indian Investment Projects registered with BOI
Project
Type
No. of
Projects
Proposed
Investment
Potential
Employment
(USD Million)
(Person)
100% Foreign
Investment
86
549.458
17, 538
Joint Venture
Investment
198
2331.340
40,231
Total
284
2,880.798
57,769
[Source: June , 2013
Board of Investment]
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Bangladesh-India Business Relations
Actual FDI from India (Fiscal year basis)
45.00
40.00
42.09
38.95
The trend of actual
inflow from India to
Bangladesh is
increasing…
35.05
35.00
27.88
30.00
25.00
20.71
20.00
15.00
10.00
5.00
0.00
FY-09
FY-10
FY-11
FY-12
FY-13
[Source: Enterprise Survey, Bangladesh Bank, World Investment Report ,
UNCTAD]
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Thank you
Prime Minister’s Office, Government of the People's Republic of Bangladesh, Jiban Bima Tower
(19th Floor), 10 Dilkusha C/A, Dhaka 1000, Bangladesh
Phone: (880-2) 7169580 Fax: (880-2) 956 2312
Email: [email protected] Web: www.boi.gov.bd
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