In addition to high tariff rates and supplementary duties, Bangladesh has registration procedures and other regulatory requirements which often impede market access.
Foreign companies are allowed to provide services in Bangladesh, except in sectors subject to administrative licensing processes. Yet, new market entrants face significant restrictions and the process for establishing legal entities is subject to strict regulatory requirements. There have been reports licenses are not always awarded transparently. Transfer of control – the ability to control the board of directors or a majority of directors – of a business from local to foreign shareholders requires prior approval from the Bangladesh Bank.
In 2016, the Bangladesh Investment Development Authority (BIDA) was formed from the Board of Investment and the Privatization Commission merger to serve as Bangladesh’s primary private investment promotion and facilitation agency. In May 2020, BIDA announced rules to implement the One Stop Service Act of 2018, which aims to improve the ease of doing business in Bangladesh. In addition to BIDA, the Government of Bangladesh has formed three other Investment Promotion Agencies (IPAs) – the Bangladesh Export Processing Zone Authority (BEPZA), Bangladesh Economic Zones Authority (BEZA), and Bangladesh Hi-Tech Park Authority (BHTPA) – to promote investment and offer “one-stop” services to investors.
Bureaucratic inefficiencies often discourage investment in Bangladesh. Overlapping administrative procedures and a lack of transparency in regulatory and administrative systems can frustrate investors seeking to undertake projects in the country. Frequent transfers of top- and mid-level officials in various Bangladeshi ministries, directorates, and departments are disruptive and prevent timely implementation of both strategic reform initiatives and routine duties.
Repatriation of profits and external payments are allowed under current law, but U.S. and other international investors have raised concerns outbound transfers from Bangladesh remain cumbersome and applications to repatriate profits or dividends can be held for additional information gathering or otherwise delayed, if tax disputes arise. Government officials cite concerns that allowing even limited outward transfers would lead to a flood of capital from Bangladesh, as reasons to delay or prevent repatriation of profits and external payments.
U.S. and other international companies have raised concerns that the National Board of Revenue has arbitrarily reopened sometimes decades-old tax cases, with particular targeting of cases involving multinational companies.
Extortion of money from businesses by individuals claiming political backing is common in Bangladesh. Other impediments to business include transportation blockades called by political parties, which can both keep workers away and block deliveries, resulting in productivity losses. Vehicles and other property are at risk from vandalism or arson during such blockades and looting of businesses has also occurred.
Land disputes are common, and both U.S. companies and citizens have filed complaints about fraudulent land sales. For example, sellers fraudulently claiming ownership have transferred land to good faith purchasers while the actual owners were living outside of Bangladesh. In other instances, U.S.-Bangladeshi dual citizens have purchased land from legitimate owners only to have third parties make fraudulent title claims to extort compensation.
Likewise, corruption remains a serious impediment to investment in Bangladesh. While the government has established legislation to combat bribery, embezzlement, and other forms of corruption, enforcement is inconsistent.
For more information and help with trade barriers, please contact:
Office of Trade Agreements Negotiation and Compliance
(202) 482-0063