Bangladesh Investment Environment Overview
For Korean companies looking to invest in Bangladesh, the most critical requirement is an accurate understanding of the local investment environment. This guide covers the entire investment lifecycle — from FDI trends, market entry options, and company incorporation procedures to taxation and accounting systems, foreign exchange management, intellectual property protection, and liquidation and exit procedures.
The government of Bangladesh manages foreign investment through three principal agencies: BIDA (Bangladesh Investment Development Authority), BEPZA (Bangladesh Export Processing Zones Authority), and BEZA (Bangladesh Economic Zones Authority). As of 2025, 100% foreign ownership is permitted in most industrial sectors, with restrictions limited to a narrow range of areas such as defense, arms, and nuclear energy.
Foreign Direct Investment (FDI) Trends
Bangladesh's FDI has shown a steady upward trajectory over the past five years, with net inflows estimated at approximately $3.6 billion for 2024–2025. By country, China is the largest investor, while Korea ranks among the top investor group, primarily in the garment and textile sector. By industry, manufacturing (garments, electronics) accounts for roughly 60%, and power and energy for approximately 20%.
| Investor Country | Key Sectors | FDI Share | Major Companies/Projects |
|---|---|---|---|
| China | Power, Infrastructure, Textiles | ~25% | Payra Coal Power, SEZ Development |
| Korea | Garments, Wigs, Electronics | ~15% | Korea Trading, Korea Fashion B, Taekwang |
| Japan | Infrastructure, Automotive, Power | ~12% | MRT Line-6, Matarbari |
| India | IT, Automotive, Power | ~10% | Tata, Reliance |
| United Kingdom | Finance, Telecom, Consumer Goods | ~8% | Standard Chartered, Unilever |
| United States | IT, Energy, Finance | ~7% | Chevron (gas), Citibank |
| Singapore | Finance, Real Estate, IT | ~5% | SembCorp, CapitaLand |
Investment Entry Methods
Foreign investment entry into Bangladesh generally takes five principal forms. Each differs in ownership structure, tax benefits, and operational flexibility, and the optimal approach should be selected based on business objectives and scale.
Taxation and Accounting Framework
Bangladesh's tax system is based on the Income Tax Act 2023, which was comprehensively revised. The principal taxes applicable to foreign-invested enterprises include corporate income tax, value-added tax (VAT), customs duties, and withholding tax. The NBR (National Board of Revenue) oversees all tax administration.
| Tax Category | Rate | Notes |
|---|---|---|
| Corporate Tax (Unlisted) | 27.5% | Manufacturing basis |
| Corporate Tax (Listed) | 22.5% | DSE-listed companies |
| Corporate Tax (Garments) | 12% | RMG special preferential rate |
| VAT (Standard) | 15% | Most goods and services |
| VAT (Exports) | 0% | Zero-rated for exports |
| Withholding Tax (Dividends) | 20% | Non-resident basis |
| Withholding Tax (Royalties) | 20% | Reduced under DTAA |
| Withholding Tax (Interest) | 20% | 10% under DTAA |
| Customs Duty (Average) | 14.5% | 0–25% by product |
| Supplementary Duty | 0–60% | Luxury goods and import restrictions |
Foreign Exchange Management
Foreign exchange management in Bangladesh is administered by Bangladesh Bank (the central bank). Repatriation of investment principal, profit dividends, and royalties by foreign investors is legally guaranteed; however, in practice, the process requires working through an AD Bank (Authorized Dealer Bank).
Intellectual Property Protection
Bangladesh's intellectual property (IP) protection framework is improving but remains relatively weak compared to developed economies. While laws governing patents, trademarks, designs, and copyrights exist, enforcement and judicial remedies are insufficient. Pre-emptive IP protection measures are essential for foreign-invested enterprises.
| IP Type | Governing Law | Registration Authority | Protection Period | Key Considerations |
|---|---|---|---|---|
| Patents | Patents Act 1911 | DPDT | 16 years | Pharmaceutical patents unprotected under TRIPs waiver (until 2032) |
| Trademarks | Trademarks Act 2009 | DPDT | 7 years (renewable) | Prior registration essential; first-to-use principle |
| Designs | Designs Act 1911 | DPDT | 5 years (extendable to 10) | Industrial design protection |
| Copyrights | Copyright Act 2000 | Copyright Office | 60 years post-author | Includes software |
Liquidation and Exit Procedures
Business exit in Bangladesh is accomplished through liquidation (winding up) procedures. Two types exist: Voluntary Winding Up and Compulsory Winding Up (by court order). Most foreign enterprises opt for voluntary liquidation. However, the process is complex and time-consuming, making advance planning critical.
Key Investment-Related Government Agencies
Below is a summary of the principal government agencies involved in Bangladesh investment and their respective roles. While BIDA serves as the integrated one-stop service center in practice, direct engagement with BEPZA (EPZ) or BEZA (SEZ) may be required depending on the investment type.
| Agency | Role | Governing Legislation | Contact |
|---|---|---|---|
| BIDA | Investment one-stop service, FDI promotion | BIDA Act 2016 | bida.gov.bd |
| BEPZA | EPZ investment management and operations | BEPZA Act 1980 | bepza.gov.bd |
| BEZA | Economic zone establishment and management | EZ Act 2010 | beza.gov.bd |
| RJSC | Company registration and administration | Companies Act 1994 | roc.gov.bd |
| NBR | Tax and customs administration | Income Tax Act 2023 | nbr.gov.bd |
| Bangladesh Bank | Foreign exchange management, financial regulation | BB Order 1972 | bb.org.bd |
| DPDT | Intellectual property registration | Various IP legislation | dpdt.gov.bd |