Bangladesh Investment Guide 2020: Comprehensive FDI Procedures, Incentives, and Risks
This is a guide to foreign direct investment (FDI) in Bangladesh. In 2020, FDI inflows reached $2.6B — the second-largest in South Asia after India — with garments, energy, ICT, and infrastructure as the main investment sectors. Investment proceeds through BIDA (Investment Development Authority, regular areas) or BEZA (Economic Zones Authority, SEZs), and companies entering special economic zones receive exceptional incentives including up to 10 years of corporate tax exemption. Korean companies have invested over $200M cumulatively in garments, ICT, and food, and the KOTRA Dhaka Trade Office's free investment consultation service lowers the initial entry hurdle.
The fact that FDI held at $2.6B even amid COVID-19 in 2020 demonstrates that Bangladesh's investment appeal is structural. Low-wage labor (garment minimum wage $95/month), a young population (median age 27), low public debt at 34% of GDP, and stable foreign reserves ($36B) underpin the investment environment. However, the 2022 forex crisis and establishment of an interim government in 2024 have changed conditions — it is essential to verify the latest investment environment through the KOTRA Dhaka Trade Office.
Investment Procedure: BIDA vs. BEZA Route Comparison
Foreign investment is registered through the one-stop service of BIDA (regular areas) or BEZA (economic zones). The BIDA route follows: investment registration → company incorporation (RJSC) → business license → operations. The BEZA route follows: zone entry application → investment approval → construction permits → operations. BEZA is more advantageous in both incentives and procedural convenience, but zone locations are limited — the route must be chosen based on the nature of the business.
| Step | BIDA (Regular Area) | BEZA (Economic Zone) | Timeline | Notes |
|---|---|---|---|---|
| Investment Registration | Online OSS — bida.gov.bd | Online OSS — beza.gov.bd | 15–30 days | BIDA is faster |
| Company Incorporation | RJSC registration in 7 days | BEZA can handle on behalf | 7–14 days | Notarization & translation required |
| Business License | Obtained separately by ministry | BEZA one-stop integrated | 30–60 days | BEZA is simpler |
| Environmental Permit | Ministry of Environment (DoE) separately | BEZA integrated processing | 15–45 days | ECC issuance |
| Construction Permit | City hall or RAJUK | BEZA internal approval | 30–60 days | Zone shortens by 2–4 months |
| Operations Launch | Total 3–6 months | Total 2–4 months | From completion | BEZA recommended |
Detailed Investment Incentive Comparison
Bangladesh provides multi-layered incentives to attract foreign investment. BEZA economic zones and BEPZA export processing zones offer far more favorable conditions than regular areas in corporate tax exemption, customs exemption, and profit repatriation. Regular areas (BIDA) also provide tax incentives for certain sectors and periods, plus infrastructure support. Korean firms must compare incentives suited to their sector and location and select the optimal route.
Additional Incentives by Sector
Bangladesh provides additional tax and non-tax incentives for strategically promoted sectors including garments, ICT, pharmaceuticals, and agri-food. In particular, software companies in IT Hi-Tech Parks (operated by BHTPA) receive full income tax exemption through 2024. The government is continuously reforming its incentive structure to diversify industry in preparation for LDC graduation (2026).
| Sector | Corporate Tax | Customs | Additional Incentives | Korean Company Opportunity |
|---|---|---|---|---|
| Garments & Textiles | Up to 10-year exemption (BEZA) | Raw material exemption | Linked to GSP benefits | Raw material & machinery supply |
| ICT & Software | Income tax exemption (through 2024) | 0% on equipment | Hi-Tech Park entry | SI & solution cooperation |
| Pharmaceuticals | 5-year reduction | API raw material exemption | WHO GMP support | Raw material & technology transfer |
| Agri-Food Processing | 5-year exemption | Processing equipment reduction | Export promotion grants | Food machinery & technology |
| Energy & Power | 15-year exemption (IPP) | Power generation equipment exemption | Priority gas supply | Power generation equipment |
| Construction & Infra | None (public procurement) | Construction material reduction | PPP framework available | Construction equipment & materials |
Investment Risks and Management Strategies
Investment Execution Checklist
| Phase | Item | Responsible Agency | Notes |
|---|---|---|---|
| Pre-entry | KOTRA Trade Office market research consultation | KOTRA Dhaka | Free, takes 1–2 weeks |
| Pre-entry | Determine investment route (BIDA/BEZA) | Internal decision | Confirm SEZ entry eligibility |
| Registration | BIDA/BEZA online investment registration | BIDA / BEZA | 15–30 days |
| Incorporation | RJSC company registration (limited company) | RJSC | 7–14 days, notarization required |
| Tax | Obtain TIN tax identification number | NBR | 5–7 days |
| Permits | Obtain sector-specific business permits | Relevant ministries | 30–90 days (by sector) |
| Environment | Obtain ECC environmental clearance certificate | Ministry of Environment (DoE) | 15–45 days |
| Finance | Designate authorized dealer (AD) bank for forex | Commercial bank | Includes account opening |
| Staffing | Local hiring + foreign work permits | Ministry of Labour | Max 20% foreign employees |
| Operations | Regular tax filings & forex reporting | NBR / BB | Annual obligations |