Bangladesh Regulation Handbook 2020 Overview
This handbook summarizes the key regulations that foreign investors should understand when doing business in Bangladesh. It covers foreign investment, company law, labor law, tax law, environmental regulation, intellectual property, and foreign exchange rules from entry to operation and exit. It also covers typical compliance issues Korean companies often face and how to respond.
Foreign Investment Law and Company Law
The Foreign Private Investment Promotion and Protection Act (1980) and the Companies Act (1994) form the legal basis for foreign investment. Most sectors allow 100 percent foreign ownership, and BIDA or BEZA registration provides investment protection. However, ownership restrictions still apply in sensitive sectors such as defense, nuclear energy, and telecommunications.
| Law | Enacted | Key Provision | Foreign Investor Relevance |
|---|---|---|---|
| Foreign Private Investment Promotion and Protection Act | 1980 | Investment protection and guarantees | Repatriation guarantees and expropriation compensation |
| Companies Act | 1994 (Amended 2020) | Incorporation and operation | Branch and subsidiary for foreign firms |
| Economic Zone Act | 2010 | BEZA establishment and zone operation | 100% foreign ownership allowed, 10-year tax holiday |
| Export Processing Zones Act | 1980 | BEPZA export-only zones | Tariff exemptions, foreign hiring |
| Industrial Policy Act | 2016 | Industrial development strategy | Priority sectors and incentives |
Taxation and Customs
Bangladesh taxation consists of corporate tax, value added tax (VAT), customs duties, and withholding tax. Corporate tax ranges from 22.5 to 45 percent depending on sector and listing status, while VAT is 15 percent standard.
Labor Law and Employment Regulations
The Labor Act (2006, revised 2018) governs employment conditions, wages, working hours, safety, and dismissal procedures. Garment minimum wage is 8,000 BDT (about US$95) per month, and it has been raised from 8,000 to 12,500 BDT under phased implementation since 2019. Foreign workers require a BIDA Work Permit, and total foreign workforce shares are allowed up to 5 percent in general and up to 20 percent in economic zones.
| Item | Regulation | Notes |
|---|---|---|
| Working Hours | 48 hours per week (8 hours per day) | Monthly overtime cap: 56 hours |
| Minimum Wage | 8,000 BDT (US$95) per month | 2019 revision — garment sector |
| Foreign Workforce Share | 5% (general) / 20% (zones) | BIDA Work Permit required |
| Occupational Safety | Accord and Alliance compliance | Mandatory garment factory inspections |
| Dismissal Procedure | 120 days prior notice or compensation | Labor court-based dispute settlement |
| Trade Unions | Formation possible with 30% membership | Garment unionization rate around 3% |