Overview of the FPI Act 1980
The Foreign Private Investment (Promotion & Protection) Act 1980 is the core law for attracting foreign capital to Bangladesh. It explicitly guarantees both promotion and protection of foreign investment, including free repatriation of profits, fair compensation in case of nationalization, and formal mechanisms for investment disputes. It is a key law that Korean companies should understand before investing in Bangladesh.
1980
Enactment
Act No. XI
12 Sections
Articles
Compact structure
Investment protection
Core Focus
Nationalization compensation
Guaranteed free remittance
Remittance
Profit, dividend, liquidation
32 countries
BIT Coverage
Bilateral treaties
Signed 1986
Korea-BD BIT
Investment protection treaty
Analysis of Key Provisions
FPI Act 1980 Main Clauses
| Article | Title | Core Content | Korean Investor Relevance |
|---|---|---|---|
| Article 3 | Definition of investment | Covers capital, technology, and know-how | Technology and technical-service investments are also protected |
| Article 6 | Profit remittance | Free repatriation of investment returns and dividends | Helps mitigate FX conversion risk |
| Article 7 | Nationalization protection | Fair compensation guaranteed in case of nationalization | Acts as a minimum safety net |
| Article 8 | Compensation valuation | Compensation based on market value | Supports valuation disputes argumentation |
| Article 9 | Dispute settlement | ICSID arbitration is possible | Provides an international forum |
| Article 10 | National treatment | Equal treatment with domestic investors | Supports non-discriminatory market access |
FPI Act versus Korea-Bangladesh BIT Protection
FPI Act 1980 (Domestic Law)
ScopeAll foreign investors
NationalizationFair compensation at market value
RemittanceUnrestricted profit remittance
DisputeICSID arbitration possible
Korea-Bangladesh BIT 1986 (Treaty)
ScopeKorean investors only
NationalizationPrompt, adequate, effective compensation
RemittanceRemittance of capital and related amounts
DisputeICSID and ad hoc arbitration
01
Practical handling of profit remittance
Article 6 of the FPI Act guarantees legal repatriation of profits for foreign investors, but practical procedures are still required under Bangladesh Bank FX rules. In practice: (1) remittance request through an Authorized Dealer bank, (2) submission of tax clearance certificate, and (3) filing of audit reports. Temporary FX-related delays can still happen, so remittance risk management is essential.
02
Expropriation protection and limits
Articles 7 and 8 of the FPI Act guarantee compensation at "fair market value" in case of nationalization. In practice, however, detailed standards for valuation methodology, valuation date, and compensation currency are limited, which leaves room for interpretation during disputes. The Korea-Bangladesh BIT (1986) provides stronger protection by requiring prompt, adequate and effective compensation.
03
ICSID dispute mechanism
Article 9 of the FPI Act and the Korea-Bangladesh BIT both recognize ICSID arbitration. Bangladesh is a party to the ICSID Convention since 1980, so Korean investors can bring investment disputes to ICSID. ICSID procedures, however, can cost USD 0.5 million to 5 million and often take 3 to 5 years, so preventive contract management is critical.
04
Practical recommendations for Korean companies
(1) BIDA registration: mandatory for foreign investors through the Bangladesh Investment Development Authority. (2) BIT implementation: explicitly include Korea-Bangladesh BIT protections in contractual clauses. (3) Transaction structure: define governing law, dispute settlement and compensation language in detail. (4) Legal advisors: consider local firms such as A.S. & Associates or Lee Khan & Partners. (5) Political risk insurance: consider K-sure coverage for overseas investment risk.
Foreign Investor Registration Process
BIDA registration
Online OSS system
→↓
Incorporation
RJSC registration
→↓
Investment execution
Capital repatriation
→↓
Operations
Protection under the FPI Act
→↓
Profit remittance
Via authorized dealer bank
→↓
Dispute handling
Use BIT and ICSID routes
BIDA FDI HeatmapOverview of Bangladesh FDI distribution
KOTRA New Vision BriefingSector-specific market entry strategy
The FPI Act 1980 establishes the baseline legal protection for foreign investors in Bangladesh by securing profit repatriation, nationalization compensation, and ICSID arbitration. When combined with the Korea-Bangladesh BIT (1986), protection becomes stronger. Korean firms should manage entry risk systematically through BIDA registration, explicit BIT clause references, and K-sure insurance.
FPI ActInvestment LawForeign InvestmentInvestment ProtectionLegal Framework
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