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Performance Analysis of Board of Investment (BOI) Bangladesh

Introduction
The Board of Investment (BOI) was established in 1989 by the Investment Board
Act to encourage investment in private sector, to identify the hindrance of investment and
provide necessary facilities and assistance in the establishment of industries. The wide
range of services BOI provides includes investment promotion and facilitation covering
support, suggestion and aftercare support to the investors. The prime vision of BOI is to
promote domestic and foreign investment as well to enhance international
competitiveness of Bangladesh and contribute to overall social and economic
development of Bangladesh.

Rational of the Study


Foreign and local investment carries enormous significance in a developing
country like Bangladesh. Realizing the importance of foreign investment Bangladesh
formulated its first industrial investment policy in 1973, revised it again in 1974, 1975,
and in 1978. Foreign private investment (Promotion and protection) act, 1980 and the
Bangladesh Export Processing Zones authority act 1980 were enacted. To make the
foreign investment more attractive new industrial policy was announced in 1982.
However, the industrial policy 1999 is by far the most comprehensive document.
Bangladesh has ever made for investment including foreign investment.
With the passage of time Bangladesh reform its regulatory structure in regard to
the FDI to open up the new avenue and to dislodge the compliances related to the FDI
and now it is all controlled by board of investment (BOI). But the effort of this structural
progress has back warded by sudden and unexpected political influence and changes. The
situation becomes worse one in the September attack on US. Bangladesh had also
severely affected by that unwanted changes in the world scenario. Before going for in
depth analysis the flow of FDI in Bangladesh we have the privilege to have a look on the
regional and worldwide flow of FDI in the recent period.

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Performance Analysis of Board of Investment (BOI) Bangladesh

Objective of the study


This study is conducted with the objective to get an overall insight the performance of
Bangladesh board of investment and their operations in the flow of FDI and local
investment in Bangladesh. The total objective is decomposed into several parts to get idea
about BOI and those the factors affecting the flow of FDI and also the process of FDI in
Bangladesh. The specific objectives of this study are:

To give an overview of Bangladesh and its investment opportunity.

To give an organization structure of BOI.

To analysis the operation, incentives, facilities of BOI.

To give an insight into the theoretical issues relating to FDI.

To highlight the role of multinational corporation in FDI.

To give an overview of local investment.

How FDI held in Bangladesh the process.

To evaluate the status of FDI in Bangladesh.

To identify the problem of FDI & prescribe some issues for their solution.

Scope of the study


The primary scope of this paper is to get acquainted with the flow of foreign
direct investment and local investment and the evaluation of performance of BOI. The
study will cover the scenario of FDI and current situation and opportunity of investment
in Bangladesh. Comparative analysis of statement of sector wise distribution of FDI in
Bangladesh and sources of FDI has been presented. The findings will be strictly
structured upon the data provided by the Directorate of Board of Investment (BOI).

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Performance Analysis of Board of Investment (BOI) Bangladesh

Sources of Information
Throughout the report I presented historical background of the flow of FDI and to
get insight about the possible changes in the coming years. I have gathered information
and data relevant to this analysis from several sources. The collected data are highlighted
in the tabular analysis and trend analysis. This analysis helps me to know about the
movement of FDI flow over the year. I also tried to find out the possible causes and
factors that shaped the trend line of the flow. In a particular year the flow is upward
moving at another time this is downward moving. So what is the reason behind that is the
objective of the study as a whole. The analysis of the report is supported by some
theoretical arguments that enhance the overall findings and guide towards a reasonable
recommendation.

Limitations of the study


Although I tried to find and set the causes that determine the shape of the flow of
FDI, I believe Im not at the best peak. I have relied extensively on published data and
other secondary sources to precede the report. But some of those sources were not
approachable and we lacked from data of that sources. In analyzing the report I have
presented some factors that determine the shape of the flow of FDI. But these are not
surely the only factors and many important factors may be omitted from the analysis. And
another thing is that the underlying factors are mostly in qualitative factors in nature and
therefore cannot be measured in numerical way. The consequences are that we failed to
provide absolute guideline about restructuring policy and some other decisions. The
finding of the report is based on some assumed scenario and changes on those scenarios
may reshape the future flow of FDI. That is the analysis is situation and time based. The
biggest problem we faced in the reporting period is the paradoxical data set. I have three
sets of data in regard to the FDI, but all that provides us contradictory result. Board of

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Performance Analysis of Board of Investment (BOI) Bangladesh

Investment does not confirm what the Bangladesh bank published and vice versa. On the
other hand the recording of FDI data is almost a new concept in our country.

Why Invest in Bangladesh?


From the inception of the independence Bangladesh has been in the centre of
economic investment incentive for many countries and institutional bodies of the world.
With the passage of time Bangladesh reform its regulatory structure in regard to the FDI
to open up the new avenue and to dislodge the compliances related to the FDI. But the
effort of this structural progress has back warded by sudden and unexpected political
influence and changes. The situation becomes worse one in the September attack on US.
During this period flow of FDI all over the world shrunken at a greater extend.
Bangladesh had also severely affected by that unwanted changes in the world scenario.
Before going for in depth analysis the status of Bangladesh from different aspects are
discussed. Bangladesh could be an attractive place of FDI. It is located between the
growing markets of south Asia.
Economic Status: The macroeconomic situation of the country is by large, stable,
characterized by a manageable fiscal deficit and low current account deficit. In external
trade, it has steady export growth. Foreign Exchange reserve is not bad.
Political Status: Bangladesh is a developing country having a republic type democratic
government. It has British style parliamentary system. After liberation in 1971 the then
government nationalized all the key industries. As a result, aid from western world
remains as the means of survival. But development of Bangladesh through aid seems to
have failed. We see hat Bangladesh is still poverty-ridden. As the effectiveness of aid
declined very much demand arose about market access to the developed countries of the
product & services of developing countries. But the market access of developed countries
is faced with several problems of which politics seems to be prominent. A free trade
policy otherwise called globalization is seen as a lively remedy to solve both the
problems of developed and developing countries.

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Investment Status: The present democratic government concentrates on more local &
foreign investments in oil, gas, cement, infrastructure, textile sectors of Bangladesh to
face the challenges of the twenty first century. Though prospects are there in Bangladesh,
due to insufficiency of capital & technology greater investment is no taking place.
However the recent trends o administrative, banking and infrastructure reform process,
low rate of inflation compared to the neighboring countries( in Pakistan 11.2%, in India
8.5%, Srilanka 16.7 % and Bangladesh 5%) and separate export processing zones are
some of the indicators of the countries development process. That may help in attracting
local and foreign investors from developed countries.
Besides, the most important tasks is to revive the rural economy so that the
migration of rural people will come down, because a country like Bangladesh has poor
resources to meet the bargaining demand of the citizens already settled in the urban areas.

Strategic Location of Bangladesh

Photo: Bangladesh on the world map


China and India between them have vast and increasingly prosperous populations,
which are projected to grow to three billion by 2050. Bangladesh is well situated in every
sense to take advantage of this opportunity. With improving education, technology and
economic growth, Bangladeshs own market of 146.6 m people is becoming increasingly
attractive to business and foreign investors. The cost of doing business in Bangladesh has
significantly and visibly decreased in recent times.

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Performance Analysis of Board of Investment (BOI) Bangladesh

Advantageous Trading Agreements

All Bangladeshi products (other than armaments) enjoy complete duty and quota
free access to EU, Japan, Canada, Australia and most other developed countries.

Bangladesh is a signatory to the Multilateral Investment Guarantee Agency


(MIGA); Overseas Private Investment Corporation (OPIC), USA; International
Center for Settlement of Investment Disputes (ICSID); World Intellectual
Property Organization (WIPO).

Bilateral agreements to avoid double taxation have been signed with 28 countries
with a further nine countries under negotiation.

Attractive Business and Investment Climate

Bangladesh inherits a largely homogeneous society, in which people live in


harmony and peace, irrespective of race and religion. It is a democratic country,
providing broad and non-partisan political support for market-oriented reforms
and for active encouragement of foreign investors.

The Foreign Private Investment (Promotion & Protection) Act 1980 provides
protection for investments made in Bangladesh.

Bangladesh is Youth and Ambition


Unlike older industrialized societies with growing legions of ageing dependents,
Bangladesh has a very youthful demographic.

59.3 % of the population are economically active (15 years and over).

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Performance Analysis of Board of Investment (BOI) Bangladesh

The country is young too, 40 years old.

Improving Education and Skills

Bangladesh has 31 public universities, 54 private universities, 60 teacher training


colleges and 1,143 technical and vocational institutions.

Typical of the sub-continent, vocational training and professional qualifications


are highly respected.

Thousands of Bangladeshis who have wide work experience abroad add to the
national reservoir of skill.

English Widely Spoken

The national language is Bengali or Bangla.

Yet our second language, English, is widely spoken, understood and written.

More than 90% of staff at management level is fluent in English.

Source: Bangladesh Bureau of Educational Information And Statistics, Bangladesh


Technical education Board

Bangladesh Export Competitiveness


Bangladesh, despite being a least developed economy, has a proven record in
export competitiveness. Here is a summary of the facts. From 2003 to 2007 Bangladesh
achieved annual export value growth of 19.6%, a testimony to its export competitiveness.
Whilst not wishing to be complacent, and being mindful of difficult global trade
conditions in 2008-2010, these positive trade differentials are likely to be with
Bangladesh well into the future.

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Manufacturing output has seen steady growth, recently in double figures.


Bangladesh provides significant benefits to exporters.

Bangladesh offers a most liberal FDI regime in South Asia, with no prior approval
requirements or limits on equity participation and repatriation of profits and
income in most sectors.

Bangladesh enjoys tariff-free access to the EU, Canada, Australia and Japan.
Bangladesh is the top manufactured products exporter to the least developed
countries as well as to Europe, with more than 50% market share.

Competitive Cost Base


In January 2010, JETRO conducted a comparative survey of investment-related costs
in 29 major cities and regions in Asia. The following comparison is based on that survey
with some selected cities.

Bangladesh offers a truly low competitive cost base. Wages and salaries are still
lowest in the region, a strong business advantage. Yet this is an increasingly well
educated, adaptive and peaceful population with many skilled workers.

Dhaka's skilled labor cost base is still less than the other major cities.

Dhaka's management grades are 2-3 times less than in Singapore, Shanghai, and
Bangkok.

Industrial estate rent in Dhaka is cost effective than Shanghai, Jakarta, Bangkok

Office rents are also very competitive with other international cities.

Dhaka's housing rent for foreigners are less expensive than Singapore, Mumbai,
Karachi, Hanoi.

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Cost of diesel in Dhaka is found to be more competitively priced than most other
large cities.

Fiscal and Non-Fiscal Incentives


Bangladesh offers some of the worlds most competitive fiscal non-fiscal
incentives. BOI can advise further on this matter.

In summary and in most cases, these amount to the following:

Remittance of royalty, technical know-how and technical assistance fees.

Repatriation facilities of dividend and capital at exit.

Permanent resident permits on investing US$ 75,000 and citizenship on investing


US$ 500,000.

Tax holidays :
o

In the Dhaka & Chittagong Divisions: 100% in first two years: 50% in the
year three and four: and 25% in the year five.

In the Rajshahi, Khulna, Sylhet, Barisal Divisions and three Chittagong


Hilly Districts: 100% for first three years, 50% for next three years, 25%
for year seven.

Depreciation allowances :
o

Accelerated depreciation for new industries is available at the rate of 50%,


30% and 20% for the first, second and third years respectively, on the cost
of plant and machinery.

Cash and added incentives to exporting industries :

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Performance Analysis of Board of Investment (BOI) Bangladesh

Businesses exporting 80% or more of goods or services qualify for duty


free import of machinery and spares, bonded warehousing.

90% loans against letters of credit and funds for export promotion.

Export credit guarantee scheme.

Domestic market sales of up to 20% is allowed to export oriented business


located outside an EPZ on payment of relevant duties.

Cash incentives and export subsidies are granted on the FOB value of
selected exports ranging from 5% to 20% on selected products.

About Board of Investment (BOI)


Board of Investment (BOI) was established by the investment board Act 1989 to
promote and facilitated investment in the private sectors both from domestic and overseas
sources with a view to contribute to the social economic development of Bangladesh. It is
headed by the Prime Minister and is a part of the Prime ministers office. Its membership
included representatives (at the highest level) of the relevant ministries- industry finance,
planning, textiles, foreign, commerce, telecommunications, energy power, science and
information & communication technology etc. and other autonomous body, such as
Governor of Bangladesh Bank, precedents of FBCCI and BCI. Broadly, the objective of
BOI is to encourage and promote investment in the private sector both from domestic and
overseas sources and to provide necessary facilities and assistance in the establishment of
industrial sectors with a view to contribute to the socio-economic development of
Bangladesh.

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Performance Analysis of Board of Investment (BOI) Bangladesh

BOIs Major Functions


Investment Promotion

Country promotion.

Sector/industry promotions.

Publications on business processes.

Investment Facilitation

Pre-investment information and counselling service.

Investor welcome service (faster immigration).

Registration/approval of foreign, joint-venture and local project.

Registration/approval of branch/liaison/representative offices.

Approving work permit for the foreign nationals.

Facilitating utility connections (electricity, gas, water & sewerage, telecom etc.).

Assistance in obtaining industrial plots.

Approving remittance of royalty, technical know-how and technical assistance


fees.

Facilitating import of capital machinery & raw materials.

Approving foreign loan suppliers' credit, PAYE scheme etc.

Policy Advocacy

Advocating policy suggestions to the government.

Assisting the government in framing new policies for private sector development.

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Performance Analysis of Board of Investment (BOI) Bangladesh

Assisting the National Taskforce on investment climate facilitation.

Organization Structure
Sl.Position

1. Chairperson

Vice
2.
Chairperson

Name and Designation

Sheikh Hasina
Honble Prime Minister

Dilip Barua
Honble Minister
Ministry of Industries
Abul Maal Abdul Muhit

3. Member

Honble Minister
Ministry of Finance

Abdul Latif Siddiqui


4. Member

Honble Minister
Ministry of Textiles & Jute

Air Vice Marshal (Retd) A K Khondker


5. Member

6. Member

Honble Minister
Ministry of Planning

Advocate Shahara Khatun


Honble Minister
Ministry of Post and Telecommunications

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Sl.Position

Name and Designation


Engineer Khandaker Mosharraf Hossain

7. Member

Honble Minister
Ministry of Expatriates Welfare and Overseas
Employment
Col. (Retd) Faruk Khan

8. Member

Honble Minister
Ministry of Civil Aviation and Tourism

Dr. Dipu Moni


9. Member

Honble Minister
Ministry of Foreign Affairs
Architect Yeafesh Osman

10.Member

Honble State Minister


Ministry of Science and Information &
Communication Technology
Brig Gen (Retd) Muhammad Enamul Huq

11.Member

Honble State Minister


Ministry of Power, Energy & Mineral Resources

Dr. Atiur Rahman


12.Member

Governor
Bangladesh Bank

Mohammad Moinuddin Abdullah


13.Member

Secretary
Ministry of Industries

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Sl.Position

Name and Designation


Fazle Kabir

14.Member

Secretary
Ministry of Finance

Md. Ghulam Hussain


15.Member

Secretary-in-Charge
Internal Resources Division

Kazi Akram Uddin Ahmed


16.Member

President, The Federation of Bangladesh


Chambers of Commerce and Industry (FBCCI)

A. T. M. Waziullah
17.Member

MemberSecretary

18.

President
Bangladesh Chamber of Industries (BCI)

Dr. Syed A Samad


Executive Chairman
Board of Investment

Performance of BOI Bangladesh


1. Industrious Low-Cost Workforce
Bangladesh offers a well-educated, highly adaptive and industrious workforce
with the lowest wages and salaries in the region. 57.3% of the population is under 25,
providing a youthful group for recruitment. The country has consistently developed a

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Performance Analysis of Board of Investment (BOI) Bangladesh

skilled workforce catering to investors needs. English is widely spoken, making


communication easy.
2. Strategic Location, Regional Connectivity and Worldwide
Access
Bangladesh is strategically located next to India, China and ASEAN markets. As
the South Asian Free Trade Area (SAFTA) comes into force, investors in Bangladesh will
enjoy duty-free access to India and other member countries

3. Strong Local Market and Growth


Bangladesh has proved to be an attractive investment location with its 146.6
million populations and consistent economic growth leading to strong and growing
domestic demand.
4. Low Cost of Energy
Energy prices in Bangladesh are the most competitive in the region.
Transportation on green compressed natural gas is less than 20% of the diesel price.
5. Proven Export Competitiveness
Bangladesh enjoys tariff-free access to the European Union, Canada, Australia
and Japan. In Europe, Bangladesh enjoys 60% of the market share and is the top
manufacturing exporter amongst 50 least developed countries.
6. Competitive Incentives

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Performance Analysis of Board of Investment (BOI) Bangladesh

Bangladesh offers the most liberal FDI regime in South Asia, allowing 100%
foreign equity with unrestricted exit policy, easy remittance of royalty, and repatriation of
profits and incomes.
7. Positive Climate
A largely homogeneous society with people living in harmony irrespective of race
and religion, Bangladesh is a democratic country enjoying broad bi-partisan political
support for private investment. The legal and policy framework for business is conducive
to foreign investment. For detailed about legal infrastructure of Bangladesh please visit
Business Laws.

Export Processing Zones (EPZ)


Export Processing Zones (EPZs) are export oriented industrial enclaves which
provide the infrastructures, the facilities, administrative and support services for a wide
variety of enterprises. Bangladeshs highly successful EPZs in Dhaka and Chittagong are
now complemented by new EPZ developments and other valuable real estate
developments around the country.
The Bangladesh Export Processing Zones Authority (BEPZA) is the official organ
of the government to promote, attract and facilitate foreign investment in the Export
Processing Zones. The primary objective of an EPZ is to provide special areas where
potential investors would find a congenial investment climate, and location free from
cumbersome procedures. Businesses from 32 countries have so far invested in the
existing zones.
There are currently eight zones with others due to open in the next few years.
1. EPZ-Adamjee
2. EPZ-Chittagong

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3. EPZ-Dhaka
4. EPZ-Mongla
5. EPZ-Uttara
6. EPZ-Ishwardi
7. EPZ-Comilla
8. EPZ-Karnaphuli
If you are interested in setting up your business in an EPZ, the Board of Investment
will be pleased to advise you and introduce you to BEPZA.

Incentives & Facilities


Fiscal Incentives
1. 10 years tax holiday for the Industries to be established before 1st January, 2012 and
Industries to set up after 31st December, 2011 tax holiday period will be:
Tax exemption period

Rate of tax exemption

st

nd

rd

th

First 02 years (1 and 2 Year)

100%

Next 02 years (3 and 4 Year)

50%

Next 01 years (5th Year)

25%

2. Duty free import of construction materials.


3. Duty free import of machineries, office equipment & spare parts etc.
4. Duty free import and export of raw materials and finished goods.
5. Relief from double taxation.
6. Exemption from divident tax.
7. GSP facility available.
8. Accelerated depreciation on machinery or plant allowed.

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Performance Analysis of Board of Investment (BOI) Bangladesh

9. Remittance of royalty, technical and consultancy fees allowed.


10. Duty & quota free access to EU, Canada, Norway, Australia etc.
Non Fiscal Incentives
1. 100% foreign ownership permissible.
2. Enjoy MFN (most favored nation) status.
3. No ceiling on foreign and local investment.
4. Full repatriation of capital & dividend.
5. Foreign Currency loan from abroad under direct automatic route.
6. Non-resident Foreign Currency Deposit (NFCD) Account permitted.
7. Operation of FC account by 'B' and 'C' type Industries allowed.
Facilities
1. No UD, IRC, ERC and renewal of Bond license.
2. Work permits issued by BEPZA.
3. Secured and protected bonded area.
4. Off-Shore banking available.
5. Import on Documentary Acceptance (DA) basic allowed.
6. Bank of Back L/C.
7. Import and Export on CM basis allowed.
8. Import from DTA (Domestic Tariff Area).
9. 10% sale to DTA (Domestic Tariff Area).
10. Customs clearance at factory site.
11. Simplified sanction procedure.
12. Sub-contracting with export oriented Industries inside and outside EPZ allowed.
13. Relocation of foreign industries allowed.
14. Accords Residentship and Cityzenship.

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Performance Analysis of Board of Investment (BOI) Bangladesh

15. One Window same day service and simplified procedure.

Foreign Direct Investment (FDI)

Foreign Direct Investment is one of the vital forces to boost up the economy. In
this project report I would like to draw a current scenario of Foreign Direct Investment in
Bangladesh. In this regard I present the most updated data, avoid the uncompleted data
and use the best judgment at the time of presenting the data to better knowing the current
trend about the Foreign Direct Investment in Bangladesh. Foreign Direct Investment
(FDI) has played a key role in the modernisation of the Bangladesh economy for the last
15 years. Foreign Direct Investment (FDI) is the acquisition of managerial control by a
citizen or corporation of a home nation over a corporation of some other host nation.
Corporations that widely engage in FDI are called multinational companies, multinational
enterprises, or multinational corporations. FDI traditionally implies export of real capital
from home to the host nation, but even when economic investment results from FDI,
capital may not be transferred from the home nation to the host one. Rather, multinational
corporation may acquire/utilize real capital from local (or a third-nation) sources foreign
capital means capital invested in Bangladesh in any industrial undertaking by a citizen
of any foreign country or by a company incorporated outside Bangladesh. In the form of
foreign exchange, imported machinery and equipment, or in such other form as the
government may approve for the purpose of such investment; Bangladesh invites FDI for
industrial growth, in particular welcoming establishment of manufacturing firms and
service sector enterprises that would sell their products within the country and also export
outside it.

Factors Affecting FDI

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Performance Analysis of Board of Investment (BOI) Bangladesh

Because Foreign Direct Investment can significantly affect a countrys economy,


the most influential factors are:
i. Impact of Inflation:
If a countrys inflation rate increases relative to the countries with which it
invests, its capital account would be expected to decrease, other things being equal.
Consumer and corporations in that country will most likely purchase more goods or
invest more in overseas (due to high local inflation), while the countrys exports to other
countries & flow of investment from foreign will decline.
ii. Impact of National Income:
If a countrys income level (national income) increases by a higher percentage
than those of other countries, its capital account is expected to decrease, other things
being equal. As the real income level (adjusted for inflation) raises does consumption of
goods. A percentage of that increase in consumption will most likely reflect an increased
demand for foreign investment.
iii. Impact of Government Restrictions:
A countrys Government can prevent or discourage investment from other
countries. By imposing such restrictions, the Government disrupts investment flows.
Among the most commonly used investment restriction are bureaucratic tangles,
projection of intellectual property right and f\fiscal policy changes. In addition to these, a
Government can reduce its countrys investment by enforcing laws, or a maximum limit
that can be invested.
iv. Impact of Exchange Rates:
Each countrys currency is valued in terms of other currencies through the use of
exchanges rates, so that currencies can be exchanged to facilitate international
transaction. The values of most currencies can fluctuate over time because of market and

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Performance Analysis of Board of Investment (BOI) Bangladesh

government forces. If a countrys currency begins to rise in value against other


currencies, its capital account balance should decrease, other things being equal. As the
currency strengthens, Investment by that country will become more expensive than the
receiving countries.

Necessity of FDI
The world has seen a spectacular wave of global corporate activity particularly
during the second half of the last decade. This has been facilitated by advances made in
the information technology. This trend, strengthened with the direction toward border
less-Economies, is drawing more and more TNCs (Trans National Corporation) into the
global operation. FDI is no longer only a strategic option of corporations; it also plays a
key role in the national economic development strategies. Various countries are
attempting to attract foreign investors through a variety of measures, i.e. liberalization of
investment environment, fiscal reforms and a package of incentive offers. FDI can
transform a countrys economic scenario within shortest possible time. It is not merely
access to fund, but also provide transfer of technical know-how and management
expertise. It is also a stabilizing factor in any economy, because once TNCs have made an
asset-based direct investment, they can not simply pull out overnight like in the case of
portfolio investment. Normally the benefits accruable from FDI are inclusive of
(a) Transfer of technology to individual firms and technological spill-over to the wider
economy,
(b) Increased productive efficiency due to competition from multinational subsidiaries.
(c) Improvement in the quality of the factors of production including management in
other firms, not just the host firm.
(d) Benefits to the balance of payments through inflow of investment funds.

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Performance Analysis of Board of Investment (BOI) Bangladesh

(e) Increase in exports.


(f) Increase in savings and investment and.
(g) Faster growth and employment.
Thus, foreign direct investment is viewed as a major stimulus to economic growth in
developing countries. Its ability to deal with two major obstacles, namely, shortages of
financial resources and technology and skills, has made it the centre of attention for
policy-makers in low-income countries in particular.

Foreign Investment Opportunity


Private investment from overseas sources is welcome in all areas of the economy
with the exemption of five industrial sectors (arms, production of nuclear energy, forest
plantation and mechanized extraction within the bounds of reserved forests, security
Printing and minting, air transportation and railways) reserved for public sector. Such
investments can be made either indecently or through joint venture on mutually beneficial
terms and conditions. In other words, 100% foreign direct investment as well as joint
venture both with local private sponsor and with public sector is allowed. Foreign
investment, however, is specially desired in the following categories: export-oriented
industries; industries in the Export Processing Zones; high technology products that
will be either import-substitute or export-oriented; undertaking in which more
diversified use of indigenous natural resources is possible; basic industries based
mainly only on local raw materials; investment towards improvement of quality and
marketing of goods manufactured and/or increase of production capacities of existing
industries; and Labour intensive/technology intensive/capital intensive industries.

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Inflows of FDI
There was an inflow of $666m foreign direct investment in 2007 which raised
significantly in 2008 to $1086m. As of 2011, inflows of foreign direct investment
recorded to $1136.38m.

Foreign and Joint Venture Investment


In the year 2009-10 (February), there were 89 new foreign and joint venture
investment projects registered to BOI which amount to $590m. The projects were
invested to mainly in the service, engineering, clothing and agricultural sectors.

Country wise foreign and joint venture investment during 20092010


Country

No. of Projects

Proposed Investment (US$ m)

Saudi Arabia
Australia
USA
Finland
India
South Korea
Malaysia
Netherlands
China
United Kingdom
Pakistan
Japan
Denmark
Sri Lanka
Canada
Taiwan
Singapore
Turkey

3
4
5
2
9
12
3
5
12
5
2
8
1
2
2
1
4
1

478.652
2.036
2.990
3.023
8.451
33.768
3.056
8.544
21.000
3.507
0.990
2.624
1.217
0.646
1.017
0.502
1.929
0.150

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Performance Analysis of Board of Investment (BOI) Bangladesh

Greece
Italy
Hong Kong
Total

1
2
5
89

0.156
1.039
14.805
590.102

Source: Bangladesh Economic Review-2011 (Bangla version), Ministry of Finance

FDI Magazine's rankings


FDI Magazine of The Financial Times in March 2010 conducted a competition
entitled Global Ranking Competition of Economics Zones based on the following nine
categories of ranking:

Best Overall Global Special Economic Zone

Best Economic Potential

Best Cost Effectiveness

Best Facilities

Best Transportation Link

Best Incentives

Best Promotion

Best Airport

Best Port

In the competition out of 700 Economic Zones globally 200 participated in the
competition. All the zones were evaluated on a 10 point scale on the basis of some set
criteria. Among the top 10 of the two categories Chittagong Export Processing Zone,
Bangladesh scored 3rd position in the Best Cost Effectiveness and also 4th position in
the Best Economic Potential for 2010-2011.

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Performance Analysis of Board of Investment (BOI) Bangladesh

Future of FDI in Bangladesh


According to a recent study, FDI inflows are projected to average about $900
million annually from 2000-2010, as compared to $620 million annually during 19922000. Outflows in this case would rise, on an annual basis, from a mere $129 million
during 1996-2000, to almost $600 million during 2001-2005, and $1.2 billion during
2006-2010.
The energy sector has been the principal recipient of the inflows but, if current
trends continue, foreign investment in telecom, manufacturing, and services could
overtake energy by 2006. All these expected trends in FDI depend on several factors. The
regulatory body like Board of Investment and other government and non-government
institution should take proper step to remove the obstacles in the way of foreign direct
investment.
Despite substantial changes in government policy, Bangladesh has failed to attract
satisfactory levels of FDI and reasons for this failure can be identified quite easily.
Government policy is obviously an important factor influencing inflows of FDI. But,
there are other, equally important factors. So far as the investment related policies of the
government are concerned, these are fine in spirit, but their actual implementation
continues to create obstacles for both local and foreign investors. An inefficient and nottoo honest bureaucratic system is primarily responsible for this problem. All the
administrative barriers are in fact generated from this non-investment-friendly
bureaucratic system.

Major findings from the study of FDI


Four major conclusions can be drawn from the study:
Bangladesh has experienced a more stable (less vulnerable) form of capital inflow, with
FDI making up about 85-90 percent of the total inflows so far.

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Performance Analysis of Board of Investment (BOI) Bangladesh

Both FDI and private debt inflows in Bangladesh have largely financed imports of
machinery and equipment a sign that Bangladesh is only in the preliminary phase of FDI
flows.
FDI and debt inflows have not helped in augmenting foreign exchange reserves so far
and are not expected to do so over the next 10 years. In fact, as inflows grow so do
outflows in the medium- to long-term.
The benefits of FDI are many and worth harnessing. But the downside risks must not be
overlooked. The growing repayment obligation presents the prospects of net negative
transfers in the future and poses major challenges requiring the country to search for new
avenues of earning (or saving) additional foreign exchange. The benefits of FDI in terms
of physical capital formation, transfer of technology, and know-how are sufficient to
justify sustaining these flows. Capital controls are not the answer to a rising flow of FDI.
To ensure that resulting payments liabilities remain within the country s debt-servicing
capacity, it is essential to develop an effective non-intrusive reporting and monitoring
system the main ingredients of which are presented in the study.

FDI Process in Bangladesh


Implementing a 100% foreign-owned or joint venture industrial project in Bangladesh
is a rather simplified process. The entire process is divided into 5 (five) major steps as
presented the following diagram

1. Information Search

Board of Investment (BOI):

The most reliable information source of the Government of Bangladesh regarding


investment.

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Performance Analysis of Board of Investment (BOI) Bangladesh

Government of Bangladesh Agencies:

Other sources of the Government of Bangladesh like Ministries and trade related
offices.

Chambers:
Chambers can provide real experiences of the existing investors. Among other chambers
following are some helpful chambers helpful to the foreign investors:

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI)

Foreign Investors Chamber of Commerce & Industry (FICCI)

The Dhaka Chamber of Commerce & Industry (DCCI)

Metropolitan Chamber of Commerce & Industry (MCCI)

International Chamber of Commerce in Bangladesh (ICCB)

Associations:

Business associations of the country could also provide specific information


related to the respective industry.

International Organizations:

UN bodies like World Bank, UNCTAD, UNDP, WTO, IFC, MIGA, FIAS etc. and
other international organizations could also be a trustworthy source.

Consultants:

Independent business consulting firms and consultants provide professional


services and assistance.

Websites:
A number of independent websites on Bangladesh hosted in different locations of the
world could be surfed from the Web. The keyword searching by 'Bangladesh Investment',
'Bangladesh Business', 'Bangladesh Profile', 'FDI Bangladesh' etc. would provide

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Performance Analysis of Board of Investment (BOI) Bangladesh

numerous results. To have more results, please search in different search engines like
Google, Yahoo and Lycos etc.

2. Physical Verification
Upon analysis of the collected information and initial decision to move forward, the
investor requires to visit Bangladesh to have physical verification. He could either visit
independently or ask LEIC or the partner to arrange the visit.
Immigration Procedures
Business travellers may request for visas with year duration and multiple entries.
Bangladesh issues following categories of business visas:

Single-entry for three months

Single-entry for six months

Multiple-entry for six months

Multiple-entry for one year

Multiple-entry for five year

Multiple-entry for work period

Extensions of each of the above are also permitted


Landing Permit (LP)/Visa on Arrival (VOA)
The foreign investors and businesspersons could avail LP/VOA from Zia International
Airport for maximum 30 days under the following conditions:

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Performance Analysis of Board of Investment (BOI) Bangladesh

The foreign investors are identified on the basis of certification from Board of
Investment (BOI)/ BEPZA / Ministry of Industries. Officials from the BOI are on
duty round-the-clock to facilitate certification of the relevant documents to get
VOA/LP.

The foreign businesspersons who are directly associated with import of Bangladeshi
products are identified on the basis of the certificate by the relevant associations of
export-oriented commercial/industrial organizations or the FBCCI or the BGMEA. The
certificate shall include Tax Identification Number (TIN) of the respective local
commercial/industrial organizations.
The conditions of issuing LP/VOA include following:

The period of LP/VOA can not be extended.

The LP/VOA applicant shall have endorsement of US$500 in the passport / in


cash.

The LP/VOA Fee will be determined on Reciprocity Policy with the respective
countries.

The applicant shall have Return Air Ticket.

The applicant shall utilize same port for entry and departure.

Various Types of Companies in Bangladesh


Business in Bangladesh may be carried on by a company formed and incorporated
locally or by a company incorporated abroad but registered in Bangladesh. The
incorporation or registration is done by the Registrar of Joint Stock Companies and Firms
(RJSC&F) under the provisions of the Company's Act 1994. Companies could be
classified in following categories:

Limited Companies:

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Performance Analysis of Board of Investment (BOI) Bangladesh

Company Limited by Shares

Private Limited Company

Public Limited Company

Company Limited by Guarantees

Unlimited Companies: unlimited companies and companies limited by guarantees may or


may not have share capital.
Private Limited Company

Restricts the rights to transfer the shares

Limits the number of its members to minimum 2 and maximum 50 excluding the
persons employed in the company

Prohibits any invitation to the public to subscribe for the shares or debentures of
the company

Entitles to commence business from the date of its incorporation


Public Limited Company

May issue invitation to the members of the public to subscribe the shares and
debentures of the company through a prospectus which complies with the
requirements of the Companies' Act 1994 and the Securities and Exchange
Commission Act 1993 as amended from time to time

Has minimum 7 members, but there is no maximum limit

Has at least 3 Directors

May a private company converted into a public company


Incorporation Options for Foreign Investors

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Performance Analysis of Board of Investment (BOI) Bangladesh

Foreign investors can incorporate following types of companies:

Setting up a 100% foreign-owned company in Bangladesh

Setting up a Joint Venture with Bangladeshi company/investor

Establishing the Company's Place of Business in Bangladesh

Setting up a branch or a subsidiary of a foreign company in Bangladesh

Setting up a Bangladeshi Company or participate in a Bangladeshi Company already


formed.
Company Formation Procedure
To register a company with the
Registrar of Joint Stock Companies and Firms (RJSC&F), promoters have to undertake
activities in following steps:
Step 1: Selection of the Company Name
Step 2: Memorandum of Association (MOA)
Step 3: Articles of Association (AOA)
Step 4: Registration Application. The application should include:

Application Form. Duly filled in, signed and stamped

MOA Duly signed and stamped

AOA Duly signed and stamped

Registration Fees

Stamp Duty for MOA

Stamp Duty for AOA

Private Companies (also require)


Form I: Declaration on Registration of Company
Form XI: Notice of situation of registered office or any change therein

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Form VI: Consent of Director to Act


Form X: List of Persons Consenting to be Directors
Form XII: Particulars of Directors, Managers and Managing Agents and any change
therein.
Public Companies (also required)
Form XI: Agreement to take Qualification Share of the Propose Company
Form XIV: Declaration before commencing business in case of the company filling a
Statement in lieu of Prospectus upon complete submission of the above, registration is
given by the RJSCF.
Establishing Place of Business
In establishing a place of business of a foreign company, the company has to be
registered with the Registrar of Joint Stock Companies as the place of business. Such
registration is required in respect of capital issue and obtaining clearance from the central
bank i.e. Bangladesh Bank.
Documentary Requirements Include:

Prescribed Application Form. Duly filled in, signed and stamped.

Copies of Charter, statutes or MOA and AOA or other similar instrument. Duly
certified by Oath Commissioner or Notary Public and authenticated by
Bangladesh Embassy in the respective country.

List of Company Directors and Secretary.

Complete address of the Registered or Principal Office in the country of origin.


Opening of Liaison/Branch/Representative Office
To open or seek extension of Liaison/Branch/Representative Office of a foreign
company, the company has to submit in prescribe application form to Board of
Investment along with following documents:

Prescribed Application Form. Duly filled in, signed and stamped.

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Performance Analysis of Board of Investment (BOI) Bangladesh

MOA and AOA of the Principal Company.

Certificate of Incorporation.

Name and Nationalities of the Directors/Promoters of the Principal Company .

Board Resolution to open a Branch/Liaison/Representative Office in Bangladesh.

Audited Accounts of the last financial year.

Proposed organogram of the office.

List of activities of the proposed office

All papers/documents must be attested by the Bangladesh Embassy/High


Commission of the country of origin. Embassy/High Commission of the applicant's
country of origin or Apex Chamber of Commerce of the country of origin. The Trade
License has to be secured from the local government office like City Corporation or
Municipality or Union Parishad, as applicable.
Securing Trade License
Joint Venture and 100% Foreign Investment proposal in the Private Sector

Entrepreneur/investors are advised to apply for registration to Board of Investment


(BOI) in order to avail of facilities and the institutional support services provided by
the Government.

Prescribed application form has to be collected from BOI Office or downloaded from
BOI website. Documents to be enclosed with the application are:
o

Application in prescribed Form duly filled in. 2 (two) copies.

Certificate of incorporation along with Memorandum & Articles of


Association in case of Public/Private Limited Company. In case of Joint

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Performance Analysis of Board of Investment (BOI) Bangladesh

Venture Project (JVP), JVP Agreement duly signed in by both the parties. 2
(two) copies.
o

Attested copies of Deeds/Documents in support of project land (in case of


own land, Purchase Deed and in case of lease / rental premises, Deed of
Agreement). 2 (two) copies.

If the total project cost exceeds Tk. 50 (fifty) million, submit Project Profile 2
(two) copies.

Background of the Promoters in official letterhead pad describing Name,


Permanent and Mailing Address, Position and Nationality. 7 (seven) copies.

List of machinery indicating quantity and price. 7 (seven) copies.

In case the project is financed by loan, copy of relevant documents in support


of loan. 2 (two) copies.

Pay order / bank draft amounting required amount in favor of "EXECUTIVE


CHAIRMAN AND MEMBER-SECRETARY, BOARD OF INVESTMENT".

After receiving the application duly filled in, signed and required documents
enclosed, BOI reviews the application and, if found suitable, Registration Certificate
is issued by 7 days.

3. Plant Setup
BOI registration makes the company eligible to avail the incentives and facilities
provided by the Government.

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Performance Analysis of Board of Investment (BOI) Bangladesh

The entrepreneurs of such projects are to fill up a simple prescribed application form and
submit to BOI for registration. After a first hand scrutiny of the information, BOI issues
registration letter.

Application in prescribed Form duly filled in. 2 (two) copies.

Certificate of incorporation along with Memorandum & Articles of Association in


case of Public/Private Limited Company. In case of Partnership Project,
Partnership Agreement duly signed in by both the parties. 2 (two) copies.

Attested copies of Deeds/Documents in support of project land (in case of own


land, Purchase Deed and in case of lease / rental premises, Deed of Agreement). 2
(two) copies.

If the total project cost exceeds Tk. 50 (fifty) million, submit Project Profile. 2
(two) copies.

Pay order / bank draft amounting required amount in favor of "EXECUTIVE


CHAIRMAN AND MEMBER-SECRETARY, BOARD OF INVESTMENT".

Entrepreneur/investors are advised to apply for registration to BOI in order to


avail facilities and the institutional support services provided by the Government.

Prescribed application form has to be collected from BOI Office. Documents to be


enclosed with the application are:

After receiving the application duly filled in, signed and required documents
enclosed, BOI reviews the application and, if found suitable, Registration
Certificate is issued by 7 days.

BOI registration makes the company eligible to avail the incentives and facilities
provided by the Government.
Any individual entrepreneur either local or foreign can set up an industry with Public
Sector Corporation. Such joint venture is required to be registered with the BOI if the

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Performance Analysis of Board of Investment (BOI) Bangladesh

private sectors contribution is more than 50% of the project cost and in such case it is
treated as private sector project. For any public sector which makes contribution out of its
own fund needs approval of the concerned ministry. The public sector project is
processed by the concerned Ministry for approval of the Planning Commission.

Government promotes rapid privatization of the state-owned enterprises (SOEs).

Infrastructure and high involvement projects like power have been encouraged for publicprivate joint venture.
Obtaining Industrial Plot
Entrepreneurs requiring industrial plot for setting up of industry in any industrial
areas/estates apart form BEPZA and BSCIC, may apply to BOI as following with a view
to justifying actual requirement:

Mentioning of the size of plot required

Copies of sanction / registration letter and

Industrial Layout Plan


After receiving the application, BOI provides assistance to get the industrial plot.
Most of the industrial areas/ estates are owned / controlled by city development
authorities in three divisional head quarters. RAJUK in Dhaka, CDA in Chittagong and
KDA in Khulna. Besides, a few industrial estates are owned and controlled by some other
government agencies namely (a) Public Works Department and (b) Housing and
Settlement Directorate.
Registration/Approval for Foreign Loan, Suppliers Credit, PAY Scheme etc.
Entrepreneurs in the private industrial sector arranging foreign credit in the form of loan,
suppliers' credit, PAVE scheme etc. are required to obtain prior approval from the
Scrutiny Committee headed by the Governor of Bangladesh Bank. However, all

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Performance Analysis of Board of Investment (BOI) Bangladesh

necessary processes are completed at BOI. Representatives from Bangladesh Bank


provide technical assistance to the applicants.
Obtaining Utility Connection Providers
Electricity: Power Development Board (PDB), Dhaka Electric Supply Authority
(DESA), Dhaka Electric Supply Company (DESCO) and Rural Electrification Board
(REB).
Gas: Gas:Titas Gas Transmission & Distribution Company Ltd. (TGTDCL), Bakhrabad
Gas System Ltd. (BGSL) and Jalalabad Gas Transmission & Distribution System Ltd.
(JGTDSL).
Telephone: Bangladesh Telegraph and Telephone Board (BTTB) for Land phone
Grameenphone, Citycell, AKTEL, Bangladesh Telecom, Bangladesh Rural Telecom
Authority, Sheba Telecom, TMI etc. for cellular phone service.
Water: WASA or Self Generated.
Sewerage: WASA or Self Serviced.
Deep Tube well Licensing: WASA.
Obtaining Work Permit
Work permit for foreign nationals is required for employment in Bangladesh. Private
sector industrial enterprises (outside EPZ), branch/liaison/representative office of foreign
origin and also local commercial enterprises desiring to employ foreign nationals are
required to apply in the prescribed form obtainable from BOI. For expatriate employment
the guidelines are as follows:

Nationals of the countries recognized by Bangladesh are considered for


employment.

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Employment of expatriate personnel is considered only in industrial


establishments and commercial enterprises duty sanctioned / registered by the
appropriate authority.

Employment of foreign nationals is normally considered for the job for which
local experts / technicians are not available and persons below 18 years of age are
not eligible for employment.

Decision of the Board of Directors of the concerned company for new


employment/ extension has to be furnished.

Initially employment of any foreign national is considered for a team of one year
which may be extended on the basis of merit of the case.

Necessary security clearance has to be obtained from the Ministry of Home


Affairs after issuance of work Permit and the duration of visa should be extended
upto the period of Work Permit.

For obtaining new Work Permit, the expatriate investors and employee must
arrive in Bangladesh with PI and E types visa respectively obtainable from
concerned Bangladesh Mission in abroad.

Application for Expatriate Work Permit must be submitted (List annexed in the
Appendix) to BOI within 15 (fifteen) days from the date of arrival.

Number of the expatriate employees in an industrial enterprise should not exceed 1:20
(foreign: local) ratio at any time during regular production and the ratio for commercial
enterprises be 1:5 (foreign: local).
Registering with Factoring Act

In order to regulate working conditions and to ensure safety in the factory, any
manufacturing company employing ten or more workers is required to be

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registered under the Factories Act, 1965 along with the office of the Chief
Inspector of Factories and Establishment (CIF&F).

The act is primarily to regulate working conditions and to ensure safety in the
factory.

Prescribed Application Form has to be collected from the office of the Chief Inspector of
Factories and Establishment, filled in and submitted with requirements. The CI&E office
issues registration within the stipulated period.
Registering with Environmental Legislation

Environment Conservation Act 1995 made it mandatory to all industrial projects


to obtained Environmental Clearance Certificate from the Department of
Environment.

The main criteria for obtaining clearance are set out in the Environment
Conservation Rules 1997 which was established under the Act.

Different levels of assessment are required depending on the particular industry


concerned.

Investors may apply in prescribed forms for Environmental Clearance Certificate to BOI
Utility Service cell (USC) enclosing required documents. The USC arranges necessary
clearances from the DOE within the stipulated period.
Remittance of Royalty, Technical Know-How and technical Assistance Fees

No prior permission of BOI is required for entering into agreements for remitting
fees for the purpose of royalty, technical know how and technical assistance if the
total fees and other expenses connected with technology transfer are within the
following prescribes limit:

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Performance Analysis of Board of Investment (BOI) Bangladesh

For new projects, such fees and other expenses should not exceed an
aggregate limit of 6% of the C&F value of imported machinery.

Recurrent annual fees for royalties and other expenses such as fees for
technical know-how, technical assistance, operational services, marketing
of products etc. should not exceed an aggregate limit of 6% of the
previous years sales of the firms as declared in the tax return.

Once the technical transfer agreement s falling within the above limits are signed,
these are required to be furnished to BOI for registration.

Proposals which are not covered under the prescribed limits require prior approval
of BOI for which application has to be submitted along with necessary documents
and copy of relevant agreement.

Prior approval/registration should be required from BOI for remitting any technical fees
by industrial concern registered with the BOI.

4. Commercial Operation

After completion of the setup, the plant goes into trial production.

Successful trial production leads to commercial production.

The investor is required to submit half-yearly performance report to BOI on


production and employment in the project.

Any changes in information provided in the registration letter have to be informed and
made approved by BOI immediately.

Local Investment

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Performance Analysis of Board of Investment (BOI) Bangladesh

Since the establishment of the Privatization Board in 1993 and thereafter the
Privatization Commission in 2000, 74 state owned enterprises (SOEs) have been
privatized. 54 were privatized through outright sale and 20 through offloading of shares.
The major sectors for privatization are jute, textiles, steel, engineering, sugar and food,
banking and financial institutions, fisheries and livestock, environment and forestry,
chemicals, telecommunications and tourism.

Current Privatization Program


Preparations are now on track to dispose off SOEs to private investors. Non-financial
public enterprises in the country have been categorized into seven sectors, namely:

Industry

Power, gas and water

Transport and communications

Trade

Agriculture

Construction

Services

As of January 2010, 22 SOEs have been included in the Commissions current


programs for privatization. These are
1. Procurement & Sales Organization, Kaptai, Rangamati;
2. Lumber Processing Complex, Kaptai, Rangamati;
3. Karnafuli Timber Extruction Unit, Kaptai, Rangamati;
4. Arco Industries Ltd., Chittagong;
5. SAF Industries Ltd., Noapara, Jessore;
6. Rangamati Textiles Mills Ltd., Ghagra, Rangamati;
7. Tangail Cotton Mills Ltd., Gorai, Tangail;

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Performance Analysis of Board of Investment (BOI) Bangladesh

8. Magura Textile Mills Ltd., Magura;


9. Rajshahi Silk Factory, Rajshahi;
10. Thakurgaon Silk Factory, Thakurgaon;
11. Dhaka Leather Company Ltd., Nayarhat, Savar, Dhaka;
12. North Bengal Paper Mills Ltd., Pakshi, Pabna;
13. Chittagong Chemical Complax,Chittagong;
14. Karnafuli Rayon & Chemical Ltd., Kaptai, Rangamati;
15. Bangladesh Can Company Ltd., Chittagong;
16. Monowar Jute Mills Ltd., Siddirganj, narayanganj;
17. Aroma Tea Ltd., Fauzdarhat, Chittagong;
18. Handloom Facilities Center (HFC), Raypura, Narsingdi;
19. Fish Landin Center & Wholesale Fish Market, Daburghat, Sunamganj;
20. Dhaka Match Factory;
21. Salatin Syndicate, Dhaka;
22. Tiger Wire Products;
Source: Privatization Commission, Bangladesh

Private Investment Statistics


Year

Proposed
Investment
Project

LocalProposed
Investment

ForeignTotal
Investment

ProposedGrowth %

BDT

Project

BDT

Project

BDT

2005-2006 1754

18370

135

24986

1889

43356

124.62

2006-2007 1930

19658

191

11925

2121

31583

-27.15

2007-2008 1615

19553

143

5433

1758

24986

-20.89

2008-2009 1336

17117

132

14749

1468

31867

27.54

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Performance Analysis of Board of Investment (BOI) Bangladesh

2009-2010 1470

27414

160

6261

1630

33678

5.67

2010-2011 1298

39976

148

26935

1446

66912

98.71

497078

209

338910

1813

835989

212

2011-2012

1604

Source: Bangladesh Economic Review-2011 (Bangla version), Ministry of Finance

Registration of Local Company


Required Supporting Documents:
1. A valid Trade License (in case of existing industries).
2. Two copies of application in prescribed form duly filled in.
3. Two attested copies of deeds of the proposed land (if the land is owned by the
entrepreneur, then attach copies of original deed or copy of loan agreement for rented
building).
4. Memorandum & Articles copy. (If Limited Company).
5. Certificate of Incorporation copy. (If Limited Company).
6. Two attested copies of Partnership Deeds ( if partnership farm).
7. Membership Certificate from local chamber of commerce or trade association (Only
for an existing enterprise).
8. Bank Solvency Certificate.
9. Two copies of project profile if the cost of project if exceeds Taka 5 Crore.
10. A pay order/bank draft for registration fees, (from any scheduled bank) in favour of
"Executive Chairman and Member-Secretary, Board of Investment".

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Remarks: After submission of a completed application, BOI will issue a Registration


letter along with a photocopy of all of letter submitted, and duly signed by a Director of
BOI. Entrepreneurs are issued a registration letter having a registration number.

Recommendation
Overcoming the barriers one can now look for the ways to overcoming the barriers to
FDI as we have mentioned above. Here, we would recommend following measures that
the authorities concerned might consider:
1. Ensuring good governance
Good governance denotes a desirable state of affairs and so is the key to success
of all the reforms. Political and bureaucratic accountability are the two principal
components of good governance, and without ensuring them, good governance is not
possible. Securing progress on this front is the highest priority as continued difficulties
pose a serious threat to the sustainability of even the development achieved already.
2. Accountability and transparency
Accountability and transparency continue to remain the twin elusive prerequisites
for the overall development of the country. Private sector investment and FDI inflow are
severely hindered by the administrative barriers that arise out of a lack of transparency
and accountability, which logically leads to inefficiency and corruption. Competence and
efficiency, which are both appallingly, lacking in the bureaucracy, will both become
achievable goals with the infusion of transparency in decision-making and governance.
3. Co-ordination among state agencies

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Without reducing the utter lack of co-ordination among the state agencies, the
services and functionaries cannot be efficient. Assuring proper co-ordination among
ministries, departments, regulatory bodies, and faster decision-making in the
implementation process will enhance the flow of investment.
4. Strengthening the regulatory authority
Government agencies responsible for facilitating investment need to be more
active. In this regard, full autonomy to the agencies like the central bank, investment
promotion agencies, telecom regulatory authority, energy regulatory authority, securities
and exchange commissions etc., is a prerequisite.
5. Rightsizing the government
The size of the state organs is quite large and thus mostly inefficient, unproductive
and hazardous. So, rightsizing the government is important. By reducing the number of
officials in the decision making process in various state organs, transparency and
accountability of bureaucracy can be established. Offering a reasonable compensation
package to the officials retained is also one of the key factors in ensuring transparency
and accountability.
6. Judicial and legal reforms
A sound judicial system, which is a must for good governance, is possible when
the judiciary can exercise its authority independently. In this regard, separation of the
judiciary from executive branch of the government is essential as influence of the
executive on the lower judiciary continues to be exercised. There is need for capacity
building in the judicial system in order to ensure speedy disposal of cases
7. Tackling corruption
Tackling corruption in banking, power, other state-owned enterprises and tax
administration ought to be an urgent priority. A comprehensive resolution of the

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corruption problem in banking, power and other state-owned enterprises will require
privatization along with independent regulatory bodies functioning in the public sector.
8. Fiscal reform
Regarding tax administration, reform option includes establishing an autonomous tax
institution with proper incentive and accountability. Countries of the region can learn
from the international experience of a number of countries including the Internal Revenue
Service of the USA.
9. Infrastructure reform
The main policy challenge is to redefine the role of public sector in infrastructure
development by gradually allowing the private sector to play a bigger role. Public
sectors role should be restricted to regulatory functions only. Mention may be made here
that, Bangladeshs existing Industrial Policy includes infrastructure as a thrust sector
acknowledging a lead role of the private sector supported by special incentives and the
Finance Minister of Bangladesh, in his 2002 budget speech, stressed the need for more
private sector participation in infrastructure development of the country.

Conclusion
In conclusion, it could be said that experiences referred to as above are based on
the same encountered in Bangladesh. But, these are more or less the same in other
countries of the region. If the respective governments do not take appropriate measures, it
would be difficult to attract the expected level of FDI. The policy regarding the foreign
direct investment should be clear and flexible and should contain some lucrative options
for foreign investors. This will certainly boast up the health of FDI in our country. Our
country is very much underdeveloped. In the context of an underdeveloped country the
role of FDI is very vital and essential. We do not have sufficient internal resources to
meet up the growing demand of increasing population at different aspect. As a result we

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have to rely greatly on FDI to accelerate our economic growth and to meet up the
demand.
Another point is credible and must have to note is the necessity of common
census of foreign direct investment. Only few months back the BOI and BB have
provided contradictory result regarding the FDI in our country. But there should not be
any discrepancy in regard to this. This figure represents the condition of the country and
should be accurate in nature.

References
1. http://www.assignmentpoint.com/business/finance/report-on-foreign-directinvestment-in-bangladesh.html

2. http://www.youngconsultants-bd.org/fdi_policy.php

3. http://www.boi.gov.bd/

4. http://www.pc.gov.bd/

5. http://www.epzbangladesh.org.bd/

6. http://www.betelco.com/bd/bdsbus/investmt.html

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Performance Analysis of Board of Investment (BOI) Bangladesh

7. http://www.sdnbd.org/sdi/statisticapocketbook/Chap01/0114.htm

8. http://www.thaibizbangladesh.net/investors_guide.php

9. http://www.bonshai.com/local_industry_permission.html

10.

http://profilebd.blogspot.com/2012/11/investment-in-bangladesh-through-

boi-bd.html

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