BangladeshBangladesh has emerged as a significant player in the global economy, thanks to its diverse industries and strategic location. The country’s economy is bolstered by sectors such as textiles, agriculture, and information technology.
Local companies in Bangladesh’s pharmaceutical industry are experiencing rapid growth, producing generic drugs for both domestic and international markets.
Introduction to Business in Bangladesh
Bangladesh is a rapidly growing economy with a large and young population, making it an attractive destination for businesses looking to expand their operations. The country boasts a favorable business environment characterized by a relatively low cost of living and a substantial pool of skilled workers. Entrepreneurs and investors are drawn to Bangladesh due to its strategic location, abundant natural resources, and supportive government policies aimed at fostering economic growth. Whether you’re considering entering the market with a new business idea or expanding an existing enterprise, understanding the business landscape in Bangladesh is crucial. In this section, we will provide an overview of the business environment in Bangladesh and the various types of business structures available to entrepreneurs.
Business Opportunities in Bangladesh
Today, Bangladesh has become one of the attractive destinations for foreign investors. Due to its cost-competitive business and low labor cost, foreign companies eagerly expand their businesses in Bangladesh. The country offers an open gate for foreign investors to invest in various industries except for the defense, mining, nuclear energy, mining, and forest plantation industries. The geographic location of Bangladesh is ideal for global trade. It has very convenient access to the international air and sea routes. Bangladesh is blessed with an abundant natural gas, water, and fertile soil. A few potential business opportunities to start a business in Bangladesh are –
- Electronics
- Foreign foods
- Garment and textiles
- ICT and business services
- Ceramics
- Leather goods
- Agribusiness
- Light Engineering
- Life Science
- Power Industry
Many foreign businesses prefer to establish a limited liability company incorporated in Bangladesh due to its favorable registration process and benefits.
Here is a detailed guide on starting a business in Bangladesh, along with the documents required and other essential requirements.
Benefits of Starting a Business in Bangladesh
Bangladesh has emerged as an attractive country, especially for foreign investors. Setting up a company in Bangladesh has numerous benefits. One of the most significant benefits is low labor costs. In addition to this, there are other benefits like:
- Rapidly growing economy
- A strategic location
- Availability of young and skilled workforce
- Profitable investment opportunities for foreigners
- Multiple trade agreements
Requirements for Starting a Business in Bangladesh
The legal requirements for company registration in Bangladesh are mentioned in the list below:
- Approval of the RJSC
- A bank account in Bangladesh
- Trade license issued by the local authority
- Business Identification Number and Tax Identification Number
- Rent an office in a non-residential location
- Prepare blueprint and the map of business for factory setup permission
- A copy of the Import or Export license
- Fire certificate for factory setup or corporate office
- Get approval from respective authority for telecommunication business approval from BTCL
Types of Business Structures in Bangladesh
Company Registration Process in Bangladesh
Step 1: Name Clearance:
To start the registration, you must have approval for your company’s name from the Registrar of Joint Stock Companies and Firms (RJSC).
Step 2: Collection of Documents:
Post that, you will be required to draft the Article of Association (AoA) and the Memorandum of Association (MoA). You must submit these along with other necessary documents to RSJC.
Step 3: Opening of a Bank Account:
After this, the third step is to open a bank account under your company’s name and make an inward remittance of at least US$ 50,000 if you’re willing to hire foreign employees.
Step 4: Submission of documents to the RJSC:
In this step, you will be required to submit the papers to the RJSC and pay the fee for registration. You can also check with the RJSC for the incorporation certificate during the standard process.
Step 5: Additional Licenses and Registrations:
Once you have completed all the procedures mentioned above and have the certificate of incorporation, Articles of Association (AoA), and Memorandum of Association (MoA), you have a registered company in Bangladesh.
You will be required to get some additional licenses and registrations, including –
- Trade License
- Tax Identification Number (TIN)
- VAT Registration Certificate
- Fire Certificate
- Environmental Clearance Certificate (if required)
How Much Does it Cost to Incorporate a Company in Bangladesh?
The cost of registering a company in Bangladesh is $3990 a year approximately. This cost includes expenses like preparing legal documents, company registration, legal address for the company, and requisite taxes and fees.
Are Foreigners in Bangladesh on Certain Passes Allowed to Start a Business in Bangladesh?
Foreign investors can establish, own, and operate different business entities in Bangladesh. However, some sectors are explicitly reserved for government investment. The four restricted sectors are –
- Arms and ammunition and other defense equipment and machinery
- Forest plantation & mechanized extraction
- Production of nuclear energy
- Security printing
Generally, there are no major restrictions on foreign investment except for some sectors, which are controlled by the administrative licensing processes. The sectors which require clearance/permission from a different line of authorities are –
- Deep-sea fishing
- Private sector insurance companies
- Private sector banks & financial institutions
- Exploration, extraction, and supply of natural gas, oil, coal, and other mineral resources
- Private sector generation, distribution and supply of power
- Crude oil refineries
- Medium and large industry using natural minerals and gas as raw materials
- Large-scale infrastructure projects (for example, flyovers, elevated expressways, inlace container depots or container freight stations.
- Satellite channels
- Sea-bound ship transport
- Cargo/passenger aviation
- VOIP/IP telephony
- Industries using heavy minerals extracted from the seashore
- Seaports/deep sea-ports
- Telecommunication services (mobile/cellular and land phone)
Government Assistance for Foreign-owned Businesses
There are some grants and incentives offered to foreign-owned businesses. Tax Holidays: These are allowed for industrial undertakings and physical infrastructure facilities set up between 1 July 2019 and 30 June 2024 in the “thrust” sector. This sector refers to the industries which directly contribute to the country’s industrialization. In Bangladesh, this sector is based on developed and underdeveloped areas. Industries set up in Export Processing Zones (EPZs) are also considered for tax holidays. On the other hand, for independent power plants starting their production before 31 December 2022, a tax exemption on income tax is granted for 15 years. Again, for Independent power plants (IPPs) commencing operations post 1 January 2023, there are some benefits:
- 100% tax exemption in the first five years
- 50% exemption in the next three years
- 25% exemption in the next to years
How Multiplier Can Help?
In Bangladesh, there are many laws associated with the process of setting up a business. Alongside the paperwork and the list of requirements, it is important to follow the process to set up your new business in a foreign land without any hassle. Thus, while setting up a business in Bangladesh, it is feasible to partner with an external EOR & PEO like to ensure a smooth workflow. We ensure to comply with the regulatory laws, maintain employee records, and manage payrolls efficiently. With us, you can smoothly set up your new business in the country without any worry.
