Can all products of Bangladesh be exported?

Export from Bangladesh is guided by the Export Policy of Bangladesh. Apart from the products listed under Export Prohibited Products and Products Under Conditional Export (listed below), all products manufactured and produced in Bangladesh can be freely exported.                    

Export Prohibited Products: The following products are totally prohibited for export from Bangladesh:

  1. All petroleum and petroleum products except those produced from natural gas (such as naphtha, furnace oil, lubricant oil, bitumen, condensate, MTT and MS). However, this prohibition shall not apply to the export of petroleum and LNG as shares of the foreign investment companies under the Product Sharing Contracts.
  2. Jute and `Shan’ seeds
  3. Wheat
  4. Any kind of live animals, animal organs or hide/ skin of wild animals as mentioned in the Wildlife (Protection) Ordinance 1973 (President’s Ordinance No. 23, 1973, Revised in 1974), except the species mentioned in the first list of the Ordinance.
  5. Fire arms, ammunition and related materials.
  6. Radioactive materials.
  7. Archeological relics.
  8. Human skeleton, blood plasma, or anything produced from human beings orblood. All types of pulses (except processed ones)
  9. All shrimps except chilled, frozen and processed ones
  10. Onion
  11. Seawater shrimps of 71/90 count or smaller, except the species Harin/ harina Chaka including sea species PUD, Cooked shrimp
  12. Cane, wood, wood logs/ thick pieces of wood (except handicrafts made from these materials).
  13. All types of frogs (alive or dead) and frog legs.
  14. Raw and wet blue leather.

Products under Conditional Export: The following products can be exported with prior approval of the concerned agencies of the government:

  1. Urea Fertilizer: Urea fertilizer produced in all factories except KAFCO can be exported with the prior approval of the Ministry of Industries.
  2. Entertainment programs, music, drama, films, documentary films etc. can be exported in the form of audio cassettes, video cassettes, CDs, DVDs etc. subject to ‘no objection’ from the Ministry of Information.
  3. Petroleum and petroleum products produced from natural gas (such as naphtha, furnace oil, lubricant oil, bitumen, condensate, MTT and MS) can be exported under ‘no objection’ from the Energy and Mineral Resources Division,
  4. Chemical products enlisted in schedules 1, 2, 3 of Chemical Weapons (Control) Act-2006 will be controlled (exported or prohibited to export) by section-9 of the ACT.

Does Bangladesh allow investment in all sectors?

The Industrial Policy of Bangladesh regulates private investments in the following ways:

Reserve industries: The industries that are kept reserved for public investment due to national security or other reasons have been termed as reserved industries. Current list of reserved industries are appended below:

  1. Arms and ammunitions and other military equipment and machineries;
  2. Nuclear power;
  3. Security printing and minting;
  4. Forestation and Mechanized Extraction within the boundary of reserved forest.

Controlled Industries: Controlled industries are those which may be set up with approval/NOC from the relevant Ministries/Agencies. In addition, approval is to be obtained following the Private Sector Infrastructure Guidelines in case of private infrastructural projects e.g. flyover, elevated expressway, monorail, underground rail, economic zone etc. The current list of Controlled Industries is appended below:

  1. Fishing in the deep sea;
  2. Bank/financial institution in the private sector;
  3. Insurance Company in the private sector;
  4. Generation, supply and distribution of power in the private sector;
  5. Exploration, extraction and supply of natural gas/oil;
  6. Exploration, extraction and supply of coal;
  7. Exploration, extraction and supply of other mineral resources;
  8. Large-scale infrastructural project (e.g. flyover, elevated expressway, monorail, economic zone, inland container depot/container freight station);
  9. Crude oil refinery (recycling/refining of lube oil used as fuel);
  10. Medium and large industry using natural gas/condescend and other minerals as raw material;
  11. Telecommunication Service (mobile/cellular and land phone);
  12. Satellite channel;
  13. Cargo/passenger aviator;
  14. Sea bound ship transport;
  15. Sea-port/deep sea-port;
  16. VOIP/IP telephone;
  17. Industries using heavy minerals accumulated from sea-beach.

What are the potential sectors for investment in Bangladesh?

The Board of Investment of Bangladesh has identified the following sectors as potential sectors for investment:

  • Agro-business
  • Ceramics
  • Electronics
  • Frozen foods
  • Garments and textiles
  • ICT and business services
  • Leather and leather goods
  • Light engineering
  • Power industry
  • Pharmaceuticals

Does Bangladesh have any policy guidelines for FDI?

The Industrial Policy of Bangladesh stipulates guidelines for Foreign Direct Investment (FDI) as below:

  • Foreign direct investment is encouraged in high-tech and innovative industries that have potential for skill and technology transfer.
  • Capital market investment remains open for ‘Portfolios’ investment.
  • FDI will be developed and preserved under the Foreign Investment (Development and Preservation) Act, 1980.
  • No restrictions to foreign investment in terms of equity participation, i.e., 100% foreign equity can be invested. While setting up industries with complete foreign investment or in joint venture, there are no restrictions to the sale of shares through public issues irrespective of paid-up capital. However, foreign investors or institutions can purchase shares through Stock Exchanges under the guidelines on this drawn up by the institutions concerned. Foreign investors or institutions can avail loan from local banks to meet their operating costs. Conditions for such type of loan are determined on the basis of the relations between the lender bank and the borrower. Reinvestment of repatriable dividend is treated as new investment and tax exemption on the interest on foreign loans under certain conditions. Prospective foreign investor is given 6 months multiple visa.
  • Prospective foreign investors are considered for citizenship with a minimum threshold investment of US$ 500,000 or by transferring US$ 1,000,000 to any recognized financial institution (non-repatriable). Minimum investment ceiling for consideration of permanent residency for a foreign investor is US$ 1, 00,000 (non-repatriable).  
  • Foreign investors can avail the same facilities as local investors in terms of tax holidays, royalty payment, technical fees, etc. Personal income taxes need not be paid by foreign technicians appointed in foreign companies registered with the patronising body for up to three years, and after that period, they have to pay on the basis of a dual taxation revocation agreement or any other agreement reached with their respective countries.
  • In respect of foreign investment, full repatriation facility of invested capital is given as per existing law. Accordingly, profits and dividends are also repatriable where applicable. If foreign investors choose to reinvest their repatriable dividend or earned profit, then this is treated as new investment.
  • Foreign citizens appointed in Bangladesh are entitled to a 50% repatriation of their wages, and 100% of their savings and retirement benefits according to the terms & conditions of appointment.
  • No restrictions to the issuing of Work Permit for skilled foreign professionals on the basis of the recommendations of local and foreign investing companies or joint venture companies. Multiple entry visas are issued to foreign investors for three years and to highly skilled professionals for the whole period of their appointment. However, the application should mention and make sure that the required human resource is not available in Bangladesh. In addition, a foreign investor may avail `No Visa Required (NVR)’ facility provided that the Board of Investment/BEPZA certifies him/her as an investor in any heavy industry or long-term industry/business with an amount of not less than US$ 5 million.
  • In respect of foreign investments in thrust sectors, preference is given to small and medium scale investors when allotting plots in BSCIC industrial enclaves/ Economic Zones.
  • Investment by non-resident Bangladeshis (NRB) is treated as foreign direct investment.
  • Foreign investors and NRBs are given preference for investment in solar-based power generation, windmill-based power generation, biomass and geothermal based power generation.
  • Special preferences are given for setting up high-tech capital-intensive industry in tandem with the vision of the government to build a digital Bangladesh.

Does Bangladesh offer any fiscal and non-fiscal incentives for investment?

Bangladesh offers some of the world’s most competitive fiscal non-fiscal incentives. The main incentives are appended below:

  • 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
    • In the Dhaka & Chittagong Divisions: 100% in first two years: 50% in the 3rd and 4th and 25% in the fifth yea.
    • In the Rajshahi, Khulna, Sylhet, Barisal Divisions and three Chittagong Hilly Districts: 100% for first three years, 50% for next three years, 25% for the 7th year.
  • Depreciation allowances
    • Accelerated depreciation for new industries is available at the rate of 50%, 30% and 20% for the first, second and third year respectively on the cost of plant and machinery.
  • Cash and added incentives to exporting industries
    • 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.

With whom does Bangladesh have FTA?

Bangladesh is party to a number of regional economic and trade cooperation arrangements, all of which aim to promote intra-regional trade through an exchange of mutually agreed concessions. Bangladesh enjoys tariff reduction under two such regional arrangements, namely SAFTA and APTA. As an LDC, Bangladesh receives special concessions in all these arrangements.

SAFTA: Members (Bangladesh, Bhutan, Maldives, Nepal, India, Pakistan, and Sri Lanka) of the South Asian Association for Regional Co-operation (SAARC) deepened trade cooperation through the adoption of the South Asian Free Trade Area (SAFTA) in 2006. Afghanistan joined SAARC in 2005 and acceded to SAFTA on 7 August 2011. Under SAFTA, tariff liberalization commenced on 1 July 2006.

APTA: Bangladesh is a member of the Asia-Pacific Trade Agreement (APTA). It is a preferential trade agreement in the region aimed at boosting intra-regional trade. Bangladesh, India, Lao PDR, Republic of Korea and Sri Lanka are its founding members, with China acceding to it in 200 while Mongolia is in the process of acceding to APTA. Since the entry into force of APTA, three rounds of negotiations have been completed. The third round, which entered into force on 1 September 2006, led to tariff concessions among participants on more than 4,000 items, and on an additional 587 products that were offered exclusively to the LDCs. At present, China offers concessions on the largest number of products (1,697) followed by the Republic of Korea (1,367) and both offer tariff concessions on products of export interest to Bangladesh such as jute goods, leather and leather products.

BIMSTEC: Bangladesh is a party to the Free Trade Agreement under the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC FTA), which was signed in 2004.

TPS-OIC: The Framework Agreement on Trade Preferential System among the Members States of the Organization of the Islamic Conference (TPS-OIC) entered into force in 2002. The first round of negotiations under TPS-OIC, including the tariff-reduction programme, was completed in 2005 and is laid out in the Protocol on the Preferential Tariff Scheme for TPS-OIC (PRETAS). Bangladesh is one of thirteen states that have ratified the PRETAS.

D-8: The member countries of the D-8 (Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, Pakistan and Turkey) signed a Preferential Tariff Agreement (PTA) in 2006. The PTA entered into force in August 2011.

Other preferential arrangements

Under the Generalized System of Preferences (GSP), Bangladeshi products currently receive preferential market access from almost all developed Members of the WTO. In addition, Bangladesh is eligible for LDC preferential schemes adopted by the emerging countries, including China and India.

European Union: As an LDC, Bangladesh enjoys duty-free and quota-free access to the EU, mainly through the EU’s Everything But Arms Initiative (EBA).

USA: Bangladesh enjoys tariff preferences for certain tariff lines under the U.S. GSP Scheme.

Canada: Bangladesh is a beneficiary of Canada’s Least Developed Country Tariff (LDCT) GSP programme, under which most products from LDCs have been made eligible for duty-free entry with effect from 1 January 2003.

Japan: Bangladesh enjoys duty-free status to Japan which significantly expanded DFQF access to Bangladesh in 2007. The principal exports of Bangladesh enjoying duty-free treatment in Japan include raw hides and skins, leather and textile items.

China: Bangladesh is a beneficiary of China’s duty-free and quota-free programme for LDC products which was launched on 1 July 2010. China has reiterated its commitment to further open its market to LDCs by expanding the programme’s coverage to 97% of all tariff lines. At present, the LDC DFQF programme covers around 92% of Bangladesh’s current exports to China.

India: Bangladesh is among the 48 LDCs which are eligible to access India’s unilateral Duty-free Tariff Preference Scheme (DFTP).

Other countries: Bangladesh is also eligible to access GSP schemes of Turkey, Switzerland, Australia, Norway, the Russian Federation and Belarus as an LDC in terms of wider product coverage and deeper tariff cuts.

Bangladesh’s trade and investment regimes can also be found at WTO’s Trade Policy Review 2012: Bangladesh.