Foreign investment, economic development

Foreign investment, economic development

The present government has clear and well-defined economic
policies, geared to promoting foreign investment in the country.
The country welcomes private investment in all areas of the
economy, with the exception of five sectors due to national
security issues. Investors are not restricted on the amount of
investment. A foreign investor can own 100 percent of an asset
without prior government approval.

Foreign investors are eligible for a wide range of tax and
fiscal incentives. The government also has set up a high-powered
committee to accelerate the approval and processing of foreign
investment proposals. This Board of Investment (BOI) coordinates
and facilitates implementation of foreign direct investment
projects.

The government is focusing on developing the country's
infrastructure and has initiated a number of policies to pursue
private investment in infrastructure facilities and services.
Investors are encouraged to build and operate with options to own
or transfer.

Projects the government is focusing on include:

* Power generation,

* Exploration and exploitation of natural resources,

* Highway development, including bridges, expressways and
tunnels,

* Port infrastructure development,

* Transportation facilities,

* Industrial parks/private Export Processing Zones (EPZs).

Major reforms undertaken by the government include:

* The Private Export Processing Zone Act,

* A permanent law reform commission to ensure greater
transparency and predictability in the way rules and regulations
are made,

* The Administrative Reforms Commission,

* An update and modernization of Company Law 1913,

* Reorganization of the Securities and Exchange Commission,

* An amended Industrial Relations Act to enhance labor market
efficiency,

* Opening of power generation to the private sector,

* Opening of air cargo operations to the private sector,

* Multiple-entry visas issued to visiting foreign investors,

* Provisions allowing for the import of standby generators free
of tax. Sale of excess electricity to nearby industrial units
without permission from any agency is allowed, provided own
distribution line is used,

* Licenses issued to four cellular telephone operators,
illustrating the government's commitment to a competitive and
market economy.

Fiscal incentives allowed for power generation include:

* A 15-year corporate income tax exemption for private power
companies,

* Power companies will be allowed to import plant equipment
without paying customs duties, VAT or any other surcharges as
well as import permit fees, except for indigenously produced
equipment manufactured according to international standards,

* Repatriation of equity along with dividends will be allowed
freely,

* Lenders to such companies will receive income tax exemptions,

* Power generation has been declared an industry, making the
companies eligible for all concessions available to industrial
projects,

* Private parties may raise local and foreign funds in accordance
with regulations applicable to industrial projects as defined by
BOI,

* Capital gains are exempt from transfer of shares by the
investing company.

The Ministry of Energy and Mineral Resources has signed two
agreements, with two more expected to be signed shortly, for two
barge-mounted power projects involving foreign investments worth
US$400 million. These are expected to be operational by the end
of 1998.

The government has secured foreign investment against
nationalization, expropriation and will compensate investors in
the event of a loss due to civil unrest, etc.

The government also provides adequate protection for
intellectual property rights, with guarantees through
multilateral agencies.

The BOI is also setting up a one-stop service, where investors
will no longer be required to go from door to door for services
like gas, electricity or telephone connections. Representatives
from the Power Development Board, Dhaka Electricity Supply
Authority, the rural Electrification Board, WASA and T&T will all
be conveniently located on one floor at the BOI.

The BOI has set up a welcome counter at Dhaka Airport to
welcome foreign investors. The board is also establishing
industrial parks where all facilities, including land, will be
available for investors to set up industries. These parks will be
set up outside EPZ areas but will be modeled on existing EPZs.
Local entrepreneurs have also shown an interest in setting up
such industrial parks.

Bangladesh has established prudent monetary and fiscal
policies to keep inflation at a lower rate, reduce the fiscal
deficit and maintain a healthy foreign exchange reserve to ensure
competitiveness in the economy. International investor confidence
and significant inflow of new investment funds is now helping
Bangladesh move forward confidently into the 21st century.