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.