Regulatory Environment for Promoting Investment in Bangladesh

Indian subcontinent inherited the British legal system since the colonial period. As a result, Bangladesh has had a very structured legal system since its inception. It has about 45 laws relevant to investment, business, trade, and commerce in various sectors. There are more than 10 policies with different incentives and supports of the government to promote private sector investment in various sectors. Existing investment, business, trade, and commerce-related laws and policies of the country could be classified into the following categories:

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Regulatory Environment (Investment-Related Laws):

The Foreign Private Investment (Promotion and Protection) Act, 1980

The Bangladesh Export Processing Zones Authority Act, 1980

The Investment Board Act, 1989

The Bangladesh Private Export Processing Zones Authority Act, 1996

The Bangladesh Economic Zones Act 2010

Bangladesh Investment Development Authority (BIDA) Act 2016

 

Investment-Related Policies:

Private Sector Power Generation Policy Of Bangladesh 2004

Bangladesh Private Sector Infrastructure Guidelines 2004

SME Policy Strategies -2005

Policy Guidelines for Enhancement of Private Participation in the Power Sector, 2008

National Tourism Policy 2009

Renewable Energy Policy of Bangladesh 2009

Plot Allocation Policy in BSCIC Industrial Estate 2010

Policy and Strategy for Public-Private Partnership (PPP) 2010

Export Policy 2015 – 2018

Import Policy Order 2015-2018

National Industrial Policy 2016

 

Trade, Companies, Commercial or Mercantile Laws:

The Contract Act, 1872

The Partnership Act, 1932

The Drugs Act, 1940

The Bangladesh Small and Cottage Industries Corporation Act, 1957

The Negotiable Instruments Act, 1881

The Drugs (Control) Ordinance, 1982

The Bangladesh Standards and Testing Institution Ordinance, 1985

The Companies Act,1994

 

Securities & Exchange Laws:

The Securities Act, 1920

The Securities and Exchange Ordinance, 1969

The Depository Act, 1999

 

Taxation, Customs & Revenue Laws:

The Customs Act, 1969

The Income Tax Ordinance, 1984

The Value Added Tax Act,1991

The Travel Tax Act,2003

The Finance (2008-09 FY) Act 2009

 

Banking & Financial Institution Laws:

The Banking Companies Act, 1991

The Financial Institutions Act, 1993

The Money Laundering Prevention Act, 2009

 

Regulatory Environment for Promoting Investment in Bangladesh

Insurance Laws:

The Insurance Act, 2010

 

Land/Property Laws:

The Transfer of Property Act, 1882

The Registration Act, 1908

 

Imports-Exports & Shipping Laws:

The Bills of Lading Act, 1856

The Imports and Exports (Control) Act, 1950

 

Labor and Industrial Laws:

The EPZ Workers Association and Industrial Relations Act, 2004

The Bangladesh Labor Act, 2006

 

Consumer Laws:

The Consumer-Right Protection Act, 2009

 

Intellectual Property Laws: 

The Patents and Designs Act, 1911

The Copyright Act, 2000

The Trade Mark Act, 2009

 

Foreign Trade & Foreign Exchange Laws:

The Foreign Exchange Regulation Act, 1947

 

Regulatory Environment for Promoting Investment in Bangladesh

 

ICT laws:

The Information and Communication Technology Act, 2006

The Bangladesh High-Tech Park Authority Act, 2010

 

Public Procurement Laws:

The Public Procurement Act, 2006

 

Environmental Laws:

The Bangladesh Environment Conservation Act, 1995

 

Procedural Laws:

The Arbitration Act, 2001

The Artha Rin Adalat Ain, 2003 (The Money Loan Court Act 2003)

 

Tourism Laws:

The Bangladesh Tourism Reserved Area and Special Tourism Zone Act, 2010

 

Fire Service Laws:

Fire Prevention and Extinction Act, 2003

Investment relevant laws and policies (Regulatory Environment for Promoting Investment in Bangladesh):

A brief introduction about the major regulatory instruments to promote investment/business in Bangladesh could be shown as follows:

1. The Foreign Private Investment (Promotion and Protection) Act, 1980: This is a revolutionary act for facilitating and promoting foreign investment in Bangladesh. This act was adopted on 1st April 1980 by the government of Bangladesh. The main objective of this act was to provide promotion and protection of foreign private investment in Bangladesh. This act allowed a foreign entity to development of capital, technical, and managerial resources of Bangladesh; discovery, mobilization, or better utilization of the natural resources. It resulted in the strengthening of the balance of payment in Bangladesh; increasing employment opportunities in Bangladesh; and the economic development of the country.

 

2. The Bangladesh Export Processing Zones Authority Act, 1980: This is another first-generation act while the government shifted its direction from a state-owned socialism motive towards a free market economy and private sector development policy. This act was adopted on 26th December 1980. It was formulated to establish the Bangladesh Export Processing Zones Authority (BEPZA). BEPZA is responsible for the creation, development, operation, management, and control of export processing zones (EPZ) and for matters connected therewith. EPZ is a name of success in Bangladesh to attract foreign investment and increase the export / international trade of the country.

 

3. The Investment Board Act, 1989: This act was adopted on 2nd March 1989 to establish the Board of Investment. The objective of the Board of investment was to inspire investment in the private sector and organize investment-related logistic support for the promotion of the private sector. Primarily the Board of investment was attached to the Ministry of Industries and later on it was looked after by the Prime Minister’s Office. There is criticism in the market that the Board of Investment failed to perform its duty as per expectation. But it has had many successes as well. Very recently this Board of Investment has been abolished by the government and created a new entity titled Bangladesh Investment Development Authority (BIDA) under the Bangladesh Investment Development Authority (BIDA) Act 2016. The Bangladesh Investment Development Authority (BIDA) is the principal private investment promotion and facilitation agency of Bangladesh. The act is created on September 01, 2016. The act mandated BIDA for providing diversified promotional and facilitating services with a view to accelerating the industrial development of the country.

 

4. National Industrial Policy 2022: The government of Bangladesh adopted the latest industrial policy in 2022 titled ‘National Industrial Policy 2022’. This policy emphasized the aim of increasing the contribution of the industrial sector to the gross domestic product to 40 percent by 2027 by enhancing skills, productivity, and generating employment. The policy also focused on the establishment of diversified export-oriented industries, creating a conducive environment for the cottage, micro, small, and indium industries and attracting more local and foreign investment in the country. An action plan with a five-year timeframe has been included in the industrial policy to develop dynamic and efficient manufacturing and service industry.

 

5. SME Policy 2019: The government of Bangladesh adopted the latest SME Policy Strategy in 2019. This SME policy has 11 strategies based on six broader areas — human resource development, business development services, access to finance, transfer of technology, cluster-based SME development strategy, and access to marketing and information. The policy emphasizes extensive SME Development activities. It is dedicated to building a sustainable, environment-friendly SME sector and has underlined the4 need for creating necessary cluster and infrastructure development. Accordingly, different financial and non-financial supports would be provided to women entrepreneurs for their development.

Regulatory Environment for Promoting Investment in Bangladesh

6. The Export Policy 2021 – 2024: The Export Policy 2021-2024 was adopted by the government of Bangladesh on 28^th February 2022. This policy aims to almost double Bangladesh’s export earnings to $80 billion from $45 billion within the period by facilitating shipments of diversified, non-traditional goods and labor-based products. It focused on increasing the productivity of the export-oriented sector, ensuring the quality of exportable products at competitive prices, diversification of export items and market destinations, special attention to ICT-based and service export, selecting a priority list, selecting one focal point in all Bangladeshi embassies in abroad, activating commercial wings of the embassies to build commercial relations with respective countries in order to increase export of Bangladesh.

 

7. The Import Policy Order 2021 – 2024: The Import Policy Order 2021 – 2024 of Bangladesh was adopted by the government on 24^th April 2022. This policy focused on controlling imports of Bangladesh to ensure the quality of imported products (allowed), control the import of conditionally importable products, and import procedures. It contains seven chapters, these are general provisions for import, special directives to import, Industrial Import, policies and directives for commercial import, import by the government, and a chapter on the Import Trade Control (ITC) Committee which looks after disputes between an importer and the Customs Authority on ITC classification or description of goods imported under First Schedule of Customs Act. Therefore it is an order with mandatory implementable power like an act.

 

8. The Bangladesh Small and Cottage Industries Corporation Act, 1957: The Bangladesh Small and Cottage Industries Corporation (BSCIC) act was adopted during the Pakistan regime on 21st May 1957. The main objective of this act was to establish a Corporation for the purpose of promoting the development of small and cottage industries in the country. BSCIC played a very significant role in the promotion and development of cottage, micro, and small industries in Bangladesh. There are 79 BSCIC industrial estates established by the organization that planted the root of industrialization in the country. BSCIC is working to develop, promote, and further the cottage, micro, and small industries of Bangladesh. They are providing all sorts of industrial logistics in BSCIC industrial estates. SCITI is operating entrepreneurship development training for new and potential entrepreneurs throughout the year.

 

9. The Bangladesh Standards and Testing Institution Ordinance, 1985: The Bangladesh Standards and Testing Institution (BSTI) Ordinance was adopted on 25th July 1985. The main objective of this act was to establish an Institution for standardization, testing, metrology, quality control, grading, and marking of goods. Standardization and ensuring the proper quality of products is a very important issue for the safety of life and wealth. Ensuring world-class quality is the most significant criterion of a product to enter the export market. Therefore the strong capacity of BSTI could play a vital role in maintaining safety and product quality in the domestic market as well as ensure quick growth of export.

 

10. The Companies Act, 1994: The government of Bangladesh adopted the companies act on 12th September 1994. This is the bible of a joint stock limited companies, associations, and NGOs operating in Bangladesh. Actually, this is the compiled and updated version of a few older acts related to the companies and other associations. This is the guiding principle of incorporating, managing, day-to-day operation, profit sharing, sustaining, or dissolution of all sorts of companies in Bangladesh. It is a safeguard for investors and a guidebook for operating companies and associations in Bangladesh. It controls registration, classification, MoA & AoA management, the role of the directors, transferring of ownership, and possibly all types of circumstances to operate companies are covered in this act in detail.

Regulatory Environment for Promoting Investment in Bangladesh

11. The Drugs (Control) Ordinance, 1982: The drugs (control) ordinance was adopted by the government of Bangladesh on 12th June 1982. The main objective of this ordinance is to control the manufacture, import, distribution, and sale of drugs. Therefore it is a sector-specific ordinance and guidebook for the pharmaceuticals industry of Bangladesh. Pharmaceutical is one of the major contributory sectors of Bangladesh by starting its journey in 1982. Currently, Bangladesh is almost self-sufficient in medicine. Bangladeshi pharmaceutical companies are exporting their world-class products to 107 countries, including Germany, the USA, France, Italy, the UK, Canada, the Netherlands, and Denmark, etc.

 

12. The Contract Act, 1872: This is one of the oldest acts enacted during the British period on 25th April 1872. This is the legal framework related to signing, managing, and dissolution/void of contracts. This act is practiced by most of the commonwealth states. Therefore it is a universal type of act.

 

13. The Partnership Act, 1932: This is another inherited act practiced by Bangladesh by the British colonial regime. This act was enacted on 8th April 1932. The main objective of this act is to define and direct to manage the rules relating to partnership.

 

14. Taxation, Customs & Revenue Related Laws: Bangladesh’s revenue sector is operating and controlled under four acts and one ordinance. These are the Customs Act 1969, The Finance (2008-09 FY) Act 2009, The Income Tax Ordinance 1984, The Travel Tax Act 2003, and The Value Added Tax Act 1991.

 

15. Intellectual Property Rights Related Laws: Bangladesh has three separate acts related to copyright, patent, and trademark titled the Copyright Act 2000, the Patents and Designs Act 1911, and the Trade Mark Act 2009 to protect all sorts of intellectual rights of the innovators.

Regulatory Environment for Promoting Investment in Bangladesh

The government of Bangladesh has already reformed many laws and policies to improve the Regulatory Environment for Promoting Investment in Bangladesh. To Know More, Please Click Here!