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Foreign Investment Promotion and Protection Act in Bangladesh

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In the ever-evolving landscape of global commerce, nations strive to attract foreign investment as a catalyst for economic growth. Bangladesh, with its burgeoning economy, has implemented the Foreign Investment Promotion and Protection Act (FIPPA) to create an environment conducive to foreign investment.

This comprehensive guide delves into the nuances of the FIPPA in Bangladesh, exploring its legal foundations, key provisions, and the impact it has on fostering a favorable climate for foreign investors.

1. Legal Foundations of Foreign Investment Promotion and Protection:

The Foreign Investment Promotion and Protection Act (FIPPA) in Bangladesh is a pivotal legal instrument that outlines the framework for promoting and safeguarding foreign investment. Enacted in 1980, FIPPA serves as the cornerstone for creating an enabling environment for foreign investors by providing legal protections, incentives, and dispute resolution mechanisms.

2. Objectives of Foreign Investment Promotion and Protection ACT:

The primary objectives of Foreign Investment Promotion and Protection ACT are:

  • Promotion of Investment: Encouraging foreign investment in various sectors of the economy.
  • Protection of Investors: Ensuring legal protections against nationalization and expropriation.
  • Facilitation of Dispute Resolution: Providing mechanisms for the resolution of investment-related disputes.

3. Promotion of Investment:

FIPPA actively promotes investment by:

  • Creating a Favorable Environment: FIPPA aims to create a favorable environment for foreign investors by offering incentives and simplified procedures.
  • Encouraging Specific Sectors: The Act identifies specific sectors where foreign investment is particularly encouraged, aligning with national development priorities.

4. Key Provisions of Foreign Investment Promotion and Protection ACT:

a. Legal Protections:

  • FIPPA ensures legal protections for foreign investors against expropriation, nationalization, and other forms of adverse government actions.
  • Investors are entitled to fair and equitable treatment, ensuring a level playing field.

b. Investment Incentives:

  • The Act offers incentives such as tax holidays, reduced customs duties, and exemptions from certain local taxes.
  • Priority sectors may receive additional incentives to attract foreign capital.

c. Dispute Resolution Mechanisms:

  • FIPPA includes provisions for the resolution of investment-related disputes through negotiation, local courts, or international arbitration.
  • This ensures a neutral and efficient mechanism for dispute resolution.

d. Remittance of Capital and Profits:

  • FIPPA allows foreign investors to repatriate their invested capital, profits, and dividends freely.
  • This flexibility contributes to the ease of doing business in Bangladesh.

5. Sectors Encouraged by Foreign Investment Promotion and Protection ACT:

While FIPPA encourages investment across various sectors, certain industries receive special attention:

  • Information Technology: To harness the potential of the digital economy.
  • Energy and Power: Supporting infrastructure development.
  • Textiles and Garments: A traditional sector with continuous growth opportunities.

6. Application and Approval Process:

a. Eligibility:

  • Any foreign investor, individual, or organization is eligible to avail of the benefits under FIPPA.
  • Certain sectors may have specific eligibility criteria.

b. Application:

  • Foreign investors must submit an application to the Bangladesh Investment Development Authority (BIDA).
  • The application should detail the nature of the investment, its financial aspects, and the proposed benefits to Bangladesh.

c. Approval:

  • BIDA reviews the application and grants approval if it aligns with FIPPA guidelines.
  • The approval process is designed to be efficient, reflecting the government’s commitment to attracting foreign investment.

7. Challenges and Mitigation Strategies:

Despite the advantages offered by FIPPA, foreign investors may face challenges such as bureaucratic delays or changes in regulatory environments. To mitigate these challenges, investors can:

  • Engage Local Experts: Local legal and business experts can provide valuable insights and navigate local complexities.
  • Stay Informed: Regularly monitor regulatory changes and adapt strategies accordingly.
  • Conduct Due Diligence: Thorough due diligence on the regulatory landscape and potential challenges is crucial.

8. The Role of BIDA:

The Bangladesh Investment Development Authority (BIDA) serves as the key regulatory body overseeing FIPPA implementation. BIDA’s proactive role includes:

  • Facilitating Approvals: Streamlining the approval process for foreign investments.
  • Providing Guidance: Offering assistance and guidance to foreign investors navigating the regulatory landscape.

9. Recent Developments and Reforms:

Bangladesh continues to refine its investment climate, with recent developments including:

  • One-Stop Service Act: Introducing streamlined processes to reduce bureaucratic hurdles.
  • Investor Feedback Sessions: Proactively engaging with foreign investors to address concerns and enhance the investment climate.

10. Future Outlook:

As Bangladesh positions itself as a hub for foreign investment, the future outlook is optimistic. The government’s commitment to ongoing reforms and the proactive engagement with foreign investors signals a sustained effort to enhance the investment climate.


The Foreign Investment Promotion and Protection Act (FIPPA) in Bangladesh stands as a testament to the nation’s commitment to fostering a favorable environment for foreign investors. With legal protections, lucrative incentives, and a proactive regulatory body, FIPPA plays a pivotal role in attracting foreign capital. As Bangladesh’s economy continues to grow, FIPPA remains a cornerstone in the nation’s journey towards becoming a thriving hub for global investments.”


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