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Regulation of inbound foreign investment law in Bangladesh

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In the interconnected global economy, Bangladesh has emerged as an appealing hub for foreign investors looking to capitalize on a burgeoning market. The regulation of inbound foreign investment profoundly influences the dynamics of this engagement. This article delves into the legal frameworks, regulatory processes, and prospects that define the landscape of inbound foreign investment in Bangladesh.

1. Legal Frameworks of inbound foreign investment:

Regulation of incoming inbound foreign investment in Bangladesh may be traced back to carefully created regulatory frameworks with the overarching goal of cultivating an environment that is amenable to investment.

The Foreign Private Investment (Promotion and Protection) Act of 1980 is the most important piece of law that governs investments made by foreign entities. This legislation offers the essential underpinning for the admission, operation, and protection of foreign investments inside the boundaries of Bangladesh.

2. Investment Promotion Agencies:

The Bangladesh Investment Development body (BIDA), which acts as the major regulatory body and plays a vital role in regulating and facilitating foreign investments, is the primary regulatory authority. BIDA also functions as the lead regulatory agency.

BIDA operates as a one-stop service provider, which enables it to speed up approval processes, assist in the fulfillment of regulatory requirements, and play a vital role in the establishment of an environment that is transparent and investor-friendly.

3. Investment Approval and Procedures:

It is mandatory for foreign investors to get investment permission from BIDA for the vast majority of industries. The approval procedure, which was intended to be as quick and painless as possible, is made easier by the fact that BIDA provides a number of services, one of which is an intuitive and web-based centralized service portal. In order to guarantee that the approval process goes off without a hitch, it is very necessary to have a complete comprehension of the various processes and paperwork requirements.

4. Sectors Open for Foreign Investment:

Bangladesh actively encourages foreign investment across diverse sectors. Traditionally, sectors like textiles, ready-made garments, and telecommunications have been focal points for foreign investors. Recent initiatives have broadened opportunities to encompass sectors such as information technology, energy, and infrastructure. Regular updates on open sectors are provided by BIDA.

5. Special Economic Zones (SEZs):

Special Economic Zones (SEZs) are strategically designated areas aimed at attracting foreign investment by providing a conducive business environment. Bangladesh has established several SEZs, each offering distinct incentives and facilities. Investors in SEZs benefit from tax exemptions, simplified customs procedures, and dedicated infrastructure support.

6. Legal Protections and Dispute Resolution:

Foreign investors in Bangladesh are afforded legal protections to safeguard their investments. The Foreign Private Investment Act acts as a shield against nationalization and expropriation. In cases of disputes, investors have the recourse of seeking resolution through international arbitration, offering a neutral and efficient mechanism.

7. Exchange Control and Repatriation of inbound foreign investment:

The regulation of foreign exchange transactions falls under the purview of the Bangladesh Bank, the central bank of the country. Governed by the Foreign Exchange Regulation Act of 1947, these transactions generally permit foreign investors to repatriate profits, dividends, and capital gains, contingent on compliance with regulatory procedures.

8. Taxation of Foreign Investment:

A nuanced understanding of tax implications is imperative for foreign investors in Bangladesh. The country offers competitive tax incentives to attract foreign capital. Tax administration is overseen by the National Board of Revenue (NBR). Investors should remain cognizant of tax rates, exemptions, and any bilateral tax treaties that might influence their investments.

9. Environmental and Social Compliance of inbound foreign investment:

In recent years, there has been a heightened emphasis on environmental and social compliance in foreign investment projects. Adherence to environmental regulations and a demonstration of commitment to social responsibility are integral components of the approval process. Investors must be prepared to align with sustainability standards.

10. Recent Reforms and Initiatives:

Bangladesh has undertaken reforms to further facilitate foreign investment. The introduction of the One-Stop Service Act aims to simplify procedures and alleviate bureaucratic hurdles. Additionally, the government has been proactive in engaging with foreign investors through dialogues and feedback sessions to address concerns and enhance the investment climate.

11. Challenges and Mitigation Strategies:

While Bangladesh presents lucrative opportunities, foreign investors may encounter challenges, including bureaucratic delays, infrastructural limitations, and cultural nuances. Strategies for mitigating these challenges include engaging local partners, staying abreast of regulatory changes, and conducting thorough due diligence.

12. Future Outlook of inbound foreign investment:

The regulatory landscape of inbound foreign investment in Bangladesh is undergoing evolution in response to global trends and local economic imperatives. As Bangladesh positions itself as a hub for investment, continuous efforts to streamline processes, enhance infrastructure, and foster a business-friendly environment are poised to shape the future landscape.


Effectively navigating the regulatory terrain of inbound foreign investment in Bangladesh demands a comprehensive understanding of legal frameworks, procedural intricacies, and sector-specific considerations. The country’s unwavering commitment to cultivating an investor-friendly environment, coupled with ongoing reforms, firmly establishes Bangladesh as an enticing destination for foreign investors seeking opportunities in South Asia. As the regulatory framework adapts to global dynamics, foreign investors assume a pivotal role in propelling Bangladesh’s economic growth and development.


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