Starting A Business In Bangladesh

Business Opportunities in Bangladesh

Today, Bangladesh has become one of the attractive destinations for foreign investors. Due to its cost-competitive business and low labor cost, foreign companies eagerly expand their businesses in Bangladesh. The country offers an open gate for foreign investors to invest in various industries except for the defense, mining, nuclear energy, mining, and forest plantation industries. 

The geographic location of Bangladesh is ideal for global trade. It has very convenient access to the international air and sea routes. Bangladesh is blessed with an abundant natural gas, water, and fertile soil. 

A few potential business opportunities to start a business in Bangladesh are - 

  • ~Electronics
  • ~Foreign foods 
  • ~Garment and textiles 
  • ~ICT and business services 
  • ~Ceramics 
  • ~Leather goods 
  • ~Agribusiness 
  • ~Light Engineering
  • ~Life Science 
  • ~Power Industry 

Here is a detailed guide on starting a business in Bangladesh, along with the documents required and other essential requirements. 

Benefits of Starting a Business in Bangladesh

Bangladesh has emerged as an attractive country, especially for foreign investors. Setting up a company in Bangladesh has numerous benefits. 

One of the most significant benefits is low labor costs. In addition to this, there are other benefits like:

  • ~Rapidly growing economy 
  • ~A strategic location 
  • ~Availability of young and skilled workforce
  • ~Profitable investment opportunities for foreigners 
  • ~Multiple trade agreements

Requirements for Starting a Business in Bangladesh

The legal requirements for company registration in Bangladesh are mentioned in the list below: 

  • ~Approval of the RJSC 
  • ~A bank account in Bangladesh 
  • ~Trade license issued by the local authority 
  • ~Business Identification Number and Tax Identification Number 
  • ~Rent an office in a non-residential location 
  • ~Prepare blueprint and the map of business for factory setup permission 
  • ~A copy of the Import or Export license 
  • ~Fire certificate for factory setup or corporate office 
  • ~Get approval from respective authority for telecommunication business approval from BTCL

Types of Business Structures in Bangladesh

Types Of Business Entities Definition Suitability
Private Limited Company This legal entity is considered separate from its owners. The Private Limited Company is an independent “legal person” that can -
  • Buy assets
  • Incur liabilities and profits & losses
  • Hire & fire employees
  • Enter contracts
  • Sue individuals/instistitons and can be sued as well
  • Pay taxes

    To acquire the advantages of appointing foreign employees, a minimum of US$50,000 is required.

    The PLCs require a minimum of two and a maximum of 50 shareholders whose financial liabilities are restricted to the amount of capital, they have invested.

This is the most flexible business entity, which can be 100% foreign-owned.
Branch Office The Branch Office can conduct business activities in Bangladesh aligned with the parent company’s business scope. However, BOs are not allowed to engage in manufacturing activities. They must subcontract these activities to a Bangladeshi manufacturing company.

The branch offices set up with the approval of BIDA or BB can accumulate the branch's outside profit net of applicable taxes subject to BIDA/BB permission.

The foreign companies interested in engaging in manufacturing and trading activities abroad can set up BOs in Bangladesh for the following purposes:

  • Exporting/importing goods
  • Carrying out research work associated with the parent company.
  • Acting as a buying/selling agent and representing the parent company located in Bangladesh.
  • Offering professional or consultancy services.
  • Promoting financial and technical collaborations between the parent company and Bangladesh companies.
  • Providing any technical support to the products supplied by the parent company.
  • Providing services to develop software and information technology in Bangladesh.
There is no official requirement for minimum capital. To establish a BO, a company must have an establishment license and a seal with the parent company’s name.
Liaison Office The liaison office is a mediator for communication between the principal place of business and other entities in Bangladesh. This is an affordable option for companies to enter the Bangladeshi market.

A liaison office cannot involve in any commercial activity directly or indirectly. Hence, it cannot earn income in the country.

Presently, LOs can engage in the following activities:

  • Conducting market research.
  • For providing any information about the company or its products to the prospective customers of Bangladesh.
  • Promoting the head office’s activities through different meetings and events can eventually lead to business in the later stages.
  • For technical or financial collaboration between the parent company and local companies.

    For establishing a liaison office in Bangladesh, the company must get approval from the Bangladesh Investment Development Authority (BIDA) and the Central Bank of Bangladesh (BB).

    There is no minimum capital requirement to establish a LO in Bangladesh. The cost for opening a LO is BDT 25,000, along with an inward remittance of US$50,000. This payment must be made to the office’s account from the Parent Company into the designated Bangladeshi bank account of the LO within two months after receiving the permission.

    Once the documents are submitted, it takes around four to eight weeks to receive approval to set up the LO.

This is a common option for companies who are first-time entrants to the Bangladeshi market.

Company Registration Process in Bangladesh

Step 1: Name Clearance:

To start the registration, you must have approval for your company’s name from the Registrar of Joint Stock Companies and Firms (RJSC). 

Step 2: Collection of Documents:

Post that, you will be required to draft the Article of Association (AoA) and the Memorandum of Association (MoA). You must submit these along with other necessary documents to RSJC.  

Step 3: Opening of a Bank Account:

After this, the third step is to open a bank account under your company's name and make an inward remittance of at least US$ 50,000 if you’re willing to hire foreign employees

Step 4: Submission of documents to the RJSC:

In this step, you will be required to submit the papers to the RJSC and pay the fee for registration. You can also check with the RJSC for the incorporation certificate during the standard process.   

Step 5: Additional Licenses and Registrations:

Once you have completed all the procedures mentioned above and have the certificate of incorporation, Articles of Association (AoA), and Memorandum of Association (MoA), you have a registered company in Bangladesh.  

You will be required to get some additional licenses and registrations, including -

  • ~Trade License 
  • ~Tax Identification Number (TIN) 
  • ~VAT Registration Certificate 
  • ~Fire Certificate 
  • ~Environmental Clearance Certificate (if required)

How Much Does it Cost to Incorporate a Company in Bangladesh?

The cost of registering a company in Bangladesh is $3990 a year approximately. This cost includes expenses like preparing legal documents, company registration, legal address for the company, and requisite taxes and fees.

Are Foreigners in Bangladesh on Certain Passes Allowed to Start a Business in Bangladesh?

Foreign investors can establish, own, and operate different business entities in Bangladesh. However, some sectors are explicitly reserved for government investment. 

The four restricted sectors are - 

  • ~Arms and ammunition and other defense equipment and machinery
  • ~Forest plantation & mechanized extraction 
  • ~Production of nuclear energy
  • ~Security printing

Generally, there are no major restrictions on foreign investment except for some sectors, which are controlled by the administrative licensing processes. The sectors which require clearance/permission from a different line of authorities are -  

  • ~Deep-sea fishing 
  • ~Private sector insurance companies 
  • ~Private sector banks & financial institutions 
  • ~Exploration, extraction, and supply of natural gas, oil, coal, and other mineral resources
  • ~Private sector generation, distribution and supply of power 
  • ~Crude oil refineries 
  • ~Medium and large industry using natural minerals and gas as raw materials 
  • ~Large-scale infrastructure projects (for example, flyovers, elevated expressways, inlace container depots or container freight stations. 
  • ~Satellite channels 
  • ~Sea-bound ship transport 
  • ~Cargo/passenger aviation 
  • ~VOIP/IP telephony 
  • ~Industries using heavy minerals extracted from the seashore 
  • ~Seaports/deep sea-ports 
  • ~Telecommunication services (mobile/cellular and land phone)

Government Assistance for Foreign-owned Businesses

There are some grants and incentives offered to foreign-owned businesses. 

Tax Holidays: These are allowed for industrial undertakings and physical infrastructure facilities set up between 1 July 2019 and 30 June 2024 in the “thrust” sector. This sector refers to the industries which directly contribute to the country’s industrialization. In Bangladesh, this sector is based on developed and underdeveloped areas. Industries set up in Export Processing Zones (EPZs) are also considered for tax holidays. 

On the other hand, for independent power plants starting their production before 31 December 2022, a tax exemption on income tax is granted for 15 years. Again, for Independent power plants (IPPs) commencing operations post 1 January 2023, there are some benefits:

  • ~100% tax exemption in the first five years 
  • ~50% exemption in the next three years 
  • ~25% exemption in the next to years 

How Multiplier Can Help?

In Bangladesh, there are many laws associated with the process of setting up a business. Alongside the paperwork and the list of requirements, it is important to follow the process to set up your new business in a foreign land without any hassle. 

Thus, while setting up a business in Bangladesh, it is feasible to partner with an external EOR & PEO like Multiplier to ensure a smooth workflow. We ensure to comply with the regulatory laws, maintain employee records, and manage payrolls efficiently. With us, you can smoothly set up your new business in the country without any worry. 

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Frequently Asked Questions

How much does it cost to start a business in Bangladesh?

To start a business in Bangladesh, an approximate capital of BDT 318320 is required. The cost is BDT 4125 (BDT 2925 registration fees + 1200 registration filing fees). 

Can a foreign-owned business in Bangladesh hire foreign staff? 

Yes, you can hire foreign staff. To hire, one has to contact BIO. The company has to bring the US $50,000 to the bank to get approval on the capability of hiring. In addition to this, there are other things to consider like tax-free EPZ, workforce cost, and raw material. 

Which is the best place in Bangladesh to set up a company? 

Dhaka is the ideal location to start a company in Bangladesh, which has the highest traffic.

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