BIDA Permission
BIDA Permission for Foreign Companies in Bangladesh
The Bangladesh Investment Development Authority (BIDA) is the primary governmental body responsible for facilitating foreign investment in Bangladesh. Foreign investors, including companies that wish to establish a presence in Bangladesh, must obtain BIDA permission as part of the process of setting up a business entity in the country.
BIDA aims to promote and encourage investment by simplifying the approval process for foreign businesses and helping them navigate through various legal and regulatory requirements. Here's an overview of the process and requirements for obtaining BIDA permission for foreign companies.
Types of Businesses Requiring BIDA Permission
Foreign-Owned Companies
Foreign investors wishing to establish a subsidiary, branch office, or liaison office in Bangladesh must obtain BIDA permission.
Joint Ventures
Foreign companies entering into joint ventures with Bangladeshi businesses also require BIDA approval.
Industrial or Service Enterprises
Any foreign company looking to engage in industrial or service operations (other than specific exemptions) must seek BIDA approval.
Real Estate and Construction
Foreign investments in real estate and construction sectors typically require BIDA permission due to the regulatory framework governing land use and development.
Process of Obtaining BIDA Permission
Preliminary Application
The foreign investor must submit a Preliminary Application to BIDA. The application should include details about the foreign entity, the proposed investment, business activities, and the financial commitment involved.
Required Documents:
- Company’s profile (including background and financial status)
- Proposed business plan
- Financial commitment statement (amount of foreign investment)
- Details of the ownership structure and proposed joint ventures (if applicable)
- Documents of the parent company (such as the Certificate of Incorporation, Memorandum, and Articles of Association)
Project Evaluation
After receiving the application, BIDA evaluates the project to ensure that it complies with Bangladesh’s investment policies, particularly in sectors where foreign investments are encouraged. BIDA reviews factors such as:
- Industry and sector (e.g., manufacturing, IT, services, etc.)
- Potential impact on employment
- Contribution to export and local economic development
- Compliance with environmental and social regulations
Issuance of Approval Letter
If the application meets the necessary criteria and the project is approved, BIDA issues an Investment Permission or Letter of Approval. This allows the foreign entity to proceed with business registration, land acquisition (if required), and other formalities necessary to establish their business in Bangladesh.
Registration with Relevant Authorities
Following BIDA approval, the foreign company must complete other regulatory registrations, including:
- Registrar of Joint Stock Companies and Firms (RJSC): For incorporating a company, including a wholly owned subsidiary or joint venture.
- Bangladesh Bank: For managing foreign currency transactions, including remittances, capital inflows, and profits.
- Tax Identification Number (TIN): Registration with the National Board of Revenue (NBR) for tax purposes.
- Customs Registration: If the business involves imports/exports, registration with Bangladesh Customs is required.
Investment Incentives
Upon approval, BIDA may also offer various investment incentives, including:
- Tax holidays: Certain industries such as export-oriented businesses, IT, and special economic zones may benefit from tax exemptions.
- Duty exemptions: On the import of capital goods and raw materials.
- Repatriation of profits: The ability to remit profits back to the parent company abroad.
Key Requirements for Foreign Investors
Minimum Investment
BIDA typically requires a minimum investment for foreign companies wishing to set up in Bangladesh, although the specific requirement depends on the type of business.
Foreign Currency Regulations
Foreign companies need to ensure compliance with Bangladesh Bank’s foreign exchange policies, especially if they are planning to remit profits, dividends, or royalty payments to their home countries.
Environmental and Social Compliance
Foreign companies must meet the necessary environmental standards and ensure that the business does not adversely affect the local community or environment.
Approval from Relevant Ministries
In addition to BIDA, foreign companies may also need approval from other ministries and authorities depending on their industry, such as the Ministry of Environment, Ministry of Commerce, or Ministry of Industries.
BIDA Permission Fees
While BIDA does not charge a direct fee for permission, foreign companies may need to bear costs related to:
- Application and processing fees for specific licenses.
- Registration fees with other government bodies.
- Professional fees (e.g., legal, tax, or business consultancy services).
Why BIDA Permission is Crucial for Foreign Companies
- Legal Requirement: Without BIDA permission, foreign companies cannot legally operate in Bangladesh.
- Investment Facilitation: BIDA assists investors by guiding them through the approval process and ensuring that their investment meets the country’s legal and regulatory standards.
- Access to Incentives: Approval opens doors to investment incentives such as tax holidays, duty exemptions, and access to economic zones.