Bangladesh offers opportunities for investment under its liberalized Industrial Policy and export-oriented, private sector-led growth strategy. All but four sectors are open for private investment in Bangladesh.

Business Environment

Economic Strengths
Government policies

Economic Strengths

Late in 2005, Goldman Sachs investment bank identified Bangladesh as one of the ‘Next Eleven’ big emerging markets. Other Next Eleven (N-11) countries include Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea, and Vietnam.

Foreign investors are allowed up to 100% equity participation and all industries are open for private investment (exceptions are defense and armaments; nuclear energy production; forestry; currency printing, railways and air transport).

The vast population of Bangladesh, with a large consumer market (young with rising incomes), is positive for private consumption.

A strategic geographic location in the vicinity of India and China, as well as low cost labor, makes it a potentially attractive destination for foreign direct investment.

The Foreign Private Investment Act provides legal protection from nationalization and expropriation, and guarantees the repatriation of capital and dividends. To illustrate: Bangladesh’s ‘investor protection’ indicator scores higher than India and Vietnam.

Bangladesh is a founding member of the South Asian Association for Regional Cooperation (SAARC, along with among others India and Pakistan) as well as the South Asian free trade area (SAFTA).

Financial markets are underdeveloped, and forecasts assume a steady increase in the size over the coming ten years, with higher availability of credit, stronger capital markets and further extension of micro-financing schemes.

Bangladesh’s business environment indicator is nearing that of India, and both infrastructure ratings are comparable.

The Anti-Corruption Commission (ACC) has cracked down on protection of overall property rights. The current administration is clearly taking the side of businesses, calling for lending rates to head much lower.


Both global market moves, particularly of export commodities, and the domestic political situation could counteract the attractive investment incentives offered by Bangladesh. This would limit the potential for economic growth, with negative implications for consumer spending growth.

Low literacy levels and an underdeveloped infrastructure have it remain a very poor country.

An as of yet high cost of credit discourages entrepreneurship, holds back industrialization and stifles small and medium sized businesses.

Bangladesh still faces many bottlenecks in its trade and investment climate. Goldman Sachs, besides a Next-Eleven country, also categorized Bangladesh as a country with broad-based weaknesses.

Indicators that helped decrease Bangladesh's ranking in the Global Competitiveness Index include the inadequate state of infrastructure, inadequate access to finance, widespread corruption and political instability.

The government's lack of capacity to handle major challenges, due to politics of confrontation, do not bode well for improving the investment climate in Bangladesh. Despite this Bangladesh has seen an average of 6% growth annually, making it an investment destination with huge potential as government policy is gradually geared towards improving the business environment.

Specific to Bangladesh are high trade barriers, high credit costs (central bank) and inadequate rule of law.

One of the biggest short term challenges for Bangladesh will be to improve the supply of electricity. The main obstacles are a shortage of gas (the main fuel used by generating plants) and the large number of old and inefficient power stations.

Government policies

Bangladesh offers opportunities for investment under its liberalized Industrial Policy and export-oriented, private sector-led growth strategy. All but four sectors (i.e. arms and ammunition and other defence equipment and machinery, forest plantation and mechanized extraction within the bounds of reserved forests, production of nuclear energy, and security printing and mining) are open for private investment in Bangladesh. The Board of Investment (BOI) established by the government for accelerating private investment, provides institutional support services to intending investors. The Board of Investment provides an overview of all business laws, rules and regulations most relevant to setting up commercial or industrial activities.

The Economic Relations Division of the Ministry of Finance offers an overview of all policies and strategies related to economic perspectives.

Overview of the most relevant policies:

Companies Act
This law is related to the formation, registration, management, and winding up of companies in Bangladesh.

Export policy
The objectives and targets, strategies, incentives and assistance that would be provided to expand export trading are presented in the Export policy.

Import policy
The main objectives of the Import Policy are to simplify the procedures for import of capital machinery and industrial raw materials with a view to promoting export, and to ensure growth of the Bangladeshi industry and availability of high quality goods to the consumers at a reasonable price.

Industrial policy
The provisions of all facilities for attracting foreign investments have been envisaged in the Industrial Policy.

Foreign Private Investment (Promotion and Protection) Act
The policy framework for foreign investment in Bangladesh is based on the Foreign Private Investment (Promotion and Protection) Act which provides for non-discriminatory treatment between foreign and local investment, protection of foreign investment from expropriation by the state and ensured repatriation of proceeds from sale of shares and profit.