Top 10 Challenges and Ways Forward to Invest in Bangladesh
Md. Joynal Abdin*
Business Consultant & Digital Marketer
Co-Founder & CEO of Bangladesh Trade Center
Bangladesh, with its rapidly growing economy and abundant Investment opportunities, has emerged as an attractive destination for both domestic and foreign investors. With a population exceeding 160 million and a strategic location in South Asia, the country offers a vast consumer market and a gateway to regional trade. Over the past few decades, Bangladesh has witnessed substantial economic growth, driven primarily by its thriving textile and apparel industry, remittances from the expatriate workforce, and a growing service sector. However, despite its promising prospects, investing in Bangladesh comes with its share of challenges. This article explores the major obstacles that investors face in Bangladesh and offers strategic ways forward to harness its investment potential.
Challenges to Invest in Bangladesh:
1. Long permissions / registrations and licenses requirement: About 37 permissions / registration / license from different Government agencies are required to invest and operate business in Bangladesh [26]. List of required permissions / registrations and licenses are enlisted at the following table:
Table – 1: List of permissions / registrations and licenses requirement.
| Sl. | Description | Relevant Authority |
|
1 |
Trade License | Local government authority like UP, City Corporation etc. |
|
2 |
TIN Registration | Income tax authority (NBR) |
|
3 |
VAT Registration | VAT Authority (NBR) |
|
4 |
Joint Stock Registration (for Limited company / Partnership) | Office of the Registrar of Joint Stock Companies and Firms |
|
5 |
Bank Account | Schedule Bank |
|
6 |
Import Registration Certificate (IRC) | Office of the Chief Controller of Import & Export |
|
7 |
Export Registration Certificate (ERC) | Office of the Chief Controller of Import & Export |
|
8 |
Mushak – 7 | VAT Authority (NBR) |
|
9 |
Registration for Turnover Tax (if applicable) | NBR |
|
10 |
Application for Tax Holiday (if applicable) | NBR |
|
11 |
Application for Duty Draw Back (if Applicable) | Duty Exemption and Draw Back Office |
|
12 |
Drug License (for pharmacy) | Directorate General of Drug Administration (DGDA) |
|
13 |
BSTI Certificate | Bangladesh Standards & Testing Institute |
|
14 |
Approval from Deputy Commissioners (For Diesel and Acid Business) | DC Office |
|
15 |
Certificate from PETRO Bangla (for Diesel and Octane business) | PETRO Bangla Office |
|
16 |
Insurance | Insurance Company |
|
17 |
Application for land in EPZ / BSCIC Estate authority (If applicable ) | Bangladesh Export Processing Zone Authority / Bangladesh Small & Cottage Industries Corporation |
|
18 |
Application for Gas Connection (if required) | Local Gas Distribution Authority |
|
19 |
Application for Electricity Connection | Local Electricity Distribution Authority |
|
20 |
Application for Water & Sanitation Connection | Local water supply and Suarez authority. |
|
21 |
Telephone and Fax Connection | Telecom operators. |
|
22 |
Environment Clearance | Department of Environment |
|
23 |
Fire License | Fire Service and Civil Defense |
|
24 |
Approval from RAJUK for Factory Establishment | RAJUK / Other Municipal Corporations |
|
25 |
Approval from Board of Investment | Board of Investment |
|
26 |
Registration from DIFE | Department of Inspection for Factories and Establishments |
|
27 |
Registration from Inspector of Boilers | Office of the Chief Inspector of Boilers |
|
28 |
Construction Certificates | RAJUK or other Municipal Authority |
|
29 |
Registration as Readymade Garments Unit (for Garments factories only) | Export Promotion Bureau (EPB) |
|
30 |
Registration at BSCIC | Bangladesh Small and Cottage Industries Corporation (BSCIC) |
|
31 |
Collecting GSP (For exporters) | EPB |
|
32 |
Trademark Registration | Department of Patent Design and Trademark (DPDT) |
|
33 |
Patent Registration | DPDT |
|
34 |
Design Registration | DPDT |
|
35 |
Bonded Warehouse License (for RMG Exporters) | Customs Bond Commissionerate |
|
36 |
Labor Inspection | DIFE |
|
37 |
Inspection by Consumer Rights Department | National Consumer Rights Protection Department |
Source: Compiled by the author from different investment relevant government documents.
2. Absence of good governance and corrupt bureaucracy: A corruption free bureaucracy could offer prompt delivery of government services to enhance investment in Bangladesh.
3. Lengthy Judicial System: Lengthy and cumbersome judicial process is discouraging foreign investors to enter into Bangladesh.
4. Limited capacity to supply adequate electricity and gas to industries: About 47.90% of people are covering under electrification in Bangladesh. Currently about 7200 – 7500 MW of electricity is generating in a day. It is not sufficient to provide electricity supply into newer industries as demanded.
5. Absence of efficient physical infrastructure: There are two Sea ports in Bangladesh. But only Chittagong port is active. On the other hand only one Dhaka – Chittagong Highway is not sufficient to support total import – export trade of Bangladesh. As a result traffic jam is destroying our valuable time during international trade through this port. We are in need of a Deep Sea Port to enhance our international trade capabilities.
6. Absence of investment promoting agency: We have regulators to provide permissions and operate inspections in industrial establishments but we do not have a government agency to promote investment in larger scale. The SME Foundation is working to promote Small and Medium Enterprises but they do not have mandate to promote foreign investment or large scale local investment.
7. Lack of professionals and sector specific trained man power: Bangladesh is lagging behind in terms of trained manpower to meet up the demands from a modern industry. It is in terms of operators, trouble shooters or engineers etc. Government has to take the lead to produce sector specific trained manpower to feed the industries as well as create employment of the young generations.
8. Differential treatment with the change of government: With the change of political parties in the government of Bangladesh priorities of private sector changes. As a result there is a threat of discontinuity of government special supports with the change of parties in the government.
9. Lack of coordination among different organs of the government: Lack of administrative coordination among different governmental bodies caused private sector sufferings in few cases.
10. Delay to get services from support organizations: Delay of getting investment relevant government services like; permissions and licenses, electricity-gas and other logistics connections etc. or non-cooperation of the government officials may cause of hues sufferings of an investor.
Ways Forward:
The government of Bangladesh could take following initiative to create and maintain an investment friendly business environment in Bangladesh:
- Reducing number of investment related permission / license / registration requirement: Decreasing number of permissions / registrations / licenses with a predetermined time frame / one stop investment requirement services could improve the investment environment in Bangladesh.
- Providing quick utility connection: Ensuring hassle free and in time delivery of industrial utilities like Electricity, Gas and water supply to manufacturing and service providing business entities could inspire local and foreign investors to invest here in Bangladesh.
- One stop investment service: Government could provide real time one stop investment relevant services through Bangladesh Investment Development Authority could improve present investment scarcity situation in Bangladesh.
- Facilitating Establishment of Business Support Service Organizations: Government could facilitate establishment of management consultant type’s business support service organization in Bangladesh to guide local and foreign investors here in Bangladesh.
- Establishment of Entrepreneurship Development Institute like India: Government of Bangladesh could establish Entrepreneurship Development Institute in Bangladesh by adopting Indian EDI model for producing entrepreneurs rather than investors.
- Activating NCID with a full functioning secretariat: Existing National Council for Industrial Development (NCID) could make functional through establishing its own secretariat. It could play the role of coordinator among all investment relevant governmental bodies for ensuring quick delivery of services and holding dispute settlement mechanism among the investors and government agencies.
- Strengthening SME Development / Cluster Development Activities: Government could strengthen SME Development and Cluster development organization through capacity building of officials, supplying adequate funds and providing legal power to act properly and involve other government agencies to cooperate with their industry development action plan.
Despite the challenges, Bangladesh offers immense potential for investors looking to tap into its growing economy and promising consumer market. By addressing infrastructure deficits, bureaucratic inefficiencies, and regulatory uncertainties, the government can foster a more conducive investment climate. Moreover, promoting education, skill development, and financial inclusion will strengthen the country’s human capital, making it an attractive destination for both domestic and foreign investors. As Bangladesh continues to embrace reforms and create a favorable business environment, the nation’s investment landscape is likely to flourish, benefiting the economy and investors alike.
Top 10 Challenges and Ways Forward to Invest in Bangladesh, this is the summary of two chapters of the book “Most Prospective Sectors to Invest in Bangladesh” of the Author. To purchase the book click here.
*Author’s Short Profile:
Mr. Md. Joynal Abdin is a Business Consultant & Digital Marketer based in Dhaka, Bangladesh. He is also Co-Founder & CEO of Bangladesh Trade Center. Previously he served at Dhaka Chamber of Commerce & Industry (DCCI) as Executive Secretary; DCCI Business Institute (DBI) as Executive Director; SME Foundation as Deputy Manager; and the Federation of Bangladesh Chambers of Commerce & Industry (FBCCI) as Assistant Secretary.
The list of services Mr. Abdin is offering includes but not limited to Business Research and Documentations like Feasibility Study, Project Proposal Preparation, Writing Business Manual, Standard Operating Procedures etc.; Export Market Selection and Product Positioning at Home and Abroad; Buyers-Sellers Matchmaking; Website Development; Search Engine Optimization (SEO); and Social Media Marketing etc.
Top 10 Challenges and Ways Forward to Invest in Bangladesh, this is the summary of two chapters of the book “Most Prospective Sectors to Invest in Bangladesh” of the Author. To purchase the book click here.
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