US-Bangladesh Investment

US- Bangladesh Investment

USA is the second largest investing country in Bangladesh after UK, the total investment so far being about $1 billion. Another $ 1.5 billion is in the pipeline for power plants, coal, mine and fertilizer plants. US investment in Bangladesh in 2015 was the highest amounting to $550m, representing one-fourth of the total global FDI into Bangladesh. US investments in Bangladesh have historically focused on the energy and power sectors covering roughly around 80% of its portfolio.  Chevron, Unocol and ConocoPhillips are the major players in this field. With a liberal investment climate, low cost of doing business, and a growing consumer market, returns on investments of US businesses in Bangladesh are apparently very high. In such as a win-win business dynamics, Bangladesh encourages more flow of FDI from the USA to accelerate economic growth of the country and help fulfilling its dream of becoming a middle income country by 2021. Bangladesh-US bilateral Investment Agreement and Convention on avoidance of double taxation between the two countries were signed in 1986 and 2004 respectively with a view to protecting and encouraging the US investment in Bangladesh.

Major laws affecting foreign investment in Bangladesh include: the Foreign Private Investment (Promotion and Protection) Act of 1980; the Industrial Policy Act of 2005, the Bangladesh Export Processing Zones Authority Act of 1980; the Companies Act of 2013, and the Telecommunications Act of 2001. Legislation offers incentives for investors, including: 100% foreign ownership in most sectors, tax holidays and exemptions, reduced import duties on capital machinery and spare parts, and duty-free imports for 100% exporters of ready-made garments. The Government of Bangladesh extended a tax holiday scheme for start-up industries. Beneficiary industries include agro-processing, steel production, jute industries, some textile units, and telecom infrastructure except for mobile phones. A tax rebate facility to non-resident Bangladeshi investors was also extended to induce investment from abroad. Import duties and supplemental taxes remain high and constitute an important source of government revenue. Customs bonded warehouses enable companies located in EPZs to avoid duty payments on inputs for goods that will be exported.

Government of Bangladesh has attached highest importance to the augmentations of private investments in the country. The incentives offered are one of the most competitive in South Asia. It has no restrictions on the amount of share of investment. Foreign investors are eligible to take advantage of a wide range of generous tax concessions and other fiscal incentives and facilities including remittance of profits. With state guarantee against nationalization and expropriation as well as international obligations as a signatory country to the major international trade and investment agencies i.e.  MIGA, OPIC, ICSID, WAIPA, WIPO and WTO, Bangladesh offers a lucrative proposition for safe investment with high returns.

Government of Bangladesh has been investing substantially to improve the situations in the infrastructure and power sector. The courageous decision of the Government to build Padma multipurpose bridge project solely on domestic finance demonstrates the government’s intention for encouraging investment.  Longest of its type in Bangladesh, the bridge is expected to add greatly to the brisk economic run of the country by changing the economic landscape of the south-west region linking it with the capital, Dhaka. With improved infrastructure, a growing consumer base and regional interconnectivity, Bangladesh would potentially offer a profitable business venture for the investors. US businesses may take advantage in potentially diverse opportunities in areas like power, energy, shipbuilding, agro-processing, pharmaceuticals, ceramics, ICT and telecommunications.

Foreign Direct Investment (FDI) into Bangladesh

Year Total FDI (m US$) FDI from USA (m US$)
2009 700.16 42.89
2010
913.32 56.95
2011 1136.38 117.24
2012 1292.56 43.80
2013
1599.16 75.95
2014
1526.70 33.67
2015
2223.00 574.00