Foreign Investment Rules in Bangladesh

Bangladesh has emerged as a promising investment destination in South Asia, thanks to its fast-growing economy, youthful workforce, and strategic location.

The country broadly welcomes foreign investors, allowing 100% foreign ownership in most sectors.

However, certain service industries such as cargo forwarding, advertising, and commercial education require partial or full local ownership.

Understanding these exceptions is crucial before planning any market entry or joint venture.

This article sheds light on the rules, restrictions, and sector-specific limitations on foreign direct investment (FDI) in Bangladesh.

Whether you’re a multinational firm, a solo entrepreneur, or an investment consultant, this guide will help you navigate the Bangladeshi investment climate with clarity and confidence.

Foreign Investment Rules in Bangladesh 2025

Bangladesh has positioned itself as a rapidly developing economy that encourages international business participation.

With an open-door policy on foreign direct investment (FDI), the country has seen a consistent rise in foreign capital inflow across various sectors.

Investors are especially drawn by the country’s competitive labor costs, improving infrastructure, and strong domestic demand.

However, while Bangladesh allows 100% foreign ownership in most areas, a few sectors still require local participation due to regulatory or strategic reasons.

Why Bangladesh Is Attractive to Foreign Investors

Several factors make Bangladesh an appealing destination for foreign investment:

• Strategic Location: Positioned between South and Southeast Asia, Bangladesh offers access to over 3 billion consumers in regional markets.
• Young Workforce: With over 60% of its population under 35, the labor force is not only young but also increasingly tech-savvy and trainable.
• Growing Economy: Bangladesh has maintained steady GDP growth of over 6% annually, even amid global economic disruptions.
• Reform-Driven Governance: The government has modernized regulatory frameworks to attract and protect foreign investors.

General Investment Policy

Bangladesh adopts a non-discrimination principle toward foreign investors. This means that, in principle, foreign businesses are treated the same as local companies.

The core policy framework encourages 100% foreign ownership in manufacturing, energy, infrastructure, ICT, and many other service sectors. In addition, the government offers:

• Tax holidays
• Duty-free import of capital machinery
• Full repatriation of profits and capital
• Access to bonded warehouse facilities

Sectors with 100% Foreign Ownership Permitted

Foreign investors are welcome in a broad range of sectors. Some key examples include:

• Garment and textile manufacturing
• Electronics and IT-enabled services
• Renewable energy and power generation
• Financial technology (FinTech)
• Tourism and hospitality
• Construction and real estate development

In these sectors, foreign investors can set up businesses as wholly owned subsidiaries without needing local partners or shareholders.

Sectors Requiring Local Ownership

While the majority of industries are open to full foreign ownership, certain sectors are restricted and require local ownership or partnership. These include:

• Freight/Cargo Forwarding Agents: Foreign investors can participate, but local ownership is mandatory for licensing.
• Courier Services: Operations must be in partnership with Bangladeshi entities.
• Shipping Agents: Local representation is required, often due to port and logistical regulations.
• Airline/Railway Cargo Agents: Foreign companies must partner with locally registered entities.
• Advertising Agencies: Commercial media and advertising require partial local ownership.
• Commercial Education Institutions: Profit-oriented schools or colleges must involve local shareholders.
• Indenting and Buying Houses: These entities often must register locally with Bangladeshi nationals as owners or majority stakeholders.

Why Local Ownership Is Required in Some Sectors

The rationale behind these restrictions includes:

• National Interest: Sectors like education and transport are considered critical to public infrastructure and social development.
• Security Concerns: Industries related to logistics and communications may pose national security concerns if fully foreign-owned.
• Employment Opportunities: Encouraging local ownership promotes entrepreneurship and job creation for citizens.

How to Structure Investment in Restricted Sectors

For foreign investors interested in restricted sectors, the most viable structure is a joint venture (JV) with a local partner. Here’s how this typically works:

• Form a legal entity (e.g., Private Limited Company) under the Companies Act.
• Define equity shares in compliance with sector-specific ownership caps.
• Ensure local directors and partners hold active roles, as required.
• Secure approval from the Bangladesh Investment Development Authority (BIDA).

Role of BIDA and Regulatory Oversight

The Bangladesh Investment Development Authority (BIDA) is the central agency facilitating investment. They provide:

• Guidelines for restricted sectors
• Licensing support and registration
• Coordination with relevant ministries and departments
• Fast-track services for large-scale or high-priority projects

Other relevant bodies may include:

• Bangladesh Telecommunication Regulatory Commission (BTRC)
• Ministry of Commerce
• Bangladesh Bank (for foreign exchange and repatriation)

Steps to Start Investing in Bangladesh

1. Conduct sector-specific due diligence
2. Register your business with RJSC (Registrar of Joint Stock Companies)
3. Apply for necessary sectoral licenses
4. Obtain trade license and TIN (Taxpayer Identification Number)
5. Register with BIDA for investment recognition and benefits

Tips for Foreign Investors

• Engage local legal and tax advisors early in the process
• Be aware of changes to the Finance Act or SROs (Statutory Regulatory Orders)
• Build strong partnerships with local firms to improve market insight and regulatory compliance
• Stay updated with BIDA and NBR notifications

Conclusion

Bangladesh is an open and investor-friendly economy that welcomes foreign capital in nearly all sectors.

However, understanding where local participation is required can help you avoid regulatory pitfalls and ensure a smoother business launch.

With a proactive approach and proper compliance, foreign investors can thrive in this fast-emerging South Asian economy.

Whether you’re planning a greenfield investment or entering through a joint venture, Bangladesh offers promising opportunities—backed by strategic reforms and a commitment to inclusive growth.