Nabhash Chandra Mandal Executive Member, Board of Investment

1. Bangladesh Investment opportunities In Bangladesh Nabhash Chandra Mandal Executive Member, Board of Investment March 29, 2014

2. CHINA INDIA INDIA SYLHET RAJSHAHI INDIA DHAKA BARISAL INDIA KHULNA CHITTAGONG Bangladesh at a Glance • Official Name : People’s Republic of Bangladesh • Political System : Parliamentary Democracy • Population : 152.7 million (Census, 2011) • Area : 147,570 km2 • Time Zone : GMT+6 Hours • GDP total : USD 128.81 bill (FY2012-13) • GDP Per Capita : USD 1044 (FY 2013) • Total Exports : USD 27.03 billion (FY2012-13) • Total Imports : USD 33.97 billon (FY2012-13) • Total FDI : USD 1.73 billion (Y 2013) • Forex. Reserve : USD USD19.15 billion(28 Feb.’14) • Major Maritime Ports: Chittagong, Mongla • Currency : BDT (1 BDT = USD 0.0128) (Avg FY September, 2012) • Major Cities : Dhaka, Chittagong, Khulna Rajshahi, Sylhet, Barisal, Rangpur • Major Maritime Ports: Chittagong, Mongla • Dialing Code : +880 200 miles 500 km Source: Bangladesh Economic Review, 2013, BBS, EPB, Bangladesh Bank 2

3. 03. Vision 2021: In Quest of a Happy, Prosperous and Inclusive Bangladesh • Medium Term Economic Targets (2013) • Raising economic growth rate to 8% • Reducing poverty rate to 25% from 45% • Enhancing electricity supply to 7,000 MW • Long Term Economic Targets (2021) • Boosting economic growth rate to 10% in 2017 and sustaining it till 2021 • Reducing poverty rate to 15% • Enhancing electricity supply to 20,000 MW • Raising the economy to the level of a middle-income country 3 3

4. 04. Road to Middle Income Country by 2021 4 To achieve the status of a middle income country by 2021: Required growth rate : 7.5%- 8% every year Per Capita Income : US$ 1,300 (World Bank Report) : US$ 1,100 (current) [Bangladesh Bureau of Statistics (BBS)] Share of Investment : 30% instead of 26.84% (FY 2013) 4

5. 05. Present status of the country: ‘‘… a peaceful society and stable .. .. ..’’ 5 Bangladesh maintains a very promising economy with stable growth rate 6%+ Per Capita Income US$ 1044 BD reduced MDG targeted poverty rate to 25% in 2012, before the targeted yr. (2013) Generated electricity 10,000 MW in December, 2013 BD is one of the top exporters of RMG to US & European countries Has never posted negative economic growth rate during the past 30 yrs. Maintains a open, market based economy Leasing & buying a private land by foreign investors in BD is easier than India, Pakistan and Srilanka (World Bank Report) Bangladesh is an emerging country for FDI and (World Bank Report) 5

6. 06. Sectoral Contribution to GDP: Sectoral Contribution to GDP since 1947: 6

7. Citi Investment Research & Analysis termed Bangladesh, China, Egypt, India, Indonesia, Iraq, Mongolia, Nigeria, Philippines, Sri Lanka and Vietnam have the most promising (per capita) growth prospects . Goldman Sachs branded as Bangladesh is in ‘Next 11’ list after the BRICS nations The International Monetary Fund (IMF) commented on the economy of Bangladesh as Resilient export and remittance flows have bolstered growth and external stability The Wall Street Journal (WSJ) dismissed the previous branding of Bangladesh as commented Bangladesh, 'Basket Case' No More - with a higher growth rate, a lower birth rate, and a more internationally competitive economy, JPMorganChase commented Bangladesh The country ranks fourth in growth in economically active population. Morgan Stanley has commented Bangladesh is at the very early stages of an investment boom… New York Timeshas termed Bangladesh as “an unlikely corner of Asia, strong promise of growth”… COFACE (Economic & Insurance Institution of France) termed among the 10 countries including Bangladesh have promisinggrowth prospects, business friendly environment- after Goldman Sachs ‘Next 11’ list like the BRICS nations COFACE countries: 1st 5: Peru, Philippine, Indonesia, Colambia & Srilanka , 2nd 5: Kenya, Tanzania, Zambia, Bangladesh & Ethiopia 07. What is told about Bangladesh

8. Bangladesh has scored higher than the average rating of around 100 developing countries in the CPIA of the World Bank that assesses four broad areas including economic & public sector management The areas are a) economic management, b) structural policies, c) policies for social inclusion and d) public sector management and institutions Bangladesh scores 3.5 out of a maximum 6 points Developing countries average point is 3.3 (BD score 0.2% higher) Basic requirements for sound investment are a) good macroeconomic statistics, b) accurate financial statements, c) stable regulatory framework and d) clear understanding of corporate governance structure Bangladesh possesses all of the above at the present time and the quality of macroeconomic statistics is improving gradually. Bangladesh is the most convenient destinations for FDI for its investment friendly facilities & regulations Leasing & buying a private land in BD by foreign investors is much easier than India, Pakistan and Srilanka ”World Bank’s latest report on Investing Across Boarder 2010 covering 87 countries lists BD as one of the most convenient destinations for FDI”.. 08. World Bank AssessmentWorld Bank on Bangladesh as an FDI destination:

9. 09. World Bank AssessmentWorld Bank on Bangladesh as an FDI destination:(contd..) According to the World Bank’s New Business report- 2013: • Bangladesh is ranked 74 for ease in doing a new business instead of previous yrs rank 132 • Bangladesh has undertaken significant & continuous reforms in business registration, process simplification and automation in service delivery Source: World Bank’s New Business Report- 2013

10. 10. FDI Policy Framework The National Industrial Policy- 2010 of Bangladesh is one of the best and liberal policies in South Asia. The main features of the policy are: a) Private sector is treated as the engine of growth b) 100% foreign equity is allowed along with unrestricted exit. c) All industrial sectors are open for foreign investors for investment except 4 *reserve sectors for the government. c) No upper ceiling for foreign investors d) Equal treatment for both local and foreign investment e) Export oriented industries are given top priority f) J/V with local partner either private or public is allowed but not mandatory. g) Foreign private investment in Bangladesh is secured by law. Reserve Sectors: 1. Defense and defense production, 2. nuclear energy, 3. extraction from reserved forests, 4. security printing and mint and air transportation (some domestic routes and international air cargo already opened for private investment.) and railways. 10

11. 11. FDI Policy Framework (contd…) The broader FDI policy & regulatory framework include, among others, the following:

12. 12. Investment Opportunities • Industrious low cost workforce • Strategic location, regional connectivity and worldwide access • Strong local market and growth • Low cost of energy • Proven export competitiveness • Competitive incentives, Tax holiday • Export & economic zones • Bangladesh is the bridge between ASIAN & SAARC nations • Bangladesh ensures adequate protection of intellectual property rights such as patents, designs & trademarks and copy right.

13. 13. Investment Environment - tax and policies • Bangladesh in global context • Duty and quota free access • Duty and quota free access to EUplus Japan, US, Canada, Australia and most other developed countries • Tariff-free access to selected SAFTA markets • Bilateral Investment treaties (BITs) • 32 countries and in process with another 08 • Double taxation treaties (DTTs) and other guarantees and bilateral agreements with 28 countries plus 21 in process • “…Bangladesh foreign trade policy provides duty and quota free access to many of the world’s major markets, for most products…” 13 13 13

14. 14.Investment Opportunities - incentives • Financial incentives • Tax holidays (Industries set up within 2015 for 17 industrial sectors): • In Dhaka & Chittagong Divisions (excluding city and adjacent ): 5 years 100% first 2 years : 50% next 2 years: last 1 year 25%. • In Rajshahi, Khulna, Sylhet, Barisal, Rangpur Divisions and 3 Chittagong Hilly Districts : 7years100% for 1st 3 years: 50% for next 3 years: 25% for last 1 year . • For Infrastructural Sectors: 10 yrs. (all over the Country) • Depreciation allowances: • Accelerated depreciation allowed for new industries:50%, 30% and 20% for 1st, 2nd, 3rd years on cost of plant & machinery • (“…very competitive range of financial incentives makes the cost of • doing business in Bangladesh even more attractive.…”) 14 14

15. 15. Investment Opportunities - incentives • Financial incentives • Businesses exporting 80% or more of goods or services • Reduced import duty on machinery & spares • (1% for export oriented industries and 3% for other industries) • Export credit guarantee scheme • Domestic market sales up to 20% allowed to export-oriented companies outside EPZ (relevant duties apply) • Cash incentives and export subsidies granted on the FOB value: • 5% for local textiles , 10% for jute products, light engineering products, 12.5% frozen fish, potato, 15% for leather products, and 17.5% for bicycles. • Remittances facilities: • Up to 75% of of the salaries of the foreigner employed in Bangladesh • Saving and retirement benefits at the time of return • Remittance of royally, technical-know how and technical assistance fees are allowed: • a. For new industry such fees should not exceed an aggregate limit of 6% of C& F value of imported machinery • b. For other projects, such fees should not exceed an aggregate limit of 6% of previous years sale. 15 15

16. Foreign investment in Bangladesh is secured by law against nationalization and expropriation. Foreign Private Investment (Promotion and Protection) Law, 1980 Bangladesh is a signatory to ICSID, UNCITRAL, OPIC, MIGA, WAIPA, WIPO and WTO. Intellectual Property right is protected by Law. Bilateral investment treaty with India signed in 6 May, 2009 The avoidance of double taxation treaty with India was signed Active presence of Bangladesh India Bangladesh Chamber of Commerce and Industry. 16. Promotion and Protection of Investment in Bangladesh

17. 17. A sustained economic growth Bangladesh at a Glance • “…constant unbroken GDP growth…” Source: Ministry of Finance, others 17

18. 18.Economic Performance - growth • Exports US$bn • Manufacturing growth % of GDP • “…export driven growth in manufacturing…” Source: Bangladesh Bureau of Statistics Bangladesh Economic Review 2013 18 18 18

19. . 19. FDI inflow… • FDI by major sectors

20. 20. FDI Inflow: Distribution by Sources/Countries (US$ Mill) In CY 2013*Jan.-June FDI inflow has increased by 88% from 2012 (Jan. June) Malaysia, British Virgin Islands, and Thailand has shown their interest * Data till June 2013 Source: Enterprise Survey, Bangladesh Bank

21. 21. Investment Opportunities Sectoral Opportunitiesortunities

22. 1. Agro-based & agro-processing industry 2. Jute & jute-mixed goods 3. Flower cultivation 5. Commercial plantation 6. Horticulture 7. Silkworm & silk industry 8. Furniture 9.Handicrafts 10. Home Textiles 11. Textiles industry 12. Readymade garments industry 13. High value added RMG 14. Computer software & ICT goods 15. Electronics 16. Light engineering incl. automobiles 18. Pharmaceutical goods 19. Leather and leather products. 20. Herbal medicines 21. Ceramics 22. Frozen Food 23. Integrated shrimp cultivation 24. Infrastructure 25. Jewellery and diamond cutting polishing 26. Oil and gas 27. Tourism industry 28. Basic chemicals/raw materials used in industries. 29. Dye and chemicals used in textiles industry. 30. Cosmetics and toiletries. 31. Information & Communication Technology 32. Health care 22. Prospective areas for Investment (as per the National Industrial Policy- 2010) 22

23. 23. BOI Role / Functions • BOI Functions are broadly categorized into three areas: • Investment promotion; • Investment facilitation (Registration, permission, recommendations etc. including investment aftercare) and • Policy advocacy • 4. Investment after care • For easy entry of investment in Bangladesh from BOI end- • All process & procedures are simplified for investment registration • Online Registration & Service Tracking system are introduced in BOI • Investor can register his project within a day.

24. 24. BOI services • BOI Service Category • Investment Counseling • Visa on Arrival • Foreign/JV / Local Investment Facilitation • a. Registration of New Industries • b. Visa Recommendation • c. Work Permit Issue • d. Recommendation for IP, Machinery Clearance Certificate • e. Recommendation for IRC, Bonded Warehouse • f. Approval of Royalty and Technical Assistance Fees • g. Processing and approval of Foreign Borrowing • h. Liaison/Branch Office Permission IP = Import Permit; IRC= Import Registration Certificate

25. 25. Private Public Partnership (PPP) Policy Promulgated by Govt. in 2010 The objectives of this Policy and Strategy are to: • Spell out the principles of partnership with private sector for undertaking various projects related to infrastructure as well as public service delivery; • Define an institutional framework, which is conducive and efficient in handling the PPP projects as well as effective to protect public interest; and • Ensure balance between risk and reward for both the government and private partners while aiming to keep the undertaking attractive for the private sector.

26. 26. Economic Zones: Economic Zones under implementation… • Govt has promulgated Economic Zones Act in 2010 to build EZ in the country • Key Features: • Comprehensive industrial Infrastructure • Development under PPP (Private Public Partnership) model • Owned and regulated by the government, but managed by the private sector • Encompasses multiple business sectors within each zone • Combines both bonded and non-bonded area • EZ includes non processing & domestic area Mongla, Sirajganj, Anowara, MirershoraiMaulvibazar 26

27. Bangladesh-India Business Relations Key Features: • Bilateral investment treaty with India signed in 6 May, 2009 • The avoidance of double taxation treaty with India was signed • Active presence of Bangladesh India Bangladesh Chamber of Commerce and Industry. • BOI arranged road show in major cities of India such as Mumbai, Chennai, Kolkata last year with active support from CII and IBCCI • Indian corporate houses like CEAT, TATA, BAJAJ, MARICO, AsianPaints, ACI Godrej, Emami, Sun Pharma, Mundi Pharma, Jyothikallol, TVS Auto etc are actively present in Bangladesh. 27

28. Bangladesh- india Business Relations Indian Investment Projects registered with BOI [Source: June , 2013 Board of Investment]

29. Bangladesh-India Business Relations Actual FDI from India (Fiscal year basis) The trend of actual inflow from India to Bangladesh is increasing… [Source: Enterprise Survey, Bangladesh Bank, World Investment Report , UNCTAD]

30. Thank you Prime Minister’s Office, Government of the People's Republic of Bangladesh, Jiban Bima Tower (19th Floor), 10 Dilkusha C/A, Dhaka 1000, Bangladesh Phone: (880-2) 7169580 Fax: (880-2) 956 2312 Email: service@boi.gov.bd Web: www.boi.gov.bd 30 30