Govt plans incentives for Bangladeshis bringing in foreign investment

Infographic: TBS

The government is planning to introduce an incentive scheme for Bangladeshi individuals who help bring in Foreign Direct Investment (FDI).

The Bangladesh Investment Development Authority (Bida) is drafting guidelines and preparing a concept paper with the aim of implementing the initiative in the next fiscal year.

The proposal was discussed during the third meeting of the Bida Governing Board held in April, chaired by Chief Adviser Muhammad Yunus. The board gave in-principle consent to the initiative at the meeting.

According to Bida, the objective is to democratise FDI promotion by recognising the efforts of Bangladeshi individuals in attracting foreign investment.

The idea is to encourage a broader and more inclusive role in national economic development.

Bida Executive Chairman Chowdhury Ashik Mahmud Bin Harun, who presented the concept paper at the meeting, said many non-resident Bangladeshis (NRBs) have expressed interest in supporting FDI efforts voluntarily, but there is currently no structured system to recognise or reward their contributions.

Notably, to encourage expatriate Bangladeshis to send remittances through legal channels, the government introduced a 2% incentive in 2019, which was later increased to 2.5%.

Similarly, Bida proposed a 1% tax-free incentive for individuals who bring in FDI.

"Many expatriate Bangladeshis have strong overseas networks and understand local languages and business environments. By recognising their potential, we can bring in investment through their efforts instead of hiring additional staff," he added.

The proposed scheme will be open to all Bangladeshi citizens, including those living abroad.

However, the incentive will only be applicable to individuals, not institutions, and only if they make a direct and significant contribution to generating FDI leads.

To qualify, individuals must act independently, with no direct or indirect relationship that could influence the investment process.

Only new equity investments worth a minimum of $5 million will be eligible, including those made in installments. Investments by existing shareholders will not qualify.

As an example, Ashik Mahmud noted that a Bangladeshi expatriate living in China and speaking the language can have a rapport with Chinese institutions that Bida might not be able to match.

"If an NRB brings in $100 million using their own contacts and knowledge—something Bida itself might not be able to achieve—why should we not recognise that contribution with an incentive, just as we do for remittances?" said the executive chairman.

To operationalise the scheme, a fund named "FDI Recognition" will be created and allocated to Bida at the start of the fiscal year. Individuals must apply for the incentive within 14 days of the public announcement of the investment, submitting supporting documents, proof of identity, and professional credentials.

Applicants must also declare, through an affidavit, that they have no conflicting relationship with the investing party. Supporting materials such as emails, letters, or references must be included to verify their role.

A review committee comprising representatives from relevant government institutions will assess each application.

Members of this committee include the adviser in charge of the Ministry of Finance, the Bida executive chairman, the governor of Bangladesh Bank, the chairman of the National Board of Revenue, and the finance secretary.

Additional members or third-party experts may be involved in the verification process if necessary.

Approved incentives will be disbursed in local currency through the applicant's bank account.

At the meeting, Planning Adviser Wahiduddin Mahmud noted that financial flows can be unpredictable and suggested prioritising investments in infrastructure, which are more tangible and easier to track.

He recommended considering industrial infrastructure development in the incentive framework.

Bida Head of Business Development Nahian Rahman Rochi said, "The Governing Board has agreed in principle. We have presented the concept paper and are now working on a Standard Operating Procedure (SOP). Once that is complete, each stakeholder's responsibilities will be clearly defined. The final guidelines will be based on the opinions of the incentive committee and then presented at the next board meeting."

The previous Bida Governing Board meeting was held in 2020, with the latest one taking place on 13 April this year. The executive chairman said such meetings will now be held every three months to expedite decision-making.

In line with this initiative, Finance Adviser Salehuddin Ahmed proposed in the national budget for FY2025-26 an allocation of Tk5,040 crore for Public-Private Partnership (PPP) based investment projects.

"A pipeline for investors is being created to increase foreign investment. Through this, investment commitments will be converted into actual investments through tracking. We are also focusing on PPPs to implement projects in potential sectors," he said in his budget speech earlier this month.

Chowdhury Ashik Mahmud Bin Harun, who also heads the Bangladesh Economic Zones Authority (Beza), said, "We are working on two tracks to boost both domestic and foreign investment—developing an Investor Relationship Management System and designing an incentive scheme. This initiative mirrors the existing cashback model for exports. The budgetary commitment in this regard is encouraging."