Bangladesh, one of South Asia’s fastest-growing economies, presents immense opportunities for global investors.
With a GDP growth rate projected at 6.5% in 2025 (World Bank), the country offers a strategic location, a young workforce, and expanding industrial sectors like garments, technology, and infrastructure.
However, expanding into Bangladesh requires careful navigation of regulatory, operational, and cultural landscapes. This guide offers a step-by-step breakdown to help businesses enter and thrive in Bangladesh.
How to Set Up a Business in Bangladesh
Before diving into the process of setting up a business in Bangladesh, it’s essential to understand the country’s economic environment, legal framework, and cultural nuances.
Bangladesh offers a range of opportunities, particularly in sectors like textiles, manufacturing, IT, and renewable energy. However, success depends on thorough preparation and adherence to local regulations.
Essential Factors to Consider
- Market Research: Understand the demand for your product or service, competitive landscape, and consumer behavior.
- Legal Structure: Decide on the most suitable business structure (e.g., sole proprietorship, partnership, or limited company).
- Regulatory Compliance: Familiarize yourself with local laws, tax policies, and labor regulations.
- Cultural Sensitivity: Build relationships with local stakeholders and adapt your business practices to align with cultural norms.
- Infrastructure and Logistics: Assess the availability of resources, transportation, and utilities.
How to Set Up a Company in Bangladesh
Setting up a company in Bangladesh involves several steps, each requiring careful attention to detail. Below is a comprehensive guide to help you navigate the process.
1. Choose a Business Structure
The first step is to select a legal structure for your business. Common options include:
– Sole Proprietorship: Ideal for small businesses with a single owner.
– Partnership: Suitable for businesses with multiple owners.
– Limited Liability Company (LLC): Offers liability protection and is preferred for larger enterprises.
– Joint Venture: A partnership with a local company to leverage their expertise and resources.
2. Register Your Company
– Name Reservation: Submit your proposed company name to the Registrar of Joint Stock Companies and Firms (RJSC) for approval.
– Document Submission: Prepare and submit the necessary documents, including the Memorandum and Articles of Association, to the RJSC.
– Trade License: Obtain a trade license from the local city corporation or municipal authority.
– Tax Identification Number (TIN): Register for a TIN with the National Board of Revenue (NBR).
– VAT Registration: If applicable, register for Value Added Tax (VAT) with the NBR.
3. Understand Local Regulations
– Labor Laws: Comply with the Bangladesh Labor Act, which governs employment contracts, working hours, and employee benefits.
– Environmental Regulations: Ensure your business adheres to environmental standards set by the Department of Environment.
– Industry-Specific Regulations: Certain sectors, such as pharmaceuticals and telecommunications, have additional regulatory requirements.
4. Taxation
– Corporate Tax: The standard corporate tax rate is 25%, with reduced rates for specific industries.
– VAT: A 15% VAT applies to most goods and services.
– Withholding Tax: Employers must deduct tax from employee salaries and remit it to the NBR.
5. Banking and Finance
– Open a corporate bank account with a local or international bank operating in Bangladesh.
– Familiarize yourself with foreign exchange regulations, especially if you plan to repatriate profits.
How Do I Go About Manpower and Human Resourcing?
Building a skilled and compliant workforce is critical to your business’s success in Bangladesh. Here’s how to manage manpower and human resourcing effectively.
1. Visas and Work Permits
– Foreign employees must obtain a work visa and work permit to legally work in Bangladesh.
– The process involves sponsorship from your local entity and approval from the Bangladesh Investment Development Authority (BIDA).
2. Work Permit Requirements
– Submit a completed application form, passport copies, and proof of employment.
– Pay the required fees and await approval from the Ministry of Home Affairs.
3. The Visa Application Process
– Apply for a work visa at the nearest Bangladeshi embassy or consulate.
– Provide supporting documents, including your work permit, employment contract, and medical certificate.
4. Additional Considerations
– Ensure compliance with local labor laws, including minimum wage requirements and working hours.
– Provide training and development opportunities to enhance employee skills and productivity.
5. Social Security Management
– Employers and employees each contribute 10% of the basic salary to the social security fund.
– Workman compensation insurance is mandatory, with a minimum coverage of 2.5 lakh taka.
Employment Contracts
Employment contracts are a cornerstone of your relationship with employees. Here’s what you need to know:
Onboarding
– Provide new hires with a detailed employment contract outlining their roles, responsibilities, and benefits.
– Conduct orientation sessions to familiarize them with company policies and culture.
Salary Payment
– Salaries must be paid within seven days of the last pay period.
– Overtime is paid at twice the regular hourly rate, with a maximum of 12 hours per week.
Leave Entitlements
– Employees are entitled to 18 days of annual leave, 14 days of sick leave, and 10 days of casual leave.
– Maternity leave is 17 weeks, while paternity leave is not mandatory but may be offered voluntarily.
Termination
– Permanent employees must be given 120 days’ notice (or pay in lieu) by the employer.
– Severance pay of 30 days for each completed year of service.
Working Hours
– The standard workweek is 48 hours, with a maximum of 60 hours including overtime.
Employment Contract Considerations
– Clearly define probation periods, termination clauses, and grievance procedures.
– Include provisions for festival bonuses, which are common practice in Bangladesh.
Should I Set Up My Own Entity or Outsource to a Local Expert?
Deciding whether to establish your own entity or partner with a local expert depends on your business goals, resources, and risk appetite.
- Setting Up Your Own Entity: Offers full control over operations but requires significant time, effort, and investment.
- Outsourcing to a Local Expert: Reduces administrative burden and ensures compliance with local regulations. However, it may limit your control over certain aspects of the business.
Consider factors such as market entry strategy, budget, and long-term objectives before making a decision.
Innovare: Your Trusted Expansion Partner in Bangladesh
Navigating the complexities of business expansion in Bangladesh can be challenging, but you don’t have to do it alone.
Innovare is a trusted partner with extensive experience in helping international businesses establish and grow their presence in Bangladesh.
From company registration and compliance to human resourcing and payroll management, Innovare provides end-to-end solutions tailored to your needs.
With a deep understanding of the local market and a commitment to excellence, Innovare ensures a seamless and successful expansion journey. Partner with Innovare and unlock the full potential of your business in Bangladesh.