FDI Approvals (BIDA) in Bangladesh (2025): A TRW Global Law Firm Playbook

Prepared by TRW — Tahmidur Rahman Remura. We advise global corporates, funds, and development partners on structuring, securing, and operating foreign direct investment (FDI) in Bangladesh end-to-end—equity, projects, reinvestments, foreign loans, royalties/technical fees, and exits.

Executive snapshot

Bangladesh welcomes FDI in almost all sectors. In practice, investors navigate two parallel rails:

1. Corporate & operational rail — incorporate (if using a subsidiary), build the project, comply with sector rules, and run tax/VAT/payroll.
2. BIDA & banking rail — register the investment project, and secure specific approvals/recommendations (work permits/visas, foreign loans & supplier credit, royalty/technical/franchise fee remittances, branch/liaison permission, capital machinery facilitation) through BIDA and your Authorized Dealer (AD) bank under Bangladesh Bank’s foreign-exchange rules. (BIDA, BB)

Bangladesh maintains a short list of reserved sectors (e.g., arms & ammunition, nuclear power, security printing/minting, forest plantation and mechanized extraction in reserved forests). Outside these, FDI is generally allowed; some “controlled” sectors require extra ministry clearances. Plan early for these forks. (BB)

The role of BIDA (and where it begins and ends)

BIDA is the apex investment promotion and facilitation agency. In FDI workstreams it typically covers: industrial project registration, permission for branch/liaison/representative offices, visa & work-permit recommendations, approval/endorsement of royalty/technical/franchise fee agreements, foreign loan & supplier credit approvals, and facilitation of capital machinery and select trade permissions—delivered increasingly through the One-Stop Service (OSS). (BIDA)

What BIDA does not replace:

• Sector regulators (telecom, financial services, energy, food/pharma, environment, etc.).
• Bangladesh Bank’s foreign-exchange rules (all cross-border flows ride on your AD bank and the GFET). (BB)

“Approval” vs “Registration”: get the nuance right

A common misconception is that Bangladesh requires a blanket “FDI approval.” In most open sectors, you will register the project with BIDA and then obtain specific approvals/endorsements tied to your transaction flows:

• Project Registration (industrial or service) — creates your BIDA file and unlocks downstream services.
• Controlled sectors — BIDA/OSS will route requests for NOCs or ministry permissions where needed.
• Foreign loans & supplier credit — need BIDA approval; repayments flow via your AD bank following GFET. (BIDA, BB)
• Royalty/technical/franchise fees — your agreement typically needs BIDA endorsement/approval; remittance is processed by the AD bank against the endorsed contract and within policy limits. (BIDA)

Structure choices for FDI

A) Wholly-owned or JV subsidiary (RJSC company)

• Best when you need limited liability, local contracting, invoicing, and scalable operations.
• Sequence: incorporation (RJSC) → BIDA project registration → sector licences → TIN/VAT BIN → banking → hiring and construction/operations.
• Equity inflows arrive as inward remittances to the company’s bank account; evidence trails (swift, FIRC/credit advice, share allotments) must align for future dividend/disinvestment remittances via your AD bank under GFET. (BB)

B) Branch or Liaison/Representative Office

• Branch can earn Bangladesh-source income (taxable) within its permitted scope; Liaison is non-commercial (coordination, market research).
• Both require BIDA permission and are common for pilot phases or project execution arms of foreign principals. (If you later scale, convert to a subsidiary.) (BIDA)

C) EPZ/EZ tech-park routes

• Investment in EPZs/Economic Zones/Hi-Tech Parks may be registered with the zone authority; BIDA still becomes relevant for foreign loans, royalties, visas, etc., when your project needs those services. (BIDA)

The FDI calendar: an end-to-end timeline

Phase 1 — Set the rails (Week 0–2)

• Decide vehicle (subsidiary vs branch/liaison) and sector footprint (check if controlled).
• Lock capital plan: equity, foreign loan/supplier credit, and expected IP/brand/technical flows.
• Identify your AD bank and open channels—they will run every cross-border payment under GFET. (BB)

Phase 2 — Corporate & BIDA (Week 2–6)

• Incorporate (if subsidiary), obtain TIN, open bank accounts.
• Register the project with BIDA via OSS; prepare to upload foundational documents (incorporation, MoA/AoA, board resolutions, project profile, machinery lists, land/lease, draft workforce plan, and—for controlled sectors—any applicable NOC requests).

Phase 3 — Licences, tax & payroll (Week 4–10)

• Fire/environmental/site clearances (as applicable), VAT BIN if you will make taxable supplies, payroll setup, and immigration planning (visa & work-permit recommendations via BIDA). (BIDA)

Phase 4 — Capital & contracts (Week 6–12)

• Equity remittances; share allotment/capitalisation trail in place.
• File foreign loan/supplier credit dossiers to BIDA (and plan for AD-bank reporting thereafter) if leveraging offshore debt. (BIDA, BB)
• Submit royalty/technical/franchise agreements for BIDA endorsement/approval before first remittances. (BIDA)

Go-live & aftercare

• Sync Mushak/VAT flows, test remittance packs (dividends, fees) with your AD bank, maintain BIDA renewal and reporting calendars.

The reserved/controlled sector checkpoint

Before committing capex, sanity-check sector status:

• Reserved for government investment (private/foreign investment not allowed): arms & ammunition/defence machinery; nuclear power; security printing & minting; forest plantation and mechanized extraction in reserved forests. (BB)
• Controlled sectors (require prior ministry/regulator permission): examples include banking/financial services, insurance, energy & minerals, large infrastructure, telecom/broadcasting, aviation, seaport/seashipping—expect additional clearances layered onto the BIDA process. (Your exact list depends on current industrial policy/sector notifications.) (BB)

Document packs you’ll actually need

For BIDA project registration (illustrative):

• Incorporation docs (COI, MoA/AoA), board resolution, project profile, machinery list (local/imported), land/lease, TIN/trade licence (if available), director list with nationalities/addresses, and draft HR plan.
• For controlled sectors: attach relevant ministry NOC/clearance requests.
• For service projects: include descriptions, pricing model, client markets, and compliance program (data, sanctions, AML where relevant).

For foreign loans & supplier credit:

• Term sheet + final loan agreement, utilisation plan, repayment schedule, pricing justification/benchmarks, FX risk note, and—if supplier’s credit—evidence of capital-goods import. Once approved, repayments can be processed by the AD bank in line with GFET and the approved schedule. (BB)

For royalty/technical/franchise fees:

• Executed agreement (scope, fee basis, caps, audit rights, IP), service-evidence protocol (training logs, access/reports), tax treatment and gross-up mechanics. BIDA endorsement/approval is typically referenced by banks before allowing remittances under policy limits. (BIDA)

Foreign-exchange (FX) hygiene: how money moves in and out

Everything cross-border runs through your Authorized Dealer (AD) bank under Bangladesh Bank’s GFET:

• Inward equity: credit to the company’s account with clear SWIFT/credit advice; align share allotment filings for future dividend/disinvestment remittances.
• Dividends: remittable via AD bank with audited accounts, AGM minutes/board resolution declaring dividends, tax evidence, and bank forms under the outward remittance chapter. (BB)
• Intercompany service charges: require contracts, invoices, withholding tax documentation, and purpose codes consistent with GFET.
• Royalty/technical/franchise fees: AD banks check BIDA endorsement/approval and policy thresholds before remittance. (BIDA)
• Foreign loans/supplier credit: after BIDA approval, inflows/outflows route through the same AD with reporting as per GFET. (BB)

TRW tip: Build a “Remittance Annex” into each cross-border agreement (royalty, services, loan) listing the documents you will provide to the AD bank—so finance teams can process without escalations.

Tax & VAT interactions (high-level)

• Corporate tax & WHT: model dividend/WHT outcomes and treaty relief if applicable; align intercompany pricing with substance and documentation.
• VAT: register for a VAT BIN if you make taxable supplies; ensure Mushak invoicing and input-tax credit flows match your ERP.
• Customs & import VAT: if importing capital machinery or raw materials, align HS classification, valuation, and any incentive scheme requirements with the project plan.

(Your tax structure depends on sector and incentives; we tailor this per project at the term-sheet stage.)

Governance, people, and visas

• Expatriates: BIDA issues visa/work-permit recommendations for expatriate hires in registered projects; plan for local-to-expat ratios, contract terms, and payroll withholding. (BIDA)
• Compliance: Maintain auditable UBO/KYC, sanctions screening, and EHS/labour records; sector buyers and lenders now test these in diligence.
• Insurance: Place D\&O (for subsidiaries), general/product liability, construction/erection all-risks (if building), and business interruption where justified.

Common pitfalls (and how to avoid them)

1. Treating BIDA as a one-time certificate. Registration is the start; loans, royalties, visas all sit on separate BIDA tracks, each with documents and renewal/variation workflows. (BIDA)
2. Bank last. Your AD bank is your lifeline for every inflow/outflow; engage them before first equity, loan, or fee payment to align GFET purpose codes and evidence packs. (BB)
3. Ignoring reserved/controlled sectors. Discovering sector status after capex is fatal. Clear it at the term-sheet stage. (BB)
4. Royalty/technical fees without endorsement. Remittances stall if the agreement isn’t endorsed/approved per policy; fix the paper first. (BIDA)
5. Supplier’s credit without import evidence. For capital-goods credit, banks require bills of entry/import evidence before repayments. Build that into your timeline. (BB)

Clause bank (Bangladesh-tuned drafting prompts)

• Regulatory cooperation: “Parties will cooperate to obtain and maintain BIDA registration, sector NOCs, and FX approvals; failure due to regulatory refusal triggers renegotiation or termination with pre-agreed unwind.”
• Remittance Annex: Enumerate documents for AD bank (agreement, invoice, service-evidence, WHT proof, board/AGM minutes for dividends, auditor’s certificate). Purpose codes to mirror GFET. (BB)
• Change-in-law: Automatic re-pricing or fee re-scoping if tariffs/VAT/SROs or FX rules alter remittance economics.
• Controlled-sector condition precedent: “Effectiveness is conditional upon receipt of [ministry] approval and BIDA confirmation.”
• Audit & information rights: Limited but effective rights to produce service-evidence (for royalties/technical fees) that banks routinely ask for.

90-day readiness sprint (TRW template)

Days 1–15 — Structure & sector: confirm vehicle, sector status, and financing mix; select AD bank; map GFET purpose codes; prepare board resolutions and cap table mechanics. (BB)
Days 16–30 — Company & BIDA: incorporate; open bank accounts; compile the BIDA registration pack via OSS; lodge controlled-sector NOC requests (if any). (BIDA)
Days 31–60 — Licences & people: VAT BIN, trade/municipal licences, environmental/fire/site, visa/work-permit recommendations; finalize royalty/technical/franchise contracts for endorsement. (BIDA)
Days 61–90 — Capital & go-live: first equity draw; foreign loan/supplier credit dossier to BIDA; test dividend/fee remittance dry-runs with the AD bank; institute compliance calendars.

FAQs

Q1: Do I need prior “FDI approval” to invest in Bangladesh?
Not in most open sectors. You register the project with BIDA, then secure specific approvals for foreign loans, royalties/technical fees, visas, and any controlled-sector NOCs. (BIDA)

Q2: Who decides how and when money moves cross-border?
Your Authorized Dealer (AD) bank, applying Bangladesh Bank’s GFET. Every inflow/outflow—equity, dividends, service fees, loan draws/repayments—must satisfy GFET documentation and purpose-code rules. (BB)

Q3: Which sectors are off-limits?
A short list is reserved for Government investment—notably arms/defence, nuclear power, security printing/minting, and forest plantation/mechanized extraction in reserved forests. Others may be controlled (additional approvals required). (BB)

Q4: Does BIDA endorse my royalty/technical/franchise agreement?
Yes—banks typically require BIDA endorsement/approval of such agreements (and compliance with policy limits) before remitting. Build endorsement into your go-live plan. (BIDA)

Q5: If I finance capex with supplier’s credit, what should I expect?
BIDA approval for the facility, and strict AD-bank evidence (e.g., capital-goods import proofs) before repayments under GFET. (BIDA, BB)

How TRW helps (end-to-end)

• Strategy & structure: Subsidiary vs branch/liaison vs zone-based entity; sector status checks; FDI term-sheets.
• BIDA & OSS execution: Project registration; controlled-sector NOCs; foreign loan/supplier credit approvals; royalty/technical endorsement; visa/work-permit recommendations. (BIDA)
• Banking & FX: AD-bank onboarding, GFET-compliant remittance packs (equity, dividends, services, loans). (BB)
• Contracts & tax/VAT: FDI-grade SPA/JVAs, services/royalty papers, change-in-law and remittance annexe, VAT/Mushak alignment.
• Aftercare & exits: Renewals, expansions, reinvestment, disinvestment/dividend flows, and clean closure.

References (max 3)

1. BIDA — FAQ & Services (project registration; branch/liaison permissions; work-permits; foreign loan & supplier credit; royalty/technical/franchise fee approvals). (BIDA)
2. Bangladesh Bank — Guidelines for Foreign Exchange Transactions (GFET) (AD-bank framework for all cross-border inflows/outflows). (BB)
3. Bangladesh Bank — Foreign Direct Investment & External Debt (Half-Yearly Survey, 2024) (reserved sectors list and openness to FDI otherwise). (BB)

Disclaimer: This playbook is general information, not legal advice. BIDA processes and FX practice evolve; obtain tailored counsel for your sector, capital plan, and contracts.