Factory Setup in Bangladesh — The 2025 Builder’s Blueprint by TRW Law Firm

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Featured snippet (quick answer)

To set up a factory in Bangladesh in 2025: pick your location (regular, EZ/EPZ), create or register the entity, obtain a trade licence, TIN & VAT/BIN, register your industrial project with BIDA (via One Stop Service), secure environmental clearance (ECC) from the Department of Environment, design and build to BNBC and local building approvals, apply for factory/establishment licence on DIFE’s LIMA portal, and close operational licences (fire, boiler, electricity, IRC/ERC for trade, bonds for exporters). Sequence is everything—time your land, utilities, ECC, and DIFE applications so machinery commissioning and export proceeds rules align. (bida.gov.bd, ecc.doe.gov.bd, LIMA)

Why this guide — and why TRW

TRW Law Firm is Bangladesh’s largest cross-border law firm. Our Dhaka–Dubai–London–U.S. teams have shepherded greenfield factories and brownfield expansions across textiles & apparel, FMCG, steel & aluminium, electronics, pharma, automotive components, agriprocessing, and renewables. We integrate regulatory strategy, land and construction, environmental & labour compliance, FX/trade controls, contracts, and supply-chain so your plant is not just built—it’s bankable, compliant, and export-ready.

1) Choose your landing zone: city, EZ or EPZ

Bangladesh offers three broad location archetypes:

1. General industrial land (private/municipal): maximum flexibility; you coordinate zoning, utilities, approvals, and logistics.
2. Economic Zones (EZs): master-planned estates with consolidated utilities, faster approvals, and investment incentives; best when schedule certainty matters and you need expandable parcels.
3. Export Processing Zones (EPZs): export-oriented estates with customs facilitation, bonded facilities, and robust compliance expectations—ideal for high-throughput exporters.

TRW tip: Start with your shipment profile (domestic vs. export mix), utility intensity (power, gas, water), and labour catchment. This determines whether EZ/EPZ’s one-window is a time saver for you or whether general land plus bespoke utility agreements yields lower lifetime cost.

2) Incorporate the vehicle and open the financial rails

• Entity type: Private limited company (most common), branch/liaison (limited scope), or JV vehicle.
• Registrations: RJSC incorporation, Trade Licence at the factory address, TIN (income tax) and VAT/BIN (indirect tax).
• Banking rails: Capital account for foreign equity; current accounts for operations; LC facilities and buyer’s credit lines.
• Shareholder agreements: If you have a JV, set reserved matters, transfer rules, deadlock mechanisms, and exit waterfall early—before capital outlays.

3) Lock the industrial project with BIDA (and plan incentives)

BIDA is your starting gate for industrial projects outside EPZs/EZs. The One Stop Service (OSS) centralizes filings and signals to banks and agencies that your project is legitimate and in motion. At minimum, your OSS pathway will touch project registration, industrial permissions, and where relevant, visas and work permits for expatriate specialists. Build your application pack (business plan, lease/land docs, corporate papers) and diarise renewals and amendments. (bida.gov.bd)

Why this matters: BIDA registration is often the first document banks, utilities, and zone authorities request when you apply for connections, LC lines, or duty benefits. Treat it like your plant’s passport.

4) Environmental clearance (ECC): sequence this early

The Department of Environment (DoE) assigns activities by impact category—Green, Orange-A, Orange-B, Red—which drive the depth of analysis and the clearance path.

• Green: lighter documentation; comparatively quicker ECC.
• Orange-A/B: site clearance and additional studies before ECC.
• Red: highest scrutiny; IEE/EIA, mitigation plan, and tighter monitoring.

Start site & process descriptions as soon as land is identified; your architects and OEMs must feed stack heights, effluent and emission controls, chemical lists, noise profiles, and waste streams into your ECC dossier. Don’t buy long-lead equipment until your category and control specs are nailed. (ecc.doe.gov.bd)

TRW sequencing tip: Run preliminary HAZOP & BAT (best available techniques) workshops with your process engineers to pre-empt DoE queries. Align EHS specs with supplier contracts so bids include compliant abatement packages.

5) Factory licence and labour compliance (DIFE): design with the end in mind

Your factory cannot operate without a Factory/Establishment Licence from the Department of Inspection for Factories & Establishments (DIFE)—and since licensing is online, you’ll use the LIMA portal to apply, track, and renew. LIMA also supports inspection scheduling, complaints, and remediation tracking. Design your plant layout, exits, ventilation, illumination, welfare rooms, and medical stations to satisfy the Labour Act and DIFE checklists before concrete is poured. (LIMA)

What DIFE expects to see easily:

• Signed layout drawings with production lines, storage, exits, and firefighting kit.
• Welfare provisions (canteen thresholds, washrooms, prayer space planning, childcare where applicable).
• OSH program (safety committee, PPE matrix, training records).
• Registers (attendance, wages, leave, overtime, accidents).
• Policies (harassment, disciplinary, grievance, equal opportunity).

TRW design nudge: Put DIFE & fire authorities in the same BIM conversation as your architect. Re-work is the biggest schedule killer.

6) Land, building and fire: translate codes into drawings

• Land & zoning: Verify land class, mutation records, permissible use, and road access. Lock perimeter set-backs and turning radii for container trucks early.
• Building approvals: Submit architectural/structural plans to local authorities; design to BNBC (Bangladesh National Building Code) standards; specify seismic, wind, and fire-resistance classes appropriate to your span and occupancy.
• Fire & safety: Fire detection, alarm audibility, hydrants, hose reels, extinguishers, smoke management, egress widths, stair enclosures, refuge areas, and emergency power. Prepare a Fire Safety Plan for approval and training.
• Boilers & pressure equipment: If you use steam, schedule boiler registration and inspector visits in the construction calendar.
• Electrical: Short-circuit and protection coordination studies; panel boards and cable derating; lightning protection; arc-flash labeling.

TRW field note: In high-bay factories, smoke stratification and roof venting details are often overlooked. These become DIFE or fire-authority punch-list items that delay final occupancy. Model them upfront.

7) Utilities & logistics: the lifeblood of throughput

• Power: Grid connection (or EZ substation) sized for peak plus expansion; gensets or gas engines for critical loads; UPS for IT/PLC and safety systems.
• Gas & steam: Gas service where available; alternatives via LPG/LNG systems with compliant storage; heat-recovery (WHR) to shave operating cost.
• Water: Source approvals; WTP for process; ETP/ZLD where required by your ECC conditions; rainwater harvesting where feasible.
• Compressed air: Dryer and condensate management; looped mains for balanced pressure.
• Inbound/outbound: Dock levelers, staging, marshalling yards; optimize for container turnaround time.
• Telecom/IT: Redundant fibre; private APNs for IoT/SCADA.

TRW contracting tip: Convert utility SLAs into liquidated damages or service credits where the monopoly context allows—at least preserve documentary ground for claims when outages breach contracted profiles.

8) Trade enablers: import, export, and customs planning

• IRC & ERC: For import/export operations, obtain the relevant Registration Certificates (IRC/ ERC) and maintain renewals—banks and customs will ask for these at every turn.
• HS codes & classification: Treat HS codes as part of product design—wrong codes derail duty reliefs and bond benefits.
• Bonded warehouse (for exporters): Duty reliefs on raw materials against export commitments; align your ERP and storekeeping to satisfy customs audits.
• Origin & preference: If you’ll ship to the EU/UK, build REX/DCTS origin workflows into your BOM and sourcing choices from day one.
• Export proceeds: Bake Bangladesh Bank timelines into your sales contracts and LC terms to avoid FX penalties.

9) People systems: hiring, policies, and culture that passes audits

• Employment contracts with grade structure, probation rules, wage/payment cadence, leave entitlements, and separation architecture.
• Working time and overtime guardrails; transparent attendance and payroll; minimum wage updates by sector.
• Safety committees, OSH training, and near-miss reporting culture.
• Worker services: Hygienic canteen, safe drinking water, medical corner, and childcare thresholds where applicable.
• Unions & participation committees: Keep the dialogue formal and documented; an informed workforce is a risk reducer, not a risk in itself.

10) The factory-setup critical path (and where projects slip)

1. Land & title diligence → LOI → lease/sale
2. Concept design → ECC dossier → DoE queries → ECC (don’t wait) (ecc.doe.gov.bd)
3. BIDA OSS registration & project approvals (feeds banks/utilities) (bida.gov.bd)
4. Building permits → civil works → superstructure
5. OEM procurement (anchored on ECC specs) → shipping
6. DIFE factory licence prep (LIMA) in parallel with fit-out/MEP (LIMA)
7. Utilities energisation → dry runs → commissioning
8. Fire clearance → occupation → pilot production
9. IRC/ERC, bond activation, and first exports

Common slips: ECC left late; exits/egress not to code; DIFE submissions with mismatched layout; utility capacities under-sized for future phases; contracts that say nothing about export-proceed clocks.

11) Contracts you’ll actually need (and the landmines inside)

• Land/lease: possession milestones, ground conditions, utility corridors, and hand-back rules.
• Design & EPC: performance specs, LDs for delay/under-performance, change-order discipline, coordinated BIM responsibility, and as-built deliverables.
• OEM supply & installation: FAT/SAT procedures, training, spares, IP escrow (if software-tied), and uptime guarantees.
• Utilities: minimum service levels, outage windows, restoration times, and metering accuracy.
• Waste & ETP operations: compliance KPIs with audit rights and incident reporting windows.
• Workforce vendors: clear scope, supervision chain, wage compliance, and termination triggers.
• Insurance program: construction all-risk, public liability, employer’s liability, machinery breakdown, and business interruption.

TRW caveat: Align EHS obligations across your contract stack so your EPC and OEMs own the performance you promise to regulators.

12) Sector lenses (what changes in the design brief)

• Textiles & apparel: ETP and chemical management drive ECC; mezzanines and travel distances drive egress; plan for modular lines to flex SKU mix.
• Steel & fabricated metals: craneways, heavy footings, dust suppression, and welding fume extraction; compliance with emissions limits set in ECC.
• Electronics: ESD flooring, clean zones, and precision HVAC; plan for controlled waste streams (soldering, solvents).
• FMCG & food: HACCP layout logic (personnel, product, and waste flows), positive pressure in cleanrooms, and water potability standards.
• Pharma: cGMP, pressure cascades, and validated utilities (WFI/Clean Steam); separate QA release paths.
• Renewables (modules/cells): chemical storage norms, acid-resistant drainage, and power-quality stability for process tools.

13) A 180-day “shovel-ready” plan (copy/paste to your PM tool)

Days 1–30 — Decide & Diligence

• Select site (general vs. EZ/EPZ) and run title & zoning checks.
• Perform high-level EHS & utilities feasibility; freeze plant capacity and phasing.
• Draft the BIDA OSS application pack and kick off banking relationships. (bida.gov.bd)

Days 31–90 — Design & De-risk

• Complete concept design and start ECC dossier (process descriptions, emission/effluent controls, waste).
• Submit DoE filings; respond rapidly to queries. (ecc.doe.gov.bd)
• Let EPC/OEM RFPs include compliance specs; short-list on schedule assurance, not price alone.

Days 91–150 — Build the Envelope

• Secure building permits; mobilize civil works.
• Prepare LIMA account, DIFE checklist, and safety committee constitution draft. (LIMA)
• Place OEM orders; align deliveries with floor readiness and crane capacity.

Days 151–180 — Fit-out, Licence & Commission

• Install MEP and fire protection; run pre-commissioning tests.
• File Factory/Establishment Licence application; schedule any inspections. (LIMA)
• Energise utilities; dry-run production; lock IRC/ERC and export banking workflows.

14) FAQs — straight answers for founders, COOs & project managers

Do I need BIDA approval if I’m in an EZ or EPZ?
Zones have their own approvals, but many investors still register projects with BIDA/OSS for coordination with banks, visas, and national-level facilitation. Confirm with your zone operator and anchor customer expectations. (bida.gov.bd)

How long does environmental clearance take?
It depends on category and dossier quality. Green is quickest; Orange/Red require deeper study and sometimes site clearance before ECC. Start early and design your abatement systems into the plant—not as an afterthought. (ecc.doe.gov.bd)

When should I apply for the factory licence?
Soon as layouts are stable and life-safety systems are in, open your LIMA account, upload drawings/policies, and line up inspections so you can move from commissioning to legal operation without dead time. (LIMA)

What’s the number-one cause of schedule slip?
Submitting ECC or DIFE applications after you’ve already poured concrete or ordered machinery—leading to redesign, rework, or corrective add-ons. Sequence compliance with construction.

Can TRW take me end-to-end?
Yes. We integrate land, company setup, BIDA/zone liaison, ECC strategy, DIFE licensing, utilities & contracts, trade/FX, and labour—plus OEM/EPC contracting and project finance support.

15) Commercial terms you’ll want in your build stack (TRW clause kit)

• Time & LDs: staged liquidated damages for civil, MEP, and commissioning milestones; relief events strictly defined.
• Compliance handoff: contractor warranties that the works meet ECC conditions, BNBC, DIFE, and fire codes; documentation deliverables (O\&M, test reports).
• Change control: standardized forms and board approval thresholds; price and time impact contemporaneously assessed.
• Performance testing: criteria for utilities, HVAC, ETP, and OEM equipment; remedies and retests.
• Interface risk: one party owns coordination across civil/MEP/OEM—no gaps.
• OSHA/OSH: site safety plans, toolbox talks, and incident reporting requirements during construction.
• Insurance: CAR/EAR, third-party liability, worker injury coverage; exact limits and insured parties.
• Disputes: multi-tier escalation, then arbitration with seat and language; interim court relief preserved for urgent measures.

16) TRW’s factory-setup taskforce (what you actually get)

• Regulatory: BIDA/zone approvals, ECC strategy and filings, DIFE (LIMA) licensing playbook, fire/boiler/electrical clearances.
• Project delivery: EPC/OEM contracting, interface matrices, compliance handoff, and claims management.
• Trade & finance: IRC/ERC, bonded warehousing, origin planning for EU/UK, bank & LC structures aligned with export-proceeds rules.
• Workforce: labour policies, wage matrices, OSH training, safety committees, and audit readiness.
• Board reporting: milestone dashboards, risk registers, and investor-ready documentation.

Speak with TRW’s Industry & Project Delivery Team

Phones: +8801708000660 • +8801847220062 • +8801708080817
Emails: info@trfirm.com • info@trwbd.com • info@tahmidur.com
Global Law Firm Locations: Dhaka — House 410, Road 29, Mohakhali DOHS • Dubai — Rolex Building, L-12 Sheikh Zayed Road.

References

1. BIDA — One Stop Service / FAQs: scope of business setup and OSS steps. (bida.gov.bd)
2. Department of Environment — ECC categories (Green/Orange-A/Orange-B/Red). (ecc.doe.gov.bd)
3. DIFE — LIMA online factory licensing & inspection portal. (LIMA)