Setting up a new factory in Bangladesh

Setting up a new factory in Bangladesh in 2024

Are you considering expanding your manufacturing operations to Bangladesh? With its growing economy, strategic location, and favorable investment climate, Bangladesh has become an attractive destination for setting up new factories. However, navigating the legal and regulatory requirements can be complex and daunting. That's where TRW Law Firm comes in. With our expertise and experience, we can guide you through the entire process, ensuring smooth and hassle-free establishment of your factory. In this article, we'll deep dive into the various legal and regulatory aspects of setting up a new factory in Bangladesh, and explain why TRW Law Firm is the best choice for your legal needs.

In order to meet the structural/building safety standards every factory in all the targeted sectors need the building permit from RAJUK/city corporation/development authorities according to the factory location.

• The business or factory owners have to submit a number of documents such as Drawing AutoCAD (DWG), City Survey Porcha, Copy of Allotment Letter, Copy of Duplicate Carbon Receipt (DCR), Environment clearance, Key Point Installation Defense Committee (KPIDC) clearance copy, and an exhaustive list of other relevant documents.

In order to get fire safety license and fire safety plan, entrepreneurs need to submit the filled-in prescribed form with the necessary documents such as trade license, land deed, approved building design, and NOC (no objection certificate) safety plan, among others.

• To fulfil environmental safety compliances, factories need to collect the Environmental Clearance Certificate from the Department of Environment (DoE).

Requirements for building permit from RAJUK

Mandatory Documents	Other Documents	Clearance	Certificate
  Indemnity Bond  Drawing AutoCAD(DWG)	  Action taken according to Gadget  City Survey Porcha  Copy of Allotment Letter  Copy of Duplicate CarbonReceipt (DCR)  Copy of Power of Attorney  Dhaka Transport Co-ordination Authority  FAR Calculation Document  Instrument documents  Letter of Gov. allottedLand/Plot  Mutation copy  NID copy	  Civil Aviation clearance copy Clearance  Certificate NOC from different authorities  Clearance from the Department of Housing and Public Works  Environment clearance  Key Point Installation Defence Committee(KPIDC) clearance copy  Special Security Force(SSF) clearance copy  Titas ClearanceCertificate	  City Corporation Certificate  DC Traffic Certificate  Developer’s RAJUKEnlistment Certificate  Electricity Certificate  Enlistment Certificateof Civil Engineer  Fire Service Certificate  Land Use ClearanceCertificate  Special ProjectPermission Certificate  WASA Certificate

Requirements for building permit from RAJUK (Cont.)

Drawing and Map	DEED (Whichever required)	Tax and Signature	Others
  Ammonia Sheet (JPG)  Auto Cad (DWG)  Old Drawing (for 3RC)  Draft survey map  Gazette wise map and deeds description  Mouza map  Plot joining map	  Heba Deed  Lease Deed  Ownership Deed  Purchase deed	  Land tax copy  Holding tax receipt  Engineer signature copy	  Architect Signature Copy  If any other queries related to construction permit  Plot joining paper  Revisional Settlement(RS) Porcha  Soil test Report (ifany)  Undertaken papers  Owner’s photo

Building Permits: City Corporations

• City corporations also have the authority to issue building permits for factories. In this report only Dhaka City Corporation (DCC) and Narayonganj City Corporation (NCC) are covered as these are the most factory dense industrial areas

Required Documents for construction permit from Dhaka City Corporation (DCC)

License name

Required document

Construction permit from DCC

Filled up No objection Certificate (NOC) for multistoried building application (For the areas under Dhaka North City CorporationTk 250 has to be submitted as the application fee through challanIf the land owner is not applying by himself and nominating someoneon his behalf then the attested copy power of attorneyLand ownership documentAttested copy of holding taxThe drawing and design of the buildingAs per the format of the agreement mentioned in the form on a non-judicial stamp equivalent to tk 300

Relevant Required Licenses for setting up a factory in Bangladesh

1. Name Clearance Certificate: This certificate is obtained from the Registrar of Joint Stock Companies and Firms (RJSC). It verifies that the proposed name for your factory is unique and not already registered by another entity. The process involves submitting an application to RJSC, along with the desired name for your factory. If the name is available, RJSC will issue the clearance certificate.
2. Export Registration Certificate (Permit): This certificate, issued by the relevant authority, allows your factory to engage in export activities. The process typically involves submitting an application to the Export Promotion Bureau (EPB) along with necessary documents such as company registration, tax identification number, and business plan.
3. Import Registration Certificate (IRC): Similar to the export registration certificate, the IRC is required for importing goods into Bangladesh. The process involves applying to the Chief Controller of Imports and Exports with relevant documents such as company registration, trade license, and tax identification number.
4. Value Added Tax (VAT) Registration Certificate: Obtained from the National Board of Revenue (NBR), this certificate is necessary for collecting and remitting VAT on sales of goods and services. The process involves submitting an application to the VAT Commissionerate along with required documents such as company registration, trade license, and bank solvency certificate.
5. Trade License (for Manufacturing): Issued by the local municipal authority, a trade license authorizes your factory to carry out manufacturing activities within a specific jurisdiction. The process involves applying to the respective local authority with necessary documents such as company registration, building construction approval, and environmental clearance.
6. Tax Identification Number (TIN): This unique identification number is assigned by the tax authority (NBR) to track tax-related activities of businesses. The process involves submitting an application to the respective tax circle office along with relevant documents such as company registration, memorandum of association, and bank solvency certificate.
7. Export Promotion Bureau (EPB) Enrollment Certificate: This certificate is obtained from the EPB and is necessary for availing export promotion schemes or incentives. The process involves applying to the EPB with necessary documents such as company registration, export-import license, and business plan.
8. Bank Solvency Certificate: Issued by a bank, this certificate confirms your factory's financial solvency and ability to meet financial obligations. The process involves submitting an application to your bank along with necessary financial documents such as balance sheet, income statement, and bank statements.
9. Article of Memorandum: This document outlines the objectives, structure, and rules governing your factory's operations. It is prepared and filed during the company registration process with RJSC.
10. Certificate of Incorporation: Issued by RJSC, this document certifies that your factory has been legally incorporated and recognized as a separate legal entity. The process involves submitting an application for company registration along with necessary documents such as memorandum and articles of association, board resolution, and director's details.
11. BOND License & General BOND: If your factory will operate in a bonded warehouse or engage in bonded manufacturing, obtaining a BOND license is essential. The process involves applying to the relevant authority (e.g., Customs Authority) with necessary documents such as company registration, factory layout plan, and security arrangements.
12. PDB Testimonial: This testimonial confirms that your factory meets the necessary requirements for electricity connection. The process involves applying to the Power Development Board (PDB) with necessary documents such as factory location details, load requirements, and electrical layout plan.
13. BIDA Registration (Local and Foreign Investment Projects): The Bangladesh Investment Development Authority (BIDA) registration is required for both local and foreign investment projects. The process involves submitting an application to BIDA along with necessary documents such as project proposal, feasibility study, and environmental impact assessment.
14. Ad-hoc IRC/BIDA Recommendation/BIDA Suparishnama: These documents may be required for specific types of investment projects and approvals from BIDA. The process involves applying to BIDA with necessary project details and supporting documents.
15. Bonded Warehouse License: If your factory will operate a bonded warehouse, obtaining a bonded warehouse license is necessary. The process involves applying to the Customs Authority with necessary documents such as factory layout plan, security arrangements, and bond agreements.
16. Police Clearance Certificate: This certificate verifies that the directors and key personnel of your factory have no criminal record. The process involves applying to the local police department with necessary personal details and identification documents.
17. Construction Certificate: If your factory will involve construction activities, a construction certificate may be required to ensure compliance with building regulations. The process involves obtaining approval from the relevant municipal authority after submitting building plans and other necessary documents.
18. Registration Certificate of Patent, Trade Marks, and Copyright: If your factory will produce patented products or use trademarked logos, obtaining registration certificates is necessary to protect intellectual property rights. The process involves applying to the Department of Patents, Designs, and Trademarks with necessary documents such as product designs, logos, and copyright statements.
19. Work Permit for Foreign Nationals: If your factory will employ foreign nationals, obtaining work permits is essential to ensure legal employment status. The process involves applying to the Department of Immigration and Passports with necessary employment details and visa documents.

Overall, the process of obtaining these certificates and registrations involves thorough documentation, compliance with regulatory requirements, and coordination with relevant authorities. With TRW Law Firm by your side, you can navigate these complexities with ease and ensure timely establishment of your factory in Bangladesh.

Audits/standards in the export-oriented RMG sector

• After the Rana Plaza incident, a new public and private audit administration was introduced as the third phase of the factory inspection system in Bangladesh
  • As part of this, the Accord and Alliance on Fire and Building Protectionprogramme was formed
  • The national safety standards are the minimum, and the audits go beyondthat
• In the RMG sector, RMG Sustainability Council (RSC), Amfori, Okotex, ISO 100 are the most familiar names that conduct audits.
• The BGMEA has partnered with the BKMEA to develop a unified code of conduct for the RMG industry as multiple audits usually create confusions
• This unified audit will be carried out a thorough assessment of the feasibility of a common code of conduct for social audits

• These include national laws, rules, policies, international conventions such as the United Nations Guiding Principles (UNGPs), and buyers code of conduct and third-party audit protocols

RSC is a private national tripartite initiative to continue the significant accomplishments in workplace safety further in Bangladesh.

• It conducts structural, electrical, fire and life safety and boiler safety inspections, along with operating an independent occupational safety and health complaints mechanism available to workers in covered RMG factories

• Under the Technical Remediation Guidance of RSC, they have Electrical Single Line Diagram Guidance, Fire Rating Requirement of Steel Construction, Fire Safety Testing and Commissioning Verification Inspection Guidance, Glossary Of Terms, Information Sheet on Third-party Certificates for Fire Safety Systems

• RSC Fire Safety Manual for RMG Buildings
• RSC Guidance on Product Certification and Certification Marks
• RSC requirements: Extension of Factory Buildings
• RSC Boiler Safety Programme: Summary of findings of External VisualInspection, Technical Guidance on Verifying Passive Fire Protection Measures (Intumescent Paint or Cementitious Coating) on Steel Building and many more

Audits/standards in the export-oriented RMG sector

Required documents for Audits

Audit Name

Requirements

Amfori

  Performance area 1: Social Management System and Cascade Effect  Performance area 2: Workers Involvement and Protection  Performance area 3: The rights of Freedom of Association andCollective Bargaining  Performance area 4: No Discrimination  Performance area 5: Fair Remuneration  Performance area 6: Decent Working Hours  Performance area 7: Occupational Health and Safety  Performance area 8: No Child Labour  Performance area 9: Special protection for young workers  Performance area 10: No Precarious Employment  Performance area 11: No Bonded Labour  Performance area 12: Protection of the Environment  Performance area 13: Ethical Business Behaviour

Audits/standards in the export-oriented RMG sector

Audit Name	Original Certificate/ License/ Permission	Building Approval and Layout	Test Report	Policy and Procedures
TUV Rheinland Bangladesh Pvt. Ltd. Document Checklist (BSCI Audit)	  Incorporation Certificate  Factory License  Trade License  Fire License  EPZ Permission (Only for EPZ Area)  Boiler License  Generator Waiver/ License  Environment ClearanceCertificate  Acid Using License (Only forTextileand Washing Plant)  Group Insurance Certificate/Updated Evidence of Biometric System/ Group Insurance Premium Copy  Bond License, Export Promotion Bureau (EPB) Certificate, TIN Certificate  Export and Import Registration Certificate (ERC/IRC)  BGMEA/ BKMEA/ LFMEAB Membership Certificate  Fire Insurance Copy (If any)	  Building Approval Plan  Floor/ Machine Layout Approval  Accord/Alliance Report or anyother assessment report related to building	  Drinking Water, WasteWater, Stack Air Emission, Air Quality, Noise Level, Temperature and Humidity Level, etc.  Environmenta l ImpactAssessment (EIA), Energy Survey/ Assessment (Water Consumption, Gas and Electricity Consumption etc.)	  Child Labour and Child Labour Remediation  Young Labour  Recruitment  Prohibition of ForcedLabour  Harassment or Abuse,Compensation andBenefits  Leave  Maternity Benefit  Working Hour  Working Hour Approval  Prohibition ofDiscrimination  Disciplinary ActionProcedure  Health and Safety  Emergency PreparednessProcedures  Freedom of Associationand Collective Bargaining  Environment, WastageManagement Procedure  Anti-Corruption or Anti-Bribery Policy

Audits/standards in the export-oriented RMG sector

Audit Name	Documents – PA1 to PA4	Documents—PA5 to PA6	Documents – PA7 and Others
TUV Rheinland Bangladesh Pvt. Ltd. Document Checklist (BSCI Audit)	  Company Organogram and Job Responsibilitiesaccording to Organogram, Authorization Letter of BSCI MR  Supply Chain Mapping, Stake Holder Mapping  Contract Agreement with Service Provider (Security, Cleaning, Food, Transport, etc.)  Sub-Contractor/ Sub supplier Policy andProcedure and MonitoringRecord  Capacity Planning,Contingency Plan  Company's Mission and Vision, Long Term Goal  Trade Union/ PC/ WWA/ WWC Formation Record, Meeting Minutes  Grievance Procedure, Grievance Record, Survey Record on Grievance Procedure	  Attendance Summary, Wage Sheet, Time Card, Pay Slip  Fair Remuneration or Living Wage Template  Resign or Terminate Workers List and Files  Maternity Register and Files  Annual Leave Encashment Record  Festival Bonus Record  Increment Record  Provident Fund Record(If any)  Production Record andPiece Rate Calculationfor Piece Rate Workers  Leave Register	  Risk Assessment and Internal Audit Report, Workers Health Checkup Record  Safety Committee Record and Meeting Minutes  Training Record: First Aid, PPE, H&S, ChemicalSafety, Fire Fighting (Internal and External), FireDrill (Internal and External)  Firefighting Equipment List, Fire Team Allocation,First Aider List, Machine List, Chemical List, ToiletList  Accident Register and Investigation Records,Hospital Agreement  Maintenance Schedule and Record: Fire FightingEquipment, Electrical Equipment and Machineries, Compressor, Boiler and Generator Maintenance, House Keeping Record, Wastage Agreement and Disposal Record, PPE Issue Register  Others Training: Orientation, BSCI CoC, Mid-Level Management, Local Law, Grievance Procedure, Disciplinary Action Procedure, Risk Assessment Awareness, Injury Analysis Awareness, Environmental Awareness, Anti-Corruption or Anti-Bribery Mapping and Training  Personal File: Fire Safety Officer, Welfare Officer, Doctor, Nurse, Boiler Operator, Generator Operator, Electricians, Security Guard, W3o9rkers

Authorities Responsible for Licensing for Fire Safety

Fire safety in Bangladesh is definitely the most questionable element of industrial safety as majority of the industrial accidents are actually fire incidents

• From June 2021 to March 2022 157 industrial accidents happened involving fire
• Factories from all the sectors need to collect fire license and fire safety plan from Fire Service and Civil Defense (FSCD).Required Documents for Fire license from Fire Service and Civil Defense (FSCD)

Permit name

Requirements

Fire License with FSCD

1. Assessment form 2. Filled-in prescribed application form/online application 3. Land deed 4. Certification to the effect that there is no case 5. Trade license 6. No Objection Certificate (NOC) safety plan (7 floors and above) 7. Building design by an engineering firm 8. Memorandum of Association in case of limited companies 9. Deed of agreements10. Cover letter from BEPZA (in case of EPZ factories)

Source: Authors’ compilation from the FSCD website and other sources

The factories that are multi-storied buildings (above six stories) need to collect this permit from FSCD

Required Documents for Fire safety plan from FSCD

Permit name

Requirements

Fire Safety Plan for multistoried building with FSCD

1. Assessment form 2. Filled-in prescribed application form/online application form 3. Land Deed 4. Certification to the effect that there is no case 5. Trade license 6. No Objection Certificate (NOC) safety plan (7 floors and above) 7. Building design by an engineering firm 8. Memorandum of Association in case of limited companies 9. Deed of agreements 10. Covering letter from BEPZA (in case of EPZ factories) 11. Submission of the engineering drawing or design (the design has to be made and finalised by an engineering consulting firm 12. Filled in prescribed application form

Source: Authors’ compilation from the FSCD website and other sources

Authorities Responsible for Factory & Establishment License

• If anyone starts to set up a factory he/she needs to submit the documents to Department of Inspection for Factories & Establishments (DIFE) for the license

Required Documents for Factory license from DIFE

Required forms and challan	Required documents with form no. 76	Required documents with form no. 77
  For approving the factory lay-out planfilled form no.76  Full filled form no.77  License fee throughtreasury challan	  Trade license copy  Rent agreements/ copy of landrejection  Copy of NID ofowner/MD/CEO/director  Soil test report  Structural design/drawing prepared by a renowned engineer or engineering consulting firm  Load bearing capacity certificate provided by a renowned engineer or engineering consulting firm  Building construction certificate provided by a renowned engineer or engineering consulting firm  Building design certificate approved by local authority (city corporation	  Trade license copy  Rent agreements/ copy of landrejection  Copy of NID ofowner/MD/CEO/director  Electricity demand note  Memorandum of article  Copy of approved factory layoutplan  Local authority (CityCorporation) approved building design copy of the factory and letter of approval and layout plan  Main copy of treasury challan  List of employees/workers of thefactory  Fire license copy

Required Documents for Drug License from DGDA

License name	Requirement
Drug License from Drug Administration's General Directorate (DGDA)	  Filled in Form 7 from Drug Administration's General Directorate (DGDA)  Bank statement of license fee payment  Treasury challan with filled in form no. 7  Receiving the store deposit or photocopying the rentagreement.  The ownership deed

Source: Authors’ compilation from DGDA website

Authorities Responsible for Standard certificate for food processing

Additional to all the previously mentioned licenses, certificate and registrations he/she will also have to collect Bangladesh Standards and Testing Institution (BSTI) registration is only applicable to the processed foods that are under the products list brought under Mandatory Certification Marks Wing

Required Documents for Bangladesh Standards and Testing Institution (BSTI) Certificate

Safety compliances	Requirements
Standard certificate from BSTI	Filled in BSTI Certificate Mark (CM)Trade LicensePermit from BOI/BSCICTrademark Registration/Copy of ApplicationLabel/Marking/Logo

Source: Authors’ compilation from the BSTI website

Relevant links to the government website:

→ Registrar of the Joint Stock of Companies also known as RJSC

→ Name clearance certificate

→ Export registration certificate (Permit)

→ Import registration certificate (I.R.C)

→ Value Added Tax (VAT) registration certificate

→ Trade license (for manufacturing)

→ Tax identification number (TIN)

→ Export Promotion Bureau (EPB) enrolment certificate

→ Bank Solvency Certificate

→ Article of Memorandum

→ Certificate of incorporation

→ BOND license & General BOND

→ PDB Testimonial

→ BIDA registration (Local and Foreign Investment Projects)

→ Ad-hoc IRC/BIDA Recommendation/BIDA Suparishnama

→ Bonded warehouse license

→ Police clearance certificate

→ Construction certificate

→ Registration certificate of patent

→ Trade marks registration

→ Copyright registration

→ Work permit for foreign nationals