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4 September, 2018 00:00 00 AM
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Regulatory environment for promoting investment in Bangladesh

The Companies Act 1994 is the guiding principle of incorporating, managing, day to day operation, profit sharing, sustaining or dissolution of all sorts of companies in Bangladesh
Md. Joynal Abdin
Regulatory environment for promoting investment in Bangladesh

Indian subcontinent inherited the British legal system since the colonial period. As a result Bangladesh has a very structured legal system since its inception. It has about 45 act / laws relevant to the investment, business, trade and commerce in various sectors. In addition there are more than 10 policies with different incentives and supports of the government to promote private sector investment in various sectors. Existing investment, business, trade and commerce related act /laws and policies of the country could be classified into 18 different categories. Such as  

I.    Investment Related Laws: Investment relevant laws of Bangladesh are The Foreign Private Investment (Promotion and Protection) Act, 1980; The Bangladesh Export Processing Zones Authority Act, 1980; The Investment Board Act, 1989; The Bangladesh Private Export Processing Zones Authority Act, 1996; The Bangladesh Economic Zones Act 2010; and Bangladesh Investment Development Authority (BIDA) Act 2016 etc.

II.    Investment Related Policies: Investment related policies are Private Sector Power Generation Policy of Bangladesh 2004; Bangladesh Private Sector Infrastructure Guidelines 2004; SME Policy Strategies -2005; Policy Guidelines for Enhancement of Private Participation in the Power Sector, 2008; National Tourism Policy 2009; Renewable Energy Policy of Bangladesh 2009; Plot Allocation Policy in BSCIC Industrial Estate 2010; Policy and Strategy for Public-Private Partnership (PPP) 2010; Export Policy 2015 – 2018; Import Policy Order 2015-2018; and National Industrial Policy 2016; etc.  

III.    Trade, Companies, Commercial or Mercantile Laws: Commercial laws are The Contract Act, 1872; The Partnership Act, 1932; The Drugs Act, 1940; The Bangladesh Small and Cottage Industries Corporation Act, 1957; The Negotiable Instruments Act, 1881; The Drugs (Control) Ordinance, 1982; The Bangladesh Standards and Testing Institution Ordinance, 1985; and The Companies Act,1994; etc.

IV.    Securities & Exchange Laws: SEC relevant acts are The Securities Act, 1920; The Securities and Exchange Ordinance, 1969; and The Depository Act, 1999; etc.

V.    Taxation, Customs & Revenue Laws: Taxation related laws are The Customs Act, 1969; The Income Tax Ordinance, 1984; The Value Added Tax Act,1991; The Travel Tax Act,2003; and The Finance (2008-09 FY) Act 2009; etc.

VI.    Banking & Financial Institution Laws: Banking acts are The Banking Companies Act, 1991; The Financial Institutions Act, 1993; and The Money Laundering Prevention Act, 2009; etc.

VII.    Insurance Laws: The Insurance Act, 2010

VIII.    Land/Property Laws: The Transfer of Property Act, 1882; and The Registration Act, 1908

IX.    Imports-Exports & Shipping Laws: The Bills of Lading Act, 1856; and The Imports and Exports (Control) Act, 1950

X.    Labor and Industrial Laws: The EPZ Workers Association and Industrial Relations Act, 2004; and The Bangladesh Labor Act, 2006

XI.    Consumer Laws: The Consumer-Right Protection Act, 2009

XII.    Intellectual Property Laws: IPR relevant laws are The Patents and Designs Act, 1911; The Copyright Act, 2000; and The Trade Mark Act, 2009; etc.

XIII.    Foreign Trade & Foreign Exchange Laws: The Foreign Exchange Regulation Act, 1947

XIV.    ICT laws: The Information and Communication Technology Act, 2006; and The Bangladesh High-Tech Park Authority Act, 2010

XV.    Public Procurement Laws: The Public Procurement Act, 2006

XVI.    Environmental Laws: The Bangladesh Environment Conservation Act, 1995

XVII.    Procedural Laws: The Arbitration Act, 2001; and The Artha Rin Adalat Ain, 2003 (The Money Loan Court Act 2003)

XVIII. Tourism Laws: The Bangladesh Tourism Reserved Area and Special Tourism Zone Act, 2010

Introduction of business related major law and policies could be narrated as follows:

1. The Foreign Private Investment (Promotion and Protection) Act, 1980: This is a revolutionary act for facilitating and promoting foreign investment in Bangladesh. This act was adopted in 1st April 1980 by the government of Bangladesh. Main objective of this act was to provide promotion and protection of foreign private investment in Bangladesh. This act allowed a foreign entity to development of capital, technical and managerial resources of Bangladesh; discovery, mobilization or better utilization of the natural resources.

2.The Bangladesh Export Processing Zones Authority Act, 1980: This is another first generation act while government shifted its direction from state owned socialism motive towards free market economy and private sector development policy. This act was adopted in 26th December 1980. It was formulated to establish the Bangladesh Export Processing Zones Authority (BEPZA). BEPZA is responsible for creation, development, operation, management and control of export processing zones (EPZ) and for matters connected therewith

3.The Investment Board Act, 1989: This act was adopted in 2nd March 1989 to establish the Board of Investment. Objective of the Board of investment was to inspire investment in private sector and organize investment related logistic support for promotion of private sector. Primarily the Board of investment was attached with the Ministry of Industries and later on it was looking after by the Prime Minister’s Office. There is a criticism in the market that the Board of Investment failed to perform its duty as per expectation. But it has many successes as well.

4.National Industrial Policy 2016: The government of Bangladesh adopted latest industrial policy in 2016 titled ‘National Industrial Policy 2016’. This policy emphasized upon achievement of middle income country through sustainable environment friendly industrialization by 2021. With this view in mind National Industrial Policy 2016 emphasized upon development of small and medium enterprises (SMEs). New potential sectors along with the service sector got attention in this policy.

5.SME Policy Strategy 2005:  The government of Bangladesh adopted SME Policy Strategy in 2005. Its successors SME Policy Strategy 2016 is in draft stage under final review of the Ministry of Industries. SME Policy Strategy 2005 was focusing on Government’s commitment to SMEs as vehicles for quality of life improvement, economic growth and poverty alleviation of the common people. The primary role of the government was determined as a facilitator of removing policy obstacles and neutralizing market failures and, providing necessary promotional support. SME Policy recommended to establish an apex organization titled SME Foundation to look after the wellbeing of SME sectors. It identified 11 potential SME sectors namely Electronics and electrical; Software-development; Light engineering and metal-working;

6.The Export Policy 2015 – 2018: The Export Policy 2015-2018 was adopted by the government of Bangladesh on 9th September 2015. This policy focused upon increasing productivity of export oriented sector, ensuring quality of exportable products in competitive price, diversification of export items and market destination, special attention to ICT based and service export, selecting a priority list, selecting one focal point in all Bangladeshi embassies in abroad, activating commercial wings of the embassies to build commercial relations with respective countries in order to increase export of Bangladesh.

7.The Import Policy Order 2015 – 2018: The Import Policy Order 2015 – 2018 of Bangladesh was adopted by the government on 10th February 2016. This policy focused upon controlling imports of Bangladesh to ensure quality of imported products (allowed), control import of conditionally importable products, and import procedures.

8.The Bangladesh Small and Cottage Industries Corporation Act, 1957: The Bangladesh Small and Cottage Industries Corporation (BSCIC) act was adopted during the Pakistan regime on 21st May 1957. Main objective of this act was to establish a Corporation for the purpose of promoting the development of small and cottage industries in the country. BSCIC played a very significant role in promotion and development of cottage, micro and small industries of Bangladesh. There are 79 BSCIC industrial estate established by the organization planted the root of industrialization in the country.

9.The Bangladesh Standards and Testing Institution Ordinance, 1985: The Bangladesh Standards and Testing Institution (BSTI) Ordinance was adopted on 25th July, 1985. Main objective of this act was to establish an Institution for standardization, testing, metrology, quality control, grading and marking of goods. Standardization and ensuring proper quality of products is a very important issue for the safety of life and wealth. Ensuring world class quality is the most significant criteria of a product to enter into the export market. Therefore strong capacity of BSTI could play vital role in maintaining safety and product’s quality in domestic market as well as ensure quick growth of export.

10. The Companies Act, 1994: The government of Bangladesh adopted the companies act on 12th September 1994. This is the bible of joint stock limited company, association, NGOs operating in Bangladesh.

Actually this is the compiled and updated version of few older acts related to the companies and other associations. This is the guiding principle of incorporating, managing, day to day operation, profit sharing, sustaining or dissolution of all sorts of companies in Bangladesh. It is a safeguard for investors, guide book for operating of companies and associations in Bangladesh. It controls registration, classification, MoA & AoA management, role of the directors, transferring of ownership, possible all types of circumstance to operate companies are covered up in this act in details.  

The writer is Executive Director (Additional Secretary),

DCCI Business Institute (DBI)

 

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Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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