Introduction to Business in Bangladesh
First of all, let’s talk about Bangladesh itself. This small but mighty country is situated in South Asia, sandwiched between India and Myanmar.
It’s home to over 160 million people, making it one of the most densely populated countries in the world. But don’t let that fool you – Bangladesh is full of surprises, including a booming business ecosystem that’s attracting entrepreneurs from all over the globe.
So what makes Bangladesh such an exciting place to do business? For starters, it’s an incredibly affordable place to set up shop. The cost of living is low, and so are the prices of goods and services, it’s no wonder that more and more entrepreneurs are flocking to this hidden gem of South Asia.
Common Businesses in Bangladesh
Bangladesh is a country with a diverse economy, and there are a variety of businesses common in the country. Here are some of the most prevalent:
Textiles and Garments – Bangladesh is famous for its textile and garment industries. It’s the world’s second-largest exporter of ready-made garments after China.
Agriculture – Agriculture is a major contributor to Bangladesh’s economy, with the sector employing around 47% of the country’s workforce.
Retail – Retail is a growing industry in Bangladesh, as the country’s middle class continues to expand.
Pharmaceuticals – The pharmaceutical industry in Bangladesh has grown rapidly in recent years, with a number of local companies producing generic drugs for both domestic and international markets.
Information Technology – The IT sector in Bangladesh is still relatively small, but it’s growing rapidly.
These are just a few examples, As the country continues to develop and modernize, new opportunities for entrepreneurship and innovation are emerging constantly.
Starting a Business in Bangladesh: Common Legal Entity Options
In Bangladesh, there are several different legal entities available for businesses to choose from when setting up their operations. Here are the most common types:
Sole Proprietorship:
A sole proprietorship is a business owned by a single individual. It’s the simplest and easiest type of business to set up, but the owner is personally liable for all debts and obligations of the business.
Partnership:
A partnership is a business owned by two or more individuals. The partners share the profits and losses of the business, and each partner is personally liable for all debts and obligations of the partnership.
Limited Liability Partnership (LLP):
An LLP is a type of partnership in which each partner’s liability is limited to the amount of their investment in the business. This means that partners are not personally liable for the debts and obligations of the business beyond their investment.
Private Limited Company (PLC):
A Private Limited Company is a separate legal entity from its owners. It can have up to 50 shareholders, and the liability of each shareholder is limited to the amount of their investment in the company.
Public Limited Company (PLC):
A PLC is similar to a private limited company, but it can have an unlimited number of shareholders and can raise capital by selling shares to the public.
Joint Venture:
A joint venture is a business arrangement in which two or more parties agree to work together on a specific project or venture. The parties share the risks, costs, and profits of the venture. It should not be confused for joint stock companies.
Are Foreign investors Allowed to Start Businesses in Bangladesh?
Yes indeed, there are business entity options available to foreign investors such as:
Subsidiary Company:
A subsidiary company is a limited liability company incorporated in Bangladesh that is owned by the foreign parent company.
Branch Office:
A branch office is a legal extension of a foreign parent company in Bangladesh. It’s not a separate legal entity.
Representative Office:
A temporary representative office of the parent company can be established in Bangladesh to conduct marketing research activities. A representative office, unlike a subsidiary or branch office, has no legal character and cannot participate in profit-making operations.
Requirements for Starting a Business in Bangladesh
These requirements include:
Trade License:
This is a legal document that grants permission to an individual or a company to conduct business activities in a specific locality. In Bangladesh, businesses need to obtain a trade license from their respective City Corporations or Municipalities.
Tax Identification Number (TIN):
TIN is a unique identification number issued by the National Board of Revenue (NBR) of Bangladesh to identify taxpayers. All individuals and businesses that conduct economic activities in Bangladesh are required to obtain a TIN number.
Business Bank Account in Bangladesh:
A business bank account is essential for conducting any commercial activities in Bangladesh. All companies operating in Bangladesh must open a bank account in a local bank. This is necessary for various reasons, including payment transactions, salary payments, and other financial activities.
VAT Registration Certificate:
The Value Added Tax (VAT) registration certificate is a document that permits a business to charge VAT on their sales. Any business in Bangladesh whose annual turnover exceeds the threshold limit (BDT 8 million) is required to register for VAT with the NBR. The VAT registration certificate is also required for importing goods from abroad.
Fire Certificate:
The fire certificate is a document issued by the Bangladesh Fire Service and Civil Defence that certifies that a building or structure meets fire safety standards. In Bangladesh, businesses must obtain a fire certificate to ensure that their premises are safe and free from fire hazards.
Environmental Clearance Certificate:
The Environmental Clearance Certificate (ECC) is a document that certifies that a business’s activities do not harm the environment. In Bangladesh, businesses involved in activities that may have an adverse impact on the environment must obtain an ECC from the Department of Environment.
Import License:
An import license is a document that permits a business to import goods into Bangladesh. In Bangladesh, certain goods require an import license from the relevant government agencies. The import license is necessary for various reasons, including ensuring the quality of the imported goods, controlling the quantity of imported goods, and preventing the import of prohibited goods.
Export License:
An export license is a document that permits a business to export goods from Bangladesh. In Bangladesh, certain goods require an export license from the relevant government agencies. The export license is necessary for various reasons, including to ensure the quality of the exported goods, to control the quantity of exported goods, and complying with international trade regulations.
Starting a business in Bangladesh can be a complex process, and it’s important to ensure that all the necessary requirements are met to avoid any legal issues down the line. It’s recommended to seek the assistance of a local lawyer or consultant who can guide you through the process and help you comply with local laws and regulations.
Step-by-Step Process of Company Registration in Bangladesh
The first step in company registration in Bangladesh is to obtain a name clearance certificate from the Registrar of Joint Stock Companies and Firms (RJSC). The proposed company name must not conflict with any existing names, and it should also comply with the naming guidelines specified by the Registrar of Joint Stock Companies. The proposed company should also conduct market research to determine the viability of their business idea.
After obtaining the name clearance certificate, the next step is to draft the Memorandum and Articles of Association (MOA & AOA) of the private limited companies. This document outlines the objectives, activities, paid up capital, and structure of the company. It should be prepared in compliance with the Companies Act 1994.
The third step is to obtain the necessary approvals from the relevant government authorities. For example, if the proposed company has foreign investment, then it needs to obtain approval from the Bangladesh Investment Development Authority (BIDA).
Next, the company needs to register with the Registrar of Joint Stock Companies by submitting the MOA & AOA and other necessary documents. Once the company is registered, it needs to obtain a Tax Identification Number (TIN) from the National Board of Revenue (NBR) to pay taxes. It also needs to register for Value Added Tax (VAT) with the NBR if its annual turnover exceeds the threshold limit.
Finally, the company needs to open a designated Bangladeshi bank account to conduct its financial activities. The minimum “paid-up capital” required to open a bank account in Bangladesh varies depending on the bank.
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