Three Misconceptions About Starting a Business in Bangladesh
As Bangladesh develops into a global manufacturing hub, economists continue to tout its market potential, citing its attractive returns and low risk of economic and political turmoil. The country made BMI Research’s shortlist of the “10 emerging markets of the future” last year, and Barron’s has highlighted it as a “top pick” for frontier market […]
As Bangladesh develops into a global manufacturing hub, economists continue to tout its market potential, citing its attractive returns and low risk of economic and political turmoil. The country made BMI Research’s shortlist of the “10 emerging markets of the future” last year, and Barron’s has highlighted it as a “top pick” for frontier market investing in 2017. Despite these accolades, investment in Bangladesh has traditionally been limited to well-established multinationals. So why is it that smaller investors are missing out on an economy of 160 million customers with GDP growth hitting 7% per annum?
We reached out to OnFrontiers expert Seezan Choudhury to address this question and give us some ground truth on what it’s really like to get involved in Bangladesh. A partner at ACE Advisory based in Dhaka and a former senior manager at KPMG Bangladesh, Seezan assists foreign companies with setting up and carrying out business in the country.
Seezan notes that the reluctance of smaller investors to get involved in Bangladesh is in part due to misconceptions regarding the investment environment. While legal protections like the Foreign Private Investment (Promotion and Protection) Act of 1980 ensure legal protection to foreign investment in Bangladesh against nationalization and expropriation, they do little to ease concerns about the practical difficulties of setting up in a developing country.
With that in mind, Seezan wrote up some common misconceptions about starting a business in Bangladesh and debunked them for us:
Myth #1: Bangladesh requires local partners.
Unlike many developing countries, Bangladesh actually doesn’t have any restrictions on 100% foreign ownership (there are some exceptions with sectors like arms manufacturing and production of nuclear energy, but if you are in those sectors, you are probably going to be approaching the government directly anyway). Many investors in a new country aren’t comfortable with the idea of sharing ownership with a local partner whom they do not trust completely, and unless you are already in business with someone, how do you really develop trust? This is often a big deterrent for smaller investors and a misconception that has kept many from investing in Bangladesh.
Myth #2: The paperwork is complicated and time consuming.
Another myth that keeps investors away is the difficulty of setting up a company in a developing country like Bangladesh. Real-world experiences, however, don’t bear those fears out. Registering a company can be done with the submission of as few as four documents and the remittance of paid-up capital. Although the documents still need to be submitted in hard copy with signatures, Bangladesh has already started to digitize the process. You can even track your application with the Registrar of Joint Stock Companies (RJSC) online. While the RJSC does take a few weeks to incorporate the company, it isn’t as long as one might imagine, and you can complete other tasks, such as the tax registration for your company in as little as one day.
Myth #3: Communication is difficult in Bangladesh.
Finally, a third misconception that investors inherently have about a foreign country is the potential language barrier. So how do you say “hello” in Bangladesh? Well, just say “hello”! English is very commonly understood and spoken in Bangladesh. Most businesses use English as their primary language, and I don’t think I’ve ever come across an email in Bengali in the many years that I’ve been working here. You can file your incorporation documents, financial statements, tax returns, and pretty much every form of filings for your business in English.
Seezan concludes that while investing in developing countries like Bangladesh does have its challenges, it’s not always as difficult as you might think. Want to learn more about Bangladesh as an investment destination? Schedule a consultation with Seezan.
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Featured image was taken by Flickr user Joiseyshowaa in Dhaka, Bangladesh.