Foreign Firms Must Register with Bida for Govt Projects

Foreign companies looking to participate in government projects in Bangladesh are now mandated to register with the Bangladesh Investment Development Authority (Bida). This new regulation also applies to foreign entities entering joint ventures or subcontracting agreements with local firms.

The initiative aims to enhance transparency and accountability in financial transactions involving foreign companies operating or planning to operate in Bangladesh. The move follows the Bangladesh Bank’s November 2023 issuance of guidelines for joint ventures, consortiums, and associations (JVCA) involving foreign partners.

According to officials, the policy was introduced due to concerns that many foreign companies working on government projects—whether independently or in partnership with local firms—were not registered with Bida. Furthermore, several of their employees were operating without work permits, and there was a lack of clarity about how transactions were conducted or how capital was brought into the country. In some cases, companies abandoned projects before completion, further complicating tax collection.

M Masrur Riaz, Chairman of Policy Exchange Bangladesh, lauded the policy, stating, "This initiative is highly positive for foreign firms intending to operate in Bangladesh long-term. It ensures transparency and proper revenue collection. However, it may discourage firms involved in short-term projects, which could limit access to global technical expertise for local companies."

The policy applies to foreign firms across major sectors, including road transport, railways, energy, power, and ICT. More than 100 foreign contractors from countries like India, China, Japan, South Korea, and the United States are already involved in Bangladesh’s infrastructure projects.

In March 2023, the Roads and Highways Department issued a circular requiring foreign firms to comply with the Bangladesh Bank’s guidelines before participating in tenders. The directive came after a Chinese company, Harzone Industry Corp, was provisionally selected as the lowest bidder for a road project but lacked Bida registration. The tender was put on hold until the companies obtained the necessary registration.

As part of the new regulation, foreign firms must report their registration to the Foreign Exchange Investment Division (FEID) of Bangladesh Bank within 30 days and comply with the Foreign Exchange Regulation Act (FERA), 1947. Joint ventures are also required to obtain a tax identification number (TIN), business identification number (BIN), and VAT registration from the National Board of Revenue (NBR).

Additionally, foreign firms must open a local bank account, ensure all foreign transactions are reported to Bangladesh Bank, and prepare audited financial statements in line with Bangladesh Financial Reporting Standards. Foreign workers in joint ventures must have valid work permits, and any funds transferred out of Bangladesh for profits, royalties, or loans will require Bangladesh Bank approval.

While the new regulations are designed to boost transparency, they also highlight the complex and evolving landscape for foreign companies looking to invest and operate in Bangladesh, underscoring the need for a more structured and accountable environment.