The government has allowed export-oriented Bangladeshi companies to invest abroad and issued a set of rules in this regard through a gazette notification.
Prior to the issuance of the rules, export-oriented Bangladeshi companies received approval to invest aboard based on a decision made by the Financial Institution Division and the decision was not made public, BB officials said.
An inter-ministerial committee was approving the proposals for such investments of the exporters.
The committee worked on an ad-hoc basis on approving overseas investments proposals of the country’s exporters.
The rules on capital account transactions (equity investment abroad), 2022 were issued on January 9, 2022 under Section 27 of the Foreign Exchange Regulation Act, 1947.
Citing the rules, the central bank issued a circular on Wednesday that stated that such equity investment proposals along with required documents under the rules could be submitted to the Bangladesh Bank’s foreign exchange investments department.
Under the new rules, a 15-member committee headed by the BB governor is vested with the authority to approve the foreign investments proposals of the country’s business entities having a strong credit rating scores and capacity to deal with such investments.
The decision of the committee will be intimated to the authorized dealer bank concerned with a copy to the applicant company, the rules said.
The rules permitted equity investment abroad at 20 per cent of the average exports in the previous five years or 25 per cent of the net asset value as per the last audited reports of eligible applicants, whichever is lower.
Applicant companies need to submit applications to the BB through their nominated authorized dealer banks with all relevant documents and information.
The rules contain detailed information regarding the formation of companies abroad.
According to the rules, receivables from the companies which would be formed abroad must repatriate receivables within 30 days of the amount becoming due.
Receivables are dividend, profit, interests, share sale proceeds, disinvestment proceeds, royalty, consultancy fee and commission, among others.
Misuse of investment will be treated as money laundering under the Money Laundering Prevention Act, the rules said.
Bangladeshi companies have so far invested $327.14 million or Tk 2,774.14 crore abroad through the formal channel, showed the first report of the Bangladesh Bank on outward foreign direct investments.
In 2015, the government first introduced the scope for the country’s private sector for investing abroad.
Since then, the country’s businesses have made investments in more than 20 countries.
Besides the legally invested amount, a large amount of money has so far been laundered from the country by businesses as well as other professionals.
In November 2020, a US state department report mentioned that Bangladeshi nationals’ investments across the world exceeded $3 billion by 2018, nine times or $2.67 billion higher than the legally invested amount.
The US state department’s report, however, did not specify the names of the countries where the investments were made.