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Local businessmen can invest abroad to remit profit money

Guidelines issued on forming companies abroad

Published : 29 Jan 2022 10:34 PM | Updated : 30 Jan 2022 12:41 PM

Bangladeshi businessmen would be able to invest in foreign countries in order to remit money to Bangladesh after making profits.

The government issued a guideline in this regard on Thursday. The detailed guidelines on setting up companies abroad are mentioned in the rules. 

All receivables of the company formed abroad, such as profit or dividend, interest, proceeds from the sale of shares, balance due on termination of investment, salary, royalty, technical notification fee, consultation fee, commission and so on must be remitted to Bangladesh within 30 days of receipt.

The misappropriation of investments will be treated as money laundering under the Prevention of Money Laundering Act.

The country’s businesspeople are seriously considering investing abroad to increase their businesses. 

 The government has issued rules with the opportunity to invest abroad that help local investors to inject funds in the foreign countries.

Exporters will be able to spend up to 20 percent of the average annual export earnings of the last five years to set up collaborative institutions in foreign countries.

In addition, exporters can invest up to 25 percent of the net assets shown in the latest audited annual financial report if they wish.

On Thursday, the Foreign Exchange Investment Department of Bangladesh Bank issued a directive in this regard in the context of the circular titled “Capital Account Transaction (Equity Investment Abroad) Rules, 2022”.

The circular sent to all the authorized dealer banks of the country engaged in foreign exchange transactions states that on January 9 this year, the Department of Financial Institutions of the Ministry of Finance enacted the Capital Account Transaction (Equity Investment Abroad) Rules, 2022 under Section 27 of the Foreign Exchange Regulation Act, 1947.

Under the rules, exporters will be able to invest equity abroad from their retention quota account. In this case, the applicant will be able to invest 20 percent of the average annual export earnings of the organization for five years or less than 25 percent of the net assets shown in the latest audited annual financial report as equity abroad.

According to the rules, the applicant organization has to apply to Bangladesh Bank through the authorized dealer bank along with the required documents. 

A 15-member selection committee has been set up to scrutinize the applications.

The president of the committee will be the Governor of Bangladesh Bank. The decision of the committee will be informed to the approved dealer bank and a copy of the letter will be given to the applicant organization.

However, Bangladesh Bank has so far allowed 15 companies to open affiliates or offices outside the country.

Five companies have been approved by the central bank to invest in food processing, pharmaceutical and date businesses in India, Ireland, the United States, Singapore and Saudi Arabia. 

Earlier, the central bank allowed 10 companies to open subsidiaries in Malaysia, Singapore, Ethiopia and Kenya.