Overview
The primary channels for distribution and sales of U.S. goods in Bangladesh are through resident agents, representatives, and licensed distributors. Many of Bangladesh’s imports are purchased through tender or direct purchase by public sector corporations, autonomous bodies, and government-controlled corporations. These agencies often prefer to deal with local firms acting as exclusive agents or licensed distributors of foreign manufacturers and suppliers. In the private sector too, businesses prefer to deal with agents to ensure after-sales service and a continuous supply of spare parts, as well as to resolve any future technical problems. Non-exclusive arrangements are common for commodities and products such as bulk agricultural commodities, chemicals, and metals, where brand names are not as important.
Using an Agent to Sell U.S. Products and Services
U.S. companies may appoint a Bangladeshi firm or individual as an exclusive or non-exclusive agent or distributor. The local agent should be reputable, imaginative, active, politically astute, and technically competent. A local agent may be authorized to service industrial consumers, to bid on government tenders, and to place orders or book indent orders.
U.S. exporters are cautioned to carefully screen any potential agents working on their behalf. The U.S. Embassy’s experience suggests a significant proportion of local agents do not adhere to U.S. standards of business ethics. Many local agents admit to having paid bribes and using undue influence to get a public procurement contract awarded. Companies need to exercise caution when hiring local agents and thoroughly educate them about acceptable business practices. Companies should monitor local agents’ activities closely. Personal interviews are useful in discussing a business proposal with a potential agent or distributor. Close political ties with the current government do not automatically guarantee success, as new governments have delayed or re-tendered deals approved by their predecessors.
U.S. firms looking for agents or distributors in Bangladesh may contact a district Department of Commerce office or the U.S. Trade Center in Dhaka (ustc-dhaka@state.gov) to discuss fee-based commercial services that can assist in identifying and evaluating potential business partners. These services include: the International Partner Search (IPS) service providing a list of pre-screened companies with experience in different fields; the International Company Profile (ICP) service providing background information on a specific company, including sales and after-sales capabilities, as well as bank and trade references; the Initial Market Check (IMC) providing an initial assessment of the market potential for a U.S. company’s product or service; the Single Company Promotion (SCP) service introducing new-to-market U.S. companies to the Bangladesh market by providing promotional events, workshops, and seminars; and the Gold Key Service (GKS) providing full-service support to U.S. companies including U.S. Embassy briefings, scheduling of meetings with local firms, and offering logistical support for visiting U.S. companies. Details on these services are available at the United States Embassy in Bangladesh Business Website.
Establishing an Office
In Bangladesh, a liaison office acts as a channel of communication between the principal place of business or head office overseas and entities within Bangladesh. A liaison office cannot undertake any commercial activity directly or indirectly and cannot, therefore, earn any income in Bangladesh. Its role is limited to collecting information about possible market opportunities and providing information about the company and its products to prospective Bangladeshi customers. It can promote trade with Bangladesh and also facilitate technical/financial collaboration between the parent company and local companies.
Approval for establishing a liaison office in Bangladesh is granted by the Bangladesh Investment Development Authority (BIDA) and the Bangladesh Bank (BB).
Foreign companies engaged in manufacturing and trading activities abroad are allowed to set up Branch Offices in Bangladesh for the following purposes:
- Export and import of goods.
- Providing professional or consultancy services.
- Carrying out research work in which the parent company is engaged.
- Promoting technical or financial collaboration between Bangladeshi companies and the parent or overseas group company.
- Representing the parent company in Bangladesh and acting as buying or selling agents.
- Providing services in Information Technology and development of software in Bangladesh.
- Providing technical support for the products supplied by a parent or group companies.
- Foreign airlines, shipping companies, and foreign consultancy firms (educational/professional institutions).
A branch office is not allowed to carry out manufacturing activities on its own, but it is permitted to subcontract them to a Bangladeshi manufacturer. Permission for setting up branch offices is granted by the BIDA and the BB. Branch offices established with the approval of BIDA/BB may remit outside profits of the branch, net of applicable taxes and subject to BIDA/BB guidelines. If a company is interested in opening a branch, liaison, or representative office in Bangladesh, it should carefully follow the guidelines and procedures mentioned in the relevant forms. Please visit the BIDA list of downloadable forms for more information.
Foreign companies/principals may not need to register/incorporate their businesses locally and can operate through their local partners or agents. A local agent may be authorized to service industrial consumers, to bid on government tenders, or to place orders or book indent orders. U.S. companies may use their local partner’s Import Registration Certificate (IRC) to import goods into Bangladesh.* Local partners obtain their Import Registration Certificates and Export Registration Certificates (ERCs) from the Office of the Chief Controller of Imports & Exports (CCI&E) at (ccie.gov.bd). The local partner will act as the foreign principal’s on-the-ground agent to undertake business activities such as creating awareness and marketing their principal’s products in Bangladesh, identifying and establishing a client base, and allocating space for a showroom to display products.
* Please note: foreign branch, liaison, or representative offices usually have Commercial Trade IRCs.
Franchising
Bangladeshi companies continue to show strong interest in opening U.S. franchises. There are no regulations barring franchise operations and growing access to global supply chains has improved product quality and reliability. Tony Roma’s, Domino’s Pizza, Pizza Hut, KFC, Burger King, Cold Stone Creamery, Tapout Fitness, and other U.S. companies have successfully opened franchises in Bangladesh. Bangladesh has a growing middle class and a sizeable percentage of the population spends on foods and beverages. Bangladesh’s 165 million people are also located in a small geographic area, thereby providing a large and geographically concentrated consumer base.
Direct Marketing
While there are no laws in Bangladesh regulating or prohibiting direct marketing for product distribution, the Embassy is only aware of companies using direct marketing distribution for basic services in rural areas (solar electricity, mobile finance, and technical advice for fertilizer/agricultural inputs) in Bangladesh.
Joint Ventures/Licensing
Bangladeshi businesses are eager to collaborate with foreign partners, and the Government of Bangladesh has significantly improved conditions for joint ventures in recent years. Local businesses are particularly receptive to joint ventures in which the foreign partner provides foreign exchange capital, equipment, technology, and expertise, and the local partner provides land, real estate, and knowledge of the domestic market. Ventures with 100 percent foreign ownership are also generally permitted, but they may encounter greater operational difficulties than those with some local ownership.
Many foreign firms incorporated outside of Bangladesh register in Bangladesh to carry out business. Business firms are incorporated and registered under the provisions of the Companies Act of 1994. Foreign investors normally form corporations in Bangladesh. Two broad categories of corporations exist: public and private. Companies of either type may be limited or unlimited. The liability of the shareholders of a limited company is restricted to the amount of share capital subscribed by them or held in their name. The liability of the shareholders of an unlimited company is not as restricted.
For step-by-step procedures for establishing businesses, including joint ventures, in Bangladesh, please visit the BIDA website.
If a foreign company wishes to invest in an industrial project (manufacturing unit) in Bangladesh, then additional guidelines also apply. Please visit the following links for more information:
Bangladesh Investment Development Authority (BIDA) – Download Forms
BIDA also provides online business services starting from business registration, registration tracking services, visa invitation letters, branch/liaison representative services, work permits, and other related services.
Express Delivery
A number of international express delivery companies are active in Bangladesh, including UPS, DHL, and FedEx. Deliveries from U.S. cities typically take 3-5 days with express services. Customs clearance can sometimes be delayed due to bureaucratic inefficiencies.
Due Diligence
Traditional commercial instruments such as letters of credit may be used to protect buyers and sellers from basic transactional risks. When considering a more extensive commercial relationship, however, U.S. businesses are advised to exercise due diligence appropriate to the relationship. To check the bona fides of a bank, agent, or customer, U.S. firms can contact one of several Bangladeshi chambers of commerce or business associations. The U.S. Embassy’s Trade Section may also be able to provide additional useful information. No fee is charged for primary information about firms. For a more detailed check, the U.S. Embassy offers the International Company Profile (ICP) as a fee-based service. An ICP is a confidential business report providing background information on individual Bangladeshi firms. Each report includes information on product lines, value and size of the business, volume of operations, business reputation, and trade references.
U.S. firms may request an ICP by contacting the U.S. Department of Commerce, the nearest Export Assistance Center in the United States (USEAC), or by directly contacting the U.S. Trade Center.