Asian Legal Insights - Bangladesh Special Edition Part⁠.2 (⁠July 2026⁠) - Foreign Investment Restrictions and Use of Land

In the first issue of this special edition newsletter, we addressed the basic framework for foreign investment in Bangladesh. For this second issue, we turn to more specific aspects of investing in Bangladesh and will address the foreign investment restrictions that may be faced by investors, the permits and approvals required to enter controlled sectors, and the legal framework relating to use of land by foreign investors. We are pleased to present the second issue in collaboration with The Legal Circle (https://legalcirclebd.com/).
 

In Bangladesh, most sectors are open to 100% foreign ownership except for two specific categories,
which are (a) reserved sectors and (b) controlled sectors. 

Reserved sectors are not open to private or foreign investment and are limited only for investment by the government. These include the following sectors: arms and ammunition, nuclear energy, security printing (currency), and mechanized extraction in reserved forests. Controlled sectors, on the other hand, are open to foreign investment but require specific permits and/or a no objection certificate (NOC) from the relevant ministries. There are twenty-two controlled sectors in Bangladesh including banking, insurance, telecommunications and logistics. Investments in these sectors may be subject to certain conditions/restrictions imposed by the government such as shareholding caps. For example, while 100% foreign ownership is common in port infrastructure, freight forwarding and shipping agency licenses often require a local partner (at least 51% local equity), though exemptions exist for large-scale investments. 

The “controlled” status is a regulatory “gateway” rather than a barrier. There are various precedents for foreign investment in these sectors. For example, in the insurance sector, global giants like MetLife (USA) have a long-standing dominant presence in Bangladesh, which shows that the Insurance Development and Regulatory Authority of Bangladesh grants licenses to foreign insurance companies that meet their requirements. In the maritime logistics and port construction sector, there are also various examples of foreign investment. In March 2025, a joint venture between Penta-Ocean and TOA Corporation was awarded a JPY 73.4 billion contract for construction of the Matarbari Deep Sea Port (Phase 1). Denmark’s renowned Maersk Group secured a $550 million deal for the Laldia Terminal in Chittagong in 2024, and Saudi Arabia’s Red Sea Gateway Terminal is currently operating at the Patenga Container Terminal in Chittagong. 

Entering a controlled sector requires a two-step regulatory process, starting with approval from the relevant ministry, followed by registration at the Bangladesh Investment Development Authority (BIDA). With reference to the examples used above, the first stage approval in the insurance sector entails applying for an operation license from the Insurance Development and Regulatory Authority, who vets the status of directors and the business plan. For the maritime sector, investors must obtain a NOC or enter into a concession agreement with the Ministry of Shipping or a port authority. The first stage approval usually takes three to six months. 

The second stage is the registration with BIDA, which can be completed through a fast-track process via BIDA’s One-Stop Service (OSS) portal. This second stage is primarily necessary for securing tax holidays, import duty exemptions on machinery, and work permits for expatriates. The registration at BIDA usually takes two to four weeks to complete.

From a practical perspective, Bangladesh prioritizes Japanese projects under the “BIG-B” (Bay of Bengal Industrial Growth Belt) initiative, which means that aligning a maritime or logistics proposal with the “Smart Bangladesh 2041” roadmap, focusing on port automation and green shipping, may increase the probability of a faster NOC approval from the ministry.

In Bangladesh, foreign individuals or companies cannot directly own land. A locally incorporated subsidiary is treated as a “local person” under Bangladesh law and can legally own land. However, the following conditions and approvals apply:

(i)　Land-related 
(a)　The company must ensure that the land is classified for “industrial” use. If the land is classified as “agricultural”, a change of land category (mutation) must be approved by the Assistant Commissioner (Land) office. 

(b)　Under the Land Holding Limitation Order, 1972, there is a general ceiling on land ownership (currently 100 bighas or approx. 33 acres). If the project requires more land, a specific waiver or “Special Permission” from the Ministry of Land is required.

(ii)　Non-land related 
(a)　The subsidiary company must be registered with the BIDA. When the land deed has to be registered with the relevant authority, the sub-registrar will typically require the BIDA registration letter showing that the land is being acquired for a valid industrial/business purpose. 

(b)　If the subsidiary sells the land, repatriating the capital gains out of Bangladesh requires
specific approval from Bangladesh Bank, which is often a lengthy process. 

The standard practice is for foreign investors to obtain long-term leases when doing business in economic zones and special economic zones. In Bangladesh, a building is generally viewed as part of the land. However, there may be certain exceptions to this general rule when doing business in Bangladesh Economic Zone (BEZA) and Bangladesh Special Economic Zone (BEPZA). Subject to the terms and conditions of the agreement with BEPZA/BEZA, investors may be able to own the structure they construct while leasing the land. It is important to thoroughly check the legal implications of such a mechanism before entering into such an agreement. 

Long-term leases within the BEZA and BEPZA are generally on the following terms:
 

In the next issue, we will address topics relating to financing in Bangladesh and applicable foreign exchange regulations.