Bangladesh has made remarkable efforts over the last decade to attract foreign investments. In order to attract more foreign investors, Bangladesh has taken steps such as offering a range of investment incentives, enacting investment friendly laws and signing bilateral investment agreements and taxation treaties with various countries. The prime reason for incentivising foreign investments is to encourage competition for expanding the economy. The foreign investors, like domestic investors, can invest in any sector except the following: (i) arms and ammunition and other defense equipment and machinery; (ii) forest plantation and mechanized extraction within the bounds of reserved forests; (iii) production of nuclear energy; and (iv) security printing. These sectors are reserved for government investment only.

The primary legislations and policies that collectively govern foreign investment activities include the Companies Act 1994, the Foreign Exchange Regulation Act 1947 and guidelines for Foreign Exchange Transactions 2018, the Foreign Private Investment (Promotion and Protection) Act 1980, the Income Tax Ordinance 1984, VAT and Supplementary Duty 2012, the Imports and Exports (Control) Act 1950, Export Policy 2021-2024 and the Import Policy Order 2021-2024 and so on.

Additionally, foreign investments are regulated by the principal authority Bangladesh Investment and Development Authority (BIDA), which supervises and promotes such investments besides the Bangladesh Export Processing Zone Authority (BEPZA) and the Bangladesh Economic Zone Authority (BEZA).

Foreign investors can set up their businesses by forming a fully foreign owned company, a joint-venture company or