Sunday, 07 August 2016 07:38

Foreign Exchange Regulation Act (Amendment) 2015 – Addition to Foreign Investment Friendliness

The increasing globalization has led to a massive growth in the number of foreign transactions in recent times. The foreign exchange market, globally, experiences transactions of trillions of dollars on daily basis. Foreign exchange transactions encompass many things, starting from billion-dollar payments made by business conglomerate, corporate giants and governments for goods and services purchased from overseas to the conversion of currencies by a traveler at an airport. Bangladesh inherited its Foreign Exchange Regulation Act 1947 (hereinafter referred to as

“Act”) from the British Government. The Act, prior to the most recent amendment, was modified couple of times; the changes made the law definite in respect of Bangladeshi citizens, but uncertainty continued when it came to foreigners living in the country.

On 9th September 2015 the Foreign Exchange Regulation Act, 1947 has again been amended. Through this recent amendment, certain unnecessary or burdensome requirements for investors and other stakeholders have been abolished. 

Previously most of the business entities had to obtain permission under section 18A of the Act from the Bangladesh Bank for their expatriate employees for their employment in Bangladesh and remittance purposes; however, this provision has been omitted by other provision. Now such onus to take permission is not on the entities; rather imposed directly on the subscribing bank. 

Any foreign establishment, who is willing to introduce its branches or liaison offices in Bangladesh, does not have to give any prior information to the Bangladesh Bank, as it was given before. With the slight help of Attorneys/Advocates/Lawyers/Solicitors in Bangladesh, such establishment will be able to start its work once the Board of Investment of Bangladesh gives its permission, but establishments will have to inform the Bangladesh Bank within a month eventually.

The current legislation also moves forward to treat both Bangladesh citizens and foreigners on same proportion in various aspects. For instance, the government may require both residents of Bangladesh and foreigners to provide details of their assets, immovable and other property, they have in abroad. The Bangladesh Bank now has the power to seek detailed information about foreign currency holdings and investments in foreign securities from both Bangladesh nationals and foreigners living in Bangladesh. 

Such amendment would certainly encourage the foreign investments in Bangladesh by easing and smoothening foreign investment procedure; and, consequently, expand the international trade. 

EXTRACT FROM THE NEWSLETTER 2016 CREATED BY FM ASSOCIATES BANGLADESH.

Last modified on Sunday, 07 August 2016 10:55