Slow repatriation weakens our investment appeal

Multinational companies in Bangladesh continue to face obstacles in sending funds abroad, whether as dividends, technical service fees or capital repatriation during exit or restructuring. Though permitted by law, these transactions are often delayed by regulatory bottlenecks, excessive paperwork and inconsistent interpretations by the authorities.

Dividend repatriation, while allowed under the law, is frequently bogged down. Each transaction must be approved by the Bangladesh Bank and authorised dealer banks, whose cautious approach causes prolonged processing. Companies are required to submit extensive documentation, including audited accounts, tax clearance certificates and evidence of the original capital inflow, sometimes dating back decades. Even after approval, shortages of foreign exchange at banks can hold up currency conversion. Tax disputes add further delays. Although Bangladesh has Double Taxation Avoidance Agreements (DTAAs), remittances are often stuck due to disagreements over residency documents and varying interpretations of tax rules.

Royalties, technical service charges and management fees face similar hurdles. These payments usually require prior registration with the Bangladesh Investment Development Authority (Bida) and approval from the Bangladesh Bank, particularly if they involve related parties or exceed specified thresholds. Regulators often question whether services were actually delivered, even when backed by intercompany agreements and benchmarks. Transfer pricing rules are frequently cited by the National Board of Revenue (NBR), but without an advance pricing agreement framework, companies are left exposed to disputes and uncertainty.

Repatriating capital during exits or restructurings is the toughest challenge. Even with full documentation, central bank approval can take months. Valuation disputes are common, with the BB discounting internationally certified assessments and approving only a portion of the proposed remittance. Clearance from the revenue board is also required. Without a clean tax assessment and a no-objection certificate, payments are typically blocked. Older investments face the additional burden of proving the original capital inflow, records that may no longer exist.

The merger of Lafarge Surma Cement with Holcim Bangladesh is a telling example. An international valuation was commissioned and approval sought from the BB for cross-border payment. The process took more than a year, and only half of the proposed amount was cleared. The group had to absorb the difference internally, showing the unpredictability of cross-border mergers and acquisitions involving foreign capital.

These delays reflect deeper structural issues. Despite formal commitments to current account convertibility, regulatory behaviour remains control-oriented. Banks, wary of audits, impose extra compliance layers. In 2023, severe foreign currency shortages delayed even approved remittances, although liquidity has since improved. Sudden rule changes by regulators add to the uncertainty, forcing companies to devote excessive resources to compliance.

The consequences are far-reaching. Investor confidence weakens when capital and profits cannot move freely. Foreign direct investment suffers as Bangladesh looks less competitive than countries with faster and clearer repatriation processes. Business costs rise as firms deploy extra teams to handle paperwork, follow up with regulators and interpret shifting rules.

Targeted reforms could ease the problem. Routine transactions such as dividends should follow a pre-approved protocol. With growing scrutiny by the revenue board, introducing advance pricing agreements would help resolve uncertainty over royalties and service fees. Time-bound approval frameworks must be enforced across the BB and the NBR. A digital, integrated portal linking the central bank, Bida, NBR and Registrar of Joint Stock Companies and Firms would automate approvals, track progress and reduce discretion. International valuations by reputable firms should be accepted unless challenged within a defined period.

Bangladesh has made considerable progress in attracting foreign investment. To unlock its full potential, it must treat capital mobility not as a concession but as a right. In global business, reputation follows repatriation, and the ability to exit with clarity is as important as the freedom to enter.

The writer is chairman of Unilever Consumer Care Ltd