Thursday, February 12, 2009

Company Formation in Bangladesh - Part 4
BOI Registration
February 12, 2009

(For an index of all of my Company Formation in Bangladesh blogs, click here: Forming a Company in Bangladesh)

Now that fundraising for my resort is progressing, I have to make my bank account an operating account so that I can take money out. If you recall from previous company formation posts, until all company registration/ work permit issues are completed, you can only open a non-operating bank account, which means that you can put money in, but you can't take money out!

I knew that the next step in resolving this issue was to get my Board of Investment (BOI) registration, but after meeting with Mamdood Alamgir, the Director of the Industrial Division of BOI, I learned that in order to register with the BOI, I would need to have my land. Of course, in order to buy my land I need my equity money and to take my equity money out of my bank account I need an operating bank account, but to get an operating bank account I need BOI registration - so the "chicken and egg" cycle starts again!

The last time I spoke with him he mentioned that a lease or registered baina would work as well as a purchase deed. Because a registered baina costs 1/3 the price of the land, I decided to take out a five year lease for just one bigha (out of the 60 bighas) of the land that I intend to purchase. I was hoping that this would satisfy the BOI requirement for some sort of land prior to registration.

I collected all of the documents on their list and went to BOI to register. Of course, when I sat down with Mr. Alamgir again, the rules and the form had changed and I was now missing my tax ID number (TIN) and my trade license. I was told by the group that I initially hired to register my company that I couldn't get these until I had BOI registration. (Another chicken and egg cycle.)

The Director assured me that I could get these things, however, if I applied for them in the district where the resort would be located. Dubious, I had no choice but to agree to try to get those items before returning to the BOI to register...

Items Needed for Bangladesh Board of Investment (BOI) Registration:
Here is a list of items that you need to submit for BOI Registration. Be sure to check with BOI before submitting, however, as the list and forms seem to change frequently! ALL documents need to be stamped with the corporate seal and signed by the Managing Director or Chairman.
  • BOI Application for Registration of a Foreign Investment Project Form (2 copies)
  • Background of Promoters (name, permanent address, mailing address, position in company, nationality, experience) (3 copies)
  • Résumé of officers (Managing Director at a minimum) (3 copies)
  • Machinery/ Equipment List (3 copies)
  • Certificate of Incorporation along with Memorandum & Articles of Association (1 copy)
  • Copy of Trade License (1 copy)
  • Copy of TIN Certificate (1 copy)
  • Attested copy of lease agreement, deed of sale, or registered baina (1 copy)
  • Project profile with financial statements (if the company is greater than 50 million taka) (1 copy)
  • Pay order/ bank draft to: Executive Chairman and Member Secretary for the registration fee
Fees for BOI Registration
As of this writing, the fee schedule is as follows. Definitely check with BOI before ordering your bank draft, however, as the amounts may have changed.

Project Cost up to 100,000,000 Tk = 5,000 Tk
Project Cost up to 250,000,000 Tk = 10,000 Tk
Project Cost up to 500,000,000 Tk = 25,000 Tk
Project Cost up to 1,000,000,000 Tk = 50,000 Tk
Projecdt Cost over 1,000,000,000 Tk = 100,000 Tk

Updating changes in BOI registration costs 1,000 Tk each time.

Getting a Bank Draft
Getting the bank draft for the Registration Fee, was, of course, a bit tricky. Banks will not issue a bank draft for money unless you have a bank account with them (that you can take money out of!) Fortunately, earlier I had opened a personal taka bank account that I could take money out of. Sadly, I can not put money into this account, unless it is a wire transfer in or a salary check. (Yes, crazy as it sounds, I have one Bangladeshi bank account that I can put money into, but not take it out of and one Bangladeshi bank account that I can take money out of, but not put money into!)

Fortunately, the day I went to the bank (where I have my personal account) the man at the counter was sympathetic. I did not want to waste time or the money going through a wire transfer from the U.S. Of course I did not know about the "you can only get a bank draft by taking money out of your own bank account rule", so I did not have enough money in my account to cover the registration fee. Luckily, I had just withdrawn some money from my U.S. ATM card and the banker was able to accept that receipt as proof that I had just brought the cash that I was using into the country.

Unfortunately, I think that having a personal bank account here is the only way to get this bank draft. It is relatively easy to open a foreign currency (i.e. dollar) bank account in Bangladesh from what I understand, but opening a personal taka account is much more difficult (another "chicken and egg" scenario!) I was able to do it because I originally came to Bangladesh on a student visa. You might check with the bank to see if you could get a bank draft from a foreign currency local bank account though...

Bangladesh Tax ID Number (TIN) and Trade License
After the BOI rejected my application because I did not have my tax ID number (TIN) and trade license, I contacted my local agent in Jessore to see if he could get them for me. He found out that we had to get our tax ID number first, and that as a foreigner I could not get that in Jessore (the district where the resort will be developed.) I could either apply for it in Khulna (the main town of the division that Jessore is in) or Dhaka (the capital city). Since Khulna is closer to Jessore, I had my agent go there. He was able to get the TIN quite quickly (the next day). There was no fee for the TIN, but apparently we had to pay a 6,000 Tk "expediting fee". Bangladesh is one of the most corrupt countries in the world, and I would love to say I flat out refuse to pay bribes, but sometimes you just can't get business done unless you do!

With the TIN we were able to apply for our trade license. The BOI guys told me that I had to apply for that in the upazila where the resort would be built. My agent had reservations about applying there, however, because the land owners don't know that it is a foreigner buying the land, and we don't want them to find out until we have purchased all of the land, because otherwise the prices will go up a lot! Fortunately, Koli is quite smart and resourceful, so when he applied for the trade license he told them that HE was Kristin Boekhoff! I had a good chuckle about that since a few months ago I had disguised myself as a Bangladeshi man to go look for land, and now a Bangladeshi man was disguising himself as a white, Christian woman in order to get a trade license! Ah, what we will not do to get this project off the ground!!

The trade license application took a little bit longer, because the councilman had a death in his family and was out of the office for a few days. I did get the license about a week later, for 1,000 Tk - plus a 2,000 Tk donation to the Chairman's "poor fund" (as Koli calls it). I am not at all happy about these bribes, but I honestly don't know what I can do about it. If I don't pay, I can't get my trade license which means that I can't start my company...

To apply for a trade license you need the following:
  • a certified copy of the company’s articles and memorandum of association
  • a copy of the certificate of incorporation
  • statement of bank solvency (I used a copy of the initial bank statement for my corporate account - the one that showed the two initial wire transfers into it)
  • the company’s tax identification number certificate
  • a copy of the rent agreement for the company’s office
  • three passport photos
  • particulars of the managing director (name, marital status, address, parent's names, etc.)

Land Requirement
Originally Mr. Alamgir told me that I could use a lease, even for an office space, to fulfill the BOI land requirement. When I went to him with the lease agreement for the one bigha for five years, however, he told me that would not be sufficient to operate a resort. I explained to him that I knew that, but that I couldn't buy all of the land until I get my equity money, and I can't use my equity money until I get an operating bank account, and I can't get an operating bank account until I get my BOI registration!

Fortunately, he understood my dilemna and said that he would try to help me out... (And no bribe was needed! At least there is one honest man in the government!)

Submitting the BOI Registration
Surprisingly, after I did have my trade license and TIN (and all the rest of the required info), submitting the BOI Registration Application was quite easy! I just went to the reception area on the 19th floor, handed it in, and waited while the woman there entered the information into her computer. When she was done she gave me a receipt with a number that I could use to check the status of my application online. Yes! Online!! (http://www.boi.gov.bd/boi_service_tracking.php) Sadly, the online status doesn't seem to be working for me; I keep getting a page load error... but, theoretically it is still exciting!

I was told that it should take 10-12 business days to get BOI registration. After that, I apply for my investor visa...

2 Comments:

At Thursday, February 12, 2009 3:41:00 PM, Blogger ks said...

This comment has been removed by a blog administrator.

 
At Friday, March 26, 2010 12:26:00 PM, Anonymous Business Registration Philippines said...

I;m glad in Bangladesh BOI registration is so easy. Here in the Philippines it takes a little more then some internet skills to actually get a project registered.

The BoI board has been saying they will upgrade their website for registration for years but if you visit their government site (http://www.boi.gov.ph) many times it can't even load.

Hopefully our country will make strides like Bangladesh has.

 

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