Bangladesh Bank (BB) has introduced a new policy allowing Authorized Dealers (ADs) to facilitate foreign remittances from Taka accounts on behalf of industrial enterprises in Hi-Tech Parks (HTPs). This change aims to ease the financial burden on these firms by permitting them to meet their foreign payment obligations related to royalty, technical know-how, and technical assistance fees without prior approval from BB or the Bangladesh Hi-Tech Park Authority (BHTPA), as long as the payments remain within the prescribed limits.
Under the revised rules, for new projects, the fees and related expenses cannot exceed 6 percent of the cost of imported machinery. For ongoing projects, the ceiling is set at 6 percent of the previous year's sales as declared in income tax returns. The central bank's circular emphasizes that ADs must ensure that the enterprises have no foreign currency income sources and that all applicable taxes and VAT have been paid before processing these remittances.
For fees exceeding the prescribed limits, companies will need prior specific approval from BHTPA. This approval is also required for other similar legitimate expenses, regardless of the amount. ADs are instructed to adhere to the Foreign Exchange Regulation Act, 1947, which includes performing due diligence on Know Your Customer (KYC) and Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) requirements, as well as fulfilling applicable reporting obligations to Bangladesh Bank and BHTPA.
Hi-Tech Parks in Bangladesh are designed to foster innovation and technological advancement by providing a conducive environment for high-tech industries. These parks offer various incentives and facilities to attract both local and foreign investments. The simplification of foreign remittance processes is expected to enhance the operational efficiency of firms within these parks, encouraging further investment and technological growth.
The move by Bangladesh Bank is part of broader efforts to support the technological and industrial sectors in the country. By reducing bureaucratic hurdles and providing financial flexibility, the central bank aims to stimulate economic growth and innovation. This policy change is particularly significant for small and medium-sized enterprises (SMEs) within Hi-Tech Parks, which often face challenges in managing foreign currency transactions.
The implementation of this policy is expected to have a positive impact on the overall business environment in Bangladesh. By ensuring that companies can more easily manage their foreign payment obligations, the central bank is helping to create a more stable and predictable financial landscape. This, in turn, is likely to attract more foreign investment and foster the growth of high-tech industries, contributing to the country's economic development.
