Barriers and Opportunities for Enhancing Capital Flows
In the COMCEC Member Countries
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Among some developing countries, governments use investment promotion agencies as a tool
to control FDI and capital flows as a whole. Where legislative frameworks may adhere to
international frameworks in principle, implementation is absent in some cases. Internationally
accepted frameworks such as the OECD Code of Liberalisation offer general provisions, but
require further institutional development that is lacking among some countries in the lower
income group.
The rest of this chapter will give an in-depth view of the legal, institutional and policy
frameworks in place for capital flows in eight COMCEC member states - two countries within
each of the four World Bank income groups, which are also spread out geographically across
the OIC’s three regional groupings of the COMCEC members – the Arab group, Asian group and
African group. These countries were chosen by the Economist Intelligence Unit as a result of
their relative success in attracting capital flows, and because they have well-established
frameworks and institutions governing capital flows that could serve as valuable examples to
other member states.
2.1. LOW-INCOME COUNTRIES
Bangladesh
Laws regulating capital inflows
Investments in the People’s Republic of Bangladesh are reasonably well protected by law and
by practice. Major laws covering foreign investment include the Foreign Private Investment
Act of 1980, the Industrial Policy of 1991, the Bangladesh Export Processing Zones Authority
Act of 1980, and the Companies Act 1994. In addition, foreign investors are also required to
follow the regulations of the Bangladesh Bank (BB, the central bank), and the National Board of
Revenue in taxation and customs matters.
Furthermore, the country’s Foreign Investment Act includes a guarantee of national treatment.
National treatment is also provided in bilateral investment treaties for the promotion and
protection of foreign investment which have been concluded with at least 14 countries:
Belgium, China, France, Germany, Italy, Malaysia, the Netherlands, Pakistan, Romania, South
Korea, Thailand, Turkey, the UK and the US.
Separate bilateral agreements on avoidance of double taxation have been signed with more
than 20 countries to date: Belgium, Canada, China, Denmark, France, Germany, India, Italy,
Malaysia, the Netherlands, Japan, Pakistan, Poland, Romania, Singapore, South Korea, Sri
Lanka, Sweden, Thailand, the UK and the US. Double-taxation treaty negotiations are also
under way with other countries, including Australia, Cyprus, Finland, Indonesia, Iran, Nepal,
Norway, the Philippines, Qatar, Spain and Turkey.
There is no restriction on the repatriation of capital invested in Bangladesh. Foreign
companies, including banks, insurance companies and other financial institutions, are free to
remit their post-tax profits to their country of origin without prior approval of the central