Bangladesh liberalises container depot sector to attract global investment

Highlights:

• Bangladesh removes foreign ownership cap on private ICDs and off-docks
• Foreign investors can fully own logistics facilities from July 1
• Previous rules required foreign firms partnering with majority local stakeholders
• Government expects stronger investment, exports, and cargo capacity growth
• Infrastructure and operational bottlenecks may still discourage foreign investors
• Foreign operators could bring technology, skills, and efficiency improvements

Bangladesh has scrapped the long-standing cap on foreign ownership of inland container depots (ICDs) and off-dock facilities, a move aimed at attracting greater foreign direct investment into the country's expanding logistics and port sectors.

The measure, announced by Finance Minister Amir Khosru Mahmud Chowdhury during the presentation of the national budget on 11 June, will take effect from 1 July. It will allow foreign investors to own 100% of private ICD and off-dock operations.

Industry stakeholders have largely welcomed the decision, describing it as a positive signal for international investors. However, they cautioned that removing ownership restrictions alone may not be enough to attract substantial foreign investment.

The decision marks a major policy shift for Bangladesh's logistics industry. Until now, foreign operators could enter the sector only through joint ventures with local partners holding majority stakes. Under the new framework, international companies will be able to establish and operate facilities independently.

Infograph: TBS

The government expects the move to encourage fresh investment in logistics infrastructure as Bangladesh prepares for higher export volumes and increasing cargo traffic in the coming years.

According to the Bangladesh Inland Container Depots Association (Bicda), the country currently has 24 privately operated ICDs, several of which already have foreign participation through joint venture arrangements. These facilities have a combined storage capacity of 1,06,000 twenty-foot equivalent units (TEUs) and can handle around 90,000 export containers, 50,000 import containers and 60,000 empty containers each month.

Three more ICDs are in the pipeline and are expected to begin operations this year or next.

Global port and logistics operators, including DP World, Medlog, Red Sea Gateway Terminal (RSGT), APM Terminals and PSA Singapore, have either invested in or expressed interest in Bangladesh's ports, terminals and off-dock businesses.

Operational efficiency key to attracting investors

Ruhul Amin Sikder, secretary general of BICDA, said the ownership cap had been introduced primarily to protect local investors who developed the sector over nearly two decades.

"Opening the sector to 100% foreign ownership changes the investment landscape. But removing the cap does not automatically mean foreign investors will come," he told TBS.

According to him, Bangladesh must address several operational bottlenecks before expecting significant foreign participation.

"Investors will look at operational efficiency first. Challenges at Chattogram Port, transportation bottlenecks and communication infrastructure need to be improved," he said.

He also pointed to the slow pace of digitalisation in logistics operations, noting that many processes remain manual despite years of reform efforts.

Ruhul further highlighted concerns regarding tariff-setting mechanisms, arguing that investors need confidence that they can earn sustainable returns on long-term investments.

"These are capital-intensive investments. Foreign investors will assess whether there is a stable and predictable return environment before making commitments," he added.

He noted that three to four additional ICDs are expected to become operational within the next two years, significantly boosting container-handling capacity. Together with the existing facilities, these depots are expected to meet the country's ICD demand through 2030.

Technology transfer, productivity gains expected

Zafor Alam, a former member of the Chattogram Port Authority, said greater foreign participation could significantly improve operational performance.

"International operators bring modern technologies, digital systems and management expertise that can improve overall efficiency," he said.

According to Zafor, the entry of global logistics firms would also create opportunities for technology transfer and workforce development.

"They will bring advanced IT systems, training programmes and international best practices. Local workers will gain valuable skills and experience from working alongside global operators," he said.

However, he stressed the need for uninterrupted power supply and a skilled workforce to support foreign investment.

"These are among the key factors foreign investors consider when selecting investment destinations," he added.

Zafor also suggested that future agreements with foreign operators should include provisions for training and employing local workers to maximise long-term benefits for Bangladesh.

Part of broader FDI strategy

The removal of foreign ownership restrictions forms part of the government's broader strategy to attract FDI and strengthen Bangladesh's trade-support infrastructure ahead of its graduation from least developed country (LDC) status.

Policymakers expect increased foreign participation to help expand logistics capacity, improve service quality and enhance the country's competitiveness as an export destination.

Industry observers say the reform removes a major barrier that had discouraged some international operators from entering Bangladesh's ICD sector. However, they note that infrastructure improvements, regulatory predictability and operational efficiency will ultimately determine whether the country can translate policy liberalisation into meaningful investment inflows.