Bangladesh is set to enter a new era of industrialisation and faster economic growth when the planned 100 economic zones (EZs) go into operation by 2030. Such zones will surely act as catalysts for a faster economic take-off. The zones will create opportunities for jobs for 10 million people and produce goods and services worth $40 billion, as per an official projection. At first, the Bangladesh Economic Zones Authority-BEZA---is setting up four economic zones in the public sector. The rest will belong to the private sector comprising Bangladeshi entrepreneurs and foreign investors.
The planned economic zones in Bangladesh have already generated great enthusiasm among local and foreign investors. The BEZA has already awarded prequalification licences to 10 local private companies so far to set up 11 other economic zones: one each to AK Khan and Company, Bay Group, Aman Group, Maisha Group, United Group, Unique Group, Akij Group and two to Bashundhara Group and Meghna Group. Significantly, several countries including China and India have already been allocated exclusive EZs.
The Asian Development Bank (ADB) has given a thumbs-up to Bangladesh's efforts in setting up the 100 economic zones as dedicated industrial districts as it said these will help attract foreign investment and boost exports. EZs are associated with more foreign affiliates in the economy that exports, said the Asian Economic Integration Report 2016. Exports by the factories located in the country's export processing zones already rose by 9.16 per cent year-on-year to $6.67 billion last fiscal year.
Prime Minister Sheikh Hasina, who has innovated the concept of economic zones keeping in view fast depletion of fertile agricultural lands in Bangladesh, has given a sense of direction to the BEZA. She stressed the need for taking into consideration potentiality of various regions. Industries particularly small and medium ones, will have to be established on the basis of availability of the resources in the concerned regions. The issue of communication system in those areas will also have to be taken into consideration, she said.
Happily, works are going on at a quicker pace to set up the EZs across the country to make Bangladesh an investment hub and an export-centric country. The BEZA has already selected around 36,000 acres of land for the planned EZs till now which will reach around 75,000 acres finally. Of the 100 economic zones, infrastructure development works, land acquisition, development of land, appointment of developers and ensuring uninterrupted supply of electricity for 74 economic zones are now under the process. The zones are being developed in a 'well-planned' and 'well-coordinated' manner. The government is providing all kinds of support to the private sector investors to make EZs ready for investment within the stipulated time.
Laws and regulations have already been prepared to remove all regulatory barriers. Necessary policies and financial and utility supports, including ensuring the supply of gas, water and electricity under one-stop service system are being arranged to offer investors a harassment-free environment. For attracting investments in EZs, the government has declared various incentives and benefits, including exemption on income tax, VAT on electricity and local purchase, customs duty, stamp duty, dividend tax and income tax.
Under the Bangladesh Economic Zones Act 2010, the BEZA has been established. The broad objectives of this are structural transformation of the economy of Bangladesh through attracting FDI, developing and diversifying export, promoting skill, sharing knowledge, generating employment, ensuring dynamic benefits for the domestic industry and social and environmental sustainability.
The BEZA is playing regulatory roles to establish the EZs. It is appointing developers under the Public Private Partnership (PPP) modality to develop the EZs. The private sector is also establishing EZs by taking licence from the government. A safe and proper ground is being prepared for investors in the economic zones. The law allows the private sector to own, develop, and manage economic zones, as well as establish infrastructure and services for the companies in the zones as a separate business.
Now the BEZA should immediately carry out a survey of manpower needs of industries to be located in the 100 economic zones. This will facilitate skill training of hundreds of thousands of the country's youths to get prepared for their jobs. The existing training institutes must be equipped enough to provide the required training so that these industries finally could phase out foreign technicians and workers from the economic zones.
The BEZA should also take stock of some serious impediments EZ entrepreneurs will face. The 45th largest economy in the world has one of the worst logistics and transport services in the region. It still does not have a modern multimodal transport system to speak of, as a result of which local exports are losing competitiveness in the global market. Besides, the ports, road, rail and air services are yet to be at par with their Asian Tiger counterparts.
There has been no marked improvement in the container handling capacity of the Chittagong Port. Highways connecting the capital with the ports have not yet been upgraded to handle huge cargo movement after the 100 economic zones go into full operation. In fact, Bangladesh's transportation system needs to go through an overhaul. Gridlock on the highways bleeds the country's economy, and bringing about a sustainable solution to the menace is in order. Barge services between Chittagong and the EZs can be a good beginning. It is essential to improve ports, road, rail, and air services. The EZs must have dedicated services in these areas. Private sector, which is ready to invest in transport infrastructure and trade logistics, should be encouraged to team up with the government.