Economic zones- streamlining the investments in industry

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Bangladesh economy is growing fast more than any other time since independence and in the past decade, its GDP has grown by average 6.5 percent driven by its exports of readymade garments, remittances and the domestic agricultural sector. Recently Bangladesh government declared a plan to become a middle-income country by 2021 and a developed one by 2041. To make the dream true Bangladesh is establishing a more liberalized trade and investment environment as it can attract large-scale foreign investment. Bangladesh government has taken initiatives to construct 100 special economic zones across the country on 75,000 acres of land by 2030 to spur planned industrial development in protecting the unscrupulous use of agricultural land.

Bangladesh Economic Zones Authority (BEZA) has been emerged by the Bangladesh Economic Zones Act, 2010, which aims to establish these economic zones in all potential areas in Bangladesh, which will create jobs for 10 million people and produce goods and services worth $40 billion. It has identified 74 locations across the country for setting up economic zones. BEZA is setting up four economic zones in the public sector, while it has awarded two final licenses in the private sector. It also awarded prequalification licenses to 10 local private companies so far to set up 11 other economic zones.

Category of economic zone:  There are six-category economic zones for investors, which are given below:

  1. PPP economic zones, established through public and private partnership (PPP) by local or foreign individuals, body or organizations.
  2. Private economic zones, established individually or jointly by local, non-resident Bangladeshis or foreign investor body, business organizations or groups.
  3. Government economic zones established and owned by the government.
  4. Special economic zones, established privately or by public private partnership or by the Government initiative, for establishing any kind of specialized industry or commercial organization
  5. G2G economic zones, established upon initiative by the government of a foreign country or the government of Bangladesh and / or in partnership between Government of Bangladesh and government of a foreign country, and
  6. Economic zones, established in collaboration with and/ or partnership between government authorities or organizations

BEZA started activities for PPP zones with the support of World Bank and DFID under two projects within PSDSP.  A few months ago, Bangladesh signed a $130 million additional financing agreement with the World Bank to scale up support for the licensed and new economic zones to attract foreign and domestic investment as well as to create more jobs in the manufacturing sector.

Recently Bangladesh has signed an MOU with India for establishing 2 Economic Zones for the Indian investors. Bangladeshi PM Sheikh Hasina handed over a Replica Map of the 2 EZs (Mongla & Kushtia) to the Indian PM.
Figure: Recently Bangladesh has signed an MOU with India for establishing 2 Economic Zones for the Indian investors. Bangladeshi PM Sheikh Hasina handed over a Replica Map of the 2 EZs (Mongla & Kushtia) to the Indian PM.

With recently approved four new economic zones, the total number of economic zones to be developed under both private and public initiatives in Bangladesh goes up to 68. Our neighboring country India has identified three rural outposts to set up its first foreign special economic zones (SEZs) at Bherhamara near Khulna, Keraniganj near Dhaka and Mirsharai in Chittagong.

Present scenario of the EZs:  

Thousands of acres of the economic zones are handed over to the local and international investors, which were previously used as cultivating land, are now lying down as unused land because of the investors still do not invest. It is really a bad sign for Bangladesh economy, which will diminish the opportunity of our agro-based people as well as the country economy.

Recently our Prime Minister Sheikh Hasina emphasized on this issue to protect the agricultural lands from unplanned industrialization and the government has undertaken a plan to bring the industries in the same zone by providing various utility services. In the fifth meeting of the governing council of BEZA Sheikh Hasina said, “We have to protect our farm land to provide food to 16 crore people. We also have to give attention to employment generation through industrialization”.

The premier also said the investors have to invest in the areas dedicated for industries. Unplanned industrialization also causes environmental degradation.

The meeting in principle also decided to ratify the “Bangladesh Economic Zone (one-step services) Act” for giving services to all local and foreign investors through different agencies more effectively. The meeting also discussed the draft of a policy for constituting Bangladesh Economic Zones (creation and operation of Economic Zones Welfare Fund), including a proposal for a new tariff regime for land in the special economic zones, and decided to provide land to the investors in a competitive price considering present global investment scenario.

Already some industrialists from home and abroad have started to invest to the economic zones but they are disappointed for unavailability of gas connections. In this aspect Nazimuddin Chowdhury, energy and mineral resources secretary recently said, “The gas crisis will not remain like now after one or one and a half years. Presently, there is a daily deficit of 50-55 crore cubic feet gas. But 100 crore cubic feet LNG will be imported daily, so there will be no gas crisis.”

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