Development work of 10 economic zones (EZs) was off to a modest start this week with the laying of the foundation stones in different places of the country. First of its kind, the EZs are expected to help boost the country’s industrialisation, creating opportunities for jobs of a large number of people. While launching the EZs through video-conferencing, Prime Minister Sheikh Hasina called upon the local people to extend cooperation so that the investors could build the zones at a faster pace. With the setting up of EZs, she said, living standard of the people will be further improved as those will generate employment, alleviate poverty and infuse dynamism into the economy. The government, she noted, will provide all-out support to all types of EZs to achieve higher middle income country status by 2021. On its part, Bangladesh is confronting the challenges of unemployment for reasons of low levels of domestic and foreign investments in its industrial sector. To address such challenges, the Bangladesh Economic Zones Authority (BEZA) has embarked upon an extensive plan to create jobs for around 10 million people in the next 15 years by establishing, at least, 100 EZs. The BEZA is expecting investments up to $20 billion from both domestic and foreign entrepreneurs in the EZs in next 15 years. The government has given it the mandate to establish, operate, manage and control all EZs in the country. The authority has set the target of facilitating earnings of an additional $40 billion in export receipts by 2030, from the planned 100 EZs. Local businesses are also eyeing export of apparel products worth $50 billion by 2021. Many developing countries across the globe have benefited through effective as well as efficient operations of EZs. For example, Vietnam has enormously boosted its industrial outpost through 200 EZs developed during the last 15 years. If Hanoi can do such a gigantic job, why not Dhaka, analysts ponder. Recently, Myanmar is doing its work to be on the right track to catch the waves of global investors. But, Bangladesh has unfortunately been lagging far behind in this race. The BEZA has now given licences to a number of entrepreneurs to operate the EZs. The government is set to develop the land and provide electricity and gas connections to such zones on a priority basis. The private owners have been authorised to set up their own industrial plants, or allow foreign firms to build factories inside the zones. Available indications suggest that, at least, five private EZs will go into operation within a year. Four exclusive economic zones have been earmarked for three countries — Japan, China and India — as the investors from there have been looking for opportunities to set up industrial plants in separate zones, for quite a long time. Japanese investors are expected to get more zones in Narsingdi and Narayanganj districts. Chinese investors will also be given another zone in Chittagong. Two special economic zones — one in Bheramara and another in Mongla — have been marked for Indian investors, as they too have expressed interest some years ago. In order to attract long-term investments, the government incorporated the provision for giving a set of tax benefits in the Bangladesh Economic Zones Act. Developers of the EZs are to enjoy such facilities. Investment of foreign entrepreneurs will not also be restricted through ceiling. They are likely to enjoy full repatriation of capital and dividend. The foreign investors will be exempted from export tax; they can enjoy 50 per cent rebate in land registration fees, and 20 per cent value added tax (VAT) exemption on utility service bills. Added to this, foreign investors in EZs will be allowed to bring 5.0 per cent of a factory’s workforce from their own countries. Foreign workers having technical expertise in respective fields will be allowed to enjoy, up to 50 per cent income tax exemption for five years. Since the passage of the Bangladesh Economic Zones Act five years ago, hardly any work was done to facilitate establishment of EZs in the country. The good news now is that the government has, of late, stepped up its efforts for creating such zones to help spur the country’s industrial growth. However, the proposed EZs still does not have the in-built infrastructures like roads, electricity and gas which are needed for their smooth operation from the very beginning. A good number of potential investors are also reported to be not so certain about the protection of their investments in the zones. Viewed in this context, there is no reason to be sure about investments flowing in, automatically in a bigger way, only because of the incentive package. For attracting private and foreign investors, more things, as analysts consider, need to be done. There should be reduction of taxes and duty structure on services, easing visa and work permits with extension of visa tenure for the overseas investors. A complete township will also have to be built in each of the EZs to give the workers a better life and better access to education and health. All these heighten the need for putting in optimal efforts to speed up implementation process of the EZs. Otherwise, it will be well-nigh impossible to crowd in investments in order to keep pace with the required economic growth momentum. If such zones are not established with the needed zeal and speed, the country will in no way be better placed to attract investments, both local and foreign.
