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EPZ-Bangladesh

EPZ-Bangladesh

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Published by Emad114
All about EPZ in Bangladesh
All about EPZ in Bangladesh

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Published by: Emad114 on Jan 11, 2010
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11/15/2012

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1. Introduction
Since independence Bangladesh has made remarkable progress in diversified areas of social, political, cultural and economic life of its citizen. In order to boost up economicdevelopment of the country number of steps have also been taken to attract ForeignDirect Investment (FDI) and facilitate industrialization process of the country. One of such efforts was the promulgation of BEPZA Act 1980 which eventually institute theformation of Bangladesh Export Processing Zones Authority (BEPZA), the governmentorgan responsible for creation, operation and development of Export Processing Zones(EPZ) in the country.After the independence the stagnant economy of the war ravaged country was desperatelyseeking private capital, technical knowhow to facilitate the industrialization process toachieve economic growth. During the initial years it could not happen. However, a visit by the than World Bank Vice President Mr. Robert McNamara in the early eighties toBangladesh transmitted the concept of EPZs to us. Since than EPZs, in tune with theliberal industrial policy of the government along with investment friendly legal &institutional framework like Foreign Private Investment (Promotion and Protection)Act’1980, have made significant progress. Pioneer EPZ of the country Chittagong EPZstarted functioning in the year 1983 in the Port city of Chittagong, seeing itsunprecedented success the second one came into being in 1991in Dhaka. Presently thereare as many as eight operational EPZs and two proposed EPZs in different locations of the country contributing to the overall economic development process of Bangladeshthrough promotion of export and FDI (Foreign Direct Investment), generation of employment, transfer of technology, and development of forward and backward linkageindustries and so on.
2. Theory of EPZ
EPZ is the acronym for Export Processing Zone. According to the United NationsIndustrial Development Organization, “an Export Processing Zone involves theestablishment of modern manufacturing plants inside a custom-bonded industrial estate by offering suitable package of investment incentives to both foreign and domesticentrepreneurs.”
 A Case Study on the Export Processing Zones (EPZs) of Bangladesh
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However, an Export Processing Zone is an industrial area that constitutes an enclave withregard to customs’ tariffs and the commercial code in force in the host country.
Economic Rationale for a better export performance of the zones:
EPZs are special enclaves, separated from the Domestic Tariff Area (DTA) by fiscal barriers and are intended to provide an internationally competitive duty free environmentfor export production at low cost. EPZs are benefited usually from the following:
Modern and efficient infrastructure
General fiscal and non fiscal concessions to firms
Better governance due to single window facilities to ensure corruption and red tapefree business environment.
3. What BEPZA is
BEPZA is the acronym for the Bangladesh Export Processing Zone Authority.Bangladesh Export Processing Zones Authority (BEPZA) was set up by an Act of Parliament in 1980 to attract foreign capital and technical know-how and thereby boostexports through the establishment of export-oriented industries in special zones withspecial facilities.Earlier in 1980, the Foreign Private Investment (Promotion and Protection) Act was passed by parliament for promotion and protection of foreign investments. As per theseacts, BEPZA, an autonomous statutory body, came into being in 1983. It was entrustedwith the responsibilities of setting up and operating EPZs in the country.
4. Objectives of BEPZA
The objective of setting up EPZs was to provide investors with a congenial investmentclimate free from excessive procedural complications. The main objectives are given below:
Promotion of foreign (FDI) & local investment
Diversifications of export
Development of backward & forward linkages
Generation of employment
 A Case Study on the Export Processing Zones (EPZs) of Bangladesh
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Transfer of technology
Upgradation of skill
Development of management
5. Evolution of the EPZ Policy in Bangladesh
The evolution of EPZ theory has been occurred in Bangladesh in two phases.
1984-1998
1998 Onwards
5.1 First Phase (1984-1998):
 The policy framework that Bangladesh inherited and maintained at independence in 1971was geared towards import substituting industrialization. The process of reform washowever, initiated as early as in 1975. The reform process was further intensifiedfollowing major policy declarations in 1982. Under the new policy regime, export promotion became a major concern of the government. A wide array of export incentiveswere offered to boost exports. These included: export subsidy, duty free access toimports, tax holidays and rebates and credit guarantees.While the incentive package mostly centered on price factor, there were several non priceconstraints as well, crucial amongst which were paucity of investment capital, lack of access to improved technology, inadequate linkages with the global markets. It wastherefore felt that adequate inflow of Foreign Direct Investment (FDI) in the export sector was necessary to promote exports. In 1980, the Foreign Private Investment (Promotionand Protection) Act was enacted to provide equal treatment to domestic and foreigninvestors. But attracting FDI requires development of infrastructure and other structuralreforms also. Since the country-wide development of infrastructure would be expensiveand implementation of economic and structural reforms would require time,establishment of EPZs was viewed as an important strategic tool for expediting the process of industrialization in the country.
 A Case Study on the Export Processing Zones (EPZs) of Bangladesh
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