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2. In late 70s when individual ownership economy revived in our country EPZ was created to
attract capital investment, employment generation and rapid industrialization. As a matter of
fact the main objective of setting up EPZ is to create individual industrial entrepreneurs and
thereby to achieve the other objectives. The economy of Bangladesh is basically agro-based.
The habitants of agro-based economy are generally remains habituated in a riskless life. In
other way, business investment particularly industrial investment brings solvency and
dynamism in human life but it is risky and hazardous. Therefore, to create industrial
entrepreneurs some institutional support must be extended to the individual businessmen.
Bangladesh EZP ensures this institutional support to the potential business entrepreneurs.
Economic Profile:
3. It reveals from the Economic Profile of Bangladesh that last years GDP was recorded at
US$61.41 billion with 5.40% annual growth.
4. Industry:
GDP growth of broad Industry sector was 8.43% in the last year compared to 7.10% in
the preceding year. The performance of the industrial sector was mainly based on the growth
in textile and wearing apparel, drugs and pharmaceuticals, fertilizer, petroleum products, glass
2
products, cement, electronics, footwear and food and beverage industries. In the last year the
contribution of this sector in national income is 28.44%.
5. Agriculture:
Agriculture still holds an important position in our national economy in creating
employment and increasing national income. In the last year the contribution of this sector in
national income is about 21.91%. Growth in agriculture has increased to 2.41%. Growth during
the year preceding year was 3.29%. Fish production in the last year has increased by 5.03%.
Growth in the sector during the preceding year was 3.6%. Food production during the last year
was about 30.05 million tons compared to 27.90 million tons in the year preceding year.
6. Services:
The service sector continued to the largest contributor to the countrys real GDP
growth in 2004-2005. The sector grew by 5.7% during the year, compared to 5.4% in 2003-2004
and contributed 49.65% to GDP growth. All sub-sectors shared in the overall growth of the
services sector activities, but relatively higher growth rates were registered by education
(7.66%), transport, storage and communication (6.64%), hotel and restaurant (7.29%), financial
services (6.77%), public administration and defense (5.75%).
Industry,
28.44%
Service,
49.65%
Agriculture,
21.91%
3
Export Policy:
8. Export policy has been liberalized by the Government of the Peoples Republic of Bangladesh
in order to keep pace with the present globalization system under WTO rules. The objectives of
the Export Policy are:
Capacity building of export related institutions like EPB (through its reorganization to
enhance institutional efficiency), BEPZA, Customs department, Land and Seaports,
Fisheries department, BSTI, Tea board and Trade bodies;
Product diversification;
Develop product quality and design and production of high value products;
Adopt new strategies for expanding export products, ensure good use of IT or computer
technology, E-commerce and other technologies;
Develop necessary infrastructures and in required cases backward and forward linkage
industries to ensure production of maximum volume of exportable items;
Create new exporters and provide all assistance to existing exporters and develop a
business friendly environment;
Develop expert manpower on trade; and
Equip trade bodies, businessmen and concerned people with necessary knowledge on
systems of world trading.
GSP
10. Generalized System of Preferences (GSP) is a preferential treatment of tariff facilities (by
way of reduced or duty free tariff rates) which is granted by the industrially Developed
countries to the eligible products imported from Developing or Least Developed Countries. In
fact this is an international trade instrument of the developed countries to promote the
4
development of developing and least developed countries. The scheme is non-reciprocal and
non-discriminatory system of preferences. The objectives of the GSP scheme are:
a. To increase export earnings of the preference receiving countries;
b. To promote their industrialization and
c. To accelerate their economic growth.
The original six member states of the EEC implemented the first full-fledged GSP scheme in
July, 1971. Norway introduced the GSP scheme in October, 1971. Japan followed it a month
later. Denmark, Finland, Ireland, New Zealand & Sweden implemented the scheme in January,
1972. Switzerland & Austria followed shortly thereafter. USA as late entrant to the scheme
implemented the same in 1976. As on today 36 developed countries are offering GSP facilities
to all the developing and LDC countries of the world. Bangladesh being a beneficiary of the
scheme has been enjoying this facility since the inception of all the schemes.
The current GSP scheme of EU is in effect since 1995. Bangladesh as an LDC is enjoying
the GSP facilities. 36 countries including European Union members are providing GSP facilities
to Bangladesh.
Export Performance:
11. During 2004-05 export performance of Bangladesh raised upto US$ 8654.52 million (13.83%
growth). Most contributors to the exportable items are RMG (Woven Garments and Knitwear),
Frozen food, Home textile, Computer Service, bicycle and ceramic. Sector highlights of major
exportable commodities are given hereunder:
5
11.22%
0.21%
1.05%
1.59% Woven garments
2.78% Knitwear
3.24% Frozen food
12. Textile:
Ready Made Garments, Textiles and Composite Textiles
a. Sector Highlights
The Ready Made Garment industry in Bangladesh accounts for more than 75% of
total exports.
Bangladesh is best placed in the region for textiles and garments because of low-
cost labor, preferential trade status and advantageous global market access.
Government incentives for the spinning and weaving industries include a 15%
cash subsidy of the fabric cost to exporters sourcing fabrics locally.
There is a huge fabric demand supply gap in the RMG industry which is being met
by imports. Thus, the potential for backward linkage industry is enormous.
b. Industry Background and Status
The phenomenal growth in RMG was experienced in the last decade. With about 2,600
factories and a workforce of 1.4 million, RMG jointly with knitwear accounted for more
than 70% of total investments in the manufacturing sector during the first half of the
1990s. At present, number of RMG factories exceeded 3,000, employing over 50% of
the industrial workforce and having 75% of the total exports earning of the country.
FIG-2 shows the growth of RMG exports from Bangladesh since 1981-82.
6
7000 6418
5787
6000
4860 4912
4352 4584
5000
3783 4020
4000 3001
3000 2547
2000
1064
1000 131
7
0
2003-04
2004-05
1981/82
1985/86
1991/92
1995/96
1996/97
1997/98
1998/99
1999/2000
2000/01
2001/02
2002/03
Fig 3: Growth of RMS Exports from Bangladesh (1981-82 to 2004-05)
c. Industry Outlook
Multi-Fiber Agreement (MFA) and Generalized System of Preference (GSP) of the EU are
the main actors behind acquainting Bangladesh RMG products to global market ensuring
assured market access. Bangladesh is now a significant RMG supplier to North America
and Europe. Due to phasing out of MFA, many are doubtful about Bangladeshs ability
to maintain the fast growth of the recent years in this sector. However, on a more
positive note, Bangladesh is expected to maintain its tariff-free access to EU under the
European GSP, since the GSP is not covered by the Uruguay Round Agreement.
Recently, Canada has also provided tariff-free access of all the items from Bangladesh.
Meantime, Bangladesh RMG industry has earned strong competitiveness as a
global standard RMG source. Marketing network has been spread over the economics of
the continents. End users could well recognize and differentiate the products
confidently.
Till today, Bangladesh RMG industry largely depends on the imported yarns and
fabrics. Bangladesh produces only 10% of export-quality cloth used by the garments
industry. The need for establishment of backward-linkage industry has become an
immediate concern to the government and the exporters. There are enormous
opportunities in setting up composite textiles industry combining textile, yarn and
garments.
d. Investment Opportunities
7
RMG and textile sectors have enormous investment opportunities. Government
provides highly favorable policy framework for investment in these sectors. Investors have the
following choices:
Establishment of new textile/RMG mill in the private sector.
Joint ventures with the existing textile / RMG mill.
Acquisition of public sector textile mills that are being privatized.
Indirect investment through financial services and /or leasing.
8
Fig 4: Frozen food Exports from Bangladesh
15. Ceramic
Tableware, Sanitary ware, Insulator
a. Sector Highlights
Global market of ceramic tableware is about US$10 billion.
Bangladesh Ceramic tableware has a good reputation to the international market
like North America and EU countries.
Bangladesh has achieved technical expertise on ceramic tableware
manufacturing.
Historically, tableware industry is labor-intensive and Bangladesh has a skilled
manpower in ceramic industry.
Sanitary ware and insulator has also a domestic and international market
demand.
The clean gas reserve required for firing is a great competitive advantage for
Bangladesh.
b. Industry Status
9
A few ceramic table ware manufacturers dominate the industry producing high quality
products for the international brands. A pool of skilled manpower has been developed.
The latest technological advancements in ceramic are also acquainted. Bangladesh
produces high quality Bone China transferring the technology from Japan. The domestic
market is also attractive. Some low-quality tableware are imported from mainly China
to cater the demand of lower segment of the domestic market.
35
29.47
30
23.65
25
19.07 17.5 18.82
20
14.21
15 11.32 10.86
8.49 10.02 9.46
10
0
1994/95
1995/96
1996/97
1997/98
1998/99
1999/2000
2000/01
2001/02
2002/03
2003/04
2004/05
Fig 5: Growth of Ceramic Tableware Exported from Bangladesh
Export Diversification:
16. Since the economy of Bangladesh is agro-based, its export base was set on primary
commodities like raw jute, tea, frozen food, agro product etc.
Product-wise Export During pro-liberation Period:
A. Major Primary Commodities:
(Value in Million US$)
10
6. Agricultural products .713 3.865 7.016 19.094 14.528 39.137 82.468
7. Animal Feed .032 1.326 2.384 - - - -
8. Animal casings .011 .118 .191 .117 .092 .154 .002
9. Crude fertilizer .201 .391 .399 .066 1.623 .072 -
10. Other primary com. .678 1.686 3.090 2.465 7.502 4.597 25.201
Total Primary Com. 149.775 170.072 243.164 286.690 313.908 501.917 648.290
Fig 6: Primary commodities export from Bangladesh
700 648.29
600
501.917
500
400 313.908
286.69
300 243.164
100
0
1972-73 1977-78 1982-83 1987-88 1992-93 1997-98 2004-05
During last 33 years, average annual growth rate of primary commodity export stands
around 14% per annum. Prior to 1981-82, countrys major exportable manufactured
commodities were jute goods and leather. Since independence, average annual growth rate of
traditional jute goods comes at 2.62% and leather goods stands at 5.42%.
17. In late 70s, Bangladesh economy was opened for private sector investment. Consequently,
from 1981-82 Bangladesh started exporting Ready Made Garments (RMG). At present, this item
accounts for more than 75% of total export. During the last 24 years average annual growth
rate of RMG product export comes at 268%. Moreover, presently the country is exporting
innumerable items under 27 major commodity head to almost 200 countries of the world.
11
B. Major Manufactured Commodities:
(Value in Million US$)
Total mfd.
198.642 323.669 443.432 944.511 2068.985 4659.285 8006.234
Commodities
12
9000
8006.234
8000
7000
6000
5000 4659.285
4000
3000
2068.985
2000
944.511
1000 323.669 443.432
198.642
0
1972-73 1977-78 1982-83 1987-88 1992-93 1997-98 2004-05
EPZs of Bangladesh:
18. In late 70s Bangladesh EPZ has emerged to attract capital investment in EPZ. The
manifested target to set up EPZ has been fixed up at rapid industrialization, employment of
human resources, transfer of technology and foreign exchange earning by boosting up export.
With this end in view, some targeted efforts have been taken to attract foreign investment and
promotion of exports through creation of special infrastructures and support service facilities,
giving fiscal and non-fiscal incentives and ensure free trade environment with the EPZ.
13
Theory of EPZ: An Export Processing zone is an industrial area that constitutes an enclave
with regard to customs tariffs and the commercial code in force in the host country.
Type - C
Type - A
Type - B
14
countrys second EPZ at Savar near Dhaka a decade later in 1993. In view of the growing
demand of the investors the government has established 4 new EPZs one at Mongla, a southern
port city of Bangladesh, one at Comilla, situated in an unique place between Dhaka and
Chittagong, one at Ishwardi near the Jamuna Bridge and the fourth one at Nilphamari named
Uttara EPZ near Syedpur Airport. The Authority has already started allotment of plots for
setting up industrial unit in those EPZs and 3 EPZs have already started operation. 50%
concession on rent of plot and factory building at EPZs of Mongla, Ishwardi & Uttara
(Nilphamari).
Recently, two new EPZs has been declared; one at Adamjee Jute Mills area and the
other at Karnaphuli Steel Mills area.
Investment:
21. Despite world wide recession FDI has increased in the EPZs during the last 48 months. In
June, 2001 the cumulative investment in EPZs was US$ 475.20 million but up to June-2005 the
15
investment stands at US$ 867.01 million. The volume of investment has increased to US$ 391.81
million with a growth ratio of 82.45%.
16
23. International:
Indian council for Research on International Economic Relations Conducted a study on
comparative performance of EPZs in Bangladesh, India and Srilanka. This working paper clearly
reflects Bangladeshi EPZs is on the top in attraction of investment and creation of employment.
Export:
24. Bangladesh has achieved phenomenal export success through the EPZs. In the total foreign
exchange earnings of the country through exports, the share of EPZs increased from a
microscopic low of 0.02% in 1983-84 to a spectacular high of 17.88% in 2004-05. The share of
EPZs in the foreign exchange earnings through the exports of manufactured goods also shows
the same trend over the corresponding period reflecting fast decline in the relative share of
the DTA in both total exports and the exports of manufactured goods and the resulting foreign
exchange earnings of the country. Annual trend rate of growth of export earnings of the EPZs
has been more than six times higher than that of total national export earnings and more than
four times higher than that of total national export earnings from manufactured goods. It
means that export performance of the EPZs is much more impressive than that of the country
as a whole.
17
25. The enterprises of EPZs have exported goods worth of US$ 10,003.62 million up to June, 05
and it was US$ 4823.79 million till June 2001. During the last 4 years the export volume
increases to about US$ 5179.83 million. This shows an increase of 107.38%. The export earnings
from EPZs crosses billion dollar mark in the last four years. BEPZA represents average 18% of
total national export during the last four years.
18
26. Productivity Performance of EPZ Workers
During 2004-2005 the export performance of EPZ workers in textile cluster stands US $ 9952.00
per worker whereas export performance of one DTA worker in the same sector recorded US $
2886.43. Therefore, EPZ workers productivity performance is 3.5 times than the DTA workers.
DTA EPZ
EXP/ EXP/
EMPL EXPORT EMPL EXPORT
SECTOR EMPL EMPL
(NOS.) US$ m (NOS.) US$ m
US$ US$
TEXTILE
18,00,000 5195.595 2886.43 1,40,187 1395.195 9952.00
CLUSTER
19
27. Export Performance on Investment:
EPZ enterprises derives highest dividend in terms of their investment. During 2004-2005 fiscal,
average export performance of enterprises stands around 1.79 times of their actual
investment.
20
28. Brand Products:
The enterprise are exporting world famous brand products like Nike, Reebok, Lafuma, H & M
(Sweden), GAP, J.C. Penny, Walmart, Kmart, OSPIG (Germany), Mother Care (UK), Lee,
Wrangler, Dockers, NBA, Tommy Hilfiger, Out Door, Adidas, Falcon (USA), Edie Bauyer, Eagle,
Releigh (UK), Emmilee, Free Spiril (UK), Miles (Germany), Brouks, American Eagle, Hi-Tech
(UK), Decathlon, Phillip- Maurice (UK), Federated, Styles Co, SAG Harbour (USA), Wins More, H
& M (SWEDEN), LL Bean, Target, Autica, Disley, Vans, Vftnfcamera Lens (IO Parts) Konika,
Minolta, Golf Shafts, Abu Garcia, Mobile Parts of Sony, Automobile Parts of Nissan, Mitsubishi &
Hino.
It is expected that BEPZA will be able to attract private sector investment in power,
water generation and distribution, effluent treatment, telecom operator and dormitory in
EPZs.
21
(Value in Million US$)
22
Fig 18: Zone-wise aggregate performance
Performance Factor:
32. Infrastructure Facilities
The success stories of EPZs in different countries formed to be closely associated with the
physical facilities provided by them to the potential investors. Therefore, the provision of
creating infrastructure, buildings and ensuring public utilities to the investors were planned in
the early stage of Bangladesh EPZ.
Infrastructure Facilities
23
Fig: Partial Infrastructural view of Dhaka EPZ
24
Fig: Partial Infrastructural view of Chittagong EPZ
25
long three years when he starts production possibly he will find that his arranged market is
lost. The present trend of global market economy is changeable; therefore, the demand for any
particular product in the market is very much flexible. In this circumstances, only a very few
lucky entrepreneurs can set up their industries in conformity with the market demand. But
major portion of intended entrepreneurs lost their enterprising ability during the gap of
planning and implementation of the project. EPZ is an ideal place for these sorts of
entrepreneurs. In every EPZ there are fully serviced plots, ready made factory buildings,
infrastructural facilities and utility connections to meet the demand of every prospective
investor. Accordingly as per the theory of economics any production process involves four
factors viz land, labour, capital and entrepreneurship. Among these factors 1st three are almost
readily available in EPZs. In every EPZ plots are ready to be leased out, skilled and semi-skilled
laborers are very much available in EPZ area, the third one is banking facilities for providing
capital. Now only an entrepreneur having knowledge of business and enterprising ability can
set up production unit in EPZs with a shortest possible time.
34. Beyond creation of infrastructural facilities, BEPZA provides space to local and foreign
bankers, insurers, C&F agents, Freight Forwarder and Courier services to give financial help
and support services to the investors. Although, BEPZA has been exempted from operation of
number of Acts and ordinances, the authority of relevant functionaries is applied by BEPZA in
rational and adaptable ways. BEPZA officials ensure smooth commercial, manufacturing and
operational activities within the zone. Investors clubs are also created within the zone for
recreation of executives and expatriates. The Industrial Relation Department of every zone
remains vigilant all around to clench labour-management feud within the zone. EPZs in
Bangladesh house mostly labour-intensive industries with a view to employing unemployed
manpower. The Chemicals of all processing industries pose environmental hazards if not
disposed of properly. In two different EPZs of Chittagong and Dhaka, there is provision for
disposal of industrial waste. These would give more cost-effective options to the manufacturers
for recycling or remarking industrial by-product than those available to isolated plants.
35. In developing EPZs, BEPZA is totally dependent on Government fund to create basic
infrastructure like land purchase/development, construction of factory and service buildings,
road, drain etc. But due to resource constraint, Government normally does not invest in hi-tech
infrastructure like Central Effluent Treatment Plant, Water treatment Plant, Electric Sub-
station, Overpass, Digital ID Card etc. To enable healthy investment climate in different EPZ,
BEPZA have to create these infrastructure on priority basis. Meanwhile, BEPZA made a request
to the Government of Japan to provide financial assistance for installation of above
infrastructures. Japan Government agreed in principle to provide DRGA Counter Part fund to
26
install 5(Five) central Effluent Treatment Plant, 3(Three) Water Treatment Plant, 2(Two)
Electric Sub-station and Female workers dormitory in different EPZs. If this limited assistance
can be lined up, obviously it will reduce environmental hazard, improve power and water
supply in some EPZs. Similar assistance will be necessary for other EPZs also.
27
Sl no. Item CEPZ (in million US$) DEPZ (in million US$)
Direct income generating
1. Land acquisition & Development 9.53 4.09
2. Factory building 3.93 4.66
3. Bay-shopping centre 0.53 0.07
4. Gas distribution network 0.26 0.52
5. Electricity distribution network 1.06 0.61
6. Water supply system 0.50
--------------- ---------------
15.81 9.95
Percentage of total investment 62% 62%
Non-income generating
1. Roads & drains 3.30 2.72
2. Office & enterprise service Bldg. 0.55 0.67
3. Residential Building 0.45 0.74
4. Investors Club 0.67 0.67
5. Custom, Police, Fire brigade 0.43 1.34
equipment store, Health centre,
Security etc.
6. Others 9.77 6.14
--------------- ---------------
25.58 16.09
--------------- ---------------
Percentage of total investment 38% 38%
Grand Total 11518.00 7244.00
37. Prospect and Constraint: BEPZA is taking up initiative to develop EPZ, where private
sector stimulate industrial investment and that will ultimately gives a momentum to make
thousands of economic transaction in the society. Now, what happened in Dhaka and
Chittagong EPZ is that BEPZA has invested around US$ 40 million to establish EPZs where
private sector industrial investment accrues US$ 770 million followed by US$ 1500 million
infrastructure investment around these zones. Moreover, there is a clear spillover effect of
linkage support industries. It is mentioned in the foregoing paragraph that during 2004-05 EPZ
28
enterprises made transactions with domestic industries to the tune of 26% of their export
earnings.
Due to availability of better infrastructure in Dhaka and Chittagong area, prospective
investors asking more space in the EPZs of these regions. In this connection I may mention that
at present we are developing Adamjee EPZ (near Dhaka City) and Karnaphuli EPZ (near
Chittagong EPZ). Lot of investors from home and abroad are coming to invest in these two
zones although we are not fully ready to allot space to them. On the other hand there have
three EPZ in North and South-West of the country viz. Mongla, Ishwardi, and Uttara EPZ. In
spite of reduced tariff BEPZA couldnt attract considerable number of enterprises due to lack
of urban facilities, residential accommodation, educational institutions, hospitals,
telecommunication facilities, hotel and resort centers. Moreover, Export oriented industries
outside EPZ enjoy more or less same incentives still they could not do upto the mark due to
lack of proper infrastructure.
Therefore, public sector BEPZA can only establish EPZs with basic infrastructure. Now,
private sector may come up to provide infrastructure related works to enterprises,
transportation, hotel and resort centers, shopping mall, universities and vocational institutes
and other social infrastructures, operation and management of water, effluent disposal, power,
telecommunication, linkage industry and supportive financial infrastructure.
If we sum up investment (FDI and Local) necessity in Bangladesh proper infrastructure
is considered as the main factor for rapid industrialization in the country.
Policy Concessions:
38. Incentives: Fiscal
To augment investment in EPZs, the government has declared a fiscal and non-fiscal incentive
scheme in the early stage of EPZ development.
Incentives - Fiscal
29
9. Accelerated depreciation on machinery or plant allowed.
10. Remittance of royalty, technical and consultancy fees allowed.
11. Duty and quota free access to EU (EBA), Canada, Norway, Australia etc and USA under
process.
The above incentive scheme may need to be further broadened to compete with the big
industrial giant of far-east and western world. Despite limitations BEPZA has been following an
affirmative policy to nurture investment activities in EPZs. It creates infrastructural facilities
including buildings, utilities and warehouses. The office of BEPZA processes the application for
setting up of industries, allot plot of land or building space and sometime the investors are
allowed to mortgage the building and machinery for raising loan from financial institutions. The
process of sanctioning takes minimum span of time. Sometimes the EPZ officials haunt the
prospective investors up to their home countries. Almost every time they receive the investors
in Airport and the whole process from landing to sanction of industries is done by BEPZA
officials believing the doctrine of one window service.
40. Although policy concession is seems to be adhoc arrangement for rapid industrialization but
concessions have good impact on new investment and re-investment of profit in new venture.
Yet policy concession is considered as second agenda for investment attraction.
30
Acts and rules have more or less simplified the procedure for establishment and operation of
industrial activities in the zone.
For better operation of the zone there should have more regulatory streamlining of
existing law of the land.
42. Technology Transfer:
Technology transfer or spillover constitutes one of the most important dynamic effects
expected of foreign investment. The field survey reveals that in a relatively simple industry
with no proprietary technology, such as RMG and footwear, technology transfer takes place
readily both inside and outside the EPZs, though on a very limited scale. The transfer is from
foreign technicians and managers working together on factory floors, from foreign buyers to
local firms, and through consultants, movement of employees, visits to plants abroad, and so
forth. But in industries, such as electronic components, with internationally established firms
resist challenging, fast-changing, and largely proprietary technology, transfer of technology to
Bangladesh is very limited. In any case, firms in Bangladesh are not capable of mounting a
competitive challenge without a lot of help. In such industries, the direct transfer of product
and process technologies through the EPZs has been very small, except in simple industries,
such as RMG
Skill Transfer:
43. Technology transfer is intertwined with skill transfer. The field survey reveals that skill
transfer to the rest of the economy occurs mainly through the movement of people who have
received training in foreign and joint-venture firms in the EPZs and through learning by locally
owned firms there. Interviews with a number of factory managers in the EPZs indicate that the
factories in the EPZs contribute significantly to workers technical production and factory
management skills even though the acquisition of broader management capability or marketing
skills is very slow. There are quite many instances in both CEPZ and DEPZ that technicians and
managers who have acquired the ability to compete in the world market have carried this
expertise to the rest of the economy. To foster such mobility and make it more productive, the
business environment outside the EPZs must be rationalized as well, through deregulation and
import liberalization (for healthy competition) and industrial restructuring (for efficient
production). When the business environment outside the zones is not attractive, technology
and skill transfer effects tend not to be fruitful or to contribute much to the local economy. In
such cases, on-the-job training in the foreign firms and joint ventures is instrumental in
transferring skill to the DTA. One cannot avoid the conclusion that the only feasible way to
acquire skills through the EPZs at an early stage of development is through on-the-job training,
not at training centers, in formal courses, or from written materials. In this context, it may be
31
noted that the relocation of electronics assembly operations in the EPZs leaves the more skilled
jobs involving high technology in their original locations giving the EPZ firms a truncated
occupational structure. Thus the notion that EPZs could serve as nurseries for the development
of industrial skills are not borne out by experience.
Economic Contribution:
44. Annual Economic Benefit
BEPZA contributes as a multiplier of economic activities in Bangladesh. Having identified the
elements relevant for estimation of benefits from EPZs, we have a rough estimate of economic
contribution of US $622.300 million to Bangladesh in 2004-2005 which is around 43.71% of the
total export. Thus the foreign currency retention is 43.71%
(Value in Million US$)
WAGES WAGES
RENTAL RENTAL
UTILITY UTILITY
SV. CHARGE SV. CHARGE
DTA GOODS DTA GOODS
ADMN. EXP. ADMN. EXP.
TELE COM. TELE COM.
32
For year 2003-2004 (Taka in Crore) For year 2004-2005 (Taka in Crore)
Fig 22: Annual Economic benefit for the years 2003-2004 and 2004-2005
Conclusion
46. One of the basic elements critical for any export activity is adequate infrastructure
especially Physical infrastructure within the zone like Water, Electricity, Factory & Service
buildings, Warehousing, Transporting, Telecommunication, Police Stations, and Fire Stations.
Outside the zone infrastructure like Port, Roads leading to the zones, transport facilities to the
zone etc. Zones must be supported by Financial Infrastructures (Bank, Insurance, C&F Agent,
Freight forwarder, couriers etc) and Social Infrastructure within the zone (Residential Complex,
School, Hospital, Club, Resort centers etc). Again, infrastructure within EPZs is generally
considered superior to that available in the wider economy. In spite of same incentive scheme
for EPZ enterprises and export oriented industries of DTA the EPZ enterprises performing well
due to adequate planned infrastructures in EPZ area.
33
A major preferential treatment is essential for development of EPZs units by granting
them the Government policy concessions in the form of fiscal and no-fiscal incentives. Although
it is an adhoc arrangement but for initial investment attraction incentive scheme should run
parallel.
There should have separate specific rules/regulations for different kind of zones in
regard to Customs, Income Tax, Foreign exchange, VISA/Landing permit etc. EPZs should be
strengthened enough to exercise regulatory functions and to act as an independent regulatory
body. At present BEPZA is exercising some regulatory functions independently.
For better export performance international market access of Bangladeshi product is of
prime important. Bangladesh has got huge potential in respect of natural resources, skilled
manpower and investment friendly atmosphere. Development partners should come forward to
find market for Bangladeshi products in the developed countries.
------ X ------
34