Bangladesh hurtles toward multiple economic zoning

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FE Report
Bangladesh is set to move away from the traditional industrial park concept to a mixed type of zoning regime as it has approved an ordinance, allowing at least four types of economic zones to operate in parallel.
Under the just-approved Economic Zones Ordinance, officials said, the government will allow setting up of different types of economic zones-some will be privately-owned, some will be on public-private partnership basis, while others will be specialised. However, industrial zones currently owned and managed by the government will continue to operate the way they do now.
But, sources said, land-scarce Bangladesh will find it difficult to establish economic zones acquiring arable lands as the move is feared to trigger widespread public protest.
"The ordinance looks good in the sense it does not undermine the traditional industrial park concept. Instead, it encourages co-existence of different models as is the case in China," said a senior official at BEPZA (Bangladesh Export Processing Zones Authority), the regulator of eight state-owned export zones.
"But the success will depend on multiple issues. Land selection, strategic location, adequate utilities and infrastructure are important factors in this respect," he added.
The ordinance says the government will, by a gazette notification, establish an authority, a replica of BEPZA, to be headed by an executive chairman to oversee future economic zones.
Officials said initially, Kaliakoir hi-tech park, Narsingdhi and Meghna export processing zones, API park and Garments village will be regulated by the proposed zone regulator.
However, the ordinance has left an option open to the would-be zones for being regulated under an interim administration before the new authority becomes operative.
The objective of the authority is to "foster and generate economic development of Bangladesh by encouraging and promoting local, joint venture and foreign investments in a zone."
"To diversify the sources of foreign exchange earnings by increasing exports and retention of foreign exchange by setting up import substitute industries and industrial parks that cater to local needs and commercial enterprises through a zone," says the ordinance.
Other objectives of the authority include bolstering the country's economic base, generating productive employment opportunities, upgrading labour standards and encouraging backward and forward linkage industries.
The authority, to be headquartered in the capital city, will "take possession of land acquired or requisitioned by the government and or take possession of land from private investors on PPP arrangement and or inclusion of land of private entrepreneurs for the purpose of creation and development of a zone."
It will also allot land and building spaces in a zone to investors on sale, lease or on rent and to allow them to mortgage allotted lands for raising commercial funds.
The proposed authority will provide infrastructure facilities including buildings, utilities and warehouses to investors on PPP basis and also extend customs bonded facilities for imports into the zone as raw materials.
The authority will comprise two boards-the first is a board of governors headed by a chairman and the second is an executive board led by a chief executive officer.
The governing body will be responsible for formulating policies for operation and management of the authority and will review the performance of the executive board.
The chief executive officer and other members of the executive board will be appointed by the government.
After continued push from the International Finance Corporation, the interim administration this month approved the ordinance, paving the way for modernising the economic zone regime.
But sources within the government agencies have feared that unless the government sets up such zones in coastal areas, the "unplanned and politically-motivated" site selection would spell disaster in the land-scarce economy.
"We've to keep in mind that Bangladesh is not China. Whatever we do we should do in the greater interest of the people," he said.