WB okays $120m loan for setting up SEZs

The board of the World Bank Wednesday approved US$ 120 million in loan for developing Bangladesh's special economic zones (SEZs) to attract investment from the local and globally famed conglomerates, the Bank said in a news release. "The project will facilitate investment in growth centres in the emerging manufacturing and services sectors of the economy with the aim of generating employment," said the release from the World Bank (WB) headquarters in Washington. A finance ministry official said the government will set up three SEZs including hi-tech park at Kaliakoir near Dhaka, another beside the Comilla EPZ and one in Chittagong. The World Bank will support Bangladesh in constructing the economic zones under the "Private Sector Development Support Project (PSDSP)" providing investment facilities to the entrepreneurs from home and abroad, he said. Bangladesh has achieved a 6.1 per cent average gross domestic product (GDP) growth rate during 2005-2010 despite the impact of the global economic meltdown and food price shocks. Going forward, the Bangladesh government targets a growth rate of 8.0 per cent a year and cut poverty to 15 per cent of the population by 2021. "The project seeks to address key constraints to growth; including access to serviced land, cumbersome procedures, access to skilled labour, and access to finance," said the news release from Washington office of the World Bank. "Achieving Bangladesh's development goals requires accelerated, sustainable, and inclusive growth," said Ellen Goldstein, Country Director, World Bank Bangladesh, adding, "creating productive employment for the estimated 2.0 million new labour entrants every year will largely depend on creating an environment conducive to private sector investment." The project will increase the capacity of government institutions in the development of economic zones and provide financing for necessary infrastructure in economic zones starting with the Kaliakoir Hi-Tech Park and will invest in up to two more economic zones, the WB said. In addition, it will create opportunities for cooperation and knowledge sharing between enterprises within the economic zones and their suppliers by providing training and supporting linkages between firms, it added. The project would also benefit from approximately US$ 17 million of funding from the UK's Department for International Development (DFID), mainly for technical assistance and capacity building for the government's zone development agencies. "The new locations for economic zones and enhanced policy framework will catalyse private investment in Bangladesh by increasing capacity and reducing constraints to private sector development." said Michael Wong, Team Leader for the project. "This is needed to fuel the economic growth necessary to achieve the government's job creation and poverty reduction targets." The credit from the International Development Association (IDA), the World Bank's concessionary lending arm, has a 40-year maturity, including a 10-year grace period. It carries a service charge of 0.75 per cent.