Economic zones to help spur foreign investment

Bangladesh will be deprived of foreign investment if economic zones (EZs) are not set up; and without investment, requisite job creation and income generation for Bangladesh will not be possible.
This was, as reported in the media, was stated by the team leader of a Bangladesh Economic Zone Authority (BEZA) project, Dr Shoichi Kobayashi, while presenting the draft final report on Technical Advisory Services for Feasibility Studies for Economic Zones at a recent workshop in the city.
Achieving the national goal of becoming a middle-income country by 2021, Dr Kobayashi was quoted as saying, is heavily dependent on successful implementation of EZs in the country. And he furthermore considers that the BEZA needs to implement the Sherpur Economic Zone successfully first before turning its attention to two other EZs to be implemented in Mirsharai and Anwara, Chittagong for attracting domestic and foreign investments, creating jobs and accelerating growth through expediting the pace of industrialisation.
In fact, foreign investors have for long been seeking separate land to build their factories in Bangladesh. As such, the government passed the Bangladesh Economic Zones Act in August 2010. Accordingly, an authority was created, headed by a secretary and four additional secretaries. The government set the deadline to start operations of the EZs by 2016. However, with the current pace of work, it is just impossible to start their operations as has been scheduled.
In this context, Dr Kobayashi has rightly observed that Bangladesh particularly needs the EZs for providing income-earning job opportunities to its unemployed and the under-employed people from the rural areas who are still living in poverty. Many Asian countries have come out of poverty by developing EZs. Bangladesh can solve its problems such as poverty and unemployment to a great extent, by doing the same in the way countries such as Thailand and Indonesia did in the last 25 years. And Vietnam has also been reaping the dividends of such special economic zones.
The government plans to start the construction of the Sherpur EZ next year and complete its work by 2018. It will cost $90 million, with only five households to be relocated to accommodate the economic zone. The proposed industrial zone in Sherpur has the potential to become one of the top seven economic zones in Asia.
Experts have recommended setting up a complete township in the proposed EZs to give workers a better life and their families and better access to education and health. Attracting foreign direct investment (FDI), they said, would not be a problem if the country can set up such EZs.
Bangladesh has been lagging far behind others in setting up EZs. It has been four years since separate laws for such zones have been enacted. But no tangible result is yet in sight. The reason for the delay is reportedly the government's alleged failure to formulate regulations with which the new laws could be implemented.
According to reports, Vietnam has built more than 400 EZs since 1990s, while China, Malaysia and Indonesia have hundreds of such zones for investors, both local and foreign. Recently, Myanmar is taking strong pro-active moves at a faster pace to catch the waves of global investors.
There is no denying that EZs are otherwise needed for the country's socio-economic uplift. As such, efforts should be geared up to build such zones immediately. Investors, especially foreigners, will not wait for years to invest in Bangladesh. Despite concerns with safety and infrastructural deficit, the investment environment here remains otherwise attractive with a large population among its working age group and low labour costs. But why the country is unable to tap the potential remains a big question.
There are eight export processing zones (EPZs) in Bangladesh and local entrepreneurs hardly get space there. These EPZs were earlier built to house foreign and joint venture investors. But now, even foreign investors are not getting vacant plots of land in such EPZs.
The EZs will reportedly be run under the concept of public-private partnership (PPP) where the government, as was earlier announced, will provide the required land, infrastructural facilities and utility services. Under the new regulation, the government will allow the private sector to own, develop and manage economic zones as well as establish infrastructure-related facilities and provide commercial services to factories operated within such zones.
Besides export, the manufacturers inside the EZs will be allowed to sell their produce in the local market which is not allowed in case of manufacturing units located at the EPZs. The idea of EZs differs from the concept of Export Processing Zone (EPZ), as the former offers freedom to investors to cater to the needs of both domestic and global markets, beyond concentrating on export markets. However, EZs also delimit geographical areas where multiple companies operate under a special regulatory regime.
The EZs, to be managed by a central authority, will offer facilities like common infrastructure and utilities, streamlined administrative process and faster issuance of permits. All EZs upon their operation are expected to generate 1.5 million new jobs. They will generate around 85 per cent of the country's exports by 2021 and attract new investments worth up to $2.5 billion.
A couple of years back, a visiting business delegation of Confederation of Indian Industry (CII), a platform of top Indian industrial conglomerates, proposed to the government of Bangladesh for establishing a special economic zone (SEZ) for them to house joint venture industries. They proposed the setting up of the SEZ at Chhatak under Sunamganj, a northern bordering district.
If the proposal is approved, 50 top Indian industrial conglomerates, as the reports said, are likely to invest in the proposed SEZ. All the industrial units would be operated as joint ventures if the SEZ is established. The Indian entrepreneurs are more interested to tie up with the Bangladeshi investors as the future of bilateral trade between the two countries looks otherwise very bright. The recent trade volume between the two countries has been increasing. As a result, the Indian businessmen are interested to invest more in Bangladesh. So are the Chinese. Many such Chinese proposals are pending with the government.
Besides attracting FDIs, the proposed EZs, especially the one in Sylhet region, will, as the experts believe, help attract millions of dollars in the form of diaspora investment, which will generate a substantial number of jobs and boost the local economy. Referring to an investment promotion meeting held recently in the United Kingdom, they said the Bangladeshi diaspora from the Sylhet region showed considerable interest in investing in real estate, tourism and hospitality, apparels and electronics.
Experts, however, are of the view that the spill-over effects of the EZs in the form of job creation, investment and transfer of management skills and technology would be much greater than those from traditional industrial parks.             
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