Investing in economic zones

The initiative to set up special economic zones (SEZs) in the country to attract investment and generate employment is a pointer that the government is seriously contemplating on safe and secure environment for investors from home and abroad. There were talks for quite a while on the expansion of the country's export processing zones (EPZs), including finding out new locations for setting up new EPZs. The emphasis on economic zones, a similar but wider concept not necessarily confined to manufacturing for exports, has received attention in many countries. In our region, India is a pioneer in setting up special economic zones (SEZs) with adequate facilities and has been deriving gainfully from the successes of the zones in export growth, increased sourcing of local materials and a boost in job creation. SEZs in India initially functioned under the provisions of the country's foreign trade policy, and fiscal incentives were made effective through the provisions of relevant statutes. Subsequently, Special Economic Zones Act-2005 was passed by Parliament in 2005 and rules governing operation of the SEZs were also framed.
In Bangladesh, although the Economic Zones Authority has been in place since 2010 to facilitate setting up of such zones, it has taken more time than expected to come up with a draft plan with identified locations. A study to explore setting up of economic zones under public private partnership (PPP) in phases was funded by the World Bank and the Department for Environmental Development (DIFD). The recently completed study has identified Sherpur in Maulvibazar and Mirershorai and Anwara in Chittagong as potential locations for economic zones to be built at an estimated cost of $1.17 billion by the investors.
Earlier, the government reportedly gave Tk 470 million to Bangladesh Economic Zones Authority (BEZA) as interest-free loan to acquire land and develop sites for economic zones. As is the practice elsewhere, the government will launch international tenders to select developers and operators willing to invest in the economic zones. Investment on the part of the government would primarily be on land acquisition, and the cost would be eventually realised from investors through long-term (say, not less than 30 years) leasing out, with provisions for renewal.
The study recommended that in view of the relative advantages of the Sherpur site vis-à-vis those of the others, the government should consider giving it a go-ahead as a priority project, putting in place the logistics and related facilities such as gas, power and water -- to mention the immediate requirements. An English daily quoting BEZA sources has reported that the government expects to complete the work of the Sherpur economic zone by 2018. Planned to be on 353 acres of land, the zone site is 55 kilometres from MAG Osmani International Airport, Sylhet and 435km from the Chittagong sea port. The zone will reportedly house textile, ceramic, pharmaceutical, paint and food processing plants, with the potential of generating employment for more than 40,000 workers.
From the perspective of location, and access and proximity to the Chittagong port, the Mirershorai site appears to be of crucial importance in providing a boost to the country's economy. Located along the Dhaka-Chittagong highway, this proposed economic zone has the potential and prospect of becoming a real engine of growth. The Mirershorai EZ is designed to be set up on 6,615.12 acres of land, and will mainly house garment, textiles and automobile assembly plants. The prime advantage believed to attract investors is that besides its being alongside the highway, it is only 67km from Chittagong port and 79km from Chittagong air port. The Anwara EZ will be located on 1,389 acres of land, at a distance of 45km from Chittagong port, 28km from the port city and 46km from the airport. The uniqueness of this zone is its direct access to the sea. Its location is expected to attract industries such as shipbuilding, shipbuilding components, steel, automobile parts, leather goods and pharmaceuticals. Completion of Mirershorai and Anwara zones, as reported, will take a while, but not later than fiscal year (FY) 2024-25.
It need not be stressed that the idea of making SEZs an engine of economic growth is integrally linked to quality infrastructure complemented by an attractive fiscal package, with minimum possible regulations. Beside the SEZ Act, one key requirement is the operational rules which, understandably, should be in conformity with those in other countries. These among others may envisage:
n Simplified procedures for development, operation, and maintenance of the zones and for setting up units and conducting business
n Single window clearance for setting up a unit in a SEZ
n Simplified compliance procedures and documentation with emphasis, as far as practicable, on self certification
Sustaining the economic zones will of course involve continued support, besides providing routine services. In order that bureaucratic tangles do not deter proper functioning, BEZA should be adequately empowered to handle issues that may not be unique in our case as the whole thing comes in a package, in a more or less uniform basis in most countries.
wasiahmed.bd@hotmail.com