Prospects of economic zones
Thursday, 22 July 2010
THE export processing zones (EPZs) have proved to be useful drawing mainly foreign investors and contributing to the country's export earnings. But there is now a move to set up special economic zones (SEZs). The idea has had some strong donor support. The government passed last Tuesday the Bangladesh Economic Zone Bill, 2010 that envisages the establishment of four types of economic zones in the country. Some of these are likely to be entirely government owned and operated like the EPZs. But most of the others are envisioned to be privately owned or to be a mix of government and private ventures. Notably the economic zones would not be restricted to only export-oriented industries but will also aim at producing all kinds of goods and services targeting consumers within the country as well as outside of it. The net aim of the efforts to set up these economic zones would be to increase the production of all types of goods and services under secure and favourable conditions in every sense of the term to boost industrialisation and generate greater employment opportunities.
The EPZs are located on public lands and the government remains responsible for supplying and maintaining various utility services to them. The investors in these zones remain largely free to carry out their declared production activities in their own premises within the EPZs. But difficulties are noted in such management practices. The government remains constrained for funds and this problem is seen reflected in the move to set up different types of economic zones where government's role would be limited.
The government, of course, would continue to have some control in the establishment and management of the economic zones to be set up in accordance with the newly passed bill. But these are perceived to be mainly self-sufficient bodies generating their own power and other facilities for smoother operations. Investments in economic zones under the new mode look promising because many entrepreneurs in the neighbourhood of Bangladesh such as in the south-east Asian countries are on the lookout to relocate some of their industries in countries where the wage differentials could help their competitiveness. Bangladesh is considered to be one such destination. With the new model of the economic zones taking off, a great deal of these investments can come Bangladesh's way, fairly soon, motivated by streamlined facilities at these zones and the prospect of finding cheap labour. However, the government will need to take appropriate steps on a priority basis for operationalising the would-be Korean export processing zone in order to give credible signals to the investors from abroad. If this project, taken up many years back, takes a longer period to become operational, the new legislation for setting up special economic zones will hardly mean anything of consequence to such investors.
There is no denying that the economic zones, properly guided and developed, hold out the prospect of rapid expansion of investment operations in the country. With the fetters of excessive bureaucratic regulations gone, these zones would be in a position to benefit from maximum self-help and the same in turn would facilitate more and more investments in them. Foreign investors are likely to set up their own state of the art facilities such as in the area of power generation. The same happening will ease pressures on the stressed public utility services. Such zones can then be a lucrative source of employment and earnings for the local population; the same should also prove to be a training ground for local workers in new technologies as well as for technology transfer. But everything would depend on how neatly the basics of materialising these zones are tackled by the government.
The EPZs are located on public lands and the government remains responsible for supplying and maintaining various utility services to them. The investors in these zones remain largely free to carry out their declared production activities in their own premises within the EPZs. But difficulties are noted in such management practices. The government remains constrained for funds and this problem is seen reflected in the move to set up different types of economic zones where government's role would be limited.
The government, of course, would continue to have some control in the establishment and management of the economic zones to be set up in accordance with the newly passed bill. But these are perceived to be mainly self-sufficient bodies generating their own power and other facilities for smoother operations. Investments in economic zones under the new mode look promising because many entrepreneurs in the neighbourhood of Bangladesh such as in the south-east Asian countries are on the lookout to relocate some of their industries in countries where the wage differentials could help their competitiveness. Bangladesh is considered to be one such destination. With the new model of the economic zones taking off, a great deal of these investments can come Bangladesh's way, fairly soon, motivated by streamlined facilities at these zones and the prospect of finding cheap labour. However, the government will need to take appropriate steps on a priority basis for operationalising the would-be Korean export processing zone in order to give credible signals to the investors from abroad. If this project, taken up many years back, takes a longer period to become operational, the new legislation for setting up special economic zones will hardly mean anything of consequence to such investors.
There is no denying that the economic zones, properly guided and developed, hold out the prospect of rapid expansion of investment operations in the country. With the fetters of excessive bureaucratic regulations gone, these zones would be in a position to benefit from maximum self-help and the same in turn would facilitate more and more investments in them. Foreign investors are likely to set up their own state of the art facilities such as in the area of power generation. The same happening will ease pressures on the stressed public utility services. Such zones can then be a lucrative source of employment and earnings for the local population; the same should also prove to be a training ground for local workers in new technologies as well as for technology transfer. But everything would depend on how neatly the basics of materialising these zones are tackled by the government.