Special economic zones
Saturday, 7 July 2007
THE export processing zones (EPZs) in Bangladesh have proved to be useful in drawing mainly foreign investors and contributing to the country's export earnings. But now thoughts are being expressed about the setting up of special economic zones (SEZs) in the country, as were expressed in the workshop jointly organised by the World Bank and the Board of Investment last Wednesday. It appears from the proceedings in that workshop that the government has plans to set up SEZs to bring scattered local industries within specific clusters with much greater participation of the private sector.
The EPZs are located on public lands and government remains responsible for supplying and maintaining various utility services in them. The investors in these zones remain largely free to carry out their declared production activities in their own premises within the EPZs. But there are also noted difficulties in such management practices. Government in Bangladesh remains constrained for funds and this problem is seen reflected in upgrading or expanding the physical facilities of the EPZs. Utility services in the EPZs such as power and water supplies, security services, etc., are found lacking though every effort is usually made to provide the best services to them.
Thus, to overcome these operational difficulties, the concept of the SEZs has been mooted. Government, of course, would continue to have some control in the establishment and management of the contemplated SEZs. But these are perceived to be mainly self-sufficient bodies generating their own power and other facilities for smoother operations. Investments under the SEZ mode are also likely to be phenomenally successful because many entrepreneurs in the neighbourhood of Bangladesh such as in the south-east Asian countries, China and Japan, are considering to relocate some of their industries to countries where the wage differentials could help their competitiveness. Bangladesh is considered to be one such destination. With the SEZ model taking off, a great deal of these investments can come Bangladesh's way, fairly soon, attracted by streamlined facilities at these zones and the prospect of finding cheap labour. Therefore, government should have no qualms in expediting the process of setting up SEZs. However, as participants in the workshop underlined it, the move towards SEZs also needs to be a transparent exercise. The model should be allowed a proper public scrutiny from different sides. Specially environmental aspect will have to be carefully considered.
Properly guided and developed, the SEZs will hold out the prospect of rapid expansion of investment operations in the country. The transformed zones can be ideal places of investments for not only the foreign investors but also the local ones to take advantage of the various facilities. With lesser bureaucratic regulations, these zones would be in a position to benefit to the maximum from self-help and the same in turn would facilitate more and more investments in them. Foreign investors particularly 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. The booming SEZs should be a lucrative source of employment and earnings for the local population. The same should prove to be a training ground for local workers in new technologies as well as for technology transfer.
The EPZs are located on public lands and government remains responsible for supplying and maintaining various utility services in them. The investors in these zones remain largely free to carry out their declared production activities in their own premises within the EPZs. But there are also noted difficulties in such management practices. Government in Bangladesh remains constrained for funds and this problem is seen reflected in upgrading or expanding the physical facilities of the EPZs. Utility services in the EPZs such as power and water supplies, security services, etc., are found lacking though every effort is usually made to provide the best services to them.
Thus, to overcome these operational difficulties, the concept of the SEZs has been mooted. Government, of course, would continue to have some control in the establishment and management of the contemplated SEZs. But these are perceived to be mainly self-sufficient bodies generating their own power and other facilities for smoother operations. Investments under the SEZ mode are also likely to be phenomenally successful because many entrepreneurs in the neighbourhood of Bangladesh such as in the south-east Asian countries, China and Japan, are considering to relocate some of their industries to countries where the wage differentials could help their competitiveness. Bangladesh is considered to be one such destination. With the SEZ model taking off, a great deal of these investments can come Bangladesh's way, fairly soon, attracted by streamlined facilities at these zones and the prospect of finding cheap labour. Therefore, government should have no qualms in expediting the process of setting up SEZs. However, as participants in the workshop underlined it, the move towards SEZs also needs to be a transparent exercise. The model should be allowed a proper public scrutiny from different sides. Specially environmental aspect will have to be carefully considered.
Properly guided and developed, the SEZs will hold out the prospect of rapid expansion of investment operations in the country. The transformed zones can be ideal places of investments for not only the foreign investors but also the local ones to take advantage of the various facilities. With lesser bureaucratic regulations, these zones would be in a position to benefit to the maximum from self-help and the same in turn would facilitate more and more investments in them. Foreign investors particularly 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. The booming SEZs should be a lucrative source of employment and earnings for the local population. The same should prove to be a training ground for local workers in new technologies as well as for technology transfer.