Incentives being finalised to help snare investors in EZs

The government is set to offer a slew of incentives including tax holiday for economic zones (EZs) to foster investment in the country, which can spur higher economic growth, officials said.

The planned incentives will be extended in the forms of tax holiday, duty waiver, and capital subsidy, they said.

A high-powered committee led by senior secretary of the Prime Minister's Office (PMO) will sit Tuesday to finalise the incentive package, which will encourage developers and investors to make investment in the EZs.

Bangladesh is placing importance on such zones to help accelerate the country's economic growth and boost employment.

The state-run Bangladesh Economic Zones Authority (BEZA) has carried out a comparative analysis of incentives and services given to special economic zones in India, economic zones in the Philippines and Export Processing Zones in Bangladesh to make the proposed incentive package "attractive," officials said.

The BEZA recommended that the developers and investors of Bangladeshi EZs will enjoy a five year income tax holiday. In the first two years, the investors will enjoy 100 per cent income tax holiday, 50 per cent waiver during the third and fourth year, and 25 per cent waiver in the fifth year.

It also suggested offering duty-free import facility of raw materials, construction materials and capital machinery for the investors of EZs. They will also be given exemption from dividend tax, the facility of full repatriation of capital and dividend, quota-less foreign direct investment, and sale of 100 per cent backward linkage raw-materials and accessories to export-oriented industries in domestic tariff areas.

Besides, the EZ investors will also be allowed to do sub-contracting business with industrial units in domestic tariff area. They will be offered exemption from 50 per cent stamp duty and registration fees for registration of leasehold land or factory space.

The BEZA also recommended that all purchase excluding petroleum product from domestic tariff area shall be exempted from value added tax (VAT) and sales tax, ten years VAT and tax waiver on electricity generation or self generated or purchased electric power for use in EZs, and one time capital subsidy up to 50 per cent of cost incurred for setting up of central effluent treatment plants.

Officials said the BEZA will also allow duty-free export of all goods from EZs, waiver of double tax after signing bilateral agreements, permission for the sale of 10 per cent finished goods of EZs to domestic tariff area, and income tax waiver on salary of foreign nationals.

During Prime Minister Sheikh Hasina's recent visits to China and Japan, she had discussions with her counterparts about establishment of separate economic zones for Chinese and Japanese investors.

Besides, foreign businessmen from many other countries also sought economic zones to facilitate their investments.

They said considering the interests from different countries to establish EZs in Bangladesh and making significant investment, the government has come forward to offering all-out cooperation.    

The government has planned to provide 8,000 acres of land in Chittagong to Japanese investors for setting up a special economic zone (SEZ) as pledged by PM. Providing land to Chinese investors for setting up economic zone is also under consideration, officials said.

The government has already finalised the private economic zone policy, allowing individuals to set up such zones across the country. Several numbers of EZs from government, private sector and foreigners is likely to be set up in the near future.

The World Bank recently proposed that the government should enable the development of 40,000 acres of land for creation of new industrial zones across the country to facilitate both foreign and local investment.