Developing economic zones

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Wasi Ahmed One only hopes the government's decision to develop economic zones under public-private partnership (PPP) is not a day-dream. A well-tested experience in many countries, dedicated economic zones have more than proved their usefulness as specialised manufacturing hubs, provided that they are equipped with all necessary infrastructure and utility services. The government, as recently been reported by the media, has already initiated moves to develop five economic zones under PPP for attracting local and foreign investment. Identification of the lands, the reports say, has already been completed, and currently a feasibility study on some of the locations is being conducted by a foreign firm assigned for the purpose. The identified sites for the proposed economic zones, to be developed under the Bangladesh Economic Zone Authority (BEZA), include Anowara, Mirersarai, Sirajganj, Mongla and Sherpur. For the lands in Mongla and Sirajganj, the BEZA authority has reportedly sought expression of interest (EoI) and short-listed two companies. BEZA is to ask for request for proposal (RFP) soon to the companies for these two sites. As for Anowara, Mirersharai and Sherpur, the processing of EoI and REP is currently on. BEZA sources say that joint venture private parties will get priority to develop lands and the investors themselves will bring in investors. The government will facilitate the process by providing the required lands. The World Bank (WB), through its Private Sector Development Support Project (PSDSP), is supporting Bangladesh to develop economic zones for promoting private sector investment in the country. The PSDSP aims to promote diversified private sector investment by improving business environment and access to industrial lands through economic zones, as well as investing in training schemes to make human resources more responsive to enterprise needs. There is apparently a sign of conflicting professional interests between the newly-established BEZA and BEPZA (Bangladesh Export Processing Zone Authority) in the allotment of lands by the government. The government's decision to provide lands for development under BEZA and not under BEPZA in future might not go well with the latter, given its years of experience in management and development of specialised zones. Besides, it has been reported that BEPZA is presently badly in need of land and thus not in a position to entertain fresh investment proposals for want of lands. A counter argument in favour of BEZA is that if the government allows more private parties to its lands, there would be a 'boom' in private investments for making more economic zones. Over and above, BEZA, guided by its new concept of attracting investment by the BEZA Act 2010, is meant to bring in local private parties by providing them lands to invite investors. There is thus a necessity on the part of the government to clearly define and determine the areas of activities by the two apparently similar, but functionally dissimilar agencies involved in promoting investment. There is, however, a mixed feeling among potential investors in land development. While some look upon it as a good opportunity for private companies to be able to develop lands and then attract investors - foreign and local - to get into the business of manufacturing products for domestic or export purposes, there are others who are concerned whether related facilities would be readily available to attract investors. Needless to say, land will become meaningless in the absence of power, gas, good road connectivity, security, state guarantee and so on. So, to start with, the authorities must take into account a host of factors that may not just pose as teething problems but could become threatening enough to bungle the whole project. Given the fact that the economic zones are meant to be productivity hubs in respective areas under PPP, a good deal will invariably depend on the state of overall management and facilitating services. Despite its conceptual difference with typical export processing zones, the objectives broadly remain more or less the same: n generation of additional economic activity; n promotion of exports of goods and services; n promotion of investment from domestic and foreign sources; n creation of employment opportunities; n development of infrastructure facilities. There are few critically important issues that need to be sorted out before it is too late. The key issue rests with infrastructure development in the locations. It is not very clear how the government plans to go ahead. Land development being the job of the private party does not guarantees an investor, foreign or local, the rights and incentive packages that he is entitled to. Besides, there has to be a strong overseeing mechanism to ensure conformity with the country's investment policy. [email protected]