The prospect of the country's new economic zones is deemed very encouraging. Businesses from both home and abroad are coming up with investment proposals worth billions of dollars.
Such proposals have, of late, come for Mirsarai, Sreehatta and Moheshkhali economic zones, which are now under construction. Around $5.78 billion will come as foreign direct investment from companies in China, South Korea, Japan, India, Singapore, the UK, Australia, Malaysia and the US.
Over 60 local companies are expected to invest $12.13 billion, according to latest data from Bangladesh Economic Zones Authority (BEZA).
Both local and foreign businesses who will invest in the zones will enjoy the same facilities. Among the foreign ones, the highest investment proposal worth $2.83 billion came for the power sector from two Chinese companies.
South Korean entity Super Petrochemical showed interest to invest $2.38 billion in petrochemicals, the second biggest amount. A Singaporean company stood third in the list with a fund of $400 million for the food processing sector.
The amount of investment would increase in the days to come when the ease of doing business would improve along with the development of infrastructure.
The government has launched an ambitious programme to set up 100 new economic zones (EZs) to generate 10 million new jobs, earn $40 billion in additional exports and attract $20 billion in foreign direct investment (FDI) -- all by 2030.
The EZs are expected to encourage industrialisation, increase production and diversify export basket. So far, the government has approved 59 sites for EZ development.
The BEZA has already awarded prequalification licences for the establishment of 15 private EZs. Licences approving start of operations were recently given to Meghna Industrial Economic Zone, Abdul Monem Economic Zone, Aman Economic Zone and Bay Economic Zone.
Such a development suggests that the work for setting up of EZs for local and foreign investors is finally gaining momentum, following the approval of 24 new zones and the sanction of nearly Tk 4.50 billion to acquire land for a special zone.
The fact remains that the foreign investors take into account what the World Economic Forum (WEF), the Ease of Doing Business and the Logistics Performance Index say about Bangladesh. The position of the country has not otherwise improved to a considerable extent, in terms of rankings, particularly in the sectors critical for the economy.
In the latest World Bank's (WB's) Ease of Doing Business ranking, Bangladesh's position did not improve on account of regulatory reforms. The overall private investment rate has also declined as a ratio to the gross domestic product (GDP), according to reports.
Bangladesh's ranking is very low when it comes to property registration, contract enforcement and dispute settlement. Alternative systems to resolve dispute and recover defaulted bank credits are not functioning properly.
There has, of late, been some progress in the preparatory work for the special EZs by way of signing contracts. The BEZA, in its recent governing body meeting, took a decision that a policy would be formulated to provide one-stop service to those who would invest in EZs. But it is not clearly known whether the BEZA enjoys enough power to ensure this
Many countries around the world have benefited tremendously from EZs. For example, Vietnam has enormously boosted its industrial output through 200 EZs developed during the last 16 years. Myanmar is also right on track now to woo the global investors. Yet unfortunately, Bangladesh is lagging far behind.
In order to attract long-term investments, the government did offer some tax benefits. Developers of the EZs will enjoy such facilities. Investment of foreign entrepreneurs will not be restricted through ceiling. They will enjoy full repatriation of capital and dividend. The foreign investors will also be exempted from export tax; they can enjoy 50 per cent rebate in land registration fees, and 20 per cent value added tax (VAT) exemption in cases like utility service bills.
More things do need to be accomplished. There should be reduction of taxes and duty structure on services, easing visa and work permit with extension of visa tenure for the overseas investors. A satellite township needs to be built in the EZs to give the workers a better life through better access to education and healthcare.
Keeping eye on the green industrialisation, BEZA has taken an initiative of planting and nurturing wide range of trees in the zones. To this effect, it has already formed a committee to formulate a green economic zone policy.
Officials of BEZA said that the authority would take care of green issue for the economic zones that are being developed under the government initiative while private sector zone developer will have to follow the rules. It would make mandatory to keep five per cent of land for tree plantation in every economic zone, sources said.
The government is developing 100 economic zones across the country over 75,000 acres of land. Of them, Mirsharai Economic Zones is the biggest economic zone which is being developed fast over 30,000 acres land. Besides, Maheshkhali Economic Zone, three tourism parks, Sreehatta EZ and private economic zones are getting ready with full swing.
Under the circumstances, maximum efforts should be given to speed up the implementation process of the EZs. Otherwise, it will be a daunting task for the government to keep the economy on track for sustaining the growth momentum that is direly needed to achieve the coveted status of a middle income country.