‘Challenges endless, possibilities unlimited’

AKM Moinuddin
Thursday, July 27th, 2017


 

The government has progressed much with its countrywide economic zones plan and Mirsarai Economic Zone alone is expected to fetch US$ 20-25 billion real investment by 2030 ushering in a new era of industrialisation and job creation in the country.

 

Paban Chowdhury, Executive Chairman of the Bangladesh Economic Zones Authority, talked to us elaborating their commitment in setting up international standard economic zones through Public Private Partnership (PPP), Government to Government and Private sector initiative under the mandate of Bangladesh Economic Zones Act, 2010.

 

The BEZA has already awarded prequalification license for establishing 15 private economic zones while full-fledged operational licenses to four private economic zones — Meghna Economic Zone, Abdul Monem Economic Zone, Aman Economic Zone and Bay Economic Zone.

 

What are the main challenges for local and foreign investors to invest in Bangladesh?

 

If we talk about challenges, I would say it is endless and possibilities are unlimited. Sky is the limit. I think if we compare with the past years, today our economic possibilities are vast. Because mega projects like Padma Multipurpose Bridge are being implemented. The government has taken initiative for mega power plants – Payra Coal-fired Power Plant, Rampal Power Plant and Japan-supported Power Plant – to ensure quality electricity. Electricity supply will become stable once the national grid starts getting electricity from these power plants. We talk too much about electricity crisis but we did not spend that much time in finding reasons and solutions to this problem in the past.

 

If we talk about road communication, I can tell you – Dhaka-Chittagong four-lane is almost completed. There will be Dhaka-Bhanga expressway connecting Padma Bridge. A rail link from Dohazari in Chittagong to Gundhum in Myanmar via Cox’s Bazar will be constructed to establish link with the proposed Trans-Asia Railway corridor. We hope there will be an Expressway connecting Chittagong. These initiatives will help bring massive changes in overall investment scenario. We see all the macroeconomic indicators are positive. The investment scenario is improving every year with improvement of GDP-Investment ratio. Our GDP is growing but it should have grown in higher rate. Per capita income is also increasing. Considering all these things, we can say our economy is performing much better than any time in the past. Our growth is very high and it will further increase. Political stability is there. Quality of utility services is also improving. Fear over energy availability will soon disappear as three agreements have so far been signed to import Liquefied Natural Gas (LNG). We hope the government will be able to ensure energy security and quality electricity. We see all these initiatives positively for boosting investment.

 

What are the underlying thoughts of establishing economic zones in Bangladesh?

 

There have been some initiatives to have special investment in the country. Bangladesh EPZ Act was formulated back in 1980 to establish Export Processing Zones in the country. An authority – BEPZA – was also established under which we now have 8 EPZs. BEPZA has so far developed 2290 acres of land. In 1996, Bangladesh Awami League came in power and took another initiative opening doors for private investors so that they can establish EPZ.  That was the most courageous initiative among all the initiatives taken for attracting investment so far. As a result, Korean EPZ was established. But the KEPZ could not fulfill the desire for some reasons. There has been no significant investment in the KEPZ and not even desired employment generation. We did not see expected impact on the society with no significant contribution to the economy. However, there was a scope to establish many private EPZs under 1996 courageous initiative. Unfortunately it did not happen.

 

Taking lessons from the past and considering donor agencies recommendation, Bangladesh has taken fresh initiative to boost investment in the country. Neighbouring country India formulated Act in 2005 to set up economic zones. In Bangladesh, Bangladesh Economic Zone Act was formulated in 2010 to establish economic zones in the country. Through these economic zones, not only export, country’s 160-170 million domestic market will be covered with the produced products from the EZs. The government came up with the idea with much flexibility and investment can be done in six categories in the EZs. Meanwhile, Special Economic Zones will be established for special services and commodities. As for example, we are giving BEPZA some 1150 acres of land to establish EZ in Mirsarai. Investment systems and scopes are made very open through the BEPZ Act.

 

Will the role of Economic Zones be different from that of Export Processing Zones and Special Economic Zones? How will Economic Zones facilitate entrepreneurs of home and abroad?

 

BEPZA and BEZA are totally different from each other. There is wide difference between these two entities. EPZ is owned, developed and operated by the government. Others have no role to play in it. They sell only 10 percent of their products in the domestic market. Economic Zone concept is totally different. Anybody can come and invest in EZ. It can be private-public initiative, it can be done with foreign investors even there is scope for G2G initiative.  We have been receiving letter of interest from many investors.

 

We are working to establish EZ with China (China 70+Bangladesh 30), Japan (Japan 75 + Bangladesh 25) in Chittagong, Narayanganj on G2G basis. We are in discussion with India to establish three EZs where we follow China model in terms of equity share. 100 percent products, to be produced in the EZs, can be sold in the domestic market. At the same time 100 products can be exported. So there is huge flexibility.

 

Will the foreign investors having commercial enterprise inside Economic Zone be entitled to enjoy any special incentives?

 

There are incentives for the investors. The investors will enjoy various exemptions like income tax exemption, duty exemption and VAT exemption with return of investment. Investors will not invest unless you make sure that there will be certain return.

 

What factors were considered in selecting the sites for economic Zones?

 

There are some factors considered by the investors in making their investment decisions. Connectivity is one of the key factors. They want a location which is well-connected with highway, railway, port proximity and airport. The investors also consider whether the economic zone has access to sea connectivity.

 

Big industries can not be established everywhere. These require direct access to sea. When we first visited Mirsarai, many people branded me as mad. Now we have so far received investment proposals worth around US$ 10 billion. In Mirsarai, we expect it will cross US$ 20 billion. It will not be surprising if the real investment there stands at US$ 20-25 billion by 2030. Because there is direct access to sea with the Mirsarai Economic Zone which is being established. It is a big opportunity for the investors. We have already received proposals to establish two big steel mills there.

 

Has BEZA set any target getting 100 Economic Zones ready by 2030 to commence commercial operation? Though it’s very distant, how confident are you in achieving this milestone?

 

When I joined here in October 2014, I threw a slogan to attract people saying we want to establish 100 economic zones within 15 years. Now it has become a national slogan. Now people keep asking me when I will visit their place. Now we have come up with another slogan – we will create employment opportunity for 1 crore people and will develop 75000 acres of land. We have recently revised our target and we say will develop 100000 acres of land. We have already 38,000 acres of land which we achieved in only 30 months. We want to go long way exceeding our targets.

 

BEZA targeted to create employment of 10 million people in next 15 years. Do you think Bangladesh should ensure a smooth pipeline of 10 million skilled people to meet such demand?

 

I think we can create employment for over 1 crore people. But there are big challenges in this area too. We want to keep our eyes wide open. We want to feel the changes and want to keep eyes on those changes happening in the world. Accordingly we are ready to act and react. It is being told that there is high economic growth. Investment flow is good. But the rate of employment is low. It is true. There is no way to ignore this fact. You may not recognize. But reality is different. Technology has occupied presence of human workforces. Except RMG industry, number of workers in other areas is gradually decreasing.

 

We need to give greater focus on service sector – hotel, tourism – where we need skilled manpower. We have taken control over Islands from Cox’s Bazar to Kutubdia. We are working on those Islands. We have issued order to work on Naf Tourism Park. We will develop Sonadia Island protecting biodiversity. We will develop it as Ecotourism Zone. We have a plan to establish an international standard Science Park where research and development works can be done. A feasibility study is being done with the support from the World Bank.

 

What arrangements are in place to ensure uninterrupted supply of power and gas in Economic Zones amid power and gas crisis situation?

 

Economic Zone is not isolated from overall situation of the country. So, we need to ensure power and energy security. The government has been working in these areas.

 

Opening and closure of business in Bangladesh for foreign investors are still challenging. Will they get any relief if they invest in enterprises inside Economic Zones?

 

As per law, there will be no problem while withdrawing investment or following exit policy. We will provide all necessary supports. No problem will appear before you as problem if you are determined to face it and move ahead. We are determined to move forward addressing all the problems.

 

Do you think Bangladesh can attain GDP growth rate of 8 percent?

 

Considering current growth trend, I think the targeted 7.24 percent GDP growth in 2017-2018 fiscal year is certainly achievable and I think it should be much higher than that. Now we see GDP’s around 30 percent investment. If we want to take the growth at 8 percent we need GDP’s 34.4 percent investment. That means we need to boost our investment ratio. We need favorable environment for investment. It will not work if we keep shouting for favorable environment. We are telling to develop ‘investment culture” in the country. The definition of the investment culture is much wider. For example, how I will behave with an investor, how I will behave when a foreign investor comes to Bangladesh, what a particular investor sees in the airport, what is the security situation, law and order situation and level of good governance – it includes all. I think this investment culture should be improved in Bangladesh. If it happens, not only 8 percent, the GDP growth rate will eventually turn 9 percent. It happened in other developing countries. However, our immediate aim should be 8 percent.

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