Since independence Bangladesh has made remarkable progress in diversified areas of social, political, cultural and economic life of its citizen. In order to boost its economic development a number of steps have been taken to attract Foreign Direct Investment (FDI) and facilitate industrialization process of the country. One of such efforts was the promulgation of BEPZA Act 1980 which eventually led to the formation of Bangladesh Export Processing Zones Authority (BEPZA), the government organ responsible for creation, operation and development of Export Processing Zones (EPZ) in the country.

After independence, the stagnant economy of the war-ravaged country was desperately seeking private capital, technical know-how to facilitate the industrialization process to achieve economic growth. During the initial years it could not happen. However, a visit by the then World Bank Vice President Robert McNamara in the early eighties to Bangladesh transmitted the concept of EPZs to us.

Since than EPZs, in tune with the liberal industrial policy of the government along with investment friendly legal and institutional framework like Foreign Private Investment (Promotion and Protection) Act 1980, have made significant progress. The pioneer EPZ of the country — Chittagong EPZ — started functioning in the year 1983 in the port city of Chittagong. Following its unprecedented success the second one came into being in 1991 in Dhaka. Presently there are as many as eight operational EPZs and two proposed EPZs in different locations of the country contributing to the overall economic development process of Bangladesh through promotion of export and FDI, generation of employment, transfer of technology, and development of forward and backward linkage industries and so on.

Attractive packages of incentives, physical industrial facilities of zones along with abundance of skilled manpower at a competitive rate have placed Bangladesh’s EPZs in a comparative advantageous position over other competing EPZs of neighboring countries. Apart from the manufacturing sectors EPZs are now inviting investment into infrastructure, power & utility, and environment management projects which have made the zones truly attractive investment destination for the prudent investors who looks to the future.

EPZs Growing Contribution

Presently 264 enterprises are carrying out their operational activities in the EPZs making an actual investment of $1.26 billion. The export from EPZs has also grown steadily which is now 17 percent of the country’s total national export and the same has exceeded two billion mark during the last financial year. The direct employment opportunities for more than 200,000 Bangladeshi nationals have also been created in the EPZ units constituting 64 percent of the total work force from female category.

National Economy

Apart from export earning objectives, employment pattern shows that EPZs have been making significant contribution to the gradual empowerment of women which supports the objective of Millennium Development Goal (MDG).

This financial and social empowerment of women has far reaching effect on the country’s poverty reduction initiatives as the increasing number of young girls and woman are joining the productive work force of EPZs migrating from poverty prone remote rural areas of Bangladesh linking the rural economy with industrialization process.

BEPZA has also accelerated the privatization effort of the government successfully by converting two loss making State Own Enterprises (SOEs) of the country namely Chittagong Steel Mills and Adamjee Jute Mills Ltd in to EPZs. Once abandoned projects are now vibrating with activity. Mention may also be made that investors from 33 countries have already invested in the EPZs of Bangladesh. The leading nations among them include South Korea, Japan, China and the host Bangladesh.

Diversification & Value Addition

Absorption of huge unskilled and skilled work force in the export-driven labor-intensive manufacturing sector of EPZs have facilitated rapid industrialization process and accelerated the real economic growth. Increasing FDI in the manufacturing activity has important bearing on the development of market access skill and transfer of technology. Vibrant economic activities of EPZs are inducing domestic economy through expansion of tertiary businesses, increased domestic consumption, outsourcing of goods and services from tariff area. A recent study suggests that in FY 2006-2007 EPZs have induced economic benefit equivalent to 6,300 crore taka to our economy.

Simultaneously with the primary objective of employment generation, EPZs have also facilitated diversification of the product base by adding new sectors like electronic, shoes, engineering products other than RMG. Backward integration to textile is taking place in EPZs to backup RMG sector in the competing global market.

Achievement of BEPZA

During the FY 2005-2006 total actual investment made in EPZs stands at $112.89 million. During the last FY 2006-2007 the actual investment is $152.37 which is 34 percent higher than the investment made in the previous financial year. In the year 2005-2006 the lease signed investment in BEPZA was $153 million and in the year 2006-2007 the lease signed investment in BEPZA is $566 million which is 270 percent more than the previous year.

From July-December 2007 the lease signed investment in BEPZA is $451.82 million which 35 percent more than the previous year’s six months. Up to the financial year 2006-2007 total export of $13.903 billion have been made from the EPZs. The Export target for the FY 2006-2007 was $2 billion and actual export made was $2.064 billion during this year. The Export target for the FY-2007-2008 is set as $2.3 billion. During this current financial year from July 2007 to December 2007 the total export made by the EPZ enterprises is $ 1084.59 million.

Facilities:

The core competency areas of Bangladesh EPZs are its diversified and attractive package of incentives and physical facilities. BEPZA provides fully serviced, secured industrial plots and Standard Factory Buildings with simplified licensing and permitting procedure. Onsite customs clearance, logistics, international couriers, offshore banking facilities have made EPZs of Bangladesh an attractive investment destination.

Challenges:

BEPZA has been striving hard to upgrade its operational efficiency to a level which would cater the diversified needs of the investors. To achieve this objective challenges ahead for BEPZA would be:

a. Development of improved physical infrastructures, integrated environment and water management, power generation, commercial complex on Public Private Partnership (PPP) basis.

b. Development of a productive and sound industrial relation environment. Compliant industrialization and full right of workers union as per international best practice benchmarking.

c. Achieve organizational excellence by developing online capabilities and automation to ensure quality and expeditious delivery of services to the investors. Ensue full implementation of E-governance in all EPZs.

d. Create more zones in the strategically located sites to accommodate the increasing demand of the existing investors. Attract relocating industries from Far East and CIS.

Conclusion

With the changing global business and investment scenario the EPZs of Bangladesh have revised its expansion strategy and in tune with the varied needs of the present day businesses Bangladesh EPZ Authority (BEPZA) is customizing its investment incentives and facilities. Opening up of new sectors of investment have provided an excellent opportunity to prospective investors.

New zones in strategically located places with state of art industrial facilities and pro-investment institutional framework providing the right kind of environment to grow. BEPZA believes that investors from all around the globe would find the EPZs of Bangladesh as a truly attractive investment destination.

— Brig. Gen. Ashraf Abdullah Yussuf is the executive chairman of Bangladesh Export Processing Zones Authority (BEPZA)