Introduction

IntroductionIn order to stimulate rapid economic growth of the country, particularly through industrialization, the government has adopted an Open Door Policy to attract foreign investment to Bangladesh. The Bangladesh Export Processing Zones Authority (BEPZA) is the official organ of the government to promote, attract and facilitate foreign investment in the Export Processing Zones.

Two fully operating EPZs, one in Chittagong and the other near Dhaka have attacted a wide range of investors. Another four EPZs, one at Mongla, a southern port city of Bangladesh, one at Comilla, and unique place between Dhaka and Chittagong, one at ishwardi near the Jamuna Bridge and the fourth one at Nilphamari named Uttara EPZ near Syedpur Airport have already started operation. Other two EPZs Adamjee near Dhaka and karnaphuli in Chittagong are progressing fast for allotment of plot to investors.

According to BEPZA Act, the objectives of BEPZA are: (i) to foster and generate economic development of Bangladesh by encouraging and promoting foreign investments in a zones: (ii) to diversity the sources of foreign exchange earnings by increasing export of Bangladesh through a zone : (iii) to encourage and foster the establishment and development of industries and commercial enterprises in a zone in order to widen and strengthen the economic base of Bangladesh, and (iv) to generate productive employment opportunity and to upgrade labor and management skills through acquisition of advanced technology (GOB 1994). Meanwhile, Chittagong Export Processing Zone (CEPZ) and Dhaka Export Processing Zone (DEPZ) were established which started functioning in 1983/84 and respectively. Currently, Bangladesh has been promoting EPZ program more vigorously with the creation of four more EPZs in Mongla, Comilla, Ishwardi and Uttara (Nilphamari) with a heavy claim on scarce national resources inviting a serious study and debate, It is important to see whether further replication of the EPZs is worthwhile in terms of the national resources deployed and the role the existing EPZs play in expediting the process of industrialization in Bangladesh

Objectives of the study The objectiv of the present paper is to examine whether the EPZs have been successful in achieving the desired goals as laid down in the, BEPZA Act and has contributed to the industrialization process of the country. Promotion of FDI & Local Investment

Promotion of Export

Promotion of Diversification of Export

Generation of employment

Development of Backward and Forward Linkage

Transfer of Technology.

Upgrade of Skill

Development of Management

Promotion of International Marketing.

Literature Review :Bangladesh Economic Survey-

Bangladesh Institute of Development Studies

Board of Investment

The survey of BEPZA

The Survey of BGMEA

Bangladesh Economic Survey

Bureau of Bangladesh Statistics

Limitation of the Study : Time constraints are the main draw back in collecting informations . Due to the shortage of enough books and journal concerning the matter it is not possible the collect actual and enough data.

Methodology : The research paper is prepared by completely depending on secondary source that includes research report, review of books, journals and other secondary materials.

General FeaturesBangladesh offers an unparalleled conductive investment climate compared to the other South Asian economics .

Bangladesh is a largely homogenous society with no major internal or external tensions and a population with great resilience in the face of adversity (e.g. natural calamities).

Bangladesh is a liberal democracy and mostly a one race and one religion country. The population of this country irrespective of race and religion have been living in total harmony and understanding for thousands of years.

It enjoys broad non-partisan political support for maker oriented reform and offers the most investor friendly regulatory regime in South Asia.

Bangladesh owns a trainable, enthusiastic, hardworking and low-cost (even by regional standards) labor force suitable for any labor-intensive industry.

Geographical location of the country is ideal for global trades with very convenient access to international sea and air route. Bangladesh is the bridge between ASEAN and SAARC nations.

Bangladesh is endowed with abundant supply of natural gas, water and very fertile soil.

Although Bengali is the official language, English is widely spoken as second language, English is widely spoken as second language. Majority of even moderately educated population can read, write and speak in English.

As a result of low per capita GDP present domestic consumption is not significant, However, it may be considered that there exists a middle class with significant purchasing power. As economic growth picks up, the purchasing power will also grow substantially and in a country of more than 133.4 million people, even a small middle class may constitute a significant market.

Bangladeshi products other than armaments enjoy complete duty and quota free access to EU, Japan, Canada, Australia, Norway and most of the developed countries . However, for apparel export to USA, Bangladesh has a quota regime which is generally favorable.

Regulatory and Legal FrameworkInvestment in Bangladesh is well protected by law and by practice. Major laws related to foreign investment are:

The Foreign Private Investment (Promotion and Protection)Act of 1980

The Bangladesh Export Processing Zones Authority Act of 1980

The Investment Board Act of 1989

The Companies Act 1994

The Bangladesh Private Export Processing Zones Act of 1996

The Industrial Policy 1999

The Import Policy Order 2003-2006

Bilateral Investment AgreementsThe Foreign Private Investment (Promotion and Protection) Act 1980 induces a guarantee of fair and equitable treatment to foreign private investment. Such national treatment is also provided in bilateral investment treaties (BITs) for the promotion and protection of foreign investment which was concluded with 24 countries listed below.

1.Austria

2. Belgium

3. Canada

4. China

5. France

6. Germany

7. Indonesia

8. Iran9. Italy

10. Japan

11.Korea, DPR

12.Korea,Republic of

13. Malaysia

14. Pakistan

15. Poland

16. Romania17. Switzerland

18. The Netherlands

19.The Philippines

20. Turkey

21. Thailand

22. UK

23. USA

24. Uzbekistan

CHAPTER THREE : REASONS FOR SETTING EPZ INBANGLADESHEPZ set up in Bangladesh due to various reasons Major reason among them is expedites export activities and stimulates rapid economic growth.

These reasons are :

stimulate rapid economic growth

Enhance industrialization

Adopted with Open door policy i.e. Globalization

Attract foreign investment

Provide special areas where potential investor would get congenialinvestment climate.

Smooth export procedure, free from cumbersome procedures

Development export promotion strategy

More employment generation

Development of export oriented industries

Proper use of domestic available raw materials

CHAPTER FOUR : THE BEPZA ACT-1980

An Act for the establishment of the Bangladesh Export Processing Zones Authority. Whereas it is expedient to make provision for the establishment of the Bangladesh export processing Zones Authority for creation, development, operation, management and control of Export Processing Zones and for matters connected therewith . It is hereby enacted as follows:

Short title and commencement:(1) This Act may be called the Bangladesh Export Processing Zones Authority Act, 1980,

(2) It shall come into force on such date as the Government may, by-notification in the official Gazette, appoint-

Definitions : In this Act, unless there is anything repugnant in the subject or context

(a) Authority means the Bangladesh Export Processing Zones Authority established under section 3.

(b) Board means the Board of Governors of the Authority,

(c)Executive Board means the Executive Board of the Authority

(d) Executive Chairman means the Executive Chairman of the Board.

(e) Prescribed means prescribed by rules made under this Act. and

(f) Zone means a place or place or places to be specified by the Government under Section 10 as a Export Processing Zone for the purposes of setting up export- oriented industries .

Type of InvestmentType- A 100% foreign owned including Bangladeshi nationals ordinarily resident in Abroad

Type B Joint venture between foreign and Bangladeshi entrepreneurs resident in Bangladesh.

Type- C 100% Bangladeshi entrepreneurs resident in Bangladesh.

Mode of InvestmentInvestment in convertible foreign currencies by foreign investors, Option to establish public/ private Ltd. companies or sole proprietorship/ partnership concerns.

Investment GuaranteeForeign Private Investment (Promotion and Protection) Act, 1980 secures all foreign investment in Bangladesh. OPICs (Overseas Private Investment Corporation, USA) insurance and finance programmes operable. Security and safeguards available under Multilateral investment Guarantee Agency (MIGA)of which Bangladesh is a member. Arbitration facility of the International Center for the Settlement of investment Dispute (ICSID) available.

Tele-communicationsE-mail, internet, Fax ISD, NWD & Cellular services are abailabe.

CommunicationAdequate sea, rail, road and air communication services are available.

One window same day service and simplified procedure

BEPZA-Issues import/Export permits

-Provides infrastructure facilities

-Offers One Window Same Day service

-Potential investors are required to deal only with BEPZA for investment and all other operational purposes.

Work ForceBangladesh offers a substantial manpower reserve skilled, semi-skilled & un-skilled. BEPZA is vested with the responsibility to administer labour matters for matters for all its enterprises.

Average Monthly wagesApprentice/ Trainee US $ 22.00

Unskilled US $ 38.00

Semi-skilled US $ 45.00

Skilled US $ 63.00

Other benefits include Conveyance Allowance, House Rent, Medical Allowance, Maternity Benefit, Festival Bonus and Overtime Benefit.

Working Hours48 hours week in a factory

39 hours week in an office

Employees Leave

10 days casual leave in a year

17 days Earned leave in a year

14 days sick leave in a year

10 days Festival holiday in a year

Package of IncentivesFISCAL

1. 10 years tax holiday

2. Duty free import of construction materials

3. Duty free import of machineries, office equipment & spare parts etc.

4. Duty free import and export of raw materials and finished goods

5. Relief from double taxation

6. Exemption from dividend tax

7. GSP facility available

8. Duty free import of 2/3 vehicles

9. Expatriates exempted from income tax for three years

10. Accelerated depreciation on Machinery or plant allowed

11. Remittance of Royalty, Technical and Consultancy Fees allowed

12. Duty and Quota Free Access to EU, Canada, Norway, Australia etc.

NON-Fiscal1.100% foreign ownership permissible

2. Enjoy MFN status

3. No ceiling on foreign and local investment

4. Full repatriation of capital and dividend

5. Foreign currency loan from abroad under direct automatic route

6. Non-resident Foreign Currency Deposit (NFCD) Account permitted

7. Operation of FC account by `B and `C type industries allowed

Facilities1. No UD. IRC and renewal of bond license

2. Work permits issued by BEPZA

3. Secured and protected bonded area

4. Off shore banking available

5. Freedom from import and export policy restrictions

6. Import on Documentary Acceptance (DA) basis

7. Back to Back L/C

8. Import and export on CM basis allowed

9. Import form DTA (Domestic Tariff Area)

10. 10% sale to DTA (Domestic Tariff Area)

11. Customs clearance at factory site

12. Simplified and hassle-free sanction procedure

1. 13. Sub-comtracting with export oriented industries inside and outside EPZ allowed

14. Relocation of foreign industries allowed

15. Resident ship and Citizenship

Infrastructure1. Basic infrastructure : electricity, water & gas

2. Fully serviced plots available

3. Factory building available on rental basis

4. Enclave for workers Dormitory and Day Care Centre

5. Warehouse/ godown available.

A Japanese Lense Factory in EPZ

Support Services

Business :Courier, Fire Station, Post Office, C&F Agent, Shipping Agent, MTO etc.

Administrative :Commissariat, investors Club, Medical Centre, School and College, Public Transport etc.

Others: Customs Office, Police Station, Banks Restaurant, Health Club, Recreation Centre, Centre, In- house Security, Sports Complex, Exclusive Telephone Exchange, Electricity Sub-station .

Indicative List of IndustriesGarments and Garments Accessories, Textiles Agro-based industries, Chemicals Backward and Forward linkage industries, Electrical equipment and components Electronic products, Software, optical goods, Woven and knitted fabrics, Engineering products, Leather products and Foot-wear, Toys Medical and Biological instruments, Pharmaceutical products, Plastic molded, products Industries based on new uses of jute, Cutting / Polishing of precious and semi precious stones, Household fittings and equipment, Head-wear Jeweler Homological instruments, Scientific measuring instruments, Aircraft instruments Laboratory ware, Printing and Publishing, Printing and copying equipment and accessories.

Chittagong Export Processing ZoneLocationSouth Halishahar 3.10 kms from the Sea Prot, 5.50 kms from the main business center, 7.21 kms from the Chittagong international Airport

Profile of Zone

Zone area : 183.37 hectares (453 acres)

Number of Industrial Polts. 428 Size of each plot : 2000 sqm

* Tariff : US$2.00/sqm/ year.

Space of Standard Factory building : 58244.98 sqm

* Tariff : US$ 2.50 sqm/ month.

Space of Warehouse : 2667.79 sqm

* Tariff : US$ 2.50/ sqm/ month

* Utility Service

Water Supply : From chittagong WASA Storage capacity : 7.26 million liters/ day

* Tariff : TK. 17.71/cu-m

* Gas Supply : From Bakhrabad Gas System Ltd.

* Tariff : TK 5.76/cu-m

Power Supply : 11 kv. 3phase, 50 cycles/sec

* Tariff : TK 3.98/kwh

Dhak Export Processing ZoneLocationGanakbari, Savar, 5 kms from Dhaka city center, 25 kms from Zia International Airport 304 kms from chittagong sea port.

Profile of Zone

Zone area : 143.70 hectares (346.51acres).

Number of Industrial Plots : 388 size of each plot : 2000 sqm

*Tariff : US $ 2.00/ sqm/ year

Space of standard Factory Building: 79843.19 sqm

Tariff : US $2.50/ sqm/month

Space of Warehouse : 2356 sqm

Tariff : US$ 2.50 sqm/month

Utility services

Water supply : Own water supply system

Tafiff : TK. 17.71 / cu-m

Gas supply : From Titas gas Field

Tariff : TK. 5.76 /cu-m

power Supply : 11 kv,3 phase, 50 cycles/sec

Tariff : Tk. 4.18/ kwh

Tariffs are subject to change from time to time .

MONGLA EXPORT PROCESSING ZONELocationMongla port area, Bagerhat, 105 kms from Jessore Airport, 397 kms from Dhaka and 664 kms from chittagong Sea Port

Profile of Zone

Zone area : 186.21 hectares (460 acres) Number of industrial Plots : 162 (first phase) size of each plot : 2000 sqm

Tariff : US $ 1.00/sqm/year.

Space of standard Factory Building : 18000 sqm

Tariff : US $ 1.25/ sqm/month

Utility Service Water Supply : Sweet water from public Health Engineering Department and own supply network.

Tariff : TK. 17.71/ cu-m

Gas Supply : From Shahabajpur Gas Field ( Proposed)

Tariff : TK. 5.76 / cu-m

Power Supply : 11kv. 3 phase, 50 cycles/sec

Tariff : TK. 4.18 /kwh

COMILLA EXPORT PROCESSING ZONELocationComilla old Airport area. 167 kms from Chittagong Sea Port, 97 kms from Dhaka

Profile of Zone :Zone area : 104.44 hectares (258 acres) Number of industrial Plots : 208 (first phase) size of each plot : 2000 sqm

Tariff : US $ 1.00/sqm/ year.

Space of standard Factory Building : 18000 sqm

Tariff : US $ 1.25/ sqm/month

Utility Service Water Supply : own water supply system

Tariff : TK. 17.71/ cu-m

Gas Supply : From Bakhrabad Gas System Ltd.

Tariff : TK. 5.76 / cu-m

Power Supply : 11kv. 3 phase, 50 cycles/sec

Tariff : TK. 4.18 /kwh

ISHWARDI EXPORT PROCESSING ZONELocationPakshi, Pabna Pakshi Bridge through by pass road 3.7 kms, 10.60kms, from ishwardiAirport, 130 kms from Jamuna Bridge 280 kms from Dhaka 255 kms from Mongla Port, 110 kms from Rajshahi Airport and 412 kms from chitt agong Sea Port.

Profile of Zone

Zone Area :124.99 hectares(308.77 acres)

Number of Industrial Plots : 2000 sqm

Tariff : US $ 1.00/ sqm / year

Space of Standard Factory Building : 18000sqm

Tariff :US $1.25 /sqm /month

Utility ServicesWater Supply :Own water supply system

Tarrif:17.71 /cu-m

Gas Supply :From Gas Transmission Company Ltd.

Tariff : 5.76 / cu-m

Power Supply : 11 kv, 3phase, 50 cycles/ second

UTTARA EXPORT PROCESSING ZONELocationShongalshi, Nilphamari, 18 kms from syedpur Airport, 401 kms from Dhaka, 650 kms from Chittangong Sea Prot. 586 kms from Mongla Prot.

Profile of Zone

Zone area : 93.20 hectares (230.21 acres) Number of Industrial Plots : 155 (first phase Size of each plot : 2000sqm

Tariff : US $ 1.00/sqm/year

Space of Standard Factory Building : 18000 sqm

Tariff : US $ 1.25 sqm/ month

Utility Service

Water Supply : Own Water supply system

Tariff : TK. 17.71/cu-m

Gas Supply : From Gas Transmission Company Ltd. (Western Zone Project, Proposed).

Tariff : Tk 5.76/ cu-m

Power Supply : 11kv, 3 phase, 50 cycles/sec

Tariff : Tk .4.18/ kwh.

ADAMJEE EXPORT PROCESSING ZONELocationAdamjee Nagar, Shiddirgonj, Narayanganj.15 kms from Dhaka city center, 40 kms from Zia International Airport, 255 kms from Chittagong Sea Port.

Profile of ZoneZone Area :118.62 hectares (293 acres)

Number of Industrial Plot: 200 (60 in 1stphase)

size of each Plot : 2000 sqm

Tariff : US $ 2.00/ sqm / year

Space of Standard Factory Building : 42737sqm

Tariff :US $ 2.50//sqm /month

Utility ServicesWater Supply :Own water supply system

Tarrif:17.71 /cu-m

Gas Supply :From Titas Gas Field

Tarrif:Tk 5.76 /cu-m

Power Supply : 11 kv, 3 phase, 50 cycles/sec

Tariff : 3.98/kwh.

KARNAPHULI EXPORT PROCESSING ZONELocationChittagong Steel mill Area, North Patenga. 5.6 kms from Chittagong sea Port, 8 kms from main business centre of chittagong, 4.7 kms from chittagong international Airport.

Profile of ZoneZone Area :90.04 hectares (222.42 acres)

Number of Industrial Plot: 211 (100 in 1stphase)

size of each Plot : 2000 sqm

Tariff : US $ 2.00/ sqm / year

Space of Standard Factory Building : 2974 sqm

Tariff :US $ 2.50//sqm /month

Utility ServicesWater Supply :From chittagongWASA & own supply by treatment plant.

Tarrif:17.71 /cu-m

Gas Supply :From Bakhrabad Gas system Ltd.

Tarrif:Tk 5.76 /cu-m

Power Supply : 11 kv, 3 phase, 50 cycles/sec

Tariff : 3.98/kwh.

* Tariffs are subject to change from time to time.

CHAPTER SIX : PERFORMANCE OF INDUSTRIES UNDER EPZMost of the FDI (87%) have been brought by companies registered with the Board of Investment, the balance (13%) have been invested in companies registered with Bangladesh Export Processing Zones Authority (BEPZA).

Source : Bangladesh Economic Review 2006.

Table 6.3 : FDI Inflow in Bangladesh during 2005-Distribution by Regulatory Agencies (in Million US$)

FDI ComponentsBOI- Registered Entities 2005BEPZA- Registered Entities 2005Total

FDI- 2005

Jan-JunJul-DecBOI

TotalJan-JunJul-DecBEPZA

Total

a. Equity Capital242.7168.1410.89.65.214.8425.6

b. Reinvested

Earnings124.789.1213.819.414.333.7247.5

c. Intra-

Company Loans51.458.5109.933.928.462.3172.2

Total418.8315.7734.563.047.8110.8845.3

Source : Bangladesh Bank Enterprise Survey, 2006.

Performance of Industries under Bangladesh Export Processing Zone Authority (BEPZA).

Table 6.3 shows the number of industries, investment cost, manpower and export performance of the seven EPZs at Dhaka, Chittagong, Comilla, Mongla, Uttara, Ishwardi and Adamjee upto June 2006. 242 industrial units were operational in these seven zones with a total investment cost of US$ 979.46 million. A total 1,77,809 manpower has been employed in these industries. Besides, establishment of a total of 133 industrial units (32 in Chittagong EPZ 26 in Dhaka EPZ, 22 in Comilla EPZ, 14 Iswardi EPZ, 18 in Mongla EPZ, 6 in Uttara EPZ, 9 in Adamzee EPZ and 6 Karnaphuli EPZ) is underway . According to the project proposal, another 66.007 jobs will be created, once those industrial units are operationalised. During the FY 2005-06 commodities worth US$ 1830 million were exported from the mills and factories of EPZ, which accounted for 18 percent of national exports.

Table 6.3: Industries under Bangladesh Export Processing Zone (EPZ) and their Performance in terms of Investment and Employment Generations (Up to June 2006)

GoodsNumber of IndustriesTotal Investment (Million US$)Total

Manpower

Readymade Garments49253.2894,742

Electronics1552.273,001

Textile goods26239.2320,158

Metal goods1220.57815

Leather goods1252.365.280

Plastics goods1321.241,025

Cap0743.1212,583

Terry towel1634.894,491

knit textile2184.2819,028

Garment goods3076.016,013

Others41102.1910,674

Total242979.461,77,809

Source: (BEPZA).

Table 6.4: Annual Investment and Exports Status in EPZs located at Dhaka, Chittagong, Mongla, Comilla, Uttara, Ishwardi and Adamjee (1997-98 to 2005-06).

(Million US$)

EPZ1997-981998-991999-002000-012001-022002-032003-042004-052005-06

DhakaTotal Invest26.2435.5019.8024.0632.0159.1449.3651.3561.57

Total Export185.64259.57364.73447.51466.76554.7966.60757.73912.30

ChittagongTotal Invest42.5936.1115.1824.3022.3742.1455.4345.3135.95

Total Export450.41452.12526.09620.36680.70641.28679.01772.39873.03

MonglaTotal Invest0.000.000.000.050.430.110.801.490.00

Total Export0.000.000.000.001.553.003.217.837.09

ComillaTotal Invest0.000.000.000.000.641.059.0319.0110.18

Total Export0.000.000.000.000.011.154.109.6634.99

UttaraTotal Invest0.000.000.000.000.160.200.420.720.00

Total Export0.000.000.000.00

IshwardiTotal Invest0.000.000.000.000.100.500.050.76

Total Export0.000.000.000.001.092.542.54

AdamjeeTotal Invest0.000.000.000.004.00

Total Export0.000.000.000.000.23

Total Investment68.8371.6134.9848.4155.71103.14115.05118.52112.46

Total Export636.05711.70890.731067.911149.021200.221353.911548.681830.18

Source : (BEPZA) June, 2006.

CHAPTER SEVEN: EPZ : CONTRIBUTION TOECONOMY.Investors from 30 countries :

Types of investment (UPTO June, 2007)

A- 100% Foregn ownership 161 60%

B- Joint Venture 43 17%

C 100% Local Venture6023%Total in op 264 100%

U/IMP withla 102

Sanctioned ind55Table 7.1: Monthly wages in EPZs of BangladeshMONTHLY WAGES IN EPZs OF BANGLADESH

CountriesUS$

El Salvador132

China100

Guetemala88

Vicarage/ Nicaragua85

Vietnam80

Hundurus78

Thailand75

Pakistan65

Indonesia64

Bangladesh30

Zone Land SFBEPZ-Chittaagong, EPZ-Dhaka 2.20 2.75

EPZ-Comilla, EPZ-ADAMJEE

EPZ-KARNAPHULI

EPZ-MONGLAN, EPZ-ISHWARDI 1.00 1.25

EPZ-UTTARA

Table 7.2 : SERVICE CHARGE UTLITIES

ZONEELECTRICITY(US$ / KWH)GAS(US$ / CUM)WATER(US$ / CUM)

EPZ-Chittagong, EPZ- IshwardiEPZ- ADAMJEE

EPZ- KARNAPHULI0.050.08.025

EPZ-DhakaEPZ- ComillaEPZ- MonglaEPZ- Uttara0.060.080.025

RATE INCLUDES SERVICE CHARGETable7.3 : InvestmentINVESTMENT (UPTO JUNE 07)

YEARInvestment ($m)YEARINV ($m)

1994-199535.932001-200255.70

1995-199630.582002-2003102.63

1996-199753.902003-2004115.05

1997-199868.832004-2005118.52

1998-199971.612005-2006112.89

1999-200034.982006-2007152.37

2000-200148.40

TOTAL INVESTMENT = $ 1132.26m

Table 7.4:Export (up to June 07)

EXPORT (UPTO JUNE 07)

YEARExport ($m)YEARExp ($m)

1994-1995228.262001-20021077.02

1995-1996337.022002-20031200.00

1996-1997462.772003-20041354.00

1997-1998636.052004-20051548.68

1998-1999711.692005-20061836.18

1999-2000890.812006-20072063.67

2000-20011067.87

Total Export : $ 13.90: 47m

TOTAL EXPORT = $ 13,903mTable 7.5: EmploymentEMPLOYMENT (UPTO JUNE 07)

YEARNo. of EMPLOYEYEARNo of EMPL

1994-19956,1412000-200116,020

1995-199610,7062001-20028,764

1996-199712,7732002-200310,167

1997-199814,0492003-200410,071

1998-199914,0592005-200623,021

1999-20009,8902006-200723,360

TOTAL : 2,01,169Table 7.6: BEPZAs CONTRIBUTION

TOWARDS TOTAL NATIONAL EXPORT

towards National Export

BEPZAs CONTRIBUTION

TOWARDS TOTAL NATIONAL EXPORT

YEARTOTAL EXPORT OF BANGALADESHTOTAL EXPORT OF EPZ% OF BEPZA;s CONTRIBUTION

1994-199534732286.56

1995-199638823378.68

1996-1997441846310.48

1997-1998516163612.32

1998-1999531371213.40

1999-2000575289115.49

2000-20016467106816.51

2001-20025986107718.00

2002-20036548120018.33

2003-20047603135417.80

2004-20058655154917.90

2005-200610526183617.44

Table7.7 : COUNTRY WNTERPRISES (UP TO JUNE 07)COUNTRY WNTERPRISES (UP TO JUNE 07)

SLCOUNTRYUNIT

(Nos)INVEST

(MS$)EMPLOY

(nos.)

1.S. Korea60295.25365.368

2.Bangladesh66249.80540.337

3.Japan24152.8326,377

4.China *27137.53334,742

5.USA1243.8819,633

6.UK1030.2405,485

7.Germany414.4693,002

8.Pakistan64.2416,599

9.Malaysia875.4684,526

10Taiwan948.3832,039

11.India166.9672,324

12.Panama12.7132,324

13.Denmark11.030243

14.Thailand10.513

15.Sweden16.8694,564

16.Italy216.7331,129other countries:

17.Belgium11.16618226.Australia

18.Switzerland12.0431027. Srilanka

19.Netherland312.55983328. Mouritius

20.France20.80317029. Indonesia

21.Nepal10.05030. UAE

22.Singapore23.233163

23.Canada313.258617

24.BR. Verginis.27.561692

25.Ireland10.02733

OTHERS13.5942,148

TOTAL2641132.262,01,169

China Including Hongkong

Table7.8 : Productivity Performance of EPZ WorkersProductivity Performance of EPZ WorkersProductivity Performance of EPZ Workers

During 2005-2006 the export performance of EPZ workers in textile cluster stands US$ 10147.00 per worker whereas export performance of one DTA worker in the same sector recorded US$ 4389.

Therefore , EPZ workers productivity performance is 2.3 times than the DTA workers

SectorDTAEPZ

Empl (Nos)Export US$ mExp/Empl

US$Empl (Nos)Export US$ mExp/Empl

US$

Textile Cluster18,00,000790143891627661651.59910147

Total ExportBangladesh

$10526 m100%

EPZ$1835 m17.43%

Bangladesh

$7901 m100%

RMG & knit ExportEPZ$ 1652 m20.40%

Table7.9 : PRODUCT WISE ENTERPRISES (UP TO JUNE 07)

PRODUCT WISE ENTERPRISES

(UP TO JUNE 07)

SlProductUnitInvestment. US$Employ ment

(Nos.)

1Garments58291.062112,421

2Textile28281.77421,946

3Terry Towel1638.5555,810

4Knit & Other Textile25111.43122,181

5Garments Accs32120.9487,609

6Caps640.7359,148

7Tent523.6234,856

8Elec & Electronics1652.6473,263

9Footware & Leather1252.5596,263

10.Metal Product1121.247873

11.Plastic Goods1421.433856

12.Paper product20.837124

13.Fishing Real & Golf131.480628

14.Rope26.134377

15.Service oriented industries35.440470

16.Agro product102.960132

17.Miscellaneous2229.0514,195

Gr. Total2641132.262,01,169

Table 7.10: ZONE Wise Statistics (Up to June 2007)

ZONE Wise Statistics (Up to June 2007)

EPZIndustryInvestment

(US$ in M)Export

(US$ in M)Employment (No)

In op. (No)U/impl. (No)

Chittagong

EPZ13530541.447,873.07116,984

Dhaka EPZ9123508.445,894.8674,386

Comilla

EPZ162361.9595.916,105

Mongla EPZ12223.3123.98260

Uttara EPZ03032.740.081,397

Ishwari EPZ03140.815.8647

Adamjee EPZ031911.689.691,816

Karnaphuli EPZ1191.91174

Total2641571132.2613,903.472,01,169

Table7.11 : ANNUAL ECONOMIC BENIDFIT FROM EPZs

2003-04. 2004-05 & 2005-06

ANNUAL ECONOMIC BENDFIT FROM EPZs

2003-04. 2004-05 & 2005-06

Taka in Crore

Performance2003-042004-052005-06

Export (Equ. BDT)7821.739245.8612848

particulars of ExpAmount%ExpAmount%ExpAmount%Exp

Wages4505.755445.886735.23

Rental700.89790.85920.71

Utiliti1391.781451.571721.33

Sv. Charge3214.103904.225414.21

DTA Goods216227.64235325.45333825.98

Admn. Exp2002.562522.733512.73

Telecom.600.71700.76780.60

Surplus Retained by Local investors1101.412122.292942.28

Total351244.90404543.75553943.07

CHAPTER SIX: RECOMMENDATIONS:For polices encouraging firms to operate in the EPZs the key factors are :

(a) A clear foreign investment policy regime

(b) An open door policy to attract foreign investment

(c) Restriction-free and duty free access to imported inputs and capital goods

(d) Rapid and low cost customs clearance for imports and exports

(e) A Completely liberalized foreign exchange regime

(f) Speedy response of BEPZA

(g) Minimum regulatory control of actions and transaction within the EPZ.

(h) speedy development of backward- linkage industries, especially for the RMG sector.

(i) Maintain a satisfactory law and order situation.

(j) Reduction of lead time.

Conclusion :EPZs in Bangladesh play a significant role in attracting foreign direct investment as well as in involving local investment, which jointly contribute to an overall increase in the countries volume of exports and in its earnings of foreign exchange. Foreign exchange earned through exports by EPZ enterprises reduces deficits in the country balance of payments. A part of it is converted into local currency to be spent on procurement of goods and services from the local economy. BEPZAs contribution to national export was 2.69% in 1990-91 and 17.44% 2005-2006.

The two EPZs provide employment to about 2,01,169 Bangladeshi workers. As the average family size in the country is 6 members, with only one earning member in a family, these 2,01,169 workers earn livelihood for more than 1.2 milllion people. In most cases, foreign investment in EPZs accompanied by utilisation of advanced technology and provides an opportunity for the local workforce to acquire new skills. The trained workers also help expedite transfer of technology.

Areas where EPZs have been established have become special growth centers in the economy of Bangladesh as a result of organized and fast development of infrastructure including roads, electricity gas, water supply, telecommunication, fire brigade, post office etc. The private sector around the EPZ areas have come up with support investments in shopping centers and market , transport agencies, accommodation and recreation facilities etc, which have accelerated the pace of economic activities. In addition to provision of services to the community associated with EPZs , the private sector has also sets up linkage industries nearby EPZs to cater to the needs of industries within them. Many EPZ enterprises have shifted their manufacturing processes of part of a process outside EPZ under subcontracting.

The EPZs in Bangladesh have been instrumental in creating salutary direct benefits in terms of flow of foreign investment, employment generation, export and foreign exchange earnings, and value added. Limited indirect benefits in terms of technology and skill transfer, and linkages have taken place. Most important factors affecting the success of the EPZs in Bangladesh are : (i) the existing macroeconomic policies affecting the EPZs (ii) a more or less realistic exchange rate and stable macroeconomic environment, and (iii) low-cost labor.

A critical limitation of the EPZs is that they accommodate only the light industries with no room for heavy industries, which are the main vehicles of technology and skill transfer. EPZs are essentially an incomplete package in the overall industrialization process underlining the importance of interfacing the EPZ policies with the DTA policies in order to ensure synergic co-existence and growth of ether Wipes and the Data so that they can be made mutually reinforcing in accelerating industrialization process and maximizing national benefits.

Reference :1.Guide book of European Investment in Bangladesh Bangladesh European Commission, August, 2001

2 Banglasdeh Economic Review 2006.

3. Statistical Pocket Book 2005

4. GOB (1997), The Bangladesh Export Processing Zones Authority Act, 1980 (Act No. XXXVI of 1980 as modified up to the 13thDecember 1994), Government of the Peoples. Republic of Bangladesh. Ministry of Law, Justice and Parliamentary- Affairs, B.B Press. Dhaka, (PP.1-11)

5. Hossain, Belayet (2001), Globalization and Chittagong Port: Problems and Prospects, a paper presented at a roundtable jointly organized by BIDS and Chittagong University on 27 January, Chittagong (PP.1-23).

6. Reza, S.A. L. Export Processing Zone in Bangladesh : A Profile, Dhaka, 1990

7. Mondal, Abdul Hye: The role of Export Processing Zones in the industrialization process of Bangladesh: Lessons for future.

8. Zaid, Bakht & Mondal, Abdul Hye, Debapriya Bhattacharya and Mahmood Raisul Awal (1994), An Evaluation of the Export Processing Zones in Bangladesh, Final Report, Bangladesh Institute of Development Studies,

[PP. 1-99..]

9. BEPZA (1998), Information for Investors, Bangladesh Export Processing Zones Authority, Dhaka; ( PP.87-88.)

10. Bhattacharya Debapriya (1998), Export Processing Zones in Bangladesh: Economic Impact and Social Issues, working Paper No. 80, International Labor Offices. Geneva, (PP.1-72)

11. DIDS (1997), Survey of Garment Workers, Bangladesh Institute of Development Studies, Dhaka.

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