Special Economic Zones of Bangladesh -Your Safe...
Transcript of Special Economic Zones of Bangladesh -Your Safe...
Special Economic Zones of Bangladesh-Your Safe Destination for Investment
Mohammed AyubAdditional SecretaryBangladesh Economic Zones AuthorityMonem Business District, 111, Bir UttamC.R. Dutta Road, Level 12 Karwanbazar, Dhaka-1205Bangladesh.E-mail: [email protected], [email protected]: www.beza.gov.bd
Bangladesh has embarked into an ambitious journey of industrialdevelopment and economic progress
“Vision 2021 incorporates participatory democracy and efficient and honest
governance, which, drawing upon a vibrant private sector, will transform Bangladesh into a major commercial hub through creating a competitive economic environment sustained
by a well-trained, skilled workforce”
1971Inception
2016Industrialization
2021Transformation
Need to transform Bangladesh by 2021 into a middle income country, free from economic disparity, built upon strong democratic foundations and well-governed
institutions
Bangladesh therefore possesses the key ingredients for Investment
Bangladesh
Access to Market
Macro Economic
Parameters
Strategic Location
Policy Support
Young Workforce
Low Cost of Dong
Business
Significant access to developed countries
Access to markets of neighbouring countries
Liberal FDI policy
Treaties with countries to avoid double taxation
Industry oriented policy
Demographic Dividend-Youth
Vibrant pool of talented and qualified young population
Consistent GDP growth
Increase in per capita income
Rising FDI and foreign trade
Located between India and China
Well connected to South East Asian Region
Access to Waterways
May evolve as Trade Hub
Cost of doing business is low among the developing countries and its South Asian counterparts
Economic Zones are placed to harness the potential of Industrial Development
Why Bangladesh?Macroeconomic Perspective: Growth Trend and
Outlook
❖ The Bangladesh economy continues to achieve robust real GDP growth despite the global
economic slowdown (average GDP growth for the last 5 years is 6.32 percent).
❖ Real GDP growth is expected to remain resilient in the medium term
Why Bangladesh?
Resilient Growth…..
Source: Towards New Sources of Competitiveness, Volume 1, World Bank , March 2014
Macroeconomic Perspective: Inflation Scenario
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5.5
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6.5
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7.5
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General Food Non-Food
❖ General inflation has fallen down steadily; On February 2016, average and point-to-point
inflation were 6.15 and 5.62 percent respectively;
❖ The government’s prudent fiscal and monetary management is the determining factors for this
moderate inflation.
❖ Given the lower oil and commodity prices and domestic crop outlook overall inflation will
likely to continue its decline.
Percentage distribution of working age populationby sex and age group
Why Bangladesh: Demographic perspective
Working age population: 15+: 106.3
million
of which 85.83 million
is over 65 years old
Why Bangladesh:Bangladesh has the lowest wage rate
Grade Monthly wage (USD)
Helper 70
Junior Operator 80.50
Operator 85.75
Senior Operator 91
High Skilled 140
Why Bangladesh: Bangladesh is the lowest utility tariff rates provider
Utilities Rate (USD)
Electricity 0.107/Kwh
Water 0.325/CM
Gas 0.095/CM
Why Bangladesh: Social perspective
✓ Main provisions are:
✓ EZ Workers Welfare Fund will be created for the workers.
✓ The fund will be created from the grant or subscription of the investors, development partners, government grants etc.
✓ Contribution by the investors will be based on the number of workers.
✓ There shall be counselors for grievance handling, compliance monitoring and building of awareness among the EZ workers.
✓ There shall be conciliator for dispute settlement.
✓ Disputes shall be resolved through arbitration.
✓ Skill development initiative will be taken under the fund.
✓ There shall be a separate bank account for the fund.
BEZA: Committed to Industrial Development
BEZA Created through BEZA Act 2010
Responsible for and devoted to organized industrial development in Bangladesh
Facilitates private sector participation
Fosters industrialization to promote growth in
domestic industrialization, foreign trade, employment generation and improving socio-
economic status
Objectives of BEZA
BEZA was established by the Bangladesh Economic Zones Act 2010 withbroad the objective of structural transformation of the economy ofBangladesh through:
Attracting FDI
Developing and diversifying export
Promoting skill, Sharing knowledge and
Generating employment
Ensuring dynamic economic benefits for the domestic industry
Social and Environmental sustainability
Our Mission
Develop 100 EZs inthe next 15 years
Create 10 million employment
Foster industrialization by increasing additional
export of USD 40 billion per year
Reasons for regime transition
Export Processing Zone Economic Zone
Static
(attracting investment and generating
employment)
Dynamic
(structural transformation of the
economy, diversification, upgradation,
knowledge sharing, skill
development, R & D)
Labor-intensive Investment-intensive
Incentive-driven Service-driven
Management-driven
Exploitative Enclave Integrated Development Tool
Limited spillover effect Wider spillover effect
Potential benefits of economic zones (WB)
Direct benefits Indirect benefits
Foreign exchange earnings
FDI
Employment generation
Government revenue
Export growth
Skill upgrading
Technology transfer
Demonstration effect
Export diversification
Enhancing trade efficiency of
domestic firms
BEZA activities at a glance
Total approved EZs 79
Total planned land for 79 zones ( acres) 79019
Land owned by BEZA (Acres) 31199
Number of approved Private EZs 23
Pre-qualification License awarded to Private EZs 11
PPP License awarded (Mongla and Mirsarai-1st Phase) 02
Private EZ license 06
Number of EZs under Development 15
Total direct investment by Developer (US$ Million) 904
Total number of Jobs created 7781
The Regulatory Framework
Act (Establishment scheme of economic zone)
• The Bangladesh Economic Zones Act, 2010
• One Stop Services Act 2018.
Policy (regarding development, operation, management and control
of private economic zones)
• Bangladesh Private Economic Zones Policy, 2014.
Rules (Qualification of developers, developer’s right and obligation
cancellation of EZ license, etc.)
• Bangladesh Economic Zones (Appointment of
Developer, etc.) Rules, 2014
• Bangladesh Economic Zones (the Procedure of Appointment of
Developer) Rules 2016
• EZ construction and building guidelines
Guidelines• Bangladesh Economic Zones Development Guidelines (draft)
Statutory Regulatory Orders for incentives
Different implementation models of BEZA to deliver on its targetand integration of private sector and FDI
Economic Zones
Private Economic
Zones
Government
Economic Zones
Special Economic
Zones
Established through public and private partnership (PPP)
by local or foreign individuals, body or organizations
Established individually or jointly by local, non-resident
Bangladesh or foreign investors, body, business
organizations or groups
Established and owned by the Government
Established privately or by public-private partnership
(PPP) or by the Government initiative, for establishment
of any kind of specialized industry or commercial
organization
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4
Private sector can participate as developer
&/or unit investor
Private sector owned economic zones
Private sector can participate as unit investor
Private sector can participate as developer
&/or unit investor
G to G Economic
Zones
5To be undertaken at Government to Government Level
Private sector can participate as developer
&/or unit investor
6 Government
Enterprises Economic
Zones
On model of BEPZA, where a government entity may act
as developer
Private sector can participate as unit investor
European investors can participate via PPP route or Private economic zone development or G2G initiatives of zone development
Fiscal Incentives For Developers
Income Tax exemption 12 years: First 10 years 100%, 11th year 70%, 12th year 30%
Exemption from custom duty on all imports for development of economic zone
Exemption from stamp duty and registration fees for land registration for the first time
Exemption of stamp duty and registration fees of loan/credit document
Exemption from tax on dividend income for 10 years
BEZs are Regionally Competitive…
Ince
nti
ves
for
Un
it
Inve
sto
rsTax Holiday for 10 years
Duty free import of raw materials
Exemption form dividend tax
Full Repatriation of capital and dividend
No ceiling of FDI
100% Backward linkage raw-materials and accessories to sell for EOI in DTA
20% sale of finished product to DTA by EPA
Ince
nti
ves
for
Un
it
Inve
sto
rsSub-contracting with DTA allowed
Exemption of stamp duty and registration fees
Exemption of VAT on all utility services
Duty exemption on export
Exemption of Custom Duty for import of vehicles
Exemption of double taxation subject to Double taxation agreement
Exemption of Salary income from IT for expatriates
Ince
nti
ves
for
Un
it
Inve
sto
rsConsider Economic Zone as custom bonded area
Foreign loan is allowed in compliance with existing laws
FC Account for non-residents
FC Account for both local and joint venture industry
Foreign investors to be free to inter into JV
Tax exemption on capital gains from transfer of shares
Provision of transfer of shares by foreign shareholders to local shareholders and investors
Incentives for Unit Investors
Issuance of work permits to foreigners is allowed up to 5% of total officers/employees of an industrial Unit.
Re-investment of remittable dividend to be treated as new foreign investment.
Resident visa for investment of US$ 75,000 or more.
Citizenship for investment of US$ 500,000 or more.
Non-Fiscal Incentives
100% foreign ownership permissible
• No ceiling on foreign investment
• Full repatriation of capital and dividend
Foreign currency loan allowed in compliance with
existing laws
• Hold nonresident foreign currency deposit account
• EZs will enjoy MFN status
Sub-contracting with Domestic Tariff Area
allowed
• Transfer of shares of foreign shareholders allowed
• 50 years land lease period with scope of extension
Potential Sectors For Investment In Economic Zones
Shipbuilding & Ship Repairing, Steel Rerolling Plants
Leather Goods
Light Engineering & Auto Parts
Power
PharmaceuticalsTelecommunication
IT-enabled services
Large-scale Export Oriented RMG
LNG Terminal & Petro-Chemical Plants
Jute and
Jute-based product
Agro-Processing including Fish
Processing & Cold Chain