Do you think establishing the special economic Zones will help increase private sector investment in Bangladesh’? Discuss.

Special economic zone (SEZ)

A special economic zone (SEZ) is an area in which business and trade laws are different from the rest of the country. SEZS are located within a country's national borders, and their aims include: increased trade, increased investment. job creation and effective administration. To encourage (সাহস দেওয়া) businesses to set up in the zone, financial policies are introduced. These policies typically regard investing, taxation, trading, quotas, customs and labour regulations. Additionally (অতিরিক্তরূপে), companies may be offered tax holidays, where upon establishing in a zone they are granted a period of lower taxation. 

Economic zones & Bangladesh

The Government of Bangladesh, with a view to encouraging rapid economic development through increased industrial activity and creation of employment opportunities for the people of Bangladesh, is establishing multi-sectoral Economic Zones (EPZ). The Government of Bangladesh has enacted the Bangladesh Economic Zones Act of 2010 with the aim of promoting Economic Zones in the Private sector, Government led EZS or in a combination. The government is planning to set up a total of 100 special economic zones in different parts of the country by the year 2030 in a bid to fetch more foreign investment and generate large-scale employment for the country's vast pool of workers. The economic zones will be set up on 75,000 acres of land under the supervision of Bangladesh Economic Zones Authority (BEZA). Of the proposed 100 economic zones, projects for 22 economic zones have already got approval with two in the private sector.

With establishment of the proposed 100 special economic zones, Bangladesh will be able to attract huge foreign investment and encourage local entrepreneurs to pour fresh funds in new industries. The government is creating investment-friendly economic zones linking Bangladesh with the free market economy and liberalise trade. It wants private entrepreneurs to get opportunities and to establish and profitably run industrial enterprises. A Bangladesh Economic Zones Authority (BEZA) report shows that the contribution of the industrial sector to the country's economy is on the rise During 1971- 80, the contribution of the sector to GDP was 11 per cent. It has increased to 30 per cent in FY 2015-16. Manufacturing sectors like textile and apparel, leather, food and beverage, and pharmaceuticals have contributed to building a vibrant industrial economy Bangladesh has a lot of low-cost, well-educated, highly adaptive and industrious workforce, which has been proven by its remarkable success in the readymade garments (RMG) manufacturing and export sector. Compared with its neighbours, Bangladesh's energy prices are much cheaper.

Three categories of economic zones:

The government has chosen three categories of economic zones.

Private economic zones will be set up through a public-private partnership by foreign or local individuals, individually or jointly by local or non-resident Bangladeshis or foreign investors, a body, business organisation or group.

Government economic zones will be established and owned by the government. Special economic zones will be established by a public-private partnership or by government initiatives for the establishment of any kind of specialized industry or commercial organisation

Incentives for zones

The location of the economic zones has to be strategically feasible, which includes regional an affordable labour force and backward linkage opportunities. The incentives must be competitive.

According to the BEZA report, the government intends to provide the same fiscal and financial incentives to industrial units as those provided to the industrial units under the Bangladesh Export Processing Zones Authority Act, 1980, and the Bangladesh Private Export Processing Zone Act. 1996. BEZA wants private sector entrepreneurs to take the land from them and do business. BEZA's 99 percent concentration is on the private sector, said the executive chairman of BEZA. The government has already planned to give certain facilities to Foreign Direct Investment (FDI). including uninterrupted gas and electricity supply.

According to BEZA's vision document, other than infrastructure, BEZA will provide multiple incentives to the developer of an economic zone and investors in a particular industrial unit. These will include fiscal benefits, such as tax exemption, customs/excise duties, and non-fiscal incentives, such as no FDI ceiling, work permits and citizenship.

The BEZA vision also expresses incentive package information for both developers and unit investors. For developers, income tax will be exempted for 12 years. For unit investors, income tax will be exempted for 10 years.