The Review of Industrial Policies in Bangladesh from 1971 - 2014. The Main Points of this assignment is The Review of Industrial Policies in Bangladesh from 1971 - 2014. The Review of Industrial Policies in Bangladesh from 1971 - 2 Industrialization is an essential pre -requisite for rapid and sustained economic development and social progress. Modernization and structural transformation of the economy and diversification of the economic base and standard of living of the people are the universally recognized dynamic benefits arising from industrial development. Industrialization is thus pursued as an overriding development objective in its own right. In the past, efforts towards industrialization in Bangladesh were made under changing economic paradigm and political economy regimes. Since independence in 1971, a total of ten industrial policies have been formulated and adopted for industrial development of Bangladesh. Concept of Industrial Policy. The policy contents of industrial policy are now getting wider and wider. While the traditional role of industrial policy. to influence the allocation of resources to industry, i.e., policies that affect the infrastructure of industry in general, such as the provision of industrial sites, roads, ports, and electric power, to regulate the internal organization of particular industries, such as industrial restructuring, consolidation of firms, and output restrictions, and To influence the growth of small and medium scale enterprises (SMEs), etc. remains as before, industrial policies are now directed at achieving on-economic goals. Main Theme of Industrial Policy In Bangladesh It has been 43 years since Bangladesh’s independent. Since then the country has formulated ten industrial policies. The country till now has gone through 10 policies: Importance of Industrial Policies in Bangladesh The key to poverty alleviation lies in the generation of productive employment through rapid economic growth and structural transformation of the economy away from agriculture and toward industry. While the slow growth of the manufacturing sector may be attributed to factors like energy shortage, reduced availability of bank credit, poor inflow of foreign direct investment (FDI) labor unrest, and poor law and order conditions no less responsible are the inconsistent policies. The market failure approach makes public policy to focus basically on supplying lacking inputs: physical capital, skills, technology, etc. While this is an important policy area, developing countries also tend to suffer from a lack of demand for such inputs. Market failures are not always easy to locate except in the most obvious situations (namely, education, infrastructure, etc.) and, when they can be located, their seriousness may not be apparent. There is what amounts to a “private sector failure”, when a firm’s goal

1. The Review of Industrial Policies
in Bangladesh from 1971 - 2014

2. Submitted to-
Dr. Abul Kashem Mohammad Jamal Uddin
Professor
Department of Sociology,
University of Dhaka.
Date of Submission: July 15, 2014.

3. Name s Roll
Md. Hasanul Banna Roll No.303
Submitted By
3rd Semester,7th Batch.
Dept. of Sociology
University of Dhaka.

4. Industrialization is an essential pre -requisite for rapid and sustained
economic development and social progress.
Modernization and structural transformation of the economy and
diversification of the economic base and standard of living of the people
are the universally recognized dynamic benefits arising from industrial
development.
Industrialization is thus pursued as an overriding development objective in its
own right.
In the past, efforts towards industrialization in Bangladesh were made under
changing economic paradigm and political economy regimes. Since independence
in 1971, a total of ten industrial policies have been formulated and adopted
for industrial development of Bangladesh.

5. Concept of Industrial
Policy.

6. The term "industrial policy" is very comprehensive and often misleading it covers a wide range
of options and instruments falling under the domain of trade, fiscal, monetary and exchange
rate policies.
It may include direct regulatory policies like investment sanctioning, import licensing and
exchange controls, and allocation of areas of activities for private and public investment.
It may also include indirect economic policies and instruments such as tariffs and quantitative
restrictions, several activities like construction, hospital and clinics, hotels and tourism,
technology-base.
The term 'industry' in the phrase industrial policy was generally understood to mean
manufacturing it did not include agriculture construction, services, or transportation.

7. The policy contents of industrial policy are now getting wider and wider. While the
traditional role of industrial policy.
 to influence the allocation of resources to industry, i.e., policies that affect the
infrastructure of industry in general, such as the provision of industrial sites, roads,
ports, and electric power,
 to regulate the internal organization of particular industries, such as industrial
restructuring, consolidation of firms, and output restrictions, and
 To influence the growth of small and medium scale enterprises (SMEs), etc. remains
as before, industrial policies are now directed at achieving on-economic goals.

8. Main Theme of Industrial Policy In
Bangladesh
It has been 43 years since Bangladesh’s independent. Since then the
country has formulated ten industrial policies.

9. The country till now has gone through 10
policies: Industrial Investment Policy, 1973.
New Industrial Investment Policy, 1974.
Revised Investment Policy, December 1975.
New Industrial Policy (NIP), June 1982.
Revised Industrial Policy (RIP), July 1986.
Industrial Policy, July 1991.
Industrial Policy, 1999.
Industrial Policy 2005 (IP 2005).
Industrial Policy 2009
Industrial Policy 2010

10. Sl
No.
Name of the
Policy
Timeline The Key Focus of the Policy
1 Industrial
Investment
Policy
January,
1973
Nationalization of all medium and large scale industrial policies
2 New Industrial
Investment
Policy
July, 1974 Encouraging private sector activity in manufacturing, and
reducing, through disinvestment, the dominant role of the public
sector
3 Revised
Investment
Policy
December,
1975
Focus on a private sector-led growth. The period witnessed large
scale denationalization of industrial enterprises, and private
sector investment began to pick up with liberal credit policies
and generous lending by commercial hanks and DFIs. Boosting up
export sector
4 New Industrial
Policy (NIP)
June, 1982 Stimulate industrial development through the private sector and
to that end it made fundamental changes in the industrial policy
environment and promotional instruments. Large scale
denationalization

11. Sl
No.
Name of
the Policy
Timeli
ne
The Key Focus of the Policy
6 Industrial
Policy
July,
1991
The whole industrial policy was premised on the philosophy of
market-based competitive economy.
7 Industrial
Policy
1999 the first ever policy that had a true vision of industrial
development, and the objectives outlined in the policy
statement had a clear sense of direction. Its major objective
was to have, within a decade, sizable industrial sector where
manufacturing would account for at least 25% of GDP and 20% of
the employed workforce.
8 Industrial
Policy (IP
2005)
March,
2005
The policy envisages that in the next one decade the
manufacturing sector will account for about 30 to 35 percent of
GDP and about 30 percent of employed workforce. More focus
on the SMEs

12. 9 Industri
al
Policy
2009 the prime objectives of this Policy will be to give clear
signal to the private sector highlighting government’s
commitment to private sector led industrialization
strategy.
10 Industri
al
Policy
2010 and hunger to less than a half by 2017 through the adoption
of short-, medium-and long-term programmes that help
build a modern and vibrant industrial sector.
Sl
No.
Name
of the
Policy
Timeline The Key Focus of the Policy

13. Importance of Industrial
Policies in Bangladesh

14. 1. It is ninth most populous country of the world but, in terms of income and
standard of living, it is among the poorest in the world.
2. Based on the United Nations criteria of per capita income, contribution of
manufacturing activity to GDP, and the rate of literacy, Bangladesh is
categorized as a "least developed country". Per capita income in the country
is about $445, and nearly a half of the population is below the poverty line.
3. The economy is dependent mainly on agriculture, which accounts for 22
percent of GDP but provides employment to as much as 52 percent of the
country's labor force.
4. The country's population and labor force are growing rapidly every year, and it
is impossible that the growing labor force can ever be absorbed in the
agriculture sector.
5. Industrial policy can be of great significance to these countries as means of
achieving faster economic growth, creation of productive employment and
alleviation of poverty.
6. Industrial growth and Improve the long-term performance of the economy in
terms of productivity, employment, and international competitiveness.

15. 7. The key to poverty alleviation lies in the generation of productive employment
through rapid economic growth and structural transformation of the economy away
from agriculture and toward industry.
8. While the slow growth of the manufacturing sector may be attributed to factors like
energy shortage, reduced availability of bank credit, poor inflow of foreign direct
investment (FDI) labor unrest, and poor law and order conditions no less responsible
are the inconsistent policies.
9. The market failure approach makes public policy to focus basically on supplying
lacking inputs: physical capital, skills, technology, etc. While this is an important
policy area, developing countries also tend to suffer from a lack of demand for such
inputs.
10. Market failures are not always easy to locate except in the most obvious situations
(namely, education, infrastructure, etc.) and, when they can be located, their
seriousness may not be apparent.
11. There is what amounts to a “private sector failure”, when a firm’s goal of making
profits (or raising share value) conflicts with national development. It may make
good commercial sense for a private firm to pull out of one country and move to
another that offers.

16. Different size categories of
industries are defined in the
following manner:

17. Diagram of Categories of Industries
Cottage
Industry
6
Micro
Industry
5
Reserved
Industry
4
Small
Industry
3
Medium
Industry
2
Large
Industry
1

18. Large Industry
 In the case of manufacturing activity, large industry will include enterprises
with either the value (replacement cost) of fixed assets excluding land and
building in excess of Tk. 200 million or enterprises having more than 150
workers.
 In the case of non-manufacturing industrial activities, large industry will
include enterprises with either the value (replacement cost) of fixed
assets excluding land and building in excess of Tk. 100 million or enterprises
having more than 50 workers.

19. Medium Industry
 In the case of manufacturing activity, medium industry will include
enterprises with either the value (replacement cost) of fixed assets
excluding land and building in the range of Tk 15 million to Tk. 200 million or
enterprises having between 50 and150 workers.
 In the case of non-manufacturing industrial activity, medium industry
will include enterprises with either the value (replacement cost) of
fixed assets excluding land and building in the range of Tk 5 million to Tk.
100 million or enterprises having between 25 and 50 workers.

20. Reserved Industry
Small Industry
 Industries that are kept reserved for public investment due to national
security or other reasons have been termed as reserved industries.
 In the case of manufacturing activity, small industry will include enterprises
with either the value (replacement cost) of fixed assets excluding land and
building in the range of Tk 0.5 million to Tk. 15 million or enterprises having
between 10 and 50 workers.
 In the case of non-manufacturing industrial activity, small industry will
include enterprises with either the value (replacement cost) of fixed assets
excluding land and building in the range of Tk 0.5 million to Tk. 5 million or
enterprises having between 10 and 25 workers.

21. Micro Industry
 Micro industries with predominance of family labor will be defined as
cottage industries
Cottage Industry
 Micro industry will include industrial enterprises with either the value
(replacement cost) of fixed assets excluding land and building of up to Tk 0.5
million or enterprises having 10 or fewer workers.

22. Urban and Rural Industrialization
in Bangladesh
Major Problems Faced by Industries in Rural and Urban Bangladesh

23. Inadequate
infrastructure
facilities
(power, water
& gas):
Poor access to
credit
Lack of
efficient
distribution
channels
Imperfect
market
Lack of
governance
Tax structure
Lack of
connectivity
Lack of proper
business
knowledge
Corruption
Poor law and
order
situation
Frequent
policy changes
Bureaucratic
hassle
Political
instability

24. Trend of Urban Sector’s Contribution to GDP in Bangladesh during 1972-
73 to 2000-01.
Source: Bangladesh Bureau of Statistics (1993), UN World Urbanization
Prospects (2000) and Bangladesh PopulationCensus,2001

25. Evolution of Industrial Policy in
Bangladesh

26. Industrial
Investment
Policy, 1973
New Industrial
Investment
Policy, 1974
Revised
Investment
Policy,
December 1975
New Industrial
Policy (NIP),
June 1982
Revised
industrial
policy (RIP),
July 1986
Industrial
policy, July
1991
Industrial
policy 2005
(IP 2005)
Industrial
policy 2009
National
Industrial
Policy 2010Evolution of Industrial Policies in Bangladesh from 1971 – 2014.

27. Industrial Investment Policy, 1973
The rationale behind such strategy can be adduced to the following
three principal factors.
1. It was embraced by a host of other countries of the world during the
time Bangladesh emerged as an independent state,
2. There was pervasive presence of IS industries in the economy that
needed to be highly protected-a legacy of the pre-independence era
and
3. The spectra of "export-pessimism" shook many of the then LDCs,
including, Bangladesh.

28. New Industrial Investment Policy, 1974
Identifying the problems in the previous policy a number of steps were
taken up by the then government mostly, to lure private investors:
 Enhancement of the investment ceiling from Tk. 2.5 million to Tk. 30 million
(and later to Tk. 100 million).
 Provisions for monetary incentives to allow more corridors to the enhancement
of a moratorium for nationalization for up to 15 years.
 Provisions for tax holidays for less-developed areas.
 Devaluation of currency by a substantial margin (perhaps largest in the history of
Bangladesh).
 The number of industries reserved for the public sector was reduced to18.
 Fiscal and monetary incentives were expanded to stimulate private investment.

29. Revised Investment Policy, December 1975
Few of the changes of that time were as follows:
 Elimination of ceiling on private investment on oil.
 Relaxation of investment sanctioning procedures.
 Amendment of the constitution to allow denationalization.
 Reviving the stock market.
 Shifting from tile fixed rate system of the 1970s to a 'managed'
system of floating exchange rate.

30. New Industrial Policy (NIP), June 1982
The principal objective of the NIP, as documented were to:
 Emphasizes export oriented growth with necessitated substantial
changes in the regime of trade and industrial incentive structure with
prominence placed on export diversification and import liberalization
 Assign the private sector be pivotal role to play in rapid industrialization
of the country.
 Down-size the role of tile public sector to a substantial extent by
specifying its areas of existence to a limited number of restricted areas.
 Rationalize the tariff structure and pursue appropriate fiscal measures
(Ministry of Industry 1986).

31. Revised industrial policy (RIP), July 1986
In keeping with the government's policy of balanced regional
development the country's geographical area was divided into three
categories:
 Developed Areas, where adequate infrastructure exists and sufficient
industrialization has taken place,
 Less Developed Areas, where infrastructure has been partially developed and
some industrialization has taken place, and
 Least Developed Areas, where neither infrastructure has been developed nor any
industrialization has taken place.

32. Industrial policy, July 1991
The whole industrial policy was premised on the philosophy of a market-based
competitive economy. A number of relatively more positive and biting policy
initiatives were undertaken to lure foreign and domestic investors:
 elimination of concessionary interest rated and special credit facilities,
 deletion of any requirement of permission to set up industries,
 removal of restrictive provisions for equity participation by foreigners.
The number of industries reserved for only public sector investment was reduced to 5 from 7
of the previous policy.

33. Industrial policy, 1999
The Industrial Policy, 1999 was perhaps the most comprehensive
policy, which sought to give the private sector a dominant role :
 Focus the role of the government as a facilitator in creating an enabling
environment for expanding private investment.
 Attract FDI in both export- and domestic market-oriented industries give
the industrial sector a dominant export Orientation.
 Encourage the competitive strength of import substituting industries for
catering to a growing domestic market.
 Encourage a balanced industrial development and regional dispersal of
industries throughout the country by introducing suitable measures and
Incentives.
 Develop indigenous technology and to expand production based on domestic
raw materials.
 Rehabilitate deserving sick industries.

34. Industrial policy 2005 (IP 2005)
The latest industrial policy was announced in March 2005.
The major objectives and strategies of IP 2005 are more or less similar
to those of the 1999 policy,
The policy envisages that in the next one decade themanufacturing
sector will account for about 30 to 35 percent of GDP and about 30
percent of employed workforce.

35. Industrial policy 2009
 The overall objective of the Industrial Policy 2009 will be to provide a
policy and institutional framework that will create and sustain a
momentum of accelerated economic growth through industrialization in line
with the vision laid out earlier.
 The Policy will aim at creating a highly positive proactive and enabling
environment in which private investors can operate without unnecessary
bottlenecks, delays and interference.
 The Industrial Policy 2009 will attempt to rationalize the existing incentives
structure for attracting higher levels of private investment in areas of
dynamic comparative advantage in the economy.

36. National Industrial Policy 2010
 industrial Policy-2010 aims at achieving the Millennial Development Goals
(MDGs) and, above all, reducing unemployment and the proportion of the
population afflicted by poverty and hunger to less than a half by 2017
through the adoption of short-, medium-and long-term programmes that help
build a modern and vibrant industrial sector.
 Achieving the recently-announced Digital Bangladesh goal by 2021, and
creating employment opportunity for at least one person from each
household in order to reduce poverty and unemployment loom large
among the central policy objectives of the government.

37. Major Structural Constraints that Hinder
Industrial Growth

38.  Limited access to credit, its high cost, legal or illegal, and procedural difficulties in
obtaining credit from banks.
 Poor- physical infrastructure
 Acute energy shortage and Unreliable supply of power and other utilities such as gas and
water.
 Lack or skilled labor and the tendency for labor to be militant.
 Competition from dumped and smuggled imports.
 Lack of' g good marketing facilities.
 Pervasive corruption in bureaucracy, particularly in the administration responsible for
delivery of public services.
 A fragile political situation.
 Poor law and order conditions.
 Insecurity of life and property.
 Growing incidences of crime and extortion at every stage starting from production to
distribution and marketing, of the products.

39. Thanks All Of You.