- Export Processing Zones (EPZs) are special economic zones in Bangladesh that are used exclusively for producing goods for export. They are established by the government to boost exports, foreign investment, employment, and industrialization.
- There are currently 8 government-run EPZs and 2 privately run EPZs in Bangladesh. EPZs provide tax incentives and facilities to attract foreign companies to set up factories.
- EPZs have contributed to Bangladesh's economy by increasing exports, investments, employment opportunities, and technology transfers over the years. However, their overall contribution remains modest compared to the national economy. The government continues working to improve EPZ programs and policies.
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Role of Export Processing Zones in Bangladesh's Economy
1. Export Processing Zone : Their Role,
Contribution, Functions in the Economy
MD. JAKIR HUSSAIN (220205001)
ARFAN MAJUMDER (220205005)
SM FARHAN ABRAR (220205013)
2. Introduction
Since independence Bangladesh has made remarkable progress in
diversified areas of social, political, cultural and economic life of its citizens.
In order to boost up economic development of the country, a number of
steps have also 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 instituted 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.
3. What is EPZ ?
EPZ means “Export Processing Zone”. These are generally known as Foreign Trade Zone.
The foreign trade zone of Bangladesh are known as Export Processing Zone or EPZ.
The concept of EPZ will be clearer by the following important definitions:
World Bank says “An Export Processing Zone is defined as a territorial or economic
enclave in which goods may be imported and manufactured and reshipped with a
reduction in duties or minimal intervention by custom officials.”
Rudy Meak says “Export Processing Zones denote a phenomenon whereby countries set
up through legislation industrial sites which permit the duty free import of raw materials
for the assembly and manufacture of goods which are primarily destined for export.”
4. Why EPZs are established
Bangladesh is a developing country with a huge population. So, there is
unemployment problem. Besides, the import is more than the export of
the country. Since there is a lack of capital in the country a radical increase
in the industrialization and export it is very difficult. Rapid industrialization
and huge increase in export can be done fast only through Foreign Direct
Investment (FDI) in Bangladesh. Many developing countries have turned
into developed through this way.
5. Characteristics of Export Processing
Zone
It is a specialized zone or region used only for producing exportable items.
The factories or industrial units in the EPZ are mostly foreign investment.
EPZ is formed by the government to increase the exporting earnings, foreign
investment and advanced technology in the country.
All the machineries and building instruments in due EPZ are imported.
The raw materials used for production are imported.
The assembling of the final product parts is also constituted in the EPZ.
The government provides the land, building and warehouse at a very low
rent. Besides, they are provided with facilities like electricity, gas,
telecommunication, rail, cars, ship, airport etc
6. Objective of EPZ
Rapid industrialization in the country.
Increasing export earnings.
Expanding the use of advanced technology.
Enhancing the employment rate and thus improving the standard of
living.
Broadening the scope of foreign direct investment.
Establishing the assembling industry.
Attracting the investment of immigrants to the domestic market.
Creating the proper use of human and the non-human resources of the
country.
7. Increasing reputation and demand of the Bangladeshi products in the
foreign countries.
Arrangement of more foreign exchange.
Increasing the labor and management skills of the people of the country.
Bringing an infrastructure development to the entire country.
Improving the strong relation with other countries.
Joining to the globalize international market to get the advanced
marketing facilities and to achieve the great commercial benefit
8. Types of EPZ in Bangladesh
Three types of investors set up their factories in EPZs. These are:
Type - A : 100% foreign owned including Bangladesh nationals ordinarily
resident abroad.
Type - B : Joint venture between foreign and Bangladesh entrepreneurs
resident in Bangladesh.
Type - C : 100% Bangladesh entrepreneurs resident in Bangladesh.
9. History of EPZ in Bangladesh
Bangladesh Export Processing Zones Authority or BEPZA, Bangladesh’s first
official exporting body, was established in 1980 to create, develop, and
manage industrial zones, such as EPZs, and to attract foreign investment to
help boost the country’s industrialization, exports, and employment. The
journey of EPZ in Bangladesh started in 1983 with the establishment of the first
EPZ in Patenga, Chittagong on the basis of a law enacted by the Parliament in
1980. Bangladesh currently has two export processing zones in Chittagong,
one in Dhaka, Narayanganj, Nilphamari, Cumilla, Pabna and Bagerhat, making
a total of 8 such zones. Besides, it has been decided to build three more EPZs
at Gaibandha, Jessore and Patuakhali, where land acquisition is already
underway. Besides EPZ, there is also an economic zone at Mirsarai in
Chittagong under BEPZA. According to BEPZA, the total investment in EPZs in
Bangladesh till 2020 was more than 5.2 billion.The total investment in EPZs in
Bangladesh was more than 5.2 billion till 2020.
10. Content of Bangladesh EPZ Both Govt.
and Private
There are basically 8 EPZs under Govt. involvement in
Bangladesh.
List of these EPZ in Bangladesh:
1. Chittagong Export Processing Zone (CEPZ)
2. Dhaka Export Processing Zone (DEPZ)
3. Mongla Export Processing Zone
4. Comilla Export Processing Zone
5. Ishwardi Export Processing Zone
6. Uttara Export Processing Zone
7. Adamjee Export Processing Zone
8. Karnaphuli Export Processing Zone
11. There are 2 EPZs under Private involvement in Bangladesh.
List of these EPZ in Bangladesh :
1. REPZ : The first Private EPZ of Bangladesh established in 10th
October, 1999.
2. KEPZ : The second Private EPZ of Bangladesh established in 30th
October, 1999 with 2600 acres of land.
12. Scenario of Different EPZ’S In
Bangladesh
Overall investments of all EPZ in since 2009-10 to 2020-21 fiscal year
Since 2009-10 Fiscal Year to 2020-2021 Fiscal Year investment has
increased positively in BEPZA. The table picture of cumulative investment
has been mentioned here-
13. Employment
Absorption of huge workforce in the export driven labor intensive
manufacturing sectors of EPZs have facilitated rapid industrialization
process and accelerated the real economic growth. Employment pattern of
EPZ in Bangladesh proved it. Year wise local employment are-
18. Major Findings Of the Study
Management and monitoring of EPZs in the country lie with the Bangladesh Export
Processing Zones Authority (BEPZA). Government functions in EPZs include creation of
infrastructure (buildings, utilities, warehouses, roads etc), processing applications for
setting up industries, allotment of land or building space, provision of space to local and
foreign banks, insurance companies, clearing and forwarding houses, courier services,
post offices etc. The government also provides financial help and support to investors,
ensures smooth manufacturing and commercial operation of the firms, and remains
vigilant about labour management relations within EPZ.
The government however, sees EPZ as a place to invest in its establishment and
functioning and then recover costs from it directly. The main source of funds for
government investment in EPZ comes as loans.
A part of capital investment in EPZ comes as depreciation of fixed assets located within
it. About 40% of government's investment in EPZ is made in non-income generating
heads. The tariff rates for physical facilities (land, buildings etc.) and utilities provided in
EPZs are not fixed with objectives of cost recovery. They are rather aligned with rates
applicable in EPZs of neighbouring countries
19. Recommendations
For the development of EPZ units a major preferential treatment is essential by granting them the
Government policy approbation in the form of fiscal and non-fiscal incentives.
For different kind of zones there should have been separate specific rules & regulations in regard to
Customs, Income Tax, Foreign exchange, VI SA/Landing permit etc.
EPZs alone will not encourage entrepreneurial activity, fuller reforms are necessary.
EPZs should be emphasized enough to exercise regulatory functions and to act as an independent
regulatory body.
The BEPZA should run awareness campaigns in order to ensure investors and other key stakeholders in
the EPZ industry understand the national and global development linkage of the EPZ programs.
Value-added changes should be made, where necessary, and the long-frame adapted to contribute to
improving EPZ programmes over time.
The BEPZA should device a strategic approach for collaborating with other key partners on land-related
matters so as to achieve efficiency in the process of allocating land rights. Key stakeholders in this regard
include the Ministry of Lands, Ministry of Water and National Environmental Management Commission.
20. A clear foreign investment policy regime should be created and an
implementing open door policy to attract foreign investment.
Rapid and low cost customs clearance for imports and exports should be
implementing.
Govt should try to implement the instructions given by European Union in
this regard.
Govt. should also provide health & safety measures properly for the EPZ
workers.
Precautionary measures should be taken to avoid unexpected dangers.
21. Conclusion
Even though in Bangladesh industrial development and export
promotions strategy , the EPZs have drawn special attention, their
contribution to the national economy in terms of investment, employment
and exports earnings remains modest . However, since the 1990s, with
favorable changes in policies, EPZ firms have demonstrated enhanced
dynamism in comparison to the rest of the economy . Bangladesh has
eight operating EPZs. Although public involvement, EPZs are still way
behind in introducing the adulterate technology such as internet banking
but overall the progress of EPZs in the country is satisfactory.