Bangladesh Economic Zones Authority (BEZA) has, of late, come up with various incentives to attract local and foreign investors to economic zones, which are being developed in the country under four types of arrangements.
The BEZA, that had started its journey in 2010 with a view to facilitating industrialisation for job creation, increased exports and advancement of the economy, has taken the belated move in order to boost the country's exports.
The types of arrangements under which the government seeks to boost the country's industrialisation process are - by the government itself, under public-private partnership arrangement, by private sector players, and under government-to-government contracts.
Under the package, economic zone developers will enjoy ten-year tax holiday, duty-free import benefit and exemption from land registration fees, stamp duty and local government taxes. And investors in the industrial enclaves will enjoy full tax holiday for the first three years of the operation of their projects.
Investors are set to enjoy reduced tax breaks for the remaining seven years and the benefit will be reduced by 10 percentage points every year until the tenth year. Companies setting up factories inside the economic zones will avail duty-free import of raw materials and bonded warehouse benefits to make products for both domestic and international markets, say the reports.
Added to this, firms will get 50 per cent discount on land registration fee, stamp duty and local government taxes. Investors will enjoy tax exemption on royalty and dividend payment, while their foreign employees will avail 50 per cent off on income taxes.
In addition, there will be no bar on repatriation of capital and profit as well as foreign exchange. Above all, electricity, gas and other connections will be easier to get in the economic zones. Factories that were in operation prior to issuance of licence for economic zones will not be able to avail the incentives.
The economic zones will be under the BEZA. So companies will have to be compliant. This will be instrumental for them to get the market for their products. This is another reason for many firms to show interest.
Bangladesh's economy is now experiencing remarkable growth which has been facilitated by political and macroeconomic stability. The government envisages higher rate of growth and improved employment by creating a more liberalised trade and investment environment, thereby attracting large-scale foreign investment.
Issues related to availability of land, high taxation rates, combined with administrative and logistical hurdles have always stood in the way of attracting investment. The BEZA will single-handedly deal with all these matters to remove the hurdles
What is encouraging is that a rising number of entrepreneurs are joining the queue to establish private economic zones, encouraged by tax breaks and a host of other benefits offered by the government. About 43 entrepreneurs have so far applied to the BEZA for licences to set up economic enclaves on their own land.
The Authority awarded the final licences to six and pre-qualification licences to 17 applicants so far. The remaining 20 applicants are awaiting approval from the BEZA governing board headed by the Prime Minister.
The BEZA list of investors, who want to set up private economic zones, include big business groups such as Meghna, City, Aman, Bashundhara, Akij, Abdul Monem, Unique, Nitol-Niloy and Kazi Farms.
Finance Minister AMA Muhith, meantime, expects that export earnings of the country will increase by additional US$40 billion and 10 million more jobs will be created when all economic zones (EZs) will be operational. He said the government plan is to establish 100 economic zones in 30,000 hectares of land by 2030. Establishment of 76 economic zones has been approved so far.
One of the preconditions for rapid economic development is increased investment. Bangladesh is gradually increasing public investment. The government is now working to create investment-supporting environment for the private sector.
The availability of electricity, gas and water connections, timely processing of investment proposals, availability of undisputed land play a crucial role in attracting private investment. The government enacted Bangladesh Economic Zones Act for making these services easily available to the investors. In pursuant to this Act, BEZA was established under Prime Minister's Office in 2011. Besides, the Private Economic Zone Policy 2015 was formulated.
The country is going fast in developing economic zones across the country that is scheduled to bolster the country's economic growth through boosting exports and creating employment opportunities. The National Board of Revenue (NBR) is providing all sorts of support to BEZA in formulating an investment-friendly tax pattern for the investors to develop economic zones. According to the NBR, the unit investors will import raw materials without paying import duty and value added tax (VAT) under the new arrangement.
BEZA has also already reformed some of the concerned legal framework to boost investment in economic zones, and received investment commitments amounting to $17 billion over last few months.
The government, meantime, needs to give some time-bound conditions to ensure tangible results. For example, a certain portion of land should also be allocated for development of planned township to ensure all amenities for workers in the zone. This will help make the country's industrialisation process meaningful.
All indications suggest that the private economic zones would be surrounded by planned cities with modern housing that will certainly lead to vibrant economic activities. The challenge that lies ahead of the country is to consolidate the gains of the new initiative by accelerating economic growth at a harmonic pace, in an inclusive and sustainable manner.
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