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6 years ago

Ensuring proper use of BSCIC industrial plots

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Bangladesh Small & Cottage Industries Corporation (BSCIC) started its journey in 1957. It was established to speed up industrial growth by supporting and helping the expansion of medium, small and cottage industries. Also, in the National Industrial Policy 2016 and in the 7th Five year plan, the role of BSCIC has been highlighted for its contribution to support small and cottage industries (SCI). One of the primary roles of the BSCIC is to extend industrial plots to the intending entrepreneurs and monitor their roles at establishing enterprises.

The small and cottage industries contribute a significant portion in the country's Gross Domestic Product (GDP) as well as in exports. Since 2017, United Nations has been celebrating June 27 as the day of Micro, Small & Medium-sized Enterprises (MSME) Day. According to data provided by the International Council for Small Business (ICSB), formal and informal Micro- Small and Medium-sized Enterprises (MSMEs) make up over 90 per cent of all firms and account on average for 60-70 per cent of total employment and 50 per cent of GDP across the world.  Bangladesh is no exception as according to Bangladesh Bureau of Statistics (BBS), more than 99 per cent of the country's businesses had started off as SMEs. In this aspect, the role of BSCIC cannot be ignored.

According to BSCIC statistics, in 2015-16 year the total earning from BSCIC estates was US $5.73bn where the investment was US$ 2.52 billion. Bangladesh earned about US$ 3.11 billion by exporting products produced in BSCIC estates. There are 946 export-oriented industries running businesses in BSCIC estate, which is 21.32 per cent of total industries in BSCIC Industrial estates. The different types of industries in BSCIC area are: textiles, plastic products, food, dyeing finishing, engineering, chemical, ready-made garment (RMG), knitwear, leather & tanning etc. The products being exported hail from the following industries: RMG, knitwear, Agro-based products, leather and leather products, steel equipment, frozen fish products etc. 

The main function of the BSCIC is to support SCIs by providing them with lands. Recently Business Initiative Leading Development (BUILD) tried to take a stock of the total number of lands that has been allocated by BSCIC, how BSCIC is operating and how transfer of lands to the second generation of businesses in the country can take place smoothly. It has been found that a number of plots in the estates are vacant. This study mainly tried to find the constraints of land ownership transfer policies of BSCIC and suggest some policy prescriptions that can simplify the process of ownership transfer of industrial plots of BSCIC and also revisit policies related to ownership transfer of land to the leather sector.

BSCIC has 94 industrial estates in Dhaka, Chattogram, Rajshahi and Khulna divisions. Till date, 74 industrial estates have been implemented. According to BSCIC statistics, in 2017, around 10,051 plots were allotted in the BSCIC industrial estate.  From this number, 5,815 industrial units (57 per cent of total) have been established, 4,436 units were in production and 968 units were under construction. Most of the units are located in Dhaka division. About 480 plots were empty in Jamdani estate, Kishoreganj, Shariatpur, Netrokona and Leather estate of Dhaka division.

Around 218 empty plots were found in Lakshmipur, Sunamganj, Rangamati and Noakhali under Chattogram division. The situation of Rajshahi BSCIC is better than the other BSCIC industrial estate. But in Khulna division, a large number of plots are empty/under construction in Barishal, Bhola, Patuakhali and Meherpur.

It was learnt from entrepreneurs and BSCIC officials that most of these plots were empty due to political pressure for selection of site, lack of infrastructures (no road, power, water or gas connections etc.) and some owners intentionally possessing plots so that they can sell them when the price of land increases.

According to the MIS report of BSCIC 2017, the ownership of 71 plots of land has been transferred so far. Among them, most of the land ownership transferred (about 0.94 per cent) was in Dhaka division. But the lowest number of land ownership transfer occurred in Chattogram division. The BSCIC officials and entrepreneurs informed that it takes a lot of time to transfer a plot due to the volume official paperwork, unclear policies and lack of required papers to be supplied by the entrepreneurs.

The study also focused on the increasing price of land from 1996 to 2013. From an individual example in Khadimnagar BSCIC, Sylhet, since 2013 to date, the price of plots per acre has been Tk 14.47 million. But in 1996, the price of the same quantity of land in this area was Tk 1.07 million and Tk 1 million in 1992.

The trend of increasing price of land has been prevalent in other estates as well, which further discouraged private sector entrepreneurs.

Regarding policy of ownership transfer, BSCIC issued a gazette on June 13 1988 where some terms and conditions were mentioned about the transfer of ownership in industrial estates. In the Land Allotment Policy 2010, there is also a section about ownership transfer where it is mentioned that the BSCIC Gazette no. IE/BSCIC/156/79, circulated on June 13, 1988, will be followed for all related policy and procedures of ownership transfer. But that gazette is not accessible for all. Also, the gazette is very old and there has been no change in it since 1988.

From five undertakings required for both parties (buyer & seller), the buyers are responsible for four of them. According to the buyer's undertakings, they cannot apply for any type of name, sector change, leasehold ownership transfer or sale/rent to the BSCIC within the next three years after transferring a plot. This is a barrier for any entrepreneur from setting up a new business. High price of the land is another issue for the entrepreneur.

The official time stipulated for transferring the ownership of land is between seven and 15 days and approximate time is more than six months. In the practice, the time required for this process usually takes more than two years at times. New investors willing to establish diversified industries are likely to be discouraged by such official deadlines.

Empty plots in BSCIC estates should be handed over to efficient entrepreneurs willing to invest in non-traditional sectors. Leather sector is one of the high priority sectors according to National Industrial Policy 2016 and Export Policy 2015-18. Also, the government has announced the footwear and leather products as product of the year in 2017. A large number of leather factories are already located in BSCIC. Empty plots can be allocated to producers in the leather and leather goods sector.

Some initiatives can be taken to explore opportunities like turning Magura, Moulavibazar, Gaibandha, Bhola, Barishal and Satkhira BSCIC estates into estates dedicated to leather & leather goods sector alike tannery estate in Savar, jamdani estate, electronics estate and hosiery estate.

BUILD presented this policy paper at its recent meeting at the Ministry of Industries, chaired by the Secretary of the ministry. The government officials and experts at the meeting felt that there is an immediate need to revisit the present Gazette of Land Ownership Transfer Policy of BSCIC and formulate a new gazette, which will be clear and easily comprehensible to all entrepreneurs. It was also noted that the process of ownership transfer should be made more transparent. Also, deadline for handing over the plots and completion of the resale process should be reduced. The undertakings of buyer's party need to be minimised from four to, at least, three. Divisional offices might have some authorities to handle resale issues.

A database to identify the number of unutilised plots and encouraging new entrepreneurs to set up new factories will help balance the dispersion of industries throughout the country. Existing BSCIC industrial estates should be modernised so that non-traditional sectors such as leather goods and footwear producers will be encouraged to set up new industries. Existing BSCIC industrial estates should be modernised. In addition to lands, the BSCIC shouted ensure utility services and technical support for people investing in BSCIC estates. In Bangladesh, where land is scarce, vacant BSCIC industrial plots should be used more rationally.

Ferdaus Ara Begum is CEO, Business Initiative Leading Development (BUILD), a partnership organization

of DCCI, MCCI and CCI.

[email protected]

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