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It is good to see that the current government is sticking to its promise of moving away from multiple mega projects involving billions of dollars in foreign loans. The previous government had the grand plan of setting up nearly 100 Special Economic Zones (SEZs). Indeed, the industrial zoning scheme that had been envisaged has effectively been shelved and according to a report published in this newspaper, "developing prioritized zones on fast track with clearly defined timelines" appears to be the plan now.
Even when the grand vision of setting up 100 SEZs had been formulated, economists had raised questions about such an ambitious target. As this plan was not based on reality since foreign direct investment (FDI) has shown dismal growth year-on-year over the last 15 years. So what possessed the previous regime to come up with this fantastic number? As pointed out by a former chief economist of the World Bank, it had everything to do with political preferences, business interests becoming the overriding factor over and above SEZ selection and overlooking investors' desire on whether or not to actually invest in Bangladesh.
Hence the current shift in thinking at policy level concurs with what is actually feasible for the economy and likely FDI commitments that may be made and then developing select zones "on a fast track with clearly defined timelines." Had the previous idea been implemented, it would undoubtedly have landed the country in even greater debt as billions in foreign exchange would have had to be borrowed, much of it from foreign lenders leading to an even greater debt trap.
The new executive chairman of the Bangladesh Economic Zones Authority (BEZA) has gone on record saying that a smaller number of zones would be developed. "We will set specific timelines to address investors' needs in a realistic and achievable way," he adds. "What investors are looking for is a stable fiscal policy, not just tax cuts." The zones expected to receive priority include the National SEZ (Mirsarai, Sitakunda and Feni), Jamalpur, Srihatta, Maheshkhali, and Sabrang Tourism Park.
Indeed, it is not merely a matter of setting up a SEZ. Undoubtedly, investors are interested in state-of-the-art infrastructure, but they will also be looking specifically at the cost of doing business in the country. For years, Bangladesh has scored low on the international indices in this regard and those nagging issues need to be worked out by the BEZA. If need be, the government should think of bringing the exercise of issuing permits and licences under one roof at the BEZA, so that a prospective investor doesn't need to run around all over the place to get required permissions. If policymakers are genuinely serious in attracting greater FDI to the country, these changes must be made.
Again, simply putting up a SEZ with requisite infrastructure and even having a "one stop service" will not be enough. When BEZA authorities talk about conducting a survey amongst investors, it ought to have another survey done because foreign company / industry workers will not simply be working all day and browsing the internet during leisure time. The quality of life for them and their families in the areas where these SEZs will be located needs to be complemented with quality education and entertainment sites. There must be good communication between SEZs and major metropolitan cities so that foreign and local officers and employees can visit their loved ones easily and safely on weekends. These are all doable and if done rightly, there is every reason why SEZs will flourish.