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Upcoming Industrial Policy: Some suggestions

| Updated: February 13, 2021 21:34:04

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Upcoming Industrial Policy: Some suggestions

National Industrial Policy 2016 is going to be replaced by its upcoming version National Industrial Policy 2021. Before that, we had National Industrial Policy 2010, 2005 etc. A policy comes into effect every five years. But how much of the previous one has been implemented by concerned ministries or agencies was not evaluated publicly ever before. The National Industrial Policy 2010 and its older versions had no plan of actions nor were the concerned ministries or agencies identified. As a result many actions were unimplemented in absence of concerned ownership or sometimes blame games were in place. To avoid such unexpected situation and make the industrial policy transparent, the government included a specific time bound Action Plan in the National Industrial Policy 2016 as Annexure - 9. This matrix provides the policy indicator to monitor and made it evaluation worthy. It also identified implementing ministries or agencies with a specific time frame. As the Ministry of Industries started its effort to draft the National Industrial Policy 2021, it is the right time to evaluate how much of the National Industrial Policy 2016 has been implemented.

There are 16 Chapters and 9 Annexures in the National Industrial Policy 2016. Chapter-1 provides justification and context of the policy while vision, mission and objectives were spelt out in Chapter-2. Definition & Classification of Industries are in Chapter-3. Next chapters are on Investment Incentives; CMSME Development; EZ, Industrial Park, Cluster Based Industries, Hi-tech Park & PP Industry Establishment; State Owned Industry Management & Reforms; Productivity & Product Quality; Intellectual Property Creation, Preservation and Management; Women Entrepreneurship Development; Export Oriented & Export Linkage Industries; Foreign Investment; Industrial Technology; Environment Friendly Industry Management; Skills Development; Implementation, Monitoring & Evaluation Mechanism of this Policy. To ensure proper implementation of National Industrial Policy 2016, a high-powered council namely the National Council for Industrial Development (NCID) under the leadership of the Prime Minister was formed. To support the NCID, the policy formed Executive Committee for National Council for Industrial Development (ECNCID) under the Chairmanship of the Industries Minister.

Annexure- provides a list of High Priority Sectors, Annexure-2 enlists priority sectors, and service sectors were listed in Annexure-3. The next annexures included reserved industries; controlled industries; list of industrialised areas; list of poorly industrialised areas; list of agro-based & agro-processing industries; list of public and private industries in tourism sector; finally, last but not the least, annexure-9 presents the most important matrix of this policy-- Time Bound Plan of Actions with List of Concerned Ministries & Agencies to Implement the Tasks. If we want to analyse this matrix, we can say that this matrix begins with mapping of creative industries & creative industries development. Cash and other investment incentives are provided by the government to the entrepreneurs but the policy recommended for providing cash incentives to all high-priority sectors. Action-11 of this matrix mentions that uninterrupted electricity and gas connections will be provided to all enterprises within a limited timeframe. But, in practice, enterprises were out of gas connectivity during last couple of years, no new gas connections were provided. Similarly getting electricity connection is also a long waited issue till now.

There are some SME development targets in the policy like development of 7500 new entrepreneurs throughout the country per year, providing single digit collateral-free loan, conducting national SME census and updating the database, establishing BSCIC service centre in every upazila etc. Current rate of credit is at single digit but collateral-free loan is still out of reach like the other targets in this segment. There are 45 tasks with several sub-tasks in this matrix, a significant number of tasks and sub-tasks were achieved, few are in process but most of them are yet to be initiated. Therefore, it is the right time to undertake a thorough evaluation on this time bound plan of action, especially which tasks are yet to be initiated by which ministries or agencies. This evaluation report could be placed before the NCID meeting to identify the most performing ministry or agency in respect of the policy implementation.

In this connection, it may be worthwhile to place some recommendations for consideration in the upcoming national industrial policy. These are:

  1. The government can establish "Industry Development Department" under the ministry of Industries and introduce a separate cadre in Bangladesh Civil Service titled "Industry Development Cadre" to provide mentorship support to the existing and new entrepreneurs. We have tremendous achievements in agriculture production through the support of agriculture extension and other allied departments. Similarly, all these Industry Development Officers will be under the Industry Extension Department under the ministry of Industries.
  2. As the medium scale enterprises have more capacity than the Cottage, Micro & Small (CMS) enterprises, they are grabbing maximum facilities provided by the government to CMS enterprises. As a result Cottage, Micro & Small enterprises are suffering to ensure their stakes. Therefore, the next industrial policy could separate medium enterprises from the CMS segment. Thus proper attention could be given to the CMS enterprises.
  3. Existing thresholds of enterprises is a little higher than those in many developing countries or thresholds defined by international organusatiobns. Therefore, it is suggested not to increase existing thresholds in the upcoming industrial policy.
  4. A National Cluster Development Authority could be established to promote SME cluster Development in Bangladesh.
  5. This policy should have a separate chapter on 4th Industrial Revolution (4IR) with list of industries that may emerge due to 4IR.
  6. Special re-skilling and up-skilling Funds could be created to re-skill the manpower which will be jobless due to the shock of 4IR. At the same time newer curriculum is needed to develop appropriate manpower to grab opportunities that will be created by 4IR.
  7. LDC graduation will be the cause of Bangladesh's preference erosion in export market. Therefore, the Industrial Policy should have preparation to ensure market access of exportable products in post-graduation period by signing FTAs with potential export destinations.
  8. LDC graduation will impose IPR & TRIPS liabilities on Bangladesh. Cost of doing business will be increased to fulfil IPR & TRIPS compliance. Therefore the policy should emphasise on necessary institutional arrangement for facing IPR & TRIPS regime soon after the LDC graduation.
  9. The upcoming policy can have a separate chapter on e-commerce and its backward and forward linkage institutional arrangement for creating digital entrepreneurs in Bangladesh.
  10. The policy should promote laboratory research, design centre, innovation centre etc. for diversification of export products.

Finally; we would like to state that proper monitoring and evaluation mechanism should be incorporated in the upcoming national industrial policy with concrete plan of actions. Otherwise framing a new policy every five years may not help us to remain competitive in the challenging environment of post LDC graduation.


Md. Joynal Abdin is Secretary, Dhaka Chamber of Commerce & Industry (DCCI)


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