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Introduction
Since independence Bangladesh has made remarkable progress in diversified areas of
social, political, cultural and economic life of its citizen. In order to boost up economic
development of the country 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 institute 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.
After the independence the stagnant economy of the war ravaged country was desperately
seeking private capital, technical knowhow to facilitate the industrialization process to
achieve economic growth. During the initial years it could not happen. However, a visit
by the than World Bank Vice President Mr. Robert McNamara in the early eighties to
Bangladesh transmitted the concept of EPZs to us. Since than EPZs, in tune with the
liberal industrial policy of the government along with investment friendly legal &
institutional framework like Foreign Private Investment (Promotion and Protection)
Act’1980, have made significant progress. Pioneer EPZ of the country Chittagong EPZ
started functioning in the year 1983 in the Port city of Chittagong, seeing its
unprecedented success the second one came into being in 1991in Dhaka. Presently there
are as many as eight operational EPZs and two proposed EPZs in different locations of
the country contributing to the overall economic development process of Bangladesh
through promotion of export and FDI (Foreign Direct Investment), generation of
employment, transfer of technology, and development of forward and backward linkage
industries and so on.
2. Theory of EPZ
EPZ is the acronym for Export Processing Zone. According to the United Nations
Industrial Development Organization, “an Export Processing Zone involves the
establishment of modern manufacturing plants inside a custom-bonded industrial estate
by offering suitable package of investment incentives to both foreign and domestic
entrepreneurs.”
3. What BEPZA is
BEPZA is the acronym for the Bangladesh Export Processing Zone Authority.
Bangladesh Export Processing Zones Authority (BEPZA) was set up by an Act of
Parliament in 1980 to attract foreign capital and technical know-how and thereby boost
exports through the establishment of export-oriented industries in special zones with
special facilities.
Earlier in 1980, the Foreign Private Investment (Promotion and Protection) Act was
passed by parliament for promotion and protection of foreign investments. As per these
acts, BEPZA, an autonomous statutory body, came into being in 1983. It was entrusted
with the responsibilities of setting up and operating EPZs in the country.
4. Objectives of BEPZA
The objective of setting up EPZs was to provide investors with a congenial investment
climate free from excessive procedural complications. The main objectives are given
below:
• Promotion of foreign (FDI) & local investment
• Diversifications of export
• Development of backward & forward linkages
• Generation of employment
The evolution of EPZ theory has been occurred in Bangladesh in two phases.
• 1984-1998
• 1998 Onwards
Table 1 shows the BEPZA’s contribution to the total national export. If we analyze these
data, we will find that BEPZA’s contribution to the national export has been increased
dramatically since the last decade. That means the production in EPZs is being increased
due to the development of infrastructure and other facilities in these days
During the FY 2005-2006 total actual investment made in EPZs stands US$ 112.89
Million. During the last FY 2006-2007 the actual investment is USD 152.37 which is
34% higher than the investment made in the previous financial year. In the year 2005-
2006 the lease signed investment in BEPZA was US$ 153 million and in the year 2006-
2007 the lease signed invest in BEPZA is US$ 566 million which is 270% more than the
previous year.
The Export target for the FY 2006-2007 was 2 Billion US Dollar and actual export is
made US$ 2.064 Billion US Dollar during this year. The Export target for the FY2007-
2008 is set as US$ 2.3 Billion. During this current financial year from July 2007 to
December, 2007 the total export made by the EPZ enterprises is US$ 1084.59 million.
6.2 Zone wise analysis: In this section, table 4 shows the data about the eight EPZs of
Bangladesh regarding investment, export and employment. The following shows the
cumulative performance of all the EPZs of Bangladesh. It reveals from the record total
number of industries in EPZs rose up to 447 with cumulative investment of US$ 1262.16,
export US$ 14988.32 million and employment up to 203766. We want to discuss
something more.
Firstly, total number of the industries operating their business in the EPZs is 264 more
than half of which are established in the Chittagong EPZ (the first EPZ in the country).
Then, the amount of investment in Chittagong EPZ (CEPZ) and Dhaka EPZ (DEPZ) are
collectively $1146.38 million while the total amount of investment in all of the eight
EPZs (including DEPZ and CEPZ) is $1262.16 million. Furthermore, in case of amount
of export we see the same picture.
However, this analysis is just data based and means that the investors are more interested
to invest in the old two EPZs where they get much more facilities. Beside that, the new
six (among which Adamjee and Karnaphuli is established very recently) EPZs should be
advertised more in front of the investors.
7. BEPZA’s contribution to achieve Millennium Development Goals
Apart from export earning objectives employment pattern shows that EPZs have been
making significant contribution to the gradual empowerment of women which supports
the objective of Millennium Development Goal (MDG). This financial and social
empowerment of women has far reaching effect on the country’s poverty reduction
initiatives as the increasing number of young girls and woman are joining the productive
workforce of EPZs migrating from poverty prone remote rural areas of Bangladesh
linking the rural economy with industrialization process.
Figure 1 says that the majority of the human resources working in the EPZs are women.
It may be pointed out that investors from Japan, South Korea, the U.S., the U.K., China,
Hong Kong, Singapore, Malaysia, Taiwan, Thailand, Spain, Panama, Germany, France,
Belgium, Netherlands, UAE, Canada, Italy, India, Pakistan and Bangladesh have already
invested in the EPZs of Bangladesh.
In the EPZs of Bangladesh, the following industries are available: Textile, Agro-based
Industries, Chemicals, Backward and forward linkage Industries, Electrical Equipment
and Components, Electronic Products, Software, Optical Goods, Garments and Garments
Accessories, Laboratory Ware, Printing and Publishing, Printing and Copying Equipment
& Accessories, Do-it-yourself Tools and Equipment, Musical instruments etc.
BEPZA pursues an open door policy in matters of foreign investment in its EPZs.
Bangladesh Export Processing Zones Authority is a statutory body but very different
from other autonomous organization. It enjoys complete freedom of action in its decision
making process independently of any Administrative Ministry.
Figure 2 shows the ratio between different types of investment. It says, Type-A industries
are of 61%, Type-B industries are of 17% and Type-C industries are of 22%. In other
word, the majority of the industries in the EPZs of Bangladesh are owned by the
foreigners.
12.1 Incentives:
BEPZA offers both fiscal and non fiscal incentives to the investors. They are described
below:
12.1.1 Fiscal Incentives: Bangladesh offered a substantial package of fiscal and non
fiscal incentives initially. But it has been made more attractive in the 1990s in
Bangladesh. Initially, in 1981, the country offered a tax holiday of 5 years. It was raised
to 10 years in 1986 and after the expiry of tax holiday; the tax liability was reduced to
50% of total tax attributable.
Beside that, the government also announced in 1986, tax exemption on dividend income
of non resident shareholders for the period for which the company enjoyed tax benefits
• Business support services: Courier (DHL, FedEx), Banks, Police Station, Fire Station,
Post Office and Shipping Agent
17. Conclusion
The concept of EPZ is not entirely new. It is a kind of “Free Trade Zone” that combines
manufacturing and trading activities. BEPZA is contributing to our economy in several
terms i.e. development of foreign investment climate, improvement of export
18. Bibliography
1. Kumar, N. (2003) Host Country Policies, WTO Regime and the Quality of
Foreign Direct Investment: A Quantitative Analysis of the Role of Multinational
Enterprises in Industrialization, Export orientation and Innovation in Host
Countries, Oxford University Press.