ON

“STANDARD LIVING OF BANGLADESH ”

Submitted to-
Md. Rezwanur Rahman
Associate Professor
Department of Management
Carmichael College, Rangpur.

Department of Management

Carmichael College, Rangpur.

Submitted By-
Md. Amin Hossain
Class Roll: 4092
Roll: 9818619
Registration: 1768100
Mobile: 01744480430

Submission Date: .............................

Letter of Transmittal

Shehab Jil Karnine
Lecturer
Department of Management
Carmichael College, Rangpur

Subject: Submission Of Term Paper

Sir,
It has been a great pleasure to submit my Term Paper of successfully on Standard living of Bangladesh. I am trying to make the best collection of data Standard living of Bangladesh. I have invested my every effort to represent the management process of Dhaka EPZ. I have aimed to use this report for the academic purposes only. I will be grateful and pleased as well having any suggestions, directions or recommendations for further improvement of the Term Paper.

I hope my Term Paper will satisfy you and I would also like to thank once again for your kind assistance in this regard.

Yours sincerely
Md. Amin Hossain
Class Roll: 4092
Roll: 9818619
Registration: 1768100
Mobile: 01744480430

Acknowledgements

At first I must convey my sincere gratitude to my respected teacher “Md. Shehab Jil Karnine” who was my department advisor during the internship program. It was because of his thorough guidance that I could prepare this term paper. His valuable advice has enriched this term paper.

I would also like to express my gratefulness to, senior Adviser of Dhaka EPZ. It was great experience for me to have worked under him. He also had the time for me to guide me in my work. He assigned a few Advisor to help me in collecting the primary data. It would have been very difficult to prepare this term paper with his assistance.

Student’s Declaration

I hereby declare that the report of term paper on Problem & Prospect of Dhaka EPZ. Submitted to the office of placement in partial fulfillment of the requirements for the degree of Bachelor Of Business Administration, Major in management of Business Administration on the ………………..by Md. Shaharukh Khan Roll-9604431,the report has been accepted and maybe presented to the term paper committee for evaluation.

(Any opinions, suggestions made in this report are entirely that of the author of the report. The college does not disregard of reject any of these opinions or suggestions)

………………………
Md. Shaharukh Khan
Roll: 9604431
Registration No: 1565482
Session: 2009-10
Department Of Management
Carmichael College,Rangpur

INDEX

|Content no. |Name of the Content |Page no. |
|01 |PREFACE | |
|02 |INTRODUCTION | |
|03 |THE RATIONALE FOR EPZS | |
|04 |SOME DEFINITIONS | |
|05 |PUBLIC & PRIVATE MODELS | |
|06 |IMPACT OF DHAKA EPZ | |
|07 |ECONOMIC DEVELOPMENT | |
|08 |EMPLOYMENT PROBLEMS | |
|09 |WORKING CONDITIONS | |
|10 |WAGES PROBLEM | |
|11 |LABOUR LEGISLATION | |
|12 |WOMEN & NEW LABOUR MARKET ENTRANTS | |
|13 |FACILITIES AND INCENTIVES FACILITIES | |
|14 |OPERATION | |
|15 |INVESTMENT AND SAVING: | |
|16 |USE OF FOREIGN CURRENCY | |
|17 |REPORT & PROSPRCT | |
|18 |EXPORT PEFORMANCE | |
|19 |INFORMATION TECHNOLOGY | |
|20 |THE OBJECTIVES OF THIS ARTICLE | |
|21 |METHODOLOGY | |
|22 |RATIONALE OF THE STUDY | |
|23 |CHALLENGES & RECOMMENDATION | |

PREFACE

This document provides a brief overview of some of the issues and trends surrounding Export Processing Zones (EPZs). EPZs have been in the past an emotive debate. Claims of widespread abuse and serious labour rights violations have been consistently raised by opponents of EPZs.But as this paper outlines there is no evidence of widespread or systematic problems – in fact the opposite can be established. EPZs are playing a vital development role in many economies, in many cases it seems with superior wages and working conditions, in comparison to firms in the domestic economy. Notwithstanding this, problems do exist in specific EPZs. This is undeniable, but where problems do exist the following question needs to be considered: How does the situation compare to enterprises operating in the domestic economy against those in EPZs? This document draws heavily from recent research by the ILO and reflects the views of employers as expressed in the ILO’s Employment and Social PolicyCommittee March 2008.

[pic]

INTRODUCTION

An export processing zone (EPZ) is a trade policy instrument used to promote non-traditional exports. EPZs have been in existence in one shape or another since the 1950s and have evolved considerably. Different countries have taken the basic model and shaped it to their needs. There is no one model and a variety of forms of “EPZs” exist, such as Free trade zones

(FTZs); export processing firms (EPFs); economic and technology development zones
(ETDZs); high-tech industrial development zones (HIDZs); and special economic zones
(SEZs). The levels of sophistication varies considerably and EPZs have evolved from initial assembly and simple processing activities to include high-tech and science parks, finance zones, logistics centres and even tourist resorts. EPZs have traditionally focused on manufacturing but increasingly are also targeting the services sector.

THE RATIONALE FOR EPZS
EPZs are a second best solution compared with generalized country wide reforms. Where country wide reforms are difficult, they can be a useful stepping stone. In this respect the EPZ concept is attractive because it is easier to resolve problems on a small geographical scale.
EPZs have been found also to act as a ‘safety valve’ and allow a government to defer necessary structural reforms in the overall economy. In this respect they can also play a useful role in ‘spearheading’ reforms. Additionally, In many developing economies lacking a modern and efficient industrial infrastructure, a well managed EPZ provides an example of msuch a structure, albeit in a small and geographically limited context2.

SOME DEFINITIONS
Four broad EPZ models3 can be identified. In the first model, the EPZ is an integral part to further economy wide reforms. In this light EPZs are to have a specific life span, losing their significance as countries implement systemic trade, macroeconomic and exchange rate reforms. As the economy opens up and a country develops its capacity for competitive industrial exports, EPZ’s exports and employment share in total export and employment falls.
Both Taiwan and South Korean EPZs fit into this category.
The second model sees EPZs in terms of the safety valve referred to earlier. They provide much needed foreign currency to accommodate import needs for the host nation and create jobs to alleviate unemployment or under-employment. However, in the absence of country wide liberalization polices, the EPZs remain enclave production areas with limited economic contributions.
A third type is the EPZ as a laboratory to experiment with market economy, outward oriented policies. China’s early special economic zones have been seen as embodying this third view.
A final, less orthodox, and much more recent, model has emerged from some developing countries in which the level of FDI following trade and macro-policy reforms has been disappointing. Some countries have established EPZs to enhance the incentives to attract FDI, matching or surpassing the incentives provided by their neighbouring (and potentially competitor) countries for these investments.

RECENT TRENDS
It is estimated that there are currently around 3,500 EPZs throughout the world, operating in around 130 countries and territories and employing around 66 million people.4 The majority of new zones having taken root in developing countries. In the past 30 years EPZs have broadly speaking been implemented at two different development stages. One set of countries have reverted to them in the early stages of their industrial development, with the expectation that they provide the “engine of growth” to propel their economies into industrialization. They also sought production and export diversification. Mauritius certainly fits this bill, but so do the more recent African hosts of EPZ such as Namibia and Togo. A second set of countries (South Korea, Taiwan and some developed countries such as the US) implemented EPZ when they already had a strong industrial production and exports sectors.
PUBLIC & PRIVATE MODELS
Zones can largely divided into public and private models. The older zones were typically setup and run by the host government. Many examples point to failure where EPZs have been designed and run by bureaucrats. Cumbersome bureaucratic procedures, poor planning, lack of effective management, and the provision of overfriendly fiscal incentives are some common reasons for failure.

Rather than focusing on fiscal incentives such as tax breaks and tariff exemptions, some modern zones have primarily focused on providing an internationally competitive business environment. This means improved infrastructure in terms of transport and logistical linkages and state-of-the-art communication networks, efficient customs operations, reliable utility services and efficient administration. More and more zones, in particular in the services area,

are today attracting high-skilled labour rather than low-skilled labour. The literature agrees that privately run, high-end zones tend to fulfil these services better than private low-end or public EPZs. For instance, the Dominican Republica private EPZs were equipped with day care and health facilities early on. A 1993 labour law made them mandatory for all EPZs in that country.

Many countries sink in a sizable investment to provide production (in the case of public
EPZs) and transportation infrastructure, utilities and communications facilities, and administrative support to the zones. Some do not see an equitable return on investment.

IMPACT OF DHAKA EPZ

A. ECONOMIC DEVELOPMENT
EPZ as noted are a broad church. Some are limited to a specific sector, geographical region or timeline. Others encompass entire regions and cut across sectors. Furthermore, making comparisons between the impact of EPZs and domestic industries is a difficult science and little research has been done in this respect. In general terms most of the available studies on the economic impact of EPZs are narrow in scope and are based on case studies instead of broad surveys. Finally, zones are not a static phenomenon. The economic conditions in which they operate change over time and affect their characteristics (or competitive attributes). Between 2002 and 2006, EPZ exports increased significantly in countries, such as, Bangladesh (26 per cent), Madagascar (111 per cent),

the Maldives (261 per cent) and Sri Lanka (15 per cent). EPZ exports represented 52 per cent of national exports in Costa Rica in 2006 (as compared to 21 per cent in 1997) and 56 per cent of national exports in Madagascar

in 2005. In China, the percentage of GDP generated by development zones and the total trade of such zones reached 68 per cent and 87 per cent of total trade respectively in 2005.
Foreign exchange earnings are one of the main benefits expected from an export processing zone. In some countries increases in gross export and earning of EPZs have been phenomenal.

For instance, in Mauritius, EPZ export earnings grew from 3 percent of total export earnings in 1971 to 53 percent in 1986 and 69 percent in 1994. According to the World Bank (FIAS)8, EPZ exports may already constitute up to 8 percent of global exports of manufactured goods in countries with EPZ programmes. The effects can be larger in smaller economies with limited production capacity.

It has been argued that EPZs produce big fiscal losses, due to the incentives offered.
However, giving a fiscal concession to entrepreneurs only creates a revenue loss if the entrepreneur would locate in the country without incentive. In today’s competitive climate, the lack of incentives would probably mean that the country would not attract investors.

The fact that EPZs are principally export orientated would further support this argument.
Trade agreements also matter. The Africa Growth and Opportunity Act (AGOA), which provides for preferential tariff treatment to exports from Africa to the United States, is a case in point. In Namibia, while the EPZ was unsuccessful until 1999, employment reached 10,000 in 2004. Similarly in Kenya, although incentives were not as generous as in Namibia, the EPZ programme only took off after the introduction of AGOA (for example between 2000 and 2002, knit apparel exports to the US increased from US$ 0.2 million to US$ 22.6 million, and woven apparel exports from US$ 43 million to US$ 102 million).10 These examples show that incentive loaded EPZs are not automatically successful and may need to be complemented by trade preferences to realise their full potential.

DHAKA EXPORT PROCESSING ZONE
Water supply: CEPZ gets water from Chittagong WASA Storage Capacity: 45,20,000 litters/day Tariff: Tk. 13.56 per M3 Power Supply: 11 kV, 3 phase, 50 cycles Tariff: Tk. 2.86 per kWh (Industrial use) Gas supply: 1,36,000 M3/day or 5,667 M3/hour Tariff: Tk 3.64 per M3 (Industrial use)

B. EMPLOYMENT
Empirical investigations confirm that the generation of employment is frequently the main benefit from EPZs. According to the ILO11, total global employment in zones is approximately 66 million people. Between 2002 and 2006, the following countries experienced significant EPZ employment growth: Morocco (103 per cent), the Philippines (37 per cent), Senegal (263 per cent), Sri Lanka (56 per cent) and Viet Nam (788 per cent). In China, employment in development zones rose from 2 per cent of the national workforce in 1995 (3.3 million workers) to 13 percent in 2005 (18.8 million workers) and contributed to 49 per cent of total employment growth. Estimates of total employment in Chinese EPZs range from 30–70 million.

In the Philippines, employment growth increased by 37% in the period 2002-2006. 13
Costa Rica’s employment increased from 11,000 in 1991 to 39,000 in 2005.14
The Dominican Republic increased employment from around 85,468 in 1988 to
190,000 in 2004.

Mauritius reduced official unemployment from 23% in 1979 to 2% in the early 1990s
(before it increased in recent years to 8% in 2000) as the country’s EPZs generated
88,000 new jobs. in Bangladesh, growth of employment in the EPZs was over sixteen times that of the organized manufacturing sector during 1983–4/1987–8 and over four times higher
1988–9/1999–2000. In Sri Lanka, total employment in EPZs stands at 10 per cent of the manufacturingemployment. It is uncertain whether these economies would have been able to create so many jobs and as

much income in the absence of EPZs. For the workers, the alternative to EPZ employment is often unemployment or underemployment. EPZs also generate employment for unskilled labour by creating demand for physical infrastructure within the zone. This stimulates the local construction industry giving employment to unskilled labour. Demand for utilities such as water, electricity, communication, and administration also rises. Finally, there has been increasing demand for various support services such as, hotels and restaurants, and transport, which can have a substantial impact on employment generation.

C. WORKING CONDITIONS
Labour conditions are often better inside than outside a zone. This is confirmed by the ILO who report that “EPZs are more likely to provide more benefits, such as health care and social security, than other sectors of the economy. This is especially the case when EPZ employment is compared with the informal sector.”

In India, for example a lot of zones have canteens or make arrangements for food to be served (on the premise that well fed workers will be more productive).20 In terms of training and HRD policies an ILO case study in Madagascar (2007) notes that 63 per cent of enterprises in EPZs conduct internal training programmes (as compared to 30 per cent in the rest of the country).

Working overtime appears to be more prominent in EPZs. But this seems to be the case were work orders are linked to tight time lines and requirements along production chains.
Even the trade unions concede that EPZs can be better places to work:
Four reasons can be attributed to this. First, EPZs often pay productivity incentive bonuses and overtime. Second, they tend to be larger and usually pay scales and working conditions are correlated with firm size perhaps because governments may monitor large firms more easily than smaller ones. Third, most foreign-owned firms apply their domestic best practice codes in all their branches. Finally, the government often regulates higher minimum wages for firms in sectors related to EPZ.

D. WAGES
A majority of sources agree that overall, wages in EPZ are higher on average than wages outside these zones. The ILO reports that based on its country studies, wages in EPZs appear to be at the same level as or above wages in the rest of the economy for equivalent work.
However, wage rates vary according to the size of the firms, their nationality and policy, type of industrial production, country regulations and institutions, and labour market conditions.

Many zone enterprises use remuneration systems such as piece-rate or incentive schemes, which give workers a higher take-home pay. Fleck (2001) found that in 1998, maquila hourly earnings were 2.6% lower than Mexican wage workers in other sectors, but benefits averaged 8% more, leaving maquila workers ahead. Brown (2001) found that women and men who work in the maquila areas earn 38 percent and 31% respectively more than their counterparts in non-maquila manufacturing.
Wage growth and bargaining power is not determined by the presence of labour unions, in particular in the export sector, which has been subject to fierce international competition. It is primarily contingent upon the demand and supply factors. Thus, the more successful the zone is, the greater is the demand for labour, and hence the better is the employees’ bargaining power.

E. LABOUR LEGISLATION
It is often reported that labour laws don’t apply in EPZs are at least are different. In this respect it seems however that in most cases the legislation applies equally in both the zones and the domestic economy. The ILO advises us that in a few countries, EPZs are given some exemptions to national labour law regulations 23 - the implication being in most they are not – and that “Whereas labour laws in EPZs generally appear to be the same as in the rest of the country, difficulties arise in application, especially if labour inspection is weak”.

this latter issue is a problem not confined to EPZs but one for the economy as a whole. Abuse of core labour standards is another issue and here there have been documented violations. Almost universally these concern Freedom of Association and the right tocollective bargaining. ILO research finds no evidence of child labour in EPZs, nor of forced labour. Since 1998, the ILO supervisory bodies have commented on problems concerning freedom of association and/or the right to bargain collectively in EPZs in 15 countries.

F. WOMEN & NEW LABOUR MARKET ENTRANTS
EPZs tend to have very high staff turnover rates with the average career of a worker seldomb exceeding five years. Research points at a large amount of ‘first time’ labour market entrants taking positions in EPZs – gaining experience and then moving on. The high percentage of young single women, who then get married and have children could also be a contributing factor to this churn.

Overall, EPZs have proven to be particularly beneficial to female employment. The majority of women are young, single and come from rural and poor backgrounds. An EPZ job is very often their first foray into the labour market. The economic participation of women—their presence in the workforce in quantitative terms—is important not only for lowering the disproportionate levels of poverty among women, but also as an important step toward raising household income and encouraging economic development in countries as a whole.26 The ILO (1998)27 reported that in Guatemala 45% and in Honduras 22% of women reported that they were the sole source of income.

Critics suggest that employment is feminized in the zones because these women are young and can easily be exploited. However but for EPZs these young women might not have been absorbed into formal employment at all and hence EPZ employment can be said to afford them an independent source of income that would otherwise have been denied. Analysis by the Indian council for research on international economic relations (2007) of the socio economic status and working conditions of female workers finds little evidence to support these hypotheses in thatcountry. This study also finds that after marriage in India, women move in with their husbands’ family. They can often continue to do the job only if their husbands approve of their employment. Single women are therefore more likely to be in employment especially in the factory sector.

Some researchers expect feminization of EPZ labour to decline in the coming years. As EPZs progressively shift from traditional manufacturing activities to information technology and services that require highly skilled workers, the number of jobs for women workers, who generally occupy low-skilled jobs, may decline. In terms of discrimination, in many cases practices in EPZs may simply be reflective of broader national practice. For instance in the recent ILO case study of Madagascar referred to earlier, the average wage of female EPZ employees is lower than that of men (8% less for low-skilled jobs and 20% less for managerial positions) however at the national level, the average wage of female workers represents less than two-thirds that of male workers.

ONE WINDOW SAME DAY SERVICE AND SIMPLIFIED PROCEDURE BEPZA
Sanctions projects generally within one week.
Issues required Import/Export Permits.
Issues required Work Permits for foreign nationals working in EPZ enterprises.
Provides required infrastructure facilities in EPZs.
Offers 'One Window Same Day Service' to investors in EPZs.

FACILITIES AND INCENTIVES FACILITIES
a. Land and factory building are available on rental basis.
b. Electricity, water, gas and telecommunications are provided by the zones.
c. Import and export permits are issued by EPZ within 24 hours.
d. Work permits are issued by BEPZA.
e. EPZ is a secured and protected area.

INCENTIVES
Fiscal Tax Exemption a. Tax holiday for 10 years
b. Exemption of income tax on interest on borrowed capital.
c. Relief from double taxation subject to bilateral agreement.
d. Complete exemption from dividend tax for tax holiday period for foreign nationals.
e. Exemption of income tax on salaries of foreign technicians for 3 years subject to certain conditions.
Duty Free Import and Export
a. Duty free import of machinery's, equipment and raw materials.
b. Duty free import of three motor vehicles for use of the enterprises in EPZs under certain conditions.
c. Duty free import of materials for construction of factory buildings in the zones.
d. Duty free export of goods produced in the zones.
Non-Fiscal I. Investment
a. All foreign investment secured by law.
b. No ceiling on extent of foreign investment.
c. Full repatriation of profit and capital permissible.
d. Repatriation of investment including capital gains, if any, permissible.
e. Remittances allowed in following cases:
f. All post tax profit and dividend on foreign Capital.
Savings from earnings, retirement benefits, personal assets of individual on retirement/termination of services.
Approved royalties and technical fees.
No permission required for expansion of the project or product diversification.
II. Project financing and banking
a. Off-shore banking facilities available.
b. Local and international banking facilities also wide-open.
III. Import
a. Freedom from national import policy restrictions.
b. Import of raw materials also allowed on Documentary Acceptance (DA) basis.
c. Advantage of opening back to back LC for certain types of industries for import or raw materials.
d. Import of goods from the domestic tariff area permissible.
IV. Project Implementation
a. Re-location of existing industries from one zone to another within the country permissible.
V. Operation
a. Sub-contracting within EPZ allowed.
b. Inter-zone and intra-zone export permitted
c. All customs formalities done at the gate site of the respective factory building within the zone.
d. Permission for import/export given in the same day.
e. Repairing and maintenance's of machinery's and capital equipment from domestic tariff area allowed.
VI. Employment
a. Liberal employment of foreign technicians/experts allowed.
b. Foreigners employed in the zones enjoy equal rights similar to those of Bangladesh nationals.
c. Law forbids formation of any labor union in the zones. Strike within the zones prohibited.
VII. Support Services
Customs office, Post Office, Medical center, Fire station, Police station.

d. Investment Opportunities
RMG and textile sectors have enormous investment opportunities. Government provides highly favorable policy framework for investment in these sectors. Investors have the following choices: ������ Establishment of new textile/RMG mill in the private sector. ������ Joint ventures with the existing textile / RMG mill. ������ Acquisition of public sector textile mills that are being privatized. ������ Indirect investment through financial services and /or leasing.

6. Services:
The service sector continued to the largest contributor to the country’s real GDP growth in 2004-2005. The sector grew by 5.7% during the year, compared to 5.4% in 2003-2004 and contributed 49.65% to GDP growth. All sub-sectors shared in the overall growth of the services sector activities, but relatively higher growth rates were registered by education (7.66%), transport, storage and communication (6.64%), hotel and restaurant (7.29%), financial services (6.77%), public administration and defense (5.75%).

7. Investment and savings:
Gross national savings during the year 2004-05 was 26.50% of GDP compared to 25.40% during the previous year. In the FY 2004-05 the rate of total investment was 23.14% of GDP in which the shares of public and private sector were 5.90% and 18.50% respectively. Total investment registered by BOI was US$ 19,992 million out of which US$ 8763 million was foreign investment. Investment made by in the EPZ was US$ 987 million.

Total number of plots (planned): 430 Size of each port: 2044 M2 Tariff: US $ 1.50/M2/year Standard Factory Building Space: 39,000 M2 in 16 blocks Tariff: US $ 2.00/M2/month Utility Services. Water supply: DEPZ gets water from its own water supply system Tariff: Tk. 13.56 per M3 Power Supply: 11 kV, 3 phase, 50 cycles Tariff: Tk. 2.70 per kWh (Industrial use) Gas supply: DEPZ gets gas from the Titas Gas Field Tariff: Tk 3.64 per M3 (Industrial use)

Export Policy:
8. Export policy has been liberalized by the Government of the People’s Republic of Bangladesh in order to keep pace with the present globalization system under WTO rules. The objectives of the Export Policy are: ������ Capacity building of export related institutions like EPB (through its reorganization to enhance institutional efficiency), BEPZA, Customs department, Land and Seaports, Fisheries department, BSTI, Tea board and Trade bodies; ������ Product diversification; ������ Develop product quality and design and production of high value products; ������ Adopt new strategies for expanding export products, ensure good use of IT or computer technology, E-commerce and other technologies; ������ Develop necessary infrastructures and in required cases backward and forward linkage industries to ensure production of maximum volume of exportable items; ������ Create new exporters and provide all assistance to existing exporters and develop a business friendly environment; ������ Develop expert manpower on trade; and ������ Equip trade bodies, businessmen and concerned people with necessary knowledge on systems of world trading.

9. Use of Foreign Currency:
The exporters can deposit a certain amount of their export earning in foreign currency under a retention quota in their foreign currency account in the form of US dollar, Pound, Sterling, Japanese yen or Euro. The amount of retention (in terms of percentage) will be fixed by the government/Bangladesh Bank. This foreign currency can be used to fulfill real business needs like business trips abroad, participation in export fair or seminars in foreign countries, import of raw materials and spare parts and setting up office abroad. Presently 10% has been fixed for lower value added products (like RMG, petroleum by products, Naphtha, furnace oil etc.) and 50% for high value added products (like Computer software and data entry/processing service etc.)
Export Performance:
11. During 2004-05 export performance of Bangladesh raised upto US$ 8654.52 million (13.83% growth). Most contributors to the exportable items are RMG (Woven Garments and Knitwear), Frozen food, Home textile, Computer Service, bicycle and ceramic. Sector highlights of major exportable commodities are given hereunder:

12. Textile:
Ready Made Garments, Textiles and Composite Textiles a. Sector Highlights ������ The Ready Made Garment industry in Bangladesh accounts for more than 75% of total exports. ������ Bangladesh is best placed in the region for textiles and garments because of low-cost labor, preferential trade status and advantageous global market access. ������ Government incentives for the spinning and weaving industries include a 15% cash subsidy of the fabric cost to exporters sourcing fabrics locally. ������ There is a huge fabric demand supply gap in the RMG industry which is being met by imports. Thus, the potential for backward linkage industry is enormous. b. Industry Background and Status The phenomenal growth in RMG was experienced in the last decade. With about 2,600 factories and a workforce of 1.4 million, RMG jointly with knitwear accounted for more than 70% of total investments in the manufacturing sector during the first half of the 1990’s. At present, number of RMG factories exceeded 3,000, employing over 50% of the industrial workforce and having 75% of the total exports earning of the country. FIG-2 shows the growth of RMG exports from Bangladesh since 1981-82.

c. Industry Outlook Multi-Fiber Agreement (MFA) and Generalized System of Preference (GSP) of the EU are the main actors behind acquainting Bangladesh RMG products to global market ensuring assured market access. Bangladesh is now a significant RMG supplier to North America and Europe. Due to phasing out of MFA, many are doubtful about Bangladesh’s ability to maintain the fast growth of the recent years in this sector. However, on a more positive note, Bangladesh is expected to maintain its tariff-free access to EU under the European GSP, since the GSP is not covered by the Uruguay Round Agreement. Recently, Canada has also provided tariff-free access of all the items from Bangladesh. Meantime, Bangladesh RMG industry has earned strong competitiveness as a global standard RMG source. Marketing network has been spread over the economics of the continents. End users could well recognize and differentiate the products confidently. Till today, Bangladesh RMG industry largely depends on the imported yarns and fabrics. Bangladesh produces only 10% of export-quality cloth used by the garments industry. The need for establishment of backward-linkage industry has become an immediate concern to the government and the exporters. There are enormous opportunities in setting up composite textiles industry combining textile, yarn and garments.

14. Information Technology
Data Processing, Software Development, Hardware Manufacturing a. Sector Highlights

������ To instigate the IT industry robustly, deregulation of the telephone has been decided and executed by mid 2003. ������ The extensive growth of mobile telephony resulted in significant opportunities. ������ The industry is at its introductory stage and has opportunity of capitalizing the potential. ������ Bangladesh has a well-educated, skilled, dedicated and growing IT workforce. ������ There is a fast growing domestic market and export demand. ������ Strong research assistance from the universities and research institutions are available. ������ Government is keen in establishing IT related infrastructure for the development of the industry. ������ Connectivity with the information highway through submarine cable. b. Industry Status ������ IT Hardware Import Policy ������ Export of Software, data processing, transcription etc. s

Economic Rationale for a better export performance of the zones:
EPZs are special enclaves, separated from the Domestic Tariff Area (DTA) by fiscal barriers and are intended to provide an internationally competitive duty free environment for export production at low cost. EPZs are benefited usually from the following: ������ Modern and efficient infrastructure ������ General fiscal and non fiscal concessions to firms ������ Better governance due to single window facilities to ensure corruption and red tape free business environment.

Comparative Analysis on Investment
22. National
|BOI conducted one FDI inflow survey |BOI Registered |BEPZA |Financial |Total |BEPZA Share % |
|during 2004 where it is revealed |In million US$ |In million US$ |Inst. |In million US$ | |
|that BEPZA alone shares 73.08% of | | |In million US$| | |
|total manufacturing FDI inflow in | | | | | |
|Bangladesh. FDI Component | | | | | |
|Textile |14.995 |101.893 |- |116.888 |87.17 |
|Chemical |19.681 |27.642 |- |47.323 |58.41 |
|Leather & Rubber |8.666 |10.026 |- |18.692 |53.64 |
|Agro-based |7.284 |1.752 |- |9.036 |19.39 |
|Food & Allied |3.212 |- |- |3.212 |- |
|Glass & Ceramics |1.28 |- |- |1.28 |- |
|Printing & Publications |0.558 |- |- |0.558 |- |
|Misc/NEC |- |9.833 |- |9.833 |100 |
|b. Service |374.252 |0.354 |66.518 |441.124 |0.08 |
|Telecommunications |237.41 |- |- |237.41 |- |
|Energy & Power |133.045 |- |- |133.045 |- |
|Power Generation |15.676 |- |- |15.676 |- |
|Oil, Gas, & Coal |117.369 |- |- |117.369 |- |
|Other Services |3.797 |0.354 |66.518 |70.669 |0.5 |
|Financial Institutions |- |- |66.518 |66.518 |- |
|Others |3.797 |0.354 |- |4.151 |8.53 |
|c. Engineering |0.771 |12.089 |- |12.86 |94 |
|Total (a+b+c)` |430.699 |163.589 |66.518 |660.806 |24.76 |
|2 |TEXTILE |26 |212.262 |314.12 |1.48 |
|3 |TERRY TOWEL |15 |27.749 |39.21 |1.41 |
|4 |KNIT & OTHER TEXTILE |19 |73.915 |106.99 |1.45 |
|5 |GARMENTS ACCS. |25 |60.096 |81.86 |1.36 |
|6 |CAPS |7 |37.548 |99.67 |2.65 |
|7 |TENT |4 |21.71 |55.22 |2.54 |
|8 |ELEC & ELECTRONICS |12 |48.807 |45.58 |0.93 |
|9 |FOOTWARE & LEATHER |12 |50.08 |46.67 |0.93 |
|10 |METAL PRODUCT |11 |18.287 |13.95 |0.76 |
|11 |PLASTIC GOODS |12 |19.384 |12.54 |0.65 |
|12 |PAPER PRODUCT |2 |0.776 |0.84 |1.08 |
|13 |FISHING REAL & GOLF |1 |31.07 |10.07 |0.32 |
|14 |ROPE |2 |5.913 |5.39 |0.91 |
|15 |SERVICE ORIENTED |4 |4.567 |1.81 |0.40 |
| |INDUSTRIES | | | | |
|16 |AGRO PRODUCT |10 |2.786 |7.12 |2.56 |
|17 |MISCELLANEOUS |17 |29.139 |8.94 |0.31 |
|Gr. Total |221 |867.01 |1548.13 |1.79 |

A major preferential treatment is essential for development of EPZs units by granting them the Government policy concessions in the form of fiscal and no-fiscal incentives. Although it is an adhoc arrangement but for initial investment attraction incentive scheme should run parallel.
There should have separate specific rules/regulations for different kind of zones in regard to Customs, Income Tax, Foreign exchange, VISA/Landing permit etc. EPZs should be strengthened enough to exercise regulatory functions and to act as an independent regulatory body. At present BEPZA is exercising some regulatory functions independently.
For better export performance international market access of Bangladeshi product is of prime important. Bangladesh has got huge potential in respect of natural resources, skilled manpower and investment friendly atmosphere. Development partners should come forward to find market for Bangladeshi products in the developed countries.

Dhaka EPZ of Bangladesh: Reality and Prospect
Objectives

The objectives of this article are:
· To identify the existing projects undertaken by the government of Bangladesh
· To identify the prospective sectors suitable for implementation in Bangladesh
· To identify the challenges ahead of Bangladesh in successful implementation of
· To suggest some measures to address those challenges
Literature Review
J.A. Gómez-Ibáñez and J.R. Meyer (1993) found that Countries worldwide with PPP experienceinclude Australia, Germany, Hungary, Italy, Japan, Korea, Spain, the USA, and the UK. Between1985 and 2004, there were a total of 2,096 PPP projects worldwide with a total capital value ofnearly US $887 billion (AECOM Consultant Inc. 2005).
The trend started in the 1970s as British governments sporadically sought private funding ininfrastructure sector. However, the practice of private participation got a firm basis in 1992 whenthe Conservative government of John Major in the UK first took Private Finance Initiative (PFI).

The journey got a momentum when the subsequent Labor government of Tony Blair also embraced the idea with due importance. Afterwards, countries allover the world greeted theconcept and now that it has found its implications. Britain has used this Public-Private Partnership concept in building schools, hospitals, capital projects like channel tunnel rail link, national air traffic services, improving the London underground, and for defense contracts. During 2003 and 2004, the UK was the country with the largest PPP investments (OECD, 2006). But Public-Private Partnership (PPP) conveys a different meaning in Canada. In Canadian context, it relates to the provision of public services or infrastructure and necessitates the transfer of risk between partners. In Bangladesh, it all started from February 15-17, 2008, while there had been a three day

conference in Dhaka jointly arranged by the Build-Operate-Transfer Group (BOT Group) of the United Nations Economic Commission of Europe and the Board of Investment (BOI) of the Government of Bangladesh. However, the first ever public-private business forum in Bangladesh was formed on September 06, 2007 in the form of “Bangladesh Better Business Forum” (BBBF), predominantly designed to improve interaction between the business-community and the in Bangladesh: Reality and Prospect 229 government high-ups. It is an unparalleled organizational tool for partnership between public and private sectors in Bangladesh. But Bangladesh is not the only one in this part of the globe to introduce Public-Private Partnership (PPP). Neighbors like India, Cambodia, Vietnam, and the Philippines have already undertaken this program in developing infrastructure, tourism, energy and have started reaping its outputs.

Methodology
This article has been prepared on the basis of primary as well as secondary data. Primary data was gathered through face to face conversation and interview with government officials of Bangladesh. The pertinent secondary information was accumulated from relevant articles, newspapers, different position papers and action plans of the government, and relevant websites. This is an exploratory research. A significant portion of the information has been gathered from literature review. Important publications of the government of Bangladesh, “Vision-2021” of the ruling party of the country, and government websites of other countries have been gone through.

Rationale of the study
As we all know, Bangladesh has been one of fifty least developed countries (LDCs) since 1975. Its economy lacked momentum until democracy was restored in 1991. The average GDP growth rate was mere 4% up to 1990. It is only since 1996-1997 that the growth rate never fell below 5%. Bangladesh started the new millennium with a promising 6% growth. But ironically it again fell under 6% amid current global recession. The other major cause was lack of investment in infrastructure, especially power and energy, port and communication, sanitation and health-care, supply of purified drinking water, education, tourism, information technology, housing etc. The present government has the promise to raise the GDP growth rate to 8% by 2013 and to the magical double digit growth of 10% by 2017 (Vision 2021 of Bangladesh Awami League). To touch this higher notch, many things need to be done. However, investment in infrastructure and service should always be the necessary first step in this front. Achieving GDP growth of 8-10% demands increasing the rate of investment from the present 24-25 percent to 35-40 percent. It is far from an easy task for the government amid the present national and global economic situation to manage such huge amount of own resource. Among the 16 crore population, only around 7 lacs pay income tax (National Board of Revenue).

So within the country, government has scarcity of own resources. Globally speaking, prospect of receiving foreign assistance has diminished like never before due to recent global melt-down. Government also lacks skilled man-power and deserving institutional framework to undertake mega infrastructure projects on its own. Under these circumstances, government desires momentum in revenue collection as well as success in delivering public goods and services by draining in resources and investments from sources other than government savings. Among the possible alternatives, government would like to encourage private investments of money and expertise, skills and technology. With this end in view, the government of Bangladesh has formulated the Public-Private Partnership (PPP) budget in 2009- 2010 fiscal as a new alternative, an alternative which is first of its kind in Bangladesh.

Sectors Name of the Projects
Health 1. Health care provider for a specific area
2. Setting up cancer and/or other hospitals
Education 1. Setting up quality secondary schools
2. Setting up dormitories, health centers, auditoriums, gymnasiums in public universities
3. Development, expansion or improvement of present Degree Colleges
4. Setting up research Institutions or research foundations dedicated to the institution

List of Organizations and their Purposes
Estd. Year Name of the Organization Purpose
1997 Infrastructure Development Company
Limited (IDCOL) under Economic
Relations Division (ERD)
To promote private sector investment in infrastructure development 2004 Bangladesh Private Sector Infrastructure Guidelines (PSIG) To boost in individual investment in the development and maintenance of infrastructure 2007 A 5 year term Investment Promotion and Financing Facility (IPFF) in Bangladesh Bank To finance government approved PPPbased infrastructure development projects PSIG forms the basis of the current PPPs. At present, PPP projects are being financed through IDCOL and IPFF by the government.

So far, around 50 initiatives in telecommunication, land port and other physical infrastructure projects have been successful under PPP in the country. There has been remarkable progress in PPP sector in FY 1998-99 when initiatives were taken to build two mega power plants at Haripur and Meghnaghat with private sector involvement for the first time. These projects were massive successes and helped to mitigate power crisis. Agreements have been signed to construct 4 power plants on rental basis with a capacity of 300 MW and two 200 MW peaking power plants under PPP in Bangladesh: Reality and Prospect 233 the PPP. Five land ports out of the 13 commissioned under the PPP have begun their operations.

Steps have been taken to run the management of new mooring container terminal at Chittagong and of another one at Mongla under joint public and private ownership. The pre-qualification of the bidders of the Elevated Expressway in Dhaka has been completed. A list of 23 projects under PPP has been presented in ADP of FY2009-10 (Budget Speech 2009-2010).
Challenges & Recommendations
1. Government’s target of operationalising the PPP projects is yet to be achieved. An independent guide-line for PPP still remains to be in place. It is creating identity crisis between the sectors as to who would implement the PPP projects. So, as far as the operation and implementation are concerned, having a separate PPP guide-line is the first attendant challenge to be addressed. Preferably, it should be a synchronized effort of both public sector and their private sector counterpart to develop a usable and workable guideline.
2. In some cases, the idea of nongovernmental, market-driven organizations taking over government programs can foster community resistance (Wettenhall 2007). Traditionally people are resistant to change. Public sector trade unions may be reluctant to accept PPP concept for their feeling that there is potential risk of increasing their work load and losing their supremacy over the private sector. On the part of the private sector, they may do the same out of the disbelief that they might be unduly dominated by the public sector in PPP and public sector bureaucracy might outperform the performance-based systems of private sector.
3. Another major challenge before the government is to set up an institution for preparation, implementation, and control of PPP budget. Our first PPP budget could not be implemented to our satisfaction and Tk. 500 crore were eventually cut from the total PPP budget of Tk. 2,500 crore due to under-utilization of fund. This is contrary to the spirit of the new concept of PPP.
4. Like many other successful governments of different countries, our government should make the ministry of finance the in-charge of PPP projects. Currently, these projects are entrusted to the Board of Investment (BoI). But, as we all know, the BoI, by and large, is a promotional entity and has no orientation about implementation.
5. In the back-drop of PPP being a new concept in the country, formulating a separate Act for PPP should be the logical first step on the part of the government. (Zouggari, 2003) told that a well-structured regulation framework can not only increase the willingness of the private sector to participate in the infrastructure development, but also increase benefits to the government by ensuring that the projects operate efficiently.
PPP in Bangladesh: Reality and Prospect 235
6. Li, Akintoye, Edwards, and Hardcastle (2005) found that PPPs can result in a monopoly situation and higher costs to public users for using the infrastructure services. If the same happens to Bangladesh, it will simply magnify the misery of the mass of the country.
7. PPP projects predominantly are capital-intensive. A fruitful match among asset, liability, and cash flow is crucial.
8. IDCOL is a company established under the Companies Act 1994 whereas IPFF is a 5
Conclusion

One of the basic elements critical for any export activity is adequate infrastructure especially Physical infrastructure within the zone like Water, Electricity, Factory & Service buildings, Warehousing, Transporting, Telecommunication, Police Stations, and Fire Stations. Outside the zone infrastructure like Port, Roads leading to the zones, transport facilities to the zone etc. Zones must be supported by Financial Infrastructures (Bank, Insurance, C&F Agent, Freight forwarder, couriers etc) and Social Infrastructure within the zone (Residential Complex, School, Hospital, Club, Resort centers etc). Again, infrastructure within EPZs is generally considered superior to that available in the wider economy. In spite of same incentive scheme for EPZ enterprises and export oriented industries of DTA the EPZ enterprises performing well due to adequate planned infrastructures in Dhaka EPZ area.

Reference

AECOM Consult, Inc., (2005). Synthesis of Public-Private Partnership Projects for Roads, Bridges and Tunnels from Around the World, 1985-2004 (Washington D.C.: United States Department of Transportation).
Akintoye, Li., (2006). “Privatizing Highways in the United States.” Review of Industrial Organization,
29/1-2 (September): pp. 27-53.
Roger, W., (2003). The Rhetoric and Reality of Public–Private Partnerships. Public Organization Review 3(1): pp. 77–107.
Canada: There Are No Free Lunches.” Journal of Comparative Policy Analysis: Research and
Practices, 7/3: pp. 199-220
Zhang, X.Q., (2006). “Public Clients’ Best Value Perspectives of Public Private Partnerships in Infrastructure
Development.” Journal of Construction Engineering and Management, 132/2 (February): pp. 107-114.
Zouggari, M., (2003). “Public Private Partnerships: Major Hindrances to the Private Sector’s Participation in the Financing and Management of Public Infrastructures.” International Journal of Water
Resources Development, 19/2 (June): pp. 123-129. http://bangladeshbudgetwatch.wordpress.com/?s=PPP+allocation (Retrieved on February, 2011) http://bdoza.wordpress.com/2009/07/17/bangladesh-budget-2009-10-and-ppp/ http://onnesha.wordpress.com/2009/06/12/bangladesh-national-budget-2009-2010/ http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:22011850~me nuPK:34463~pagePK:34370~piPK:34424~theSitePK:4607,00.html (Retrieved on January, 2011) http://www.albd.org/autoalbd/index.php?option=com_content&task=view&id=367&Itemid=1 (Retrieved on October 29, 2010), Election Manifesto of Bangladesh Awami League-2008 http://www.bdnews24.com/budget/ http://www.brookings.edu/~/media/Files/events/2009/0112_infrastructure/20090112_infrastructure.pdf
(Retrieved on February 12, 2010) http://www.mof.gov.bd/en/ http://www.nbr-bd.org/ http://www.parliament.uk/commons/lib/research/rp2001/rp01-117.pdf (Retrieved on September, 2010) http://www.prothom-alo.com/ (Retrieved on May 30, 2011)