Framing a comprehensive policy to spur industrialisation

Framing a comprehensive policy to spur industrialisation


Md. Joynal Abdin

The Financial Express on 24 May 2015

Bangladesh adopted free market economy in late 80s. Opening up its market to foreign investment the government is trying to assist the private sector in playing a vital role in industrialisation and employment generation with a view to alleviating poverty. The government and the private sector worked hand in hand in promoting export-oriented readymade garment (RMG) units and it became the largest foreign currency earning sector of the country. The government allowed back-to-back letter of credit (LC), bonded warehouse facility and many more to assist the garment factory owners. But after three decades of the RMG sector’s inception none of the other sectors is coming forward to back it. Experts forecast few sectors were awaiting takeoff during the last decade. For example, we have export potential of our leather goods sector, ceramics products, pharmaceuticals, shipbuilding, jute goods, home textiles, agro-processed products, information and communication technology (ICT), light engineering products, frozen food, handicrafts etc.

Bangladesh has a domestic market of about 160.4 million (16.04 crore) people and the easy access to two largest markets of the world-India with 1.27 billion people and China with 1.36 billion people. Bangladesh has free trade agreements with India through SAFTA, BIMSTEC and negotiating more free trade agreements with India and China under the Asia Pacific Trade Agreement (APTA). India is offering duty-free market access to a long list of Bangladeshi products as a least developed country (LDC). With economic development the local people’s purchasing power is also increasing in the domestic market. Therefore, Bangladesh has every potential to be an industrialised country, if a comprehensive legal framework is developed.

The government of Bangladesh has already enacted and partly implemented a long list of policies to promote local investment and attract foreign direct investment. For example, we have the National Industrial Policy-2010, the National Salt Policy-2011, National Handicraft Policy, Export Policy 2012-2015, Import Policy Order 2012-2015, Policy and Strategy for Public-Private Partnership (PPP)-2010, SME Policy Strategies-2005, Safeguard Rules-2010, Antidumping Rules-2008, Small and Medium Enterprise (SME) Credit Policies and Programmes, ICT Policy-2009, National Livestock Development Policy-2007, National Poultry Development Policy-2008, National Shipbuilding Policy-2012 etc. Objectives of all the policies are to promote industrialisation, ensure a fair competition, attract foreign investments, encourage the private sector to establish manufacturing enterprises so that more employment could be generated.

A large number of organisations, corporations and boards are working to implement the policies under different ministries. For example, the Ministry of Industries is working with the Bangladesh Chemical Industries Corporation (BCIC), Bangladesh Sugar & Food Industries Corporation (BSFIC), Bangladesh Steel & Engineering Corporation (BSEC), Bangladesh Small and Cottage Industries Corporation (BSCIC), Bangladesh Standards and Testing Institution (BSTI), Bangladesh Industrial Technical Assistance Centre (BITAC), Bangladesh Institute of Management (BIM), Department of Patents, Designs and Trademarks (DPDT), National Productivity Organisation (NPO), Office of the Chief Inspector of Boilers (Boiler), Bangladesh Accreditation Board (BAB) etc. The Ministry of Commerce is working with the Office of Chief Controller of Imports and Exports (CCI&E), Export Promotion Bureau (EPB), Bangladesh Tariff Commission (BTC), Bangladesh Tea Board, Registrar of Joint Stock Companies and Firms, Trading Corporation of Bangladesh (TCB), Bangladesh Foreign Trade Institute (BFTI), Business Promotion Council (BPC), the Institute of Cost and Management Accountants of Bangladesh, Institute of Chartered Accountants of Bangladesh (ICAB), Directorate of National Consumer Rights Protection etc. The Ministry of Finance is working with National Board of Revenue (NBR), Bangladesh Bank, Investment Corporation of Bangladesh (ICB), Bangladesh Securities and Exchange Commission (BSEC), Microcredit Regulatory Authority etc.  Not only these, the government of Bangladesh has established several ‘not-for-profit’ organisations registered under the Companies Act 1913/1994 to assist the government in promotion of industrialisation, employment generation and poverty alleviation through their respective activities. They include the Palli Karma-Sahayak Foundation (PKSF), Small and Medium Enterprise Foundation (SME Foundation), Social Development Foundation (SDF) and Bangladesh NGO Foundation.

All these organisations can be divided into two major categories. Some of them are regulators and some are facilitators. But there are some others playing the role of both regulator and facilitator. There are few facilitators trying to play the role of regulator as well. There are few areas of overlapping in the scope of more than one organisation. These areas of overlapping create confusion in the event of development interventions by concerned organisations. Sometimes the organisations cross their jurisdiction of work. But all of these are for wellbeing of the country. But today we are living in the age of specialisation. Without clearly distinct professionalism none can perform their duties accordingly. Therefore, it is the time to let the organisations play their role from their respective professional views. For example, over 90 per cent of Bangladesh’s business entities are small and medium enterprises (SMEs). The SME Cell of the Ministry of Industries, BSCIC, SME Foundation, SME and Special Programmes Department of Bangladesh Bank all are working with the SME Development. All these institutions are implementing their respective action plans for promotion and development of SME organisations. Therefore, any overlapping or look-alike work is undertaken by these institutions. There is a scope for better coordination among these institutions for reaping better results from their interventions.

Let us come back to the starting point that the government has so many policies and organisations to facilitate and promote industrialisation. All these policies are framed by the ministries or agencies without any hand-in-hand coordination with others. As a result, everybody is following their own policy or act without bothering about the other policies adopted by another organ of the same government. For example, the industrial policy offered a special facility or tax waiver to a particular sector for increasing their competitiveness in local or export market. But due to noncompliance with the tax, VAT or customs duty act, the National Board of Revenue (NBR) is unable to allow the same facility to that particular group. On the other hand, policies are the results of newer visions of the government while old laws and acts are hindering implementation of these policies, because policies are not equally mandatory for all organs of the government to comply with. Policies have a limited scope to prevail over a law or act.

Similarly, industrial development depends upon many factors of business environment. All the factors are not relevant to a particular ministry or agency of the government. For example, to develop an industrial cluster we need at least the following things like electricity, gas, water, roads, security, technology, raw materials and other support services. Supply of electricity, gas and water, construction of roads and security are the headaches of different organisations under different ministries. Therefore, it is very tough to maintain coordination among the concerned departments or organisations and and get their support to accomplish the single task of industrialisation.

On the other hand, all those policies have been framed from macroeconomic perspectives without taking into account distinctive strategies or any specific action plan or timeframe. If all the policies have the microeconomic versions with specific timeframes and the agencies responsible are identified, then the policies could be implemented in a better way.

But to get optimum results out of the long list of policies, we could think of a comprehensive act. The title of the act can be “Industrial Development Act of Bangladesh”. All the policies can be addressed in separate chapters of the act. The act could have both macroeconomic and microeconomic versions with time-bound duties and responsibilities of the concerned organs of the government. SME development, cluster development, low-cost labour-intensive industries, import substituting industries, cluster-based SME development, maximum value addition product, export-oriented industries, next generation business enterprises etc. could be the main pillars of this industrial development act.

A special secretariat under the supervision of the Prime Minister could take the lead in maintaining coordination among the relevant organisations, agencies and ministries to implement the industrial development act. A strong monitoring and evaluation team can be there to ensure transparency in implementing each component of the act by the organisations concerned by following predetermined timeframes. As the act is supposed to prevail over any other conflicting act, all government agencies will be bound to implement it on a priority basis. Thus the objective of industrialisation can be achieved within the shortest possible time. Without such comprehensive and coordinated efforts our dream would remain a dream even after another 43 years of Independence.


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Md. Joynal Abdin

Development Researcher, Columnist and Author

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