INDUSTRIAL POLICY OF BANGLADESH
Before starting the discussion about industry policy of Bangladesh, here is the
short preview of industry policy around the world. After this discussion we will
move forward to the industry policy of Bangladesh.
Industrial Policy is defined as the strategic effort by the state to
encourage economic transformation, i.e. the shift from lower to higher
productivity activities, between or within sectors. Specifically, industrial policy
refers to “any type of selective government intervention or policy that attempts
to alter the structure of production in favor of sectors [or activities] that are
expected to offer better prospects for economic growth in a way that would not
occur in the absence of such intervention in the market equilibrium”
Industrialization is the first and foremost requirement of rapid economic
development of a country. The industrialization is not only helpful in the
development of industries but it also promotes agriculture, trade, transport,
foreign trade, services and social sectors of the economy. It increases
employment opportunities, national income, per capita income and living
standard of the populace. Therefore, an industrial policy is required to establish
healthy traditions of industrialization and to guide, regulate and control (if
required) industrial development. The industrial policy of a country is influenced
by the ideology ‘and principles of the concerned government. The industrial policy
helps the country making it self-sufficient and prosperous by preparing a
structure and basis of industrial development. Hence, the industrial policy of the
govt. must be well defined, clear and progressive. Moreover, it should be adhered
to and implemented earnestly.
A key aspect of modern industrial policy is embedding private initiative in a
framework of public action to encourage diversification, upgrading, and
technological dynamism to achieve development in the twenty-first century.
Development and Modern Industrial Policy in Practice provides an up-to-date
analysis of industrial policy. Modern industrial policy refers to the set of actions
and strategies used to favor the more dynamic sectors of the economy.
Historically, traditional industrial policies tended to adopt a sector-based and in
many cases protectionist approach, supporting industries such as steel and coal.
These policies might have been reasonable in post-war Europe to help rebuild the
continent and boost sectors requiring heavy investment but this kind of policy
makes no sense in today’s globalized world and given the new technologies that
have reduced the minimum scale required for production in many industries.
Moreover, the financial system is now able to fund large investment projects. As a
consequence, new industrial policy has tended to adopt a more general approach,
analyzing the economy’s activities as a whole and determining what is expected
from them. New industrial policy is therefore based on two fundamental actions.
The first consists of creating the appropriate regulatory and legislative framework
that respects copyright, does not inhibit innovation and ensures that services
associated with industry can flourish. The second is to identify those economic
activities that might be held back by faults in the market and, in turn, design
policies to help these activities realize their full potential.
industrial policy is currently undergoing a transformation in parallel with the
production and technological changes occurring in the world economy. The main
function of new industrial policy is to design policies that help the production
sector to prosper and grow. It is not a question of favoring one sector at the
expense of another but of creating the right conditions to foster innovation,
growth and job creation. Such a task is motivating but not easy and Europe’s
public powers would be well-advised to buckle down and get down to business as
soon as possible.
Bangladesh is a developing country, and the present government is striving
relentlessly to attain rapid economic development in the country. Many programs
taken so far have been carried out successfully. Despite a lack of resources faced
by the government, development programs in the key sectors have continued. At
the same time, considering the importance of the private sector, an all-out
support is being provided to initiatives taken in this sector. As a result, a new kind
of dynamism is under way in both public and private sectors. In this backdrop, it is
essential to examine various aspects of industrialization and its impacts on overall
economic activities. Given the present environment of global competition, the
private sector is playing an important role in the industrialization of the country.
Therefore, the Government in the Ministry of Industries has taken the role of a
facilitator. Faced with the challenges of the free market economy and
globalization, the government has accepted private ownership and management
of industrial enterprises as one of the major guiding forces in achieving economic
growth. Besides this, the government has also brought about many constructive
and timely reforms in the running of businesses, and liberalized trade so that
private entrepreneurs can seize opportunities of establishing and running
industrial enterprises profitably and freely.
In the meantime, quite a number of publicly managed industrial enterprises have
already been sold out and transferred to private ownership. In order to establish
economically prospective industries in industrial sub-sectors, there are plans to
set up industrial parks and special economic zones so that huge amount. of
unused and abandoned land can be utilized. All this is aimed at fostering
industrialization and economic development and generating employment
opportunities in the country. To reduce poverty and generate employment
opportunities, more efforts are needed to establish agro based industries as well
as to raise agricultural production. This will ensure the protection and fair price of
agricultural products and employment of a huge number of unemployed people.
In order. to create further employment opportunities beyond the agricultural
sector, initiatives should be taken to set up small, medium and large industries
across the country. If these types of industries are set up in a planned way, then
unemployment rates will decline and poverty alleviation will be accelerated. With
these objectives in mind, the Industrial Policy has been radically reshaped.
In 1947, the Indian subcontinent was divided into two parts. One was India and
the other one was Pakistan. Pakistan had two parts. One was West Pakistan and
the other one was East Pakistan, which is now known as Bangladesh. The
government of then West Pakistan dominated the people of this country in
different sectors. In the economic sector, the discrimination was the most. Most
of the industries of Pakistan were in this country. However, the profit from them
was taken to West Pakistan. The progress in jute manufacturing started in that
period. Jute manufacturing sector is one of the oldest traditional manufacturing
sectors of Bangladesh, which emerged in erstwhile East Pakistan in the early
1950s. During the1960s and 1970s major share of the manufacturing sector in
national income and manufacturing employment was accounted for by this
sector. Exports of jute and jute goods were the two most important sources of
foreign exchange of Pakistan during the 1960s. The East was subjugated, as all the
revenue went to West Pakistan. In 1971, with the liberation war of 9 months,
Bangladesh became independent. As after the war, the country was left in dire
states, the industrial development was very slow. However, Ready Made
Garments (RMG) started during this period. And in this sector, Bangladesh could
lay claim to considerable success. Today garment export is the main source of
foreign exchange earnings. Its success was not necessarily influenced by
government policy but essentially by outside forces. It originated in the 1970s
when the investors of other South East Asian nations ventured to set up garment
factories in Bangladesh and to work around the export quotas imposed on their
native countries by the United States. In the 1980s, the Pharmaceutical Sector
made advancement in Bangladesh. It is one of the most developed hi tech sector
which is contributing in the country's economy. After the circulation of Drug
Control Ordinance - 1982, its development accelerated. During the 80s, other
sectors like tea manufacturing, leather factories etc also gained importance. In
1990s, sectors like ship breaking, steel, cement and cold storage goods etc
developed and gained momentum. From 2000 to 2012, many industries started
their journey successfully, and contributed to the economic growth of
Bangladesh. Among them are- electronics, glass, aluminum, plastic, cycle, and
ceramic etc. industries. To sum up the whole thing, we can say that after 1971,
Bangladesh is slowly and steadily turning its attention to develop its economy,
through industrial development, moving away from the agricultural sector.
The industrial sector has historically been the sector that has driven growth as
countries have moved from low to middle income status. This is because industry
can provide high-wage employment for large numbers of workers and can raise
social productivity by producing high- value goods on a mass scale. Poor countries
can earn valuable foreign exchange by exporting manufactured products and the
foreign exchange can be used to invest in newer machines and technologies so
that a rapid move up the technology ladder becomes possible. The average
productivity of industry is higher than in agriculture or most service-sector
activities, so as people move out of agriculture into industry, Gross Domestic
Production (GDP) increases. Bangladesh as a country with a poor land-person
ration is unlikely to prosper through agricultural growth alone. Agriculture is
unlikely to deliver rapid growth in Bangladesh because of the difficulty of setting
up large-scale farms that can compete with countries that specialize in agriculture
such as Australia or Argentina. Bangladesh has natural resources but that can be
exploited, with the exception of natural gas. Thus, industrialization and
specialization in manufacturing is the obvious way in which Bangladesh can raise
its per capita income and social productivity. The industrial sector consists of
manufacturing, together with utilities (gas, electricity and water) and construction
main industries, textiles and apparel, jute, sugar, tea, leather,
telecommunications, pharmaceuticals, cement, ceramics, shipbuilding, fertilizer,
food processing, paper newsprint, light engineering, etc.
The Bangladesh government gives importance to the private sector as a driving
force of industrialization, and has brought about constructive and realistic
reforms in formulating policies. The government will aid in the following way to
play a supporting role through concerned public institutions: (a) Before setting up
industries, all foreign investors will register with concerned offices in a measured
manner. b) The Bangladesh Small and Cottage Industries Corporation will allot
industrial plots in its own industrial areas and in other industrial areas created
with specific objectives. Similarly, the Bangladesh Export Processing Zones
Authority (BEPZA) will allot plots in its own areas. The Board of Investment will
make necessary recommendations and take steps to allot land where public land
is available. (c) The concerned utility agencies will determine the timeline for
providing electric power, gas, water and sewerage, and telephone connections in
consultation with relevant authorities and provide clearance regarding
environmental pollution. Wherever possible, these authorities will provide their
services through one-stop service centers. (d) The Board of Investment and BEPZA
will approve, as necessary, the royalty, technology or technical assistance fees
and the appointment and remuneration of foreign employees. (e) The sponsoring
authority will provide entrepreneurs with advance information in order to avoid
investment risks because of unplanned and excessive investments in certain
sectors.
Industrialization is an important prerequisite for rapid socio-economic
development, attaining high growth, employment generation and ensuring
people's standard of living. To meet this end, Ministry of Industries has been
providing necessary facilities and assistance in formulating policies and strategies
in country's industrial sector. In order to accelerate industrial development
appropriate Industrial Policy has been formulated. The contribution of this sector
in economy (GDP) is increasing gradually. In FY 1980-81 industrial sector
contributed 17.31 percent to the economy. This contribution increased to 32.42
percent in FY 2016-17. It stood at 33.71 percent in FY 2017-18. The vision of the
Ministry is to elevate Bangladesh into middle income country through
industrialization by 2021. To implement this vision, Ministry of Industries is
formulating appropriate industrial policy, reconstructing and reforming stateowned industrial enterprises, development of small, medium and cottage
industries, providing policy support to large industries, protecting products’
standard and preserving intellectual property etc. In this regard, it has already
enacted National Industrial Policy, 2016, Trademarks Act, 2009, Industrial Plots
Allotment Policy, 2010, Salt Policy-2011, The Ship Breaking Recycling Rules 2011,
Geographical Indication Act, 2013, Guidelines for the Industrial Development
Award 2013. In addition, the CIP (Industrial) Selection Policy, 2014, National
Motor Cycle Industry Development Policy, 2017, SME Policy and Handy Craft and
Cotton Industry Policy have been formulated.
The industrial sector is likely to grow rapidly over the next decade raising its
contribution to the country's GDP to 30 to 35 percent, and the workforce in this
sector is expected to increase to 35 percent of national employment need. In
order to attain this growth in this sector, special importance has been given in the
Industrial Policy on agro-based and agro processing industries and on steps to
overcome possible adverse conditions in the export-oriented garment sector.
Importance has also been given on considering the SMEs and cottage industries
as one of the major driving forces, aiding women entrepreneurs on a priority
basis, setting up special economic zones in different parts of the country,
improving the quality of industrial products to world standard, marketing of
goods at competitive prices, and enhancing productivity in the industrial sector.
The Industrial Policy-2010 aims at achieving the Millennium Development Goals
(MDGs) and, reducing unemployment and the proportion of the population
afflicted by poverty and hunger to less than half by 2017 through the adoption of
short, medium and long-term programs to help build a modern and vibrant
industrial sector. Industrial Policy-2010 also pledges that no effort will be spared
in raising the growth rate of the Gross Domestic Product (GDP) to 8 percent by
2013, further to 10 percent between 2017 and 2021, and thereby to elevate.