PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Report No.: AB6145
Project Name
Region
Country
Sector
Lending Instrument
Project ID
{If Add. Fin.} Parent Project ID
Borrower(s)
Implementing Agency
Environmental Screening
Category
Date PID Prepared
Estimated Date of Appraisal
Completion
Estimated Date of Board
Approval
Decision
Other Decision {Optional}
I.
BD Private Sector Development Project
South Asia
Bangladesh
Other industry (50%); Micro- and SME finance (20%);
Public administration- Industry and trade (10%);
Telecommunications (10%); General industry and trade
sector (10%)
Specific Investment Loan
P120843
NA
The Government of Bangladesh
ERD, BEPZA, BEZA, and BCC
{X}A { }B { }C { }FI
November 29, 2010
December 16, 2010
March 1, 2010
Project authorized to proceed to negotiations upon
agreement on any pending conditions and/or assessments.
NA
Country Context
Bangladesh achieved sustained annual GDP growth of approximately 6.3 percent in the
period FY05-091, despite the global financial crisis and global food price shocks. Growth
was underpinned by stable macroeconomic and prudent monetary policies, rising industry and
services output and continued high levels of remittances. Going forward, the Government of
Bangladesh’s objective is to develop a growth trajectory that will support an overall increase in
real GDP growth to 8 percent per annum and reduce poverty from 40 percent to 15 percent by
2021.
Remittances and exports have been the key drivers of growth. A large and industrious labor
pool, spread across the Middle East, Europe and the US, ensured a steady increase in
remittances, with inflows reaching US$11 billion in FY10. Strong export growth is based on
low, but steady FDI of one percent of GDP, with 51 percent in infrastructure, 24 percent in
services and 24 percent in manufacturing (most RMG).
1
The GOB fiscal year span the period from 1 July – 30 June.
The sustained growth in Bangladesh’s labor force of nearly 2 million a year is an asset that
nevertheless increases the country’s vulnerability. The Bangladesh labor force is estimated to
grow to 58.3 million in 2010-112. Creating productive employment will largely depend on
creating an environment conducive to private sector investment, particularly for labor-intensive
manufacturing and services.
II.
Sectoral and Institutional Context
The new Economic Zones and enhanced policy framework are intended to transform the
nascent potential in the services and manufacturing sectors. As with the RMG sector, FDI
can play an important role in accelerating technology transfer and skills upgrading. The
manufacturing sector can further gain from industry agglomeration that reduces transaction costs
and encourage spillovers.
Recent analytical work and policy dialogue point to some binding constraints to growth,
including (i) access to serviced land; (ii) power provision; (iii) access to skilled labor and gender
segregation; (iv) cumbersome bureaucracy and burdensome contract enforcement procedures,
and (v) access to finance, particularly to MSMEs as well as a lack of long-term finance.
The proposed PSDSP directly addresses the CAS’ strategic objective, namely to increase
transformative investments and enhance the business environment. It also contributes to
improved investment climate for private sector investment, by developing economic zones with
tailored infrastructure services and piloting reforms such as a moveable asset registry and dispute
resolution mechanism. In close collaboration with IFC, the proposed project will support the
development of a modern Economic Zone regime in order to accelerate export-led growth. The
project will also contribute to increased infrastructure services efficiency by enabling private
provision of infrastructure services within the zones.
III.
Project Development Objectives
The proposed Project Development Objective (PDO) is to increase employment through the
facilitation of investment in selected emerging growth centers in the manufacturing and services
sectors of the economy.
IV.
Project Description
The proposed PSDSP will include three components:



A Technical Assistance (TA) and capacity building component to support EZ related
institutions and business environment reforms;
Off-site infrastructure development in EZs not funded by the private sector; and
Technical Assistance to firms.
Government of Bangladesh (2009). “Steps Towards Change – National Strategy for Accelerated Poverty
Reduction II (FY2009-11)”
2
Component 1: TA and Capacity Building
Sub-component 1.1 - Capacity building for zone related institutions
This sub-component will provide TA and capacity building to those institutions crucial to
establishing and operating EZs in Bangladesh. These will include the Bangladesh Economic
Zone Authority (BEZA), the Bangladesh Export Processing Zone Authority (BEPZA), the PPP
unit in the PMO, the Ministry of Finance (MoF), the Board of Investment (BoI), the Department
of Environment (DOE), as well as specialized institutions such as the Hi-Tech Park Authority
(HTPA) and the Bangladesh Computer Council (BCC). Capacity building will focus on
developing proper economic criteria, planning targeted infrastructure development in the
selection of zone locations; conducting environmental and social assessments, and developing
the necessary background and marketing material for attracting developers and investors to the
EZs.
Sub-component 1.2 – Creating a conducive business environment within Economic Zones
This sub-component will provide TA to develop a more business-friendly environment within
zones. Activities funded under this sub-component will act as a pilot for wider business
environment reforms. Two reforms will be piloted under the project: i) developing a secured
lending regime for movable property and ii) setting up a special commercial court as a subdivision of the appeals court to settle commercial disputes of zone-registered companies or
between EZ companies and suppliers. The sub-component will also develop a one-stop shop
system within the EZ Authority to deal with firm registration, export and import licensing,
customs clearance, and other required regulations. Additional TA will provide for a legal and
institutional review and capacity building to establish these services within the zones.
Component 2: Public Investment Facility (PIF)
This component will invest in developing off-site infrastructure (last-mile infrastructure), as well
as internal infrastructure of a public-good nature, for targeted EZs, starting with the Kaliakoir HiTech Park. These investments may include land preparation and development, access roads,
sewerage systems, power distribution, and rail connections and landings. The PIF can also fund
some on-site investment, such as internal road networks, water and drainage systems, and
supporting private investment in common user facilities, such as effluent treatment plants. The
component will also provide compensation – i.e. resettlement costs - for affected households in
the development of the zones.
The project will begin implementation of this component with the proposed site at Kaliakoir,
which will be developed as a Hi-Tech Park. Public land has already been made available for the
Park and preliminary development has been completed. The Park will operate on 262 acres of
land that has been enclosed by a boundary wall. Some infrastructure has also been built up,
including an administrative building, basic internal road structure and an optical fiber network.
Full site surveys and feasibility assessments have also been conducted, funded by UK-DFID, for
both Kaliakoir and Comilla EPZ. An update of the master plan and social and environment
management plans developed for Kaliakoir and Comilla EPZ will be carried out before
implementation, following private sector feedback given during the road shows.
Component 3: Business Linkages and Product/Process Improvement
This component will support better linkages between firms located in the zones and local
suppliers. The project is aimed at increasing information exchange between these firms,
improving supplier product standards, and ensuring compliance with international labor and
environmental standards. It will also provide TA to firms through training and research
institutions working with groups of firms on:
i.
ii.
iii.
iv.
V.
VI.
Sourcing: TA will be provided to firms in the zones to assist with local sourcing;
Training Institutions: The component will support training institutions to develop
continuous technical training courses;
Social and Environment Audits: TA will be provided to firms to conduct social and
environmental management audits (labor, energy, water, processing, waste, etc.), and
Process development: The component will support research institutions in working with
firms to develop new products or processes.
Financing
Source:
IDA
UK-DFID
Total
($m.)
120
17.56
137.56
Implementation
The Ministry of Finance (ERD division) will be the implementing agency for the project. The
Ministry of Finance will delegate implementation of sub components (i.e. Kaliakor Hi-Tech
Park) to specialized agencies mandated by Government. The Ministry of Finance will delegate
such implementation via memorandum of understandings.
VII.
Safeguard Policies (including public consultation)
Safeguard Policies Triggered by the Project
Environmental Assessment (OP/BP 4.01)
Natural Habitats (OP/BP 4.04)
Pest Management (OP 4.09)
Physical Cultural Resources (OP/BP 4.11)
Involuntary Resettlement (OP/BP 4.12)
Indigenous Peoples (OP/BP 4.10)
Forests (OP/BP 4.36)
Yes
No
X
X
X
X
X
X
X
Safety of Dams (OP/BP 4.37)
Projects in Disputed Areas (OP/BP 7.60)*
Projects on International Waterways (OP/BP 7.50)
VIII.
X
X
X
Contact point at World Bank and Borrower
World Bank
Contact:
Title:
Tel:
Email:
Contact:
Title:
Tel:
Email:
Michael D. Wong
Sr. Private Sector Development Specialist
+1 202 458 5719
mwong1@worldbank.org
G. M. Khurshid Alam
Sr. Private Sector Development Specialist
5764+4250
kalam@worldbank.org
Borrower/Client/Recipient
Contact:
Mr. Arastoo Khan
Title:
Additional Secretary to the ERD
Tel:
+880 8112684
Email:
Implementing Agencies
Contact:
Mr. A. N. M. Safiqul Islam
Title:
Deputy Secretary, Project Director, BCC
Tel:
+88-02-8120188
Email:
safiqul_mosict@yahoo.com
Contact:
Title:
Tel:
Email:
IX.
Mr. A. K. M. Mahbubur Rahman FCA
Member Finance, BEPZA
+880-8650062
member-fin@bepza.org
For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D.C. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Web: http://www.worldbank.org/infoshop
*
By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the
disputed areas