industrial policy 2010 appraisal a. r. bhuyan
TRANSCRIPT
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Thoughts on Economics
Vol. 20, No. 03
Bangladesh Industrial Policy 2010:
A Critical Appraisal
Ayubur Rahman Bhuyan1
[Abstract: The draft industrial policy (2010) of Bangladesh,
announced recently, proposes an integrated strategy of economic
growth through rapid industrialization. It envisages an increase in
the industry sectors share in GDP to 40 percent by 2021, with the
proportion of the workforce employed in the sector concurrently
rising to 25 percent of the countrys total labour force. While manyof the provisions of the proposed policy were common to previous
policies as well, it has brought some improvements over the
immediate past (2005) industrial policy, in particular about the
classification of industry and redefinition of industry size in terms
of both fixed capital and the employment of labour. This paper,
however, expresses some reservations about certain provisions in
the proposed policy, for example, those regarding thrust sector
and regulated industries, the revival of sick industries, and a
guarded approach to divesting public sector enterprises merely for
purpose of protecting jobs. The paper attributes the failure of past
1 Former Professor of Economics at the University of Dhaka.
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8 Bangladesh Industrial Policy 2010
industrial policies to boost industrial growth to the policy makers
inability to address the many structural impediments and policy
failures that slowed down the pace of industrial activity. The paper
expresses optimism that if the structural impediments and policy
obstacles that retarded industrial growth in the past were
removed, the industrial sector in Bangladesh could be expected to
achieve a double-digit growth and come closer to reaching the
target of raising the industry sectors share in GDP to 35-40
percent in the next decade.]
I. Introduction
Government announced a draft Industrial Policy on 5 September
2010. The Cabinet Committee has already okayed the draft policy,which is now awaiting parliamentary approval. When approved by
the Parliament, the new policy will replace the previous industrial
policy announced in March 2005.
Government believes that rapid industrialization is key to the
countrys economic development.2 A densely populated country
with a population of around 150 million living on a land area of147570 square kilometer (56977 square miles),3 its economy is
2While the pace of industrialization in developing countries depends in a large measure on
factors like factor and resource endowment, country size, geographical location, social mores,
and international environment, industrial policy plays a crucial role in influencing industrial
growth (James, Naya, and Meier, 1987).3 While the population density per square kilometer of total area in Bangladesh is 977, the
population density per square kilometer of cultivated land is 1600.
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dependent mainly on agriculture, which accounts for a fifth of GDP
but provides employment to as much as 50 percent of the countrys
labor force. Since the countrys population and labor force are
growing rapidly every year, it is hardly possible that the growing
labor force can ever be absorbed in the agriculture sector, unless
the countrys industrial sector is sufficiently developed and
expanded to create additional employment opportunities. Given the
unfavorable land-man ratio and the under-developed state of the
countrys agriculture sector, the key to the generation of productive
employment lies in strong economic growth through the structural
transformation of the economy away from agriculture and toward
industry [Bhuyan, 2005].
The proposed industrial policy presents an integrated strategy for
achieving high economic growth in the country through rapid
industrialization. It has been prepared taking into consideration the
governments determination to achieve the Millennium
Development Goals (MDGs) by 2015, and halve the number of the
unemployed and hunger- and poverty-stricken people by 2017.
To alleviate poverty by creating additional employment
opportunities, the proposed policy aims to create job for at least
one man per family. It envisages rapid industrialization through
short-, medium-, and long-term measures, for raising the rate of
GDP growth to 8 percent by 2013, and 10 percent in 2017 and
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10 Bangladesh Industrial Policy 2010
thereafter. The policy reiterates the countrys well-publicized
desire to achieve the status of a middle-income country by 2021.
The proposed policy puts emphasis on private sector
industrialization efforts but at the same time vows to reform the
public sector enterprises to make them profitable.
A critical evaluation of the just-announced draft industrial policy is
the objective of the paper. Section II highlights the salient features
of the Policy, its goals, and strategies proposed to achieve the
desired policy objectives. Section III briefly mentions the industrial
policy provisions regarding re-classification of industry and re-
definition of industry size, investment incentives, institutional
arrangements for expanding industrial activity, and the
implementation, monitoring and evaluation of projects. Section IV
presents a critical appraisal of the proposed Policy. Concluding
observations and suggestions for improvements in the Policy
appear in the fifth and final section.
II. Policy Goals, Objectives and Strategies
The proposed industrial policy envisages an increase in theindustry sectors share in GDP to 40 percent by 2021 from the
present 28 percent, and seeks to raise the proportion of the
workforce employed in industry to 25 percent of the countrys total
labour force by 2021 from 16 percent now.
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To ensure the growth and expansion of the industrial sector, the
new Policy shall make available adequate opportunities for
establishing both import-substituting industries that will cater for
the domestic market and expanding and developing export-oriented
ones. To create higher value addition in exports, the new policy
will encourage transforming resource-based export industries into
process-based ones.
The Policy gives priority to providing the industrial sector with
adequate facilities of electricity, gas and water, and other physical
infrastructure like road, rail transport and telecommunications.
Agro-based, food processing, and labour-intensive industries will
receive priorities in matters of getting fiscal and other incentives.
Steps will be taken to raise investment in the tourism industry and
raise its efficiency.
The Policy puts emphasis on the development of small, medium
and cottage industries, including giving encouragements to women
entrepreneurs, to boost economic growth through creating more
jobs. It encourages the growth of SMEs in rural areas to reduce the
pressure of migration to urban areas.
The establishment and balanced development of industries in
different geographical regions of the country is a core objective of
the Policy. To that end, it recommends for establishing Economic
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Zones, Industrial Parks, High-Tech Parks, and Private EPZs for
rapid and balanced industrial development of the country. In
particular, it proposes to set up separate economic zones for sectors
such as textiles, ceramics and pharmaceutical ingredients. A
special law will be enacted for these purposes.
The proposed Policy relies on the premise that a vibrant and
dynamic private sector is the key to the countrys rapid industrial
growth. The growth and expansion of the private sector will
therefore be the main objective of the industrial policy. Public
investment shall be limited only to sectors considered crucial on
grounds of national security and in areas that might have a
crowding-in effect on private sector investment. Government will
only play the role of a facilitator.
The new Policy encourages the privatization of public sector
enterprises (PSEs) but in the event the government considers it
necessary to retain certain PSEs in the public sector, these
enterprises will be encouraged as complementary and competitive
to private sector industries. The Policy, however, imposes a
condition that, while privatizing PSEs, alternative employment of
workers that are likely to become redundant after privatization
should be ensured.
Public Private Partnership (PPP) shall be an important element in
the proposed industrial policy. Under the Policy, PPP projects like
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flyovers, elevated expressways, monorail, underground rail,
economic zones etc will be approved under the Private Sector
Infrastructure Guidelines. Funds will be arranged under PPP
initiatives for developing infrastructure for industrial clusters,
industrial parks, the development of labour-intensive industries,
and setting up environment-friendly industries.
The policy will provide necessary protection to local industries
from unfair competition from dumped or smuggled imports. It will
formulate appropriate measures to tackle problems of sick
industries and devise an exit policy for industries that have long
remained sick. It will adopt appropriate measures to rehabilitate
sick industries, on a case to case basis, but at the same time
formulate a law to rid the nation of sick industries.
Sick industries, if found potentially viable, may be converted into
public limited companies to make them efficient, competitive, and
profitable. Government shall not undertake any new projects to
replace sick industries without settling their liabilities. The new
Policy is, however, in favour of adopting appropriate reforms in the
jute sector, diversifying the uses of jute, and taking measures to
make jute industries profitable. It will also seek to improve the
management of public sector cotton textile mills to make them
efficient and profitable.
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The new Policy seeks to make the industrial sector environment-
friendly and encourage industrial enterprises to adopt pollution
control measures. To that end, Government will ensure that the
industrialization process is environment-friendly and conforms to
specific WTO agreements and standards.
III. Classification of Industry and Redefinition of Industry
Size, Investment Incentives, Institutional Arrangements for
Industrial Expansion, and Implementation and Monitoring
Mechanism
3.1 Industry Classification and Redefinition of Industry Size
The proposed Policy classifies industries into five categories:
Large, Medium, Small, Cottage, and Micro. The industrial policy
of 2005 classified industries into only three categories: Large,
Medium and Small. Cottage and micro industries are new additions
in the industry classification under the 2010 Policy.
In addition to reclassifying industries, the proposed Policy has
given a uniform definition of the size (large, medium, small, and
cottage) of Manufacturing and Service industries in terms of both
fixed capital and labour employment.
The new policy includes more industries in the category of
Service industries, raising their number to 30, from 19 in the
2005 and 5 in the 1999 policy. The number of Reserved
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industries (industries reserved for only public sector investment),
however, remains unchanged at 4 (four) the same as in the 2005
policy.
The number of Thrust Sector industries has been brought down to
30 in the 2010 policy from 33 in the 2005 policy. Thrust sector
industries are those industries, which, according to the framers of
the Policy, have high growth potential. These industries shall be
eligible for special fiscal incentives and supports, viz., tax
exemption, tax at reduced rates, avoidance of double taxation, etc.,
and perhaps easier access to credit facilities from banks on
concessional terms.
The industrial policy of 2011 has introduced a list of Regulated
industries. There are 17 industries in the list, which will be
regulated because of concerns over national security or to protect
the environment, public health, and national interest. Government
will frame rules from time to time for these regulated industries.
The Industrial Policy 2010 allows the private sector to set up such
regulated industries, but only subject to government rules and only
with the express approval of the government.
The proposed Policy provides for special incentives to encourage
Women Entrepreneurs. Women entrepreneurs, who may either be
sole proprietors or hold 51 percent of shares in partnership or joint
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stock companies, shall be eligible for receiving these special
incentives.
3.2 Investment Incentives
There is a long list of tax incentives in the proposed policy, viz.,
tax exemption, tax holiday, accelerated depreciation allowances,
tax policy benefits, incentives for NRBs, equal treatment for local
and foreign investors etc.
The prevailing tax holiday facilities (valid until 30 June 2011) shall
continue under the proposed Policy. At present, industrial
establishments in Dhaka and Chittagong Divisions, except the three
hill districts, enjoy 100% tax exemption in the first two years, 50%
tax exemption in the next two years, and 25% tax exemption in thefifth and final year. In the case of Rajshahi, Khulna, Sylhet and
Barisal Divisions and the 3 hill districts, prevailing tax exemptions
are 100% in the first three years, 50% in the next three years, and
25% in the seventh and final year.
The provision of accelerated depreciation allowances shall
continue until 30 June 2010. The prevailing four-tier customs dutyrate structure shall also continue under the proposed industrial
policy. The customs duty rates in force are 2.5% for machinery and
spare parts, 5% for basic raw materials, 10% for intermediate
products, and 25% for finished products.
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The new Policy will ensure that investors can invest without any
hassles and undesirable official interference. It calls for the
simplification of investment sanctioning procedures and for the
removal of all legal complexities, delays and red tape in decision-
making to give prompt services to investors.
To meet the demand for industrial term loans, the policy
recommends institutional reforms in banks and financial
institutions. The capital market shall be strengthened to enable it
raise more industrial investment from the secondary market.
The new Policy will encourage both foreign and domestic
investment. It will seek to rationalize existing incentives to attract
investment in sectors in which the country has a comparative
advantage.
3.3 Institutional Arrangements for Expanding Industrial
Activity
The Policy proposes to adopt well-conceived medium- and long-
term measures for the development of the industrial sector and to
devise workable and efficient institutional arrangements for
expanding industrial activity and a mechanism to monitor the
progress in the implementation of industrial sector projects.
The Ministry of Industries shall be the focal point for the
promotion of industrial activity. The Board of Investment (BOI)
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shall be the main agency to assist and develop private sector
industrial investment. BSCIC and EPZs will allot industrial plots in
their respective areas.
The Policy seeks to make the programmes of different training
institutes under different ministries engaged in human resource
development more dynamic and effective. The training institutes
named in the Policy are Bangladesh Institute of Management
(BIM); Bangladesh Institute of Technical Assistance Centre
(BITAC); National Productivity Organization (NPO); Small and
Cottage Industry Training Institute (SCITI); Training Institute for
Chemical Industries (TICI); National Hotel and Tourism Training
Institute (NHTTI) of Bangladesh Tourism Corporation; different
training institutes under Jute and Textile Ministries and the
Corporations under them; and other training institutes under
Bangladesh Handloom Board and Bangladesh Sericulture Board.
3.4 Implementation, Monitoring and Evaluation
A high-level 15-member body National Council for Industrial
Development (NCID) with the Prime Minister as president and
the Industries Minister as vice-president is proposed in the Policy.
NCID shall meet at least once in six months. There shall be a 24-
member executive committee of the NCID (ECNCID) with the
Industries Minister as its convener.
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The Policy refers (paragraphs 16.4 and 16.7) to the Bangladesh
Better Business Forum (BBBF) and the Regulatory Reforms
Commission (RRC) (formed during the latest Caretaker
Government regime) to promote contact and cooperation between
industrialists and government policymakers and create a conducive
business environment.
There shall be a coordination committee (comprising 18 members)
to coordinate activities of different government organizations.
Programmes and action plans of various private sector
organizations shall be utilized for effective implementation of the
2010 industrial policy.
IV. A Critical Appraisal of the Industrial Policy 2010
4.1 Reclassification of Industry and Redefinition of Industry
Size
A welcome feature of the 2010 industrial policy is that it retains all
the good provisions of the 2005 policy. For example,
1) It recognizes the dominant role of the private sector in
industrial development in which the government will act
only as a facilitator.
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2) It lays emphasis on both export orientated and import
substituting industries and raising their competitiveness in
both domestic and international markets.
3) It proposes to give special incentives and support measures
to assist women entrepreneurs, and for promoting agro-based
and food-processing industries.
The 2010 Policy has also brought an improvement over the 2005
policy by changing the classification of Industry and giving a new
definition of industry size. Thus,
1) The 2010 policy classifies industry into five categories
large, medium, small, micro, and high-tech industries. The
2005 policy classified only three large, medium, and small.
2) The 2010 policy has also changed the size definition of
manufacturing and non-manufacturing industries.
3) The 2005 policy defined the size of manufacturing industries
in terms of the amount of fixed capital investment, and the
size of non-manufacturing industries in terms of the
employment of workers.
4) The 2010 policy has redefined all types of industries
whether manufacturing or non-manufacturing (service) in
terms of both fixed capital and the employment of labor.
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5) The industry-related people would definitely appreciate the
2010 industrial policy provision that has recognized micro
and high-tech industries as separate categories of industry.
6) The reclassification of industries in the new Policy shall
enable micro and high-tech industries avail of the facilities
catering for their special needs and problems.
7) The industry-related people would also welcome the
redefinition of industry size because, for purpose of
ascertaining the presence of anti-competitive or monopoly
practices, both capital and employment of labour are
necessary to measure the true size of industrial enterprises.
4.2 Thrust Sector Industries
In order to turn the industrial sector into a major instrument of
economic growth, the new industrial policy has made a long list of
thrust sector industries. Although the number of thrust sector
industries in the new Policy is fewer (30) than in the 2005 policy
(33), the list is still large, even unwieldy. The rationale behind the
long list of thrust sector industries is difficult to understand.
1) The list, of course, includes some industries with high
potential, but there are others, which do not produce
standardized products, require only small amounts of capital,
and have very small markets for their products.
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2) The long list of Thrust industries may in fact detract
attention from the relatively more important ones that
genuinely need significant fiscal, financial and
infrastructural support.
3) Moreover, the proposed Policy makes incentives for the
thrust sector industries conditional to their performance and
contribution to the economy. The incentives will thus not be
automatic, which will create confusion among new
entrepreneurs that will need guaranteed access to the
declared incentives.
4) Declaring some industries as belonging to the thrust sector is
not without peril. To cite an example, when garments and
leather industries were declared as thrust sectors in the past,
many enterprises took advantages of their being so
designated and were able to obtain huge amounts of bank
loans but later turned loan defaulters. Many banks suffered
as a result.
5) On these considerations, limiting the thrust sectors to a few
promising industries would be more realistic and
meaningful.
4.3 Regulated Industries
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1) The proposed industrial policy includes a large number of
industries (17 in all) in the list of Regulated Industries. This
provision will require government to frame wide-ranging
rules to regulate the related industries thereby increasing the
sphere of government, whereas the declared objective and
strategy of the industrial policy is to enhance the role of the
private sector in industrial activity.
2) The highly restrictive provision that the registering
authorities BOI, BSCIC, BEPZA etc. shall not register
the regulated industries without the express approval of the
concerned Ministry/Organization could hinder private sector
initiative.
3) The sphere of Government should be limited essentially to
the provision, development and maintenance of essential
infrastructure and utilities in which the private sector is
unlikely to show any interest.
4) All unnecessary regulations should therefore be withdrawn.
5) Regulations that are necessary, for example, regulations
pertaining to environment, and worker health and safety
policies, should be set realistic goals, implemented
efficiently, and subjected to periodic review.
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6) The list of regulated industries may therefore be shortened
and contain fewer and a limited number of industries.
4.4 Policy Contradictions about Private and Public Sector
Involvement
1) The proposed industrial policy suffers from a contradiction.
On the one hand, it recognizes the role of a vibrant private
sector in industrial growth, but on the other hand it plans to
go ahead with SOEs and calls for raising their profitability.
2) It is hardly likely that an SOE will ever behave like a profit-
seeking entity and improve its efficiency. Asking a public
sector manager to earn profit is like asking a monk to run a
casino. Government should not therefore get involved inrunning businesses. Its role should be that of a facilitator
instead.
3) It is common knowledge that a market economy cannot
thrive if there is a large presence of SOEs. The large
amounts of accumulated defaulted loans now in the state-
owned banks are because of the presence of the public sectorin the operation and management of industries.
4) A lot of bad debt was created in the decade of the 1980s in
the name of rescuing the ailing jute industry. At the moment,
too, there is an official move to forgive the defaulted loans in
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the name of reviving the jute industry. It is learnt that in the
Agrani Bank alone, government has submitted a proposal to
forgive defaulted loan worth Taka 1 crore.
5) Given the continuing operating losses of SOEs, discarding
the principle of divesting the loss-making SOEs just for
purpose of protecting jobs is fraught with the danger of
increasing the number of sick industries.
6) A proper solution of the problem of the ailing SOEs is their
outright privatization.
4.5 Public Private Partnership (PPP)
1. The emphasis on PPP in the proposed industrial policy is
laudable but the concept is still in a rudimentary stage.
2. Government will need to act expeditiously to devise a
transparent mechanism and frame well-defined rules for
participating in and mobilizing funds for the PPP projects.
3. Usually in the advanced countries, the debt-equity ratio in
PPP projects is 70:30, and in those countries the 70% debt
are generally funded by commercial banks, specialized
financial institutions, and international financial institutions.
4. In Bangladesh, given the weak state of the capital market,
the debt requirement will perhaps be much higher.
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5. Hence, in order to enable the private sector entrepreneurs to
participate in PPP projects, the banking sector should be
required to extend credit on easier credit terms.
4.6 Investment Incentives
4.6.1Tax Holiday and Accelerated Depreciation Allowances
1) The continuation of the prevailing tax holiday facilityproposed in the Policy would greatly help the private sector
industrial entrepreneurs.
2) However, the tax holiday facility should not be limited for a
given time period but extended for further periods on case-
by-case basis.
3) Area wise tax exemption facilities currently enjoyed by
industrial establishments may be made more liberal in the
proposed Policy.
4) Thus, in Dhaka and Chittagong Divisions, excluding the
three hill districts, the exemption could be extended to a
period of seven years (instead of the present five years):
100% in the first four years, 50% in the next two years, and
25% in the final and seventh year.
5) In the other four Divisions and the three hill districts,
exemption could be allowed for nine years: 100% in the first
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five years, 50% in the next three years, and 25% in the next
and ninth year.
6) The business community will surely appreciate the
continuation of the provision of accelerated depreciation
allowances. Nevertheless, there is a strong case for bringing
more industries under the tax holiday facility, because tax
holiday is widely regarded as superior to accelerated
depreciation allowances.
7) Needless to mention, tax holiday facility should be given to
specific industries, only if its rationale is established by
sound economic criteria.
4.6.2 Other Fiscal Policy Measures
a) Keeping in view the need of the local industries to remain
competitive, it would be advisable to reduce the customs
duty rates on machinery and spare parts, basic raw materials,
and intermediate products from the prevailing 2.5%, 5%, and
10%, to o.5%, 2.5%, and 5%, respectively.
b) Moreover, there should not be any VAT or any other duty on
the import of machinery and spare parts and basic raw
materials.
c) However, a reasonable rate of customs duty may be imposed
on intermediate products that have domestic production.
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1. The proposed industrial policy 2010 contains provisions,
which appeared in almost all past industrial policies starting
from the New Industrial Policy of 1982 to the Industrial
Policy of 2005.
2. To name a few, the common provisions relate to expanding
private sector participation in manufacturing, increasing the
efficiency of public sector enterprises, liberalizing the import
regime, providing incentives to exporters, liberalizing the
foreign investment regime, and offering attractive incentives
to foreign investors.
3. However, these provisions achieved little by way of raising
investment levels or achieving sustained industrial growth.
5.2.1 Why Did Past Industrial Policies fail?
1) Past industrial policies were not effective because they
lacked a strategic vision or a clear direction for industrial
development.
2) The policies scarcely addressed the hard-core problems that
hindered industrial activity, thus making the policy
incentives meaningless.
3) There was virtually no recognition in the policies of the
supply-side constraints, both structural and policy-
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induced, that were the major impediments to the expansion
of private sector manufacturing industries.
5.2.2 Major Structural Constraints impeding industrial growth
Major Structural Constraints that hindered industrial growth
include
a) limited access to credit, its high cost, legal or illegal, andprocedural complexities in obtaining credit from banks
b) poor physical infrastructure
c) acute shortage of energy, and unreliable supply of power and
other utilities such as gas and water
d) lack of skilled labor and the tendency for labor to be militant
e) competition from dumped and smuggled imports
f) pervasive corruption in bureaucracy, particularly in the
administration responsible for delivery of public services
g) poor law and order conditions, and
h) growing incidences of crime and extortion at every stage
starting from production to distribution and marketing of the
products.
The afore-mentioned structural impediments continue to vitiate the
business climate and dissuade entrepreneurs to bring in new
investment or expand the existing ones. This also explains why
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foreign investors are not willing to invest in this country despite the
availability of attractive incentives. Foreign investors want a
congenial, secure, business environment, not just incentives. If the
local investors are hesitant to invest, why will the foreigners invest
in this country?
5.2.3 Policy Failures that affected Industrial Growth
a. Apart from the structural constraints mentioned in the
foregoing, manufacturers faced a number of problems,
induced by policy failures.
b. Many entrepreneurs, in particular the foreign investors,
complain that most policy reforms in this country are
incomplete and remain only in paper.
c. For example, during the early 1990s, the government opened
up the economy, lowered tariffs, eliminated quantitative
restrictions, and used the floating exchange rate mechanism
to promote exports. But the progress in these reforms was
not maintained.
d. Moreover, the lack of complementary reforms to improve
the conditions of power infrastructure, telecommunications
and financial services has meant below potential benefits
from increased openness.
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5.2.4 Suggested Remedies for Structural and Policy-induced
Constraints
1) The proposed 2010 Industrial Policy does not appear to
address the above-mentioned structural and policy-induced
problems very seriously.
2) Some of the measures proposed in the policy are largely
peripheral in nature. For example, the decisions to have large
thrust/service/regulated sectors or to give new definitions to
industry do not address the genuine problems of the
industrial sector.
3) In order to take full advantage of emerging global
opportunities, Bangladesh needs to remove the structuralimpediments and address the weaknesses in its domestic
policy environment.
4) The root causes of the problem lie in the fundamental
governance issues in power infrastructure, finance,
enforcement of law and order, and eradication of corruption.
5) Without improvements in these areas, the mere
announcement of an ambitious industrial policy with lofty
objectives is unlikely to help achieve a sustained growth of
the countrys industrial sector.
5.2.5 Addressing Sector-specific Problems
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1. Apart from addressing the broader issues centering structural
and policy-related constraints, the proposed industrial policy
should also address the sector-specific problems faced by
different industries.
2. While the most common problems faced by all industries are
those of infrastructure, capital and technology, some of the
problems are specific to particular industries.
3. The proposed industrial policy should incorporate
appropriate provisions to periodically monitor and address
the specific industry-related problems.
5.2.6 Policy toward Foreign Direct Investment (FDI)
a) Industrial policy should not consider FDI merely a means of
complementing domestic resources for industrialization. It
should also ensure that foreign investors bring in new
technology in the country. A strict screening of FDI would
therefore be necessary.
b) To that end, the proposed industrial policy should clearly lay
down that foreign investors shall not be accorded permission
to invest and conduct business in this country unless they
brought the latest technology.
5.2.7 Protection of the Environment
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1) The proposed industrial policy lays strong emphasis on the
protection of the environment and directs manufacturing
enterprises to control environmental pollution by setting up
effluent treatment plants (ETPs) and strictly comply with
environment-related laws and regulations.
2) While the emphasis on environmental protection is highly
welcome, it will be necessary for the government to adopt
appropriate measures that will make the private sector
enterprises tasks easier to take effective steps against
environmental pollution and desist from such activities as
may cause environmental pollution.
5.2.8 Industrial Policy needs to be simple and easily
implementable
a) The test of a good policy lies in its simplicity and
implementability.
b) With 16 elaborate chapters, the proposed industrial policy
document appears to be rather large.
c) Unduly long and elaborate policy documents may have the
unintended effect of the crucially important objectives
getting lesser priority.
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Thoughts on Economics 35
d) As regards implementation, the availability of adequate
resources, whether institutional, financial, or human, will be
crucially important.
e) There will be the need for better coordination among
concerned ministries and implementing agencies to improve
policy implementation.
5.2.9 Improving Governance
1. The implementation of industrial policy in Bangladesh
remained weak in the past because of inherent bureaucratic
complexities, red tape, and delays in decision-making. The
proposed industrial policy will need to address these
problems seriously.
5.2.10 Conclusion
Given the slow growth experience of the industrial sector
over the past three decades, the target of raising the
industrial sectors share to 40 percent of GDP by 2021 may
appear a little ambitious.
Nevertheless, if the state machinery were able to improve the
quality of governance, and if all structural and policy
obstacles to industrial expansion as identified in the
foregoing could be overcome, Bangladesh could expect to
achieve a double-digit industrial growth in the coming years
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36 Bangladesh Industrial Policy 2010
and move closer to achieving the target of raising the
industry sectors share in GDP to 35-40% in the next decade
as set by the 2010 industrial policy.
REFERENCES
Bhuyan, A.R. Industrial Policy in Bangladesh: A Survey.
Thoughts on Economics, 15(3), July-September 2005.
GOB: Ministry of Industries.New Industrial Policy, 1 June 1982.
GOB: Ministry of Industries.Industrial Policy 1991, July 1991.
GOB: Ministry of Industries.Industrial Policy 1999.
GOB: Ministry of Industries.Industrial Policy 2005, March 2005.
GOB: Ministry of Industries. Draft Industrial Policy 2010,
September 2010.
James, W.E., S. Naya and G.M. Meier. Asian Development:
Economic Success and Policy Lessons. San Francisco, Cal., USA:International Center for Economic Growth, 1987.