Country
Profile
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Bangladesh
Bangladesh
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Introduction
Bangladesh, a founder member of WTO, has been pursuing policies and
institutional reforms towards a free market economy in line with the prevailing
world trend. The government has embarked upon an outward looking export-led
industrialization strategy in early eighties and has been continuing the same
to take advantage of liberalized world trade regime to achieve faster rate of
growth of GDP and overall economic development. The major elements of the
existing trade policy, among others, are:
o) Liberalized import and import procedures with no need of
licensing.
o) Rationalization of the tariff structure with a maximum rate of 37.5%
import duty in 1999-2000.Average rate of protection dropped from 100% in 1985
to 22% in 1996.
o) Reduction in quantitative restrictions (QRs.), the coverage of which
has been reduced from 42% in 1985 to only 2% percent of imports in 1996.
o) The exchange rate policy regime is more unified, flexible and
market-based. Local currency Taka (BDT) is freely convertible for current account
transactions.
o) IMF consistent counter trade/Special Trading Arrangements are
allowed.
o) Export promotion measures are specific and transparent.
To provide continuity and stability, the government has formulated Five
Year Export and Import Policies from 1997 and envisaged a private sector-led
growth policy in the Export Development Strategy of the Fifth Five-Year Plan
(FFYP 1997-2002).
The Export Policy, Import Policy, Industrial Policy, Telecommunication
Policy, Energy Policy, Foreign Exchange Policy, Manpower and Labour Policy,
etc. are briefly narrated below
Export Policy
The Export Policy 1997-2002 has been designed to operate in the imperative and opportunity of the market economy with a view to maintaining growth of export and narrowing down the gap between import payment and export earnings.1.1 Objectives of Export Policy
o) Diversify the range of exports and improve their quality
o) Set up backward-linkage industries and services and promote use of local inputs
in export products to maximize value addition particularly in textile
sector
o) Extend fiscal and other incentives to attract entrepreneurs both local and
foreign to invest in export-oriented industries
o) Consolidate existing market and explore and develop new ones.
o) Take advantage of the post Uruguay Round liberalized and globalize
international market
o) Develop an export infra-structure
o) And develop trained human resources in export sector.
1.2 Strategy of Export Policy
The main elements of the long term export strategy are as follows:
o) Remove all bottlenecks
to achieve the objectives of export policy;
o) Provide policy support
to private sector operators on a continuous basis to ensure
competitiveness
o) Strengthen support
services and infrastructure for exports and export-oriented industries;
o) Priority will be given
to build such infrastructure;
o) Develop managerial and
entrepreneurial skills through HRD programs
o) Design an appropriate
export development program to broaden and diversify the country’s export base
which is central to the export strategy;
o) Build long term
capability to export by developing new products through adaptation and
increased R&D activities
o) Maximize utilization of financial and other assistance extended by
WTO to the LDCs;
o) Ensure maintenance of ecological balance and pollution free
environment in the production of exportable goods;
o) Extend technical and marketing assistance for development of new
products and their marketing.
1.3 In order to achieve rapid export-led growth under private sector the
Export Policy envisaged the following incentives:
1.3.1 Fiscal incentives
i. Duty-free import of capital machinery for export-oriented industries
outside Export
Processing
Zones
o) Bonded warehouse to facilitate duty-free import of raw materials for export production
o) Duty-drawback, if the bonded warehouse facilities are not used
o) Sale of 20 per cent of products by the 100 per cent export-oriented
industries in the local market on payment of duties
o) Exemption of 50 per cent of income arising out of export business from
income tax
o) Tax holidays
o) Duty-free import of samples
o) Restructuring of the Export Credit Guarantee Scheme (ECGS)
o) (BDT) Taka has been made convertible into foreign exchange for import of goods
and exporters are allowed to retain their foreign exchange earnings gradually
at higher proportion
o) 20% of the rejected goods of the 100% export oriented industries including
leather goods and ready-made garments will be admissible for sale in the local
market subject to payment of usual duties and taxes.
1.3.2 Financial incentives
o) Foreign currency export-credit under Export Development Fund at a
concessional rate of interest (LIBOR + 1 per cent)
o) Back-to-back letters of credit for import of raw materials for export
production on deferred payments basis
o) Retention of export earning by the exporters in their own accounts ranging
from 40 per cent in general cases to 7.5 per cent in lower value-added
items
o) Facility for use of $25.00 million credit line for the markets of
Commonwealth of Independent States (CIS)
o) 25 per cent compensatory cash benefit to the local producers and suppliers
of fabrics and other textile products for export in lieu of bonded warehouse
and duty draw-back facilities
o) Ten per cent Market Development Assistance for export of jute yarn and
twine
o) Banking facility for BMRE projects and
o) Export Credit Guarantee facility.
o) Extension of time limit for adjustment of export credit from 180 days to 270
days in case of export of frozen food, tea and leather.
1.3.3 General incentives
o) Recognition of leather industries exporting at least 80 per cent of their
products as 100 per cent export-oriented industries to enjoy the benefits of
such industries and 80% export oriented other industries will get financial
incentives including bank loan as available to 100% export oriented industries
with scale premises up to 20% of their local production in the local market on
payment on payment of usual duties and taxes
o) Banning the export of crust leather to increase value addition
o) Giving facility of entrepot trade for export
o) Enhancing the financial limit for despatch of export samples abroad;
o) Product and market development support under Export Promotion Fund
(EPF)
o) Awarding national trophy for export performance
o) Extending quasi-diplomatic and social privileges under CIP (Commercially
Important Person) schemes
o) Private Export Processing Zone (PEPZ) Act passed to allow establishment
of Private EPZ by local and foreign investors;
o) Reduced air freight for export of all crash programme items including
fruits and vegetables and withdrawal of royalty from extending cargo
service;
o) Deemed export facilities for use of local raw materials.
o) Recognizing agricultural farms of a minimum size of 5 acres as small and
medium size agricultural industry to encourage production of vegetables, fresh
flowers orchid etc. for export.
o) Increased import facilities for product development.
1.4 Thrust Export Sectors
The following sectors have been declared as thrust sectors in the current
Export Policy:
1. Leather and Leather Goods
2. Ready-made Garments
3. Computer Software (IT)
4. Agro-Processing Industry
Toys luggage and fashion items, electronics, silk fabric, leather goods,
Diamond cutting and polishing, jewelry, stationery goods, cut and artificial
flower and orchids, gift items vegetables and engineering consultancy and
services.
Soft term credit will be provided for product development of these items in
addition to marketing facilities etc.
Import Policy
2.1 .The main features of the Import Policy are given below:
2.1.1 Liberalization of imports through removal and significant reduction of
tariff and non-tariff barriers and gearing up customs administration for speedy
clearance of goods. At present maximum tariff rate is 37.5%.
2.1.2 Rationalization of the tariff structure to remove disincentives to
domestic production arising from tariff anomalies; this involves lowering of
duties, particularly on industrial inputs and capital machinery; and
2.1.3 Making foreign exchange convertible in current account transactions. A
key object of tariff rationalization was to create a neutral trade regime by
eliminating anti-export bias resulting from high tariffs and Quantitative
Restrictions (QRs). The government is committed to the reduction of tariffs as
part of its liberalization programme under WTO.
2.1.4 Like tariff rationalization, significant progress has been made in removing
QRs. whereas almost 25 per cent of all items under 4-digit headings of imports
were subject to QRs in 1990, now only 119 items covering only 2 per cent of
imports are so disposed. Of these, only 27 items are restricted for trade
reasons.
2.3. General provisions for Import:
2.3.1 Banned list: Unless other wise specified items included in this list can
not be imported.
2.3.1 Restricted list: Any item included in this list shall be importable only
on fulfillment of the conditions specified against the item.
2.3.2 Freely Importable Items: Unless otherwise specified, any item which does
not appear either in Banned or in restricted list are freely importable.
2.3.3 Freely Importable Items: Unless otherwise specified, any item, which does
not appear either in Banned or in restricted list are freely importable.
2.4 Import by Commercial importers:
2.4.1.Commercial imports are normally allowed under cash foreign exchange.
Subject to the availability of fund, import of a few commercial items may be allowed
under government allocation.
2.4.2.Industrial raw and packing materials and spares are freely importable
under cash foreign exchange by commercial importers.
2.4.3.Foreign firms registered in Bangladesh under the Company Act,1994 are
allowed to import permissible commercial items against their commercial IRC,
without any prior permission from the Chief Controller but have to inform his
office in writing regarding the detail information of the item before
importation.
2.4.4. Registered Commercial Importers may import permissible items of
industrial capital machinery and accessories under cash foreign exchange
without any value limit for commercial purpose
2.4. Compulsory Membership of Recognized Chambers/ Trade Association:
2.5.1.It has been made obligatory for all importers, exporters and indentors to
become member/provisional member/primary member of a recognized Chamber of
Commerce and Industry or Trade Association as appropriate for the trade.
2.5.2.Permanent/regular IRC/ERC will be issued only on the basis of
permanent/regular membership.
Industrial Policy
The Fifth Five Year Plan of Bangladesh envisages that Bangladesh will have within a decade a sizable industrial sector where manufacturing will account for at least 25 per cent of the gross domestic product (GDP) in place of present 11.3 percent and at least 20 per cent of the employed workforce in place of present 7.7 percent.
A vibrant and dynamic private sector will be the principal actor in
Bangladesh's industrial arena. The goals of export orientation and external
competitiveness imply the pursuit of industrialization in accordance with the
dynamic comparative advantage of the economy. Given Bangladesh's resource
endowment, the principle of dynamic comparative advantage means production of
labour intensive manufactures with skill up-gradation and productivity growth
as its cutting edge. Decentralized small and medium industries will constitute
important elements in the industrial scene of Bangladesh. Industrial Policy,
1999 aims at addressing these concerns and build on earlier efforts and gains
towards industrialization of Bangladesh economy.
3.1 Main Objectives:
3.1.1 To expand the
production base of the economy by significantly raising the level of industrial
investment
3.1.2 To promote the private sector to lead the growth of industrial production
and investment
3.1.3 To define the role of the government as facilitator in creating an
enabling environment for expanding private investment
3.1.4 To focus public undertaking in those industrial activities where public
sector involvement is essential to facilitate the growth of the private
sector.
3.1.5 To attract foreign direct investment in both export and import substitute
industries
3.1.6 To ensure rapid growth of industrial employment by encouraging investment
in labor intensive manufacturing industries including investment in efficient
medium, small and cottage industries
3.1.7 To generate female employment in higher skill categories through special
emphasis on skill development
3.1.8 To raise industrial productivity and to move progressively to higher
value added products through skill and technology up-gradation
3.1.9 To enhance operational efficiency in all remaining public manufacturing
enterprises through appropriate management restructuring and pursuit of
market-oriented policies
3.1.10 To diversify and rapidly increase export of manufactures
3.1.11 To encourage the competitive strength of import substituting industries
for catering to a growing domestic market
3.1.12 To ensure the process of industrialization which is environmentally
sound for preventing environmental pollution and maintaining ecological
balance
3.1.13 And to encourage balanced industrial development throughout the country
by introducing suitable measures and incentives.
3.2 Main Targets Of The Industrial Policy
Liberalization of industrial policy in Bangladesh started with the announcement
of Industrial Policy, 1982. This was followed by successive and progressive liberalization
in 1991, 1992 and 1999 to make it compatible with globalization and a
competitive market economy. The targets of the policy are to:
3.2.1 Develop the industrial sector in order to increase its contribution to
GDP, income, employment and poverty alleviation
3.2.2 Expand industries by the private sector and make role of Government
‘promotional’ rather than ‘regulatory’
3.2.3 Encourage domestic and foreign investment in overall industrial and
infrastructure development
3.2.4 Promote private sector –led export- oriented growth
3.2.5 Develop export-oriented, export-linkage and efficient import-substitute
industries
3.2.6 Expedite development of labor intensive industries through acquisition
and improvement of appropriate technology
3.2.7 Encourage the development of agro-based and agro-supportive industries
3.2.8 Motivate investment in the intermediate and basic industries.
Financial Incentives to Industries
3.3.1. There shall be a
tax holiday for five and seven years for industries set up in the developed and
less
Developed areas respectively which will remain effective until the year
1995
3.3.2. The National Board of Revenue in consultation with the Ministry of
Industries will publish in the official gazette area wise classification for the
application of concessional duties and tax holidays
3.3.3. There will be no discrimination in case of duties and taxes for the same
type of industries set up in the public and private sectors
3.3.4. Local industrial products will be protected through tariff
rationlization keeping in view the interests of the entrepreneurs and the
consumers
3.3.5. To create internal market for jute products, industries producing jute
substitute synthetic fibers especially polypropylene bag will be discouraged ,
high tariff rates will be imposed on related imports in these areas. In
addition, effective steps will be taken for compulsory use of jute bags for
packing of food grains, sugar, cement & fertilizer etc
3.3.6. Duties and taxes on import of goods which are produced locally will be
higher than those applicable to import of raw materials to be used to produce
such goods
3.3.7. In case where credits/loans obtained from foreign institutions or
Government through private initiative for private industrial investments, the
following conditions shall be applicable
o) The Government will relend the above mentioned credits/loans through
commercial banks/DFIs. The concerned Banks/DFIs will disburses the
credits/loans to the entrepreneurs with applicable service charge
o) The entrepreneurs shall undertake full responsibility for repayment of the
loans/credits. For this, the concerned Banks/DFIs will provide guarantee to the
Government for repayment of the loans/credits. Concerned Banks/DFIs will,
however, be entitled to claim collateral from the entrepreneurs.
3.3.8. An Exchange rate Fluctuation Absorption Scheme ( EFAS) will be created
to reduce the impact on industrial sponsore for fluctuation of Bangladeshi
currency with foreign currencies.
3.3.9. Special incentives will be provided to encourage non-resident
Bangladeshi for investment in industries. In case of their investment in
Bangladesh, they will enjoy facilities similar to those given to the foreign
investors. Besides, they will be able to buy newly issued shares/debentures of
Bangladeshi companies. Moreover, they will be able to maintain foreign currency
deposit in the NFCD account for up to five years.
3.3.10. Provision will be made up to 80-100 percent accelerated depreciation
allowance.
3.3.11 Special financial incentive for industries located in the
least-developed areas and for small and cottage industries. As long as natural
gas cannot be supplied to the non-gas lined least developed areas and the price
of natural gas remains lower than that of fuel oil, a subsidy will be provided
on fuel oil use in industries in this areas. The concerned ministries will make
provision for necessary funds for this purpose.
Small, Cottage, Medium and Large Industries
o) 'Small Industry' means an industrial undertaking engaged either in
manufacturing process or service activity which employs less than 50 workers
and/or whose fixed capital is less than Tk.100 million.
o) 'Cottage Industry' means an industrial unit either engaged in manufacturing
or servicing generally run by the family members either as full time or part
time.
o) 'Medium Industry' means an industrial undertaking which employs 50 to 99
workers and/or whose fixed capital is from Tk.100 million to Tk.300
million.
o) 'LARGE INDUSTRY' means an industrial undertaking which employs 100 workers or
more and/or whose fixed capital is more than Tk.300 million.
Foreign Investment
1. The Government is encouraging foreign investment with special importance. Such
investments shall be established either independently or through joint venture
on mutually beneficial terms and conditions. The Foreign Private Investment
(promotion and protection) Act, 1980 will continue to be the legal framework of
foreign investments. The main provisions of the Act to protect foreign investment
include
a) Ensuring equal treatment in all respects for local and foreign investment
b) Protection of foreign investment from nationalization:
c) Ensuring repatriation of proceeds from sale of shares and profits. In
addition, adequate rules will be framed for protecting the intellectual
property rights such as patents, designs and trademarks and copyrights.
2. In case of foreign investment, there will be no limitations pertaining to
equity participation, i.e. up to 100 percent foreign investment will be
allowed.
3. In case of joint ventures or industries set up independently by foreign
investors, there will be no obligation to sell shares through public issue
irrespective of the amount of paid up capital.
4. If the foreign investors reinvest their repatriable dividends, those will be
treated as new investments.
5. Foreign investors or companies with foreign investment may obtain working
capital loans equivalent to their equity amount. The amount and terms of loan
will be determined in accordance with the Bank-Client relationship and the
bank's rules and procedures.
6. Rules will be framed to facilitate foreign investors or companies with
foreign investments to buy shares through the stock exchange.
7. BSCIC has already developed industrial states with infra-structural
facilities like roads, water, power & fuel etc. for small and cottage
industries and steps are being taken for setting up more industrial states. In
case of industries set up in the industrial estates, foreign investors will
also get special concessionary financial benefits similar to local
investors.
8. Other facilities to be provided to foreign investors are as under:
o) Tax exemption on royalties, technical knowledge and technical assistance
fees and the facilities for their repatriation
o) Tax exemption on the interest on foreign loan
o) Tax exemption on capital gains from the transfer of shares by the investing
company.
o) Avoidance of double taxation in case of foreign investors on the basis of
bilateral agreements
o) Exemption of income tax up to three years for the foreign technicians
employed under the approved industries.
o) Remittance up to 50 percent of the salary of the foreigners employed in
Bangladesh and the facilities of repatriation of their savings and retirement
benefits at the time of their return
o) There will be no restriction in issuing work permits to foreign nationals in
Bangladesh and
o) Facilities for repatriation of invested capital, profit and dividends.
Facilities in the Export Processing Zones
To assist in the establishment of export-oriented industries, an Export Processing Zone has been set up in the port city of Chittagong. To provide facilities for setting up air-freighted, another Export Processing Zone is being developed at Savar near Dhaka. In this area industries may be established entirely through foreign investment or through joint ventures of local and foreign investors of entirely through local initiative. Infrastructural facilities which are essential for industries existing in the areas like warehouses, communication water supply, electricity, gas etc. Besides, the following facilities are provided to industries situated in these areas:
a) Income tax exemption for 10 years and income tax rebate of 50% on export
earning after this period
b) Duty free import of raw materials, machinery, construction materials and
other materials used in manufacturing process
c) Income tax exemption on salaries of foreign executives and
technicians for three years
d) Tax exemption on interest on foreign loans
e) Tax exemption on royalties, technical know-how and technical assistance
fees
f) Tax exemption on the profits on accounts of transfer of shares by foreign
companies
g) Reallocation of running manufacturing units from abroad EPZ
h) Export linkage materials required for production of goods to be exported
will be allowed to be exported through back-to-back LC by recognized export
oriented industries which operates through bonded warehouse facilities to be
interior of the country
i) Offshore banking facilities
j) Backward linkage industries to supply materials for production in the EPZ
will be encouraged.
Classification of Investment in the EPZs
Type A:
One hundred percent foreign investment including investment made by
Bangladeshis living abroad. Under this type of investment, the total investment
cost including the construction, raw materials cost and requirement for the
whole of working capital have to be met through the foreign investors own
source of foreign currency.
Type B:
Joint collaboration of projects by foreign investors and Bangladeshi investors
living within the country. Under this type of investment, the expenditure of
the project will be met as per ratio of investment of the local and foreign
partners. But the cost of all imported machinery must be met by the foreign
partner.
Type C
One hundred percent investment made by Bangladeshi investors residing in
Bangladesh. Under this type of investment, the cost of machinery spare parts,
raw materials and other imported goods will have to be met through supplier
credits/ non- reparable foreign currency, credits/pay as you earn scheme and
through any other approved arrangements.
Thrust Sector Industries-Bangladesh
1) Agro-based industries 2) Artificial flowers 3) Computer Software and
Information Technology 4) Electronics 5) Frozen food 6) Cut flower 7) Gift items 8) Infra-structure 9) Jute products 10) Jewelry and Diamond and
Polishing 11) Leather 12) Oil and Gas 13) Seri-culture and silk industry 14)
Stuffed toys 15) Textiles industries and 16) Tourism.
Reserved Industrial Sectors
1. Arms and Ammunition and other defense equipment and machinery
2. Production of Nuclear Energy
3. Security printing (currency notes)
4. Forest Plantation and Mechanized extraction within the bounds of reserved forests
Telecommunications Policy (TP)
4.1 Objectives of TP, 1998:
The aim of the TP, 1998 is to develop a national sound telecommunication
infrastructure to support the economy and welfare of the country by providing
satisfactory telecommunication facilities. The strategic vision of the
Government is to facilitate Universal Telephone service throughout the country
at an affordable cost without compromising performance. To achieve this
Government’s role as a service provider will diminish as the private sector’s
role increases and its ability to formulate policy, regulate and facilitate
will be strengthened through a new Telecommunications Act and the establishment
of new institutions including a Telecommunication Regulatory Board which will
become the guardian of the Act and fulfill its regulatory functions. The
main objectives of the National Telecommunications Policy, 1998 are briefly
given below:
4.1.1 The freedom for exchange of information is recognized as an important element of human rights
4.1.2 Telecommunications are to promote national integration and safeguard the
social and cultural fabric of the nation
4.1.3 Universal access to and delivery of a full range of modern,
sophisticated, efficient and cost effective telecommunication services are to
be provided
4.1.4 Digitization will replace all analogue switching equipment by the year
2002 and analogue transmission equipment by 2005
4.1.5 An environment of competition in the field of telecommunications for
enhancing rapid development in volume, efficiency and accessibility, shall be
ensured
4.1.6 Telecommunications Services are to be efficient and cost-effective and
user- friendly. The users shall have multiple choices for access to networks
& markets of different services, systems and carriers
4.1.7 The Government has opened the telecommunications market to the private
sector which will become a much stronger force in telecommunications
development in the coming years
4.1.8 Resources to the sector are to be maximized through participation of both
public and private entrepreneurs in operating the services in areas where it is
economically and socially justified. Local resources may be mobilized through
ADP allocation, domestic private investment, issue of Telecommunication Bonds,
allocating a part of the revenue earnings, Bank Loans etc. Foreign investment
may be arranged through Suppliers Credit, Joint Ventures, BLT/ BOT/BOO/BTO
agreement etc., in addition to the usual loans and grants from international
organizations as well as through bilateral agreements with other countries in
conformity with the industrial policy of the Government. Joint ventures with
local companies will be encouraged
4.1.9 Liberalized Tariff Policy : Tariff Policies are to be liberalized with
regard to the area or the service
4.1.10 Research and development activities to facilitate the absorption of new
technology and to upgrade the facilities and services in telecommunications and
regional cooperation in this sector will be encouraged.
4.2 Implementation
Strategy:
4.2.1 Government, with the participation of the public and private sectors,
intends to meet its goals and objectives through a combination of policy
related technical and financial strategies. It will ensure that the present
inadequate infrastructure is alleviated through the formulation of competition
and performance standards. While supporting the private sector as the engine of
growth it will continue to support Bangladesh Telegraph and Telephone Board
(BTTB) in the short to medium term for an orderly transition from a
monopolistic to a multi- operator environment
4.2.2 Human resource development in tandem with the need of the
telecommunications sector standards and qualifications for different categories
of personnel of all operators are to be set, based on their services
4.2.3 Defense and security interests of the country are to be protected
4.2.4 The role of the technologies of telecommunications and computers which
are becoming increasingly interdependent on and complementary to each other
leading to the age of information technology is to be acknowledged and
encouraged for the benefit of the nation
4.2.5 Promotion of local manufacture of viable telecommunications equipment
will be encouraged to meet the local and regional demand and a vision to
compete in international markets in near future is to be inculcated
4.2.6 Assignment, monitoring and management of radio frequency spectrum is to
be conducted in an effective, fair, rational and equitable manner.
Telecommunication network standards & their management should be compatible
with international standards and
4.2.7 Protection of the users’ interests shall be ensured.
4.3 Targets:
A set of targets consisting of telephone density and accessibility of
telecommunications facilities and services to the people is given below :
(a) Tele-density (Short Term) : The tele-density of the country is about 0.4
telephone for every 100 persons. The target of expansion of telephone penetration
is fixed at 13 million line units including associated inland and overseas
transmission links and facilities by the year 2000 in order to substantially
eliminate the un-serviced demand and increase the tele-density from 0.4
telephone to 1 telephone for every 100 persons.
(b) Accessibility up to Village Level : The aim will be to lay emphasis on the
efforts to upgrade the semi-urban and rural telecommunication facilities and
make the telecommunication services with the latest technology available in phases
to all the Thanas, Unions, Growth Centers and ultimately to the Villages by the
year 2005. The private sector operators who are licensed for the purpose will
contribute all their efforts towards this end
Energy Policy
Due to overriding importance of energy in socio-economic development, the
Government of Bangladesh has given urgent attention to the overall development
of energy sector . It involved survey, exploration, exploitation and
distribution of indigenous natural gas; survey and exploitation of hydro-power
survey of coal and peat; establishment of petroleum refining facility and
distribution systems; and establishment of power generation plants and networks
for transmission and distribution of electricity. During last two decades about
20% (percent) of total public sector investment was allocated for the
development of energy sector.
Per-capita consumption of commercial energy and generation of electricity in
1990 were 56 KGOE/ year and 73 kWh/ year respectively. Per capita consumption
of commercial energy and electricity in Bangladesh is one of the lowest among
the developing countries. In 1990, more than 73% of total final energy
consumption was met by different type of biomass fuels (e.g. agricultural
residues, wood fuels, animal dung etc.).
In 1990 only 2.2 % of total households (mostly in urban areas) had piped
natural gas connections for cooking and 10 % of households had electricity
connections and only 3.9% of total households used kerosene for cooking. The
Government has decided to formulate National Energy Policy (NEP) to ensure
proper exploration, production, distribution and rational use of energy sources
to meet the growing energy demand of different zones, consuming sectors and
consumers groups on a sustainable basis.
5.2 Objectives Of National Energy Policy (NEP) :
The objectives of NEP are :
(i) To provide energy for sustainable economic growth so that the economic
development activities of different sectors are not constrained due to shortage
of Energy
(ii) To meet the energy needs of different zones of the country and
socio-economic groups
(iii) To ensure optimum development of all the indigenous energy sources
(iv) To ensure sustainable operation of the energy utilities
(v) To ensure rational use of total energy sources
(vi) To ensure environmentally sound sustainable energy development programmes
causing minimum damage to environment and
(vii) To encourage public and private sector participation in the development
and management of the energy sector.
5.3 The energy sector has been suffering from several problems, such as high
level system loss, weak management and inadequate investment in the past
resulting in serious power shortage. The present Government took a number of
initiatives to increase investment in this sector and supply power.
5.4 Among the significant steps taken were adoption of the independent power
policy (IPP), invitation to the private sector to invest in the energy sector
including foreign direct investment, allowing establishment 10MW small power
plant for generation of electricity for own use and sale, upward adjustment of
tariff which had remained at the same level for years, and automatic tariff
adjustment corresponding with fuel price increases. It has produced result in
terms of interest of foreign direct investment in energy under BOO/ BOT
arrangements as well as gas exploration and development. The following energy
generation projects are being set up under BOO/BOT arrangements:
o) 450 MW generation plant at Meghnaghat
o) 360 MW generation plant at Haripur
o) Two barge-mounted power stations for 200 MW at Haripur
o) Two barge-mounted power stations for 200 MW at Khulna
· 200 MW generation plant at Baghabari
· 200-300 MW generation plant at Serajgonj
5.5 In the gas sub-sector, eight blocks have already been contracted out to
four International Oil Companies (IOCs). Bids have been received for additional
twelve blocks in the second round of bidding and letters of intent (LOI) have
been issued to nine foreign companies awarding five more blocks for oil and gas
exploration on July, 1998 as a prelude to sign production sharing contract
(PSC).
Foreign Exchange Policy
6.1 Liberalization Of Exchange Control Regulations
In its bid to liberalize Bangladesh’s foreign exchange policies, Bangladeshi
‘Taka’ was declared convertible for current external transactions, on March 24,
1994.
6.2 To facilitate investment it has also been decided that prior approval of
the Bangladesh Bank is no longer required for :
6.2.1 Remittance of profits to their head offices by foreign firms and
companies
6.2.2 Issuance of shares to non-residents against investments for setting up
industries
6.2.3 Remittance of dividends on such shares to the non-resident investors
6.2.4 Portfolio investment by non- residents including foreign individuals /
enterprises in shares and securities through stock exchanges
6.2.5 Remittance of dividend on portfolio investment by non-residents through
stock exchange
6.2.6 Remittance of sale proceeds including capital gains of portfolio
investments of non-residents through stock exchanges
6.2.7 Opening of letters of credit by banks against suppliers’ credit and other
foreign borrowings contracted by industrial enterprises in the private sector
in accordance with general guidelines prescribed by BOI ( subject to a maximum
effective rate of interest of LIBOR + 4%, repayment period not less than 7
years ) or with specific approval of BOI
6.2.8 Remittance in repayment of principal and payment of interest of such
loans
6.2.9 Remittance of technical fees and royalties against technical assistance /
royalty agreements in conformity with BOI guidelines
6.2.10 Remittance of savings of expatriate personnel at the time of their
leaving Bangladesh out of the salaries and benefits stated in their employment
contracts as approved by BOI
6.2.11 Extension of term loans by banks on normal banking considerations to
foreign firm and
6.2.12 Extension of working capital loans to all foreign owned/ controlled
industrial and trading firms/companies by banks on the basis of banker-customer
relationship and normal banking practice.
Manpower & labor policy
Bangladesh offers a substantial manpower reserve – skilled, unskilled, educated
and otherwise. There is a good supply of easily trainable low cost labor in
the country. Many of them have a working knowledge of English language and
possess the basic skills required by industries. Of late, there is an
increasing supply of professionals, technologists and other middle and low level
skilled workers. They receive technical training from universities, colleges,
technical training centers polytechnic institutions etc. The expenditure
incurred by an employer to train his employees is exempted from income
tax.
7.1 Employment conditions :
The minimum age for workers in Bangladesh is 18 years in factories and
establishments. In the private sector, the dignity of labour is ensured in
accordance with the principles enunciated in the ILO convention and
recommendations.
7.2 Labor Laws : In Bangladesh 44 LABOR LAWS are now in operation. These
relate to (a) wages and employment, (b) trade union & industrial disputes,
(c) working environment and (d) labor administration and related matters. The
main labor laws are :
(i) Workmen’s Compensation Act, 1923
(ii) Payment of Wages Act, 1936
(iii) Maternity Benefit Act, 1936
(iv) Employment of Labor (Standing Orders) Act, 1965
(v) Shops & Establishments Act, 1965
(vi) Factories Act, 1965
(vii) Industrial Relations Ordinance, 1969
7.3 Wages and fringe benefits :
In the public sector, wages and fringe benefits of the workers are determined
by the government on the recommendation of the National Wages Commission
established from time to time. Such Commissions were appointed in 1973, 1977,
1984, 1989 & 1992. Wages & fringe benefits declared by the government
in 1997 have 20 grades of wages.
The public sector employees are, however, covered by the pay Commission
declared by the government from time to time.
In the private sector, the wages & fringe benefits of the workers and
employees are determined through collective bargaining process. Sometimes
private industries follow the public sector wages & salary structure for
their workers and employees respectively.
7.4 Working hours :
Workers in the public or private sector remain at their job for eight and a
half hours daily (including half an hour for meal or rest), with Friday as
weekly holiday making 48 working hours a week . Work in excess of these, is
paid as overtime. The rate of overtime is 2 hours pay for 1 hour job.
7.5 Registration Under Factories Act
Any manufacturing company employing ten or more workers (with or without use of
power) is required to be registered under the Factories Act, 1965 (Act IV of
1965) with the office of the Chief Inspector of Factories and Establishment.
The Act is primarily to regulate working conditions and to ensure safety
measure in the factory.
7.6 Clearance from the department of environment
7.7 Support service institutions
The following institutions extend industrial support service to the industries
under both public and private sector:-
Bangladesh Council for Scientific and Industrial Research (BCSIR)
Bangladesh Industrial Technical Assistance Centre (BITAC)
Bangladesh Institute of Management (BIM)
Bangladesh Standard and Testing Institution (BSTI)
Bangladesh Institute of Development Studies (BIDS)
Chamber of Commerce and Industries
(i) Undertakes research works and formulates various possibilities of
commercial and industrial exploitation of the existing indigenous
resources.
(ii) Undertakes quality control measures for various industrial products.
Provides vocational and technical training for the apprentices of engineering industries.
Provides personnel training for management of staffs of various
industries.
(i) Sets up national standard for industrial products.
(ii) Responsible for enforcing standardization (quality & specification)
through issue of certificates.
(i) Undertakes research programmes of various fields of industries including
training of executives of both private and public agencies responsible for
industrial management, industrial financing and evaluation of schemes.
(ii) Publishes periodicals on various research studies.
Extend Support services to the private sector and assist public sectors in
formulation of various public policies relating to Trade, Commerce and
Industry.
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