Bangladesh : Piloting reform through the development and management of economic zones

Bangladesh has achieved an impressive steady economic growth of more than 5.5 percent annually over the last decade. However, this growth rate will need to increase dramatically if Bangladesh is to reach the Millennium Development Goal of reducing poverty by half by 2015. Critical to achieving this growth is private domestic and foreign direct investment. Both domestic and foreign investors in Bangladesh face many constraints which can be addressed by Export Processing Zones (EPZs), industrial parks and Special Economic Zones (SEZs). However, for zones to have an impact on poverty reduction, they must be part of a larger economic growth strategy which allows for an overall improved investment climate in Bangladesh. The report piloting reform through the development and management of economic zones recommends that Bangladesh pursue reforms that leverage the benefits of public-private partnerships. The public sector can allocate large tracts of developable land for the purpose of developing economic zones and provide the necessary regulatory oversight, while the private sector may offer expertise in zone development and management along principles of demand responsiveness and commercial viability. This study recommends that Bangladesh implement three parallel and inter-related reform tracks, which firstly aim to rehabilitate and commercialize existing publicly-managed economic processing zones and industrial estate properties to better serve the needs of their tenants. Secondly, the need to develop new, modern zones based on public-private partnerships. Lastly, the report suggests the creation of a large special economic zone, to be implemented on a single property by a master developer, reflecting integrated planning practice and fair and transparent processes of land acquisition, resettlement and compensation.