Published in The Daily Star on Monday, 12 January 2015.
BSCIC plots see poor investment
Weak road infrastructure, energy crisis are to blame, analysts say
Suman Saha
State-owned industrial estates saw minimal growth in investment in 2014 despite political stability throughout the year.
The Bangladesh Small and Cottage Industries Corporation (BSCIC), which has 74 industrial estates in 59 districts, received Tk 1,673.88 crore as new investment in 2014, up only 0.52 percent from the previous year.
Of the investment last year, 56.26 percent was bank loan, 26.91 percent equity and the rest was entrepreneurs’ own funds, according to BSCIC data.
“The investment situation in the industrial estates is not satisfactory given the double digit credit growth in the overall SME sector,” said Zaid Bakht, a research director at Bangladesh Institute of Development Studies.
For the SME sector, banks and non-bank financial institutions disbursed Tk 72,062.24 crore in the first nine months of 2014, up 15.35 percent year-on-year, according to Bangladesh Bank.
The industrial estates should have attracted higher investment as political environment was relatively stable in 2014, Bakht told The Daily Star.
For higher investment, Khondaker Golam Moazzem, additional research director of Centre for Policy Dialogue, stressed improving road connectivity and providing adequate gas and electricity to the industrial estates. Unplanned development of the industrial estates is another reason why investment is not increasing there, Moazzem said.
As a result, investment has been stagnant in these industrial zones over the last five years, he added.
At least 20 of the industrial estates were developed on political grounds and without conducting any feasibility study, insiders said. The allotment process was also faulty, with many entrepreneurs refusing to set up factories in the plots. “As a result, many plots are now sitting idle,” Moazzem said.
Abu Taher Khan, director (technology) of the BSCIC, also agreed that the country is failing to enjoy “all the socio-economic benefits” of the industrial estates.
The BSCIC has already taken some initiatives to boost investor confidence, he said. For example, he said they have sought funds from the finance ministry to improve road connectivity in the industrial estates.
Besides, the BSCIC has recently cancelled allotment of 60 plots and will hand those over to real entrepreneurs, he said.
The industrial estates have 903 export-oriented factories as of June last year. Companies operating in the zones exported goods, mostly knitwear, worth around Tk 23,000 crore in fiscal 2013-14, which is 9.69 percent of the country’s total exports.
Of the 5,698 industrial units in the plots, 4,144 are in production, while the rest are either ailing or closed, according to the BSCIC. Some 1,058 plots are now under construction. The industrial estates have created employment for around 5.5 lakh people as of June 2014.