Thoughts on Economics
Vol. 20, No. 03

Bangladesh Industrial Policy 2010:
A Critical Appraisal

Ayubur Rahman Bhuyan[1]

[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 sector’s 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 country’s total labour force. While many of 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 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 sector’s 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 country’s economic development.[2] A densely populated country with a population of around 150 million living on a land area of 147570 square kilometer (56977 square miles),[3] its economy is dependent mainly on agriculture, which accounts for a fifth of GDP but provides employment to as much as 50 percent of the country’s labor force. Since the country’s 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 country’s 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 country’s 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 government’s 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 thereafter. The policy reiterates the country’s 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 the industry sector’s 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 country’s total labour force by 2021 from 16 percent now.

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 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 country’s 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 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.
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 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 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 the fifth 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 duty rate 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.

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) 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.

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.

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.

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.

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

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.

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 in running 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 sector in 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 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.

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 facility proposed 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 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.

V. Concluding Observations and Suggestions for Improvements in the 2010 Policy

1. General Observations

1) All successive governments in the country since independence announced policies and strategies for accelerating the process of economic growth through the development of the industrial sector, but the growth of the industrial sector has remained slow.

2) One may attribute this slow growth to factors like energy shortage, reduced availability of bank credit, poor inflow of foreign direct investment (FDI), labor unrest, poor law and order conditions, as so on, but no less responsible were the inconsistent policies, which vitiated the overall business environment, discouraged investors, and hindered industrial activity in the country.

3) It is the considered view of experts that in order to pave the way for strong growth and expansion of the industrial sector, industrial policies periodically announced by government, should contain appropriate measures to address the aforementioned problems.

5.2 Specific Observations

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-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, and procedural 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 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.

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 structural impediments 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 country’s industrial sector.

5.2.5 Addressing Sector-specific Problems

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

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.

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 sector’s 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 and move closer to achieving the target of raising the industry sector’s 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.
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[1] Former Professor of Economics at the University of Dhaka.
[2] While 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.