To accelerate the country’s march towards prosperity, the government of Prime Minister Sheikh Hasina took a visionary initiative of establishing 100 economic zones in all potential regions including backward and underdeveloped areas by 2030. Acting as an engine of economic growth, these economic zones are expected to create 10 million new jobs and fetch additional annual export to US$40 billion. The government has already enacted a number of laws and policies to offer business friendly environment and attractive facilities including tax incentives and allowances to the investors.
Response from both local and international investors has so far been very positive. The Bangladesh Economic Zones Authority (BEZA), the agency implementing the government’s plan to establish 100 economic zones across the country, has already received investment proposals of around $20 billion from local and international investors.But a sudden policy shift dealt a body blow to the investors in the economic zones. The lead story of yesterday’s daily sun informs that over two dozens of local business conglomerates which invested in the economic zones are concerned over the newly imposed 15 per cent VAT on land lease. They are also frustrated over the complexities limiting access to bank loans and uncertainty over the continuation of privileges offered to the investors at the time of investing.
Local investors said they have lost their confidence after receiving letters from BEZA on a settled VAT issue, which will unexpectedly increase their investment cost in the EZ projects. They invested in economic zones with the lure of receiving tax holiday as provided for industrial units regardless of the type of products manufactured in the EZs. Now burdening them with an added and unforeseen tax is not only unfair but also may threaten the growth of the economic zones. They are also facing inordinate delay in getting their allotted plots and getting utility services.
Seeking redressal of their grievances, the business conglomerates sent a letter to the Prime Minister’s Office. They hope PM will directly intervene to address the challenges and obstacles the investors are facing in setting up their business in economic zones. The letter mentions, “Without the necessary infrastructures and utilities, it will be impossible for us to even start setting up our industries in the Economic Zones, let alone going into commercial production.”
Given the significance of issue for the country’s economic growth and job creation, the relevant authorities must take prompt steps to alleviate the investors’ concern. Transparent, predictable and consistent policy is a must to promote investment.