Chapter 1

Introduction

Bangladesh is a developing country, and the present government is striving relentlessly to attain rapid economic development in the country. Many programs taken so far have been carried out successfully. Despite a lack of resources faced by the government, development programs in the key sectors have continued. At the same time, considering the importance of the private sector, an all-out support is being provided to initiatives taken in this sector. As a result, a new kind of dynamism is under way in both the public and private sectors. In this backdrop, it is essential to examine various aspects of industrialization and its impacts on overall economic activities.

Given the present environment of global competition, the private sector is playing an important role in the industrialization of the country. Therefore, the Government in the Ministry of Industries has taken the role of a facilitator. Faced with the challenges of the free market economy and globalization, the government has accepted private ownership and management of industrial enterprises as one of the major guiding forces in achieving economic growth. Besides this, the government has also brought about many constructive and timely reforms in the running of businesses, and liberalized trade so that private entrepreneurs can seize opportunities of establishing and running industrial enterprises profitably and freely.

In the meantime, quite a number of publicly managed industrial enterprises have already been sold out and transferred to private ownership. In order to establish economically prospective industries in industrial sub-sectors, there are plans to set up industrial parks and special economic zones so that huge amount of unused and abandoned land can be utilized. All this is aimed at fostering industrialization and economic development and generating employment opportunities in the country.

To reduce poverty and generate employment opportunities, more efforts are needed to establish agro-based industries as well as to raise agricultural production.. This will ensure the protection and fair price of agricultural products and employment of a huge number of unemployed people. In order to create further employment opportunities beyond the agricultural sector, initiatives should be taken to set up small, medium and large industries across the country. If these types of industries are set up in a planned way, then unemployment rates will decline and poverty alleviation will be accelerated. With these objectives in mind, the Industrial Policy has been radically reshaped.

In order to provide administrative, institutional and infrastructural facilities in the country’s industrialization, there are organizations such as the Bangladesh Standards and Testing Institution (BSTI), Bangladesh Industrial Technical Assistance Center (BITAC), Bangladesh Institute of Management (BIM), Bangladesh Small and Cottage Industries Corporation (BSCIC), National Productivity Organization (NPO) and Small and Cottage Industries Training Institute (SCITI) under the Ministry of Industries, and the National Institute of Textile Training, Research and Design (NITTRED), Textile Vocational Institutes, Textile Diploma Institute and Bangladesh Silk Research and Training Institutes under the Ministry of Textiles and Jute. For the leather industry, the Bangladesh College of Leather Technology and different district level polytechnic institutes provide technical education. These institutes also provide assistance for industrialization by providing training on management and quality control of goods, safeguarding consumers’ interests, producing and repairing import-substitute spare-parts used in industries, manufacturing new tools necessary for the production of industrial goods that are in demand, and by improving efficiency and overall productivity. However, many industrial entrepreneurs are not fully aware of the necessary technical and other assistance available for the industrial sector through these institutes. Therefore, extensive publicity is necessary for the proper use of these important institutes and the facilities available there.

In order to further strengthen the country’s industrialization process, the present government has identified the Small and Medium Enterprises (SMEs) as a priority sector and as the driving force for industrialization. A national taskforce led by the Principal Secretary of the Prime Minister’s Office has been formed so that proper policies and planning are followed in establishing SMEs. At the same time, with a view to providing entrepreneurs with assistance in the establishment of SMEs, a cell has been created under the supervision of the Ministry of Industries comprising officials experienced in SMEs from the Ministry of Industries, Bangladesh Small and Cottage Industries Corporation (BSCIC), National Productivity Organization (NPO), Asian Development Bank (ADB), FBCCI, National Association of Small and Cottage Industries, Bangladesh (NASCIB) and women entrepreneurs.

The provisions of all facilities for attracting foreign investments have been envisaged in the Industrial Policy. The government has taken an initiative to formulate a separate SME policy to provide entrepreneurs with necessary guidance and strategic support in respect of the establishment of SME industries all over the country. These strategic guidelines will be followed in establishing SMEs across the country.

Far-reaching changes have occurred in the past decade in economic and social activities across the globe, especially with regard to the participation, contributions and successes of women in industrial activities. Therefore, the creation of women entrepreneurs and their participation in industrialization have been given considerable prominence in the present Industrial Policy.

Necessary steps have been taken to hygienically preserve and market agricultural products of Bangladesh. With this end in view, measures will be taken for the preservation of frozen, pasteurized, canned and dry foods in a modern and hygienic way in order to sell them in local and overseas markets throughout the year.

Steps will be taken to properly utilize the natural and mineral resources of the country such as gas, coal, hard rock, limestone, silicon, monazite, zircon, rutile, oyster, pearl, coral, fossil, seaweeds, etc, available in the country’s long sea-beach so that new profitable industries can be set up. Steps will also be taken at the same time to use solar power and municipal refuse to generate electric power in order to minimize power shortage in running small and cottage industries.

This is an age of information and communication technology (ICT). The application of ICT in running industrial enterprises efficiently and profitably can ensure quality development of goods, make production cost-effective and ensure faster customer services. So, providing further importance and incentives to the use of ICT in a number of sectors is one of the notable features of the present Industrial Policy.

The industrial sector is likely to grow rapidly over the next decade raising its contribution to the country’s GDP to 30 to 35 percent, and the workforce in this sector is expected to increase to 35 percent of national employment need. In order to attain this growth in this sector, special importance has been given in the Industrial Policy on agro-based and agro- processing industries and on steps to overcome possible adverse conditions in the export-oriented garment sector. Importance has also been given on considering the SMEs and cottage industries as one of the major driving forces, providing assistance to women entrepreneurs on a priority basis, setting up special economic zones in different parts of the country, improving the quality of industrial products to world standard, marketing of goods at competitive prices, and enhancing productivity in the industrial sector.

There is a proposal in the Industrial Policy for the formation of a high level committee led by Minister of Industries and comprising senior officials from public and private organizations involved in industrialization.  This committee will submit a report to the Cabinet for its decisive approval, and afterwards the relevant ministries/divisions/ agencies will take necessary programs for industrialization to get underway in the approved sectors.

In the end, it can be hoped that the guidelines contained in the new Industrial Policy will help expand planned industrialization in the country, bring about sustainable and continuous industrial growth, and overcome the past failures of industrialization to a great extent. As a result, a sound and prospective foundation of economic development will be established. This will help bring about poverty alleviation, create further employment opportunities, reduce unemployment instances, improve living standards of people, and achieve an overall economic growth in the country.

Chapter 2

Objectives

2.1      One of the foremost objectives of the Industrial Policy 2005 is to set up planned industries considering the real domestic demand, prospect of exporting goods abroad, and discouraging unplanned industries in the light of past experience.

2.2     Accept private initiatives as the main driving force of economic development and uphold the government’s facilitating role in creating a favourable atmosphere in order to augment private investments in the country’s industrialization, given the background of a free market economy and globalization,.

2.3       Arrange for state-owned industrial enterprises to be sold/transferred/leased or administered in any other way by the Privatization Commission or concerned ministries in order to accelerate the privatization process.

2.4      Take necessary initiatives to set up industries with private entrepreneurships, and where that is feasible, establish industries on state initiative in those sectors that are considered very important and essential because of national interest, where private entrepreneurs are not forthcoming.

2.5      Catering the needs for local and foreign market and also for consumer satisfaction of the local products; measures to be undertaken  (a) produce world class quality products, (b) diversification of goods, (c) introduce cost-effective management in the production system, (d) more value addition in the industrial sector, and (e) provide support for enhancing productivity by using continuous, appropriate and advanced technology.

2.6      Provide assistance to augment the industrial sector’s contributions to the GDP of the national economy, meet the general demands of local consumers and earn more foreign exchange so that local industrial entrepreneurs can attain further capacity to establish industries, and industrial goods can have access to the overseas market on a competitive basis.

2.7      Provide inspiration for the speedy expansion of cottage industries and SMEs and for further investment in these sectors so that new employment opportunities are generated, unemployment reduced and poverty alleviation program made in the country.

2.8      Prioritize the expansion and development of agro-based and agricultural processing industries, and assist in the expansion of poultry, dairy and goat-sheep industry as agricultural industries.

2.9       Provide women entrepreneurs with all necessary assistance in establishing industries in various sectors.

2.10    Increase productivity at enterprise level; produce high-value added products step by step through development and application of appropriate technology and increase of export through export diversification.

2.11    Provide all necessary assistance for producing environment-friendly product with the objective for creating a pollution-free environment in the industrial sector.

2.12     Expand the local market and establish more backward linkage industries in order to accelerate the export of high value-added garments produced in the export-oriented garment industries and other relevant industrial sub-sectors.

2.13     Further enrich the industrial sector with the proper utilization of the country’s various natural and mineral resources.

Chapter 3

Policy Strategy

3.1      Ensure full utilization of current production capacity in the industrial sector, especially by reusing that it is not hampered because of infrastructural deficiency.

3.2     Provide special facilities as well as infrastructural support to Cottage and Small and Medium Enterprises (SME)  located in different parts of the country.

3.3       Provide financial, technical, technological and infrastructural facilities in order to inspire setting up and developing agro-based industries.

3.4       Take steps to preserve and market agro-based goods hygienically by processing in frozen, pasteurized, canned or dry form so that goods produced in the country are preserved and marketed in compliance with modern standards in order to ensure that they can be made available in the local market or exported throughout the year.

3.5      Take steps to properly utilize the natural and mineral resources in the country such as gas, coal, hard rock, limestone, silicon, monazite, zircon, rutile, oyster, pearl, coral, fossil, seaweeds, etc, available on the long sea-beach so that new profitable industries can be set up.

3.6      Take action to use solar power and municipal refuse to generate electric power in order to run small and cottage industries.

3.7     Assist backward linkage industries on a priority basis. The objective is to diversify and produce goods of world standard and value added items so that they help to diversify our exports.

3.8     Consider the readymade garment and textile industries as a priority sector in view of their special contributions to the country’s export trade.

3.9      Provide necessary assistance to value added linkage industries and sub-contracting industries so that they are developed.

3.10    Provide assistance to waste management development in order to ensure proper waste minimization and waste removal and produce pollution-free goods.

3.11     Strengthen and ensure efficiency in import substitution industries so that the gradually increasing demand for goods in the local market can be met.

3.12     Inspire well-proportioned industrialization across the country by providing incentives, wherever necessary.

3.13     Conduct a survey to determine the demand in the local market of goods produced in sick industries as a primary step towards the rehabilitation and development of those industries. In view of competition in the local market, take action to reduce the production cost of goods in sick industries in a cost-effective way so that the qualitative standards of goods and productivity are ensured.

3.14     Provide incentive to various institutions that are concerned with technological and technical efficiency enhancement, side by side with human resources development, in order to improve efficiency in the industrial sector.

3.15    Remove policy discrimination, if any, between domestic and foreign investments, and enhance regional and sub-regional cooperation.

3.16   Privatize non-profitable industries in the state sector quickly and in phases. Restrict state investment and administration only to those industries in the public sector which the government think are not safe for investment in the private sector.

3.17   Provide all-out assistance to create a strong capital market so that investments in the industrial sector are   increased.

3.18    Give preference to infrastructural development including ports, power, transport and communications, and human resources development. Specifically promote private investments along the principles of construction, administration and BOO, and construction, administration and BOT in these sectors.

3.19     Quite a number of publicly managed industrial enterprises have already been sold and transferred to private owners. Take initiatives to set up industrial parks with a view to establishing economically viable industries in these industrial sub-sectors.

3.20     Provide further structural and other facilities to establish and develop compact industrial areas. Develop planned industrial areas by establishing Special Economic Zones in areas with vast economic potentials, and utilizing local resources.

3.21     Take necessary steps to bring about the country’s industrial development in line with different agreements with the World Trade Organization (WTO).

3.22    Consider highly developed technology-based seed breeding, production and development, and agricultural goods processing activities as industries. At the same time, take strong steps regarding the diverse use of jute.

3.23     Market daily essentials such as flour produced from wheat in flour mills, refined edible oil produced from unrefined edible oil, refined salt produced from unrefined salt, etc, after enriching them with vitamins, minerals and iodine.

3.24    Arrange for incentives to be given for research and development, acceptance and transfer of environmentally friendly appropriate technology. At the same time, develop market-oriented institutional structure in overall technological development.

3.25         Promote foreign direct investments in order to bring about technology transfer, efficiency and management development and enhance marketing skills.

3.26     Establish coordinated and extensive Management Information Service (MIS) comprising different public and private agencies under the Ministry of industries (various chambers of commerce and industries) and arrange for information received from MIS to be supplied to administrative divisions and districts levels.

3.27     Create a long-term credit fund to generate industrial production capacity and also a venture capital fund to support in the commercial production and marketing of creative industries.

3.28    Collect information on industrial development and arrange for technology dissemination through the Technology Dissemination Cell, set up at the Ministry of Science and Technology, Industry and Business Association, and the Bangladesh missions abroad.

3.29    Take assistance from extended administrative-judicial system (Financial Loan Courts, Arbitration Centers and various other tribunals) in order to resolve trade disputes quickly and at minimum cost.

3.30     Ensure the availability of the working capital from financial institutions after the establishment of an industry so  that working capital can be obtained in time.

3.31     Ensure the availability of assistance of the capital market so that industrial entrepreneurs can overcome the lack of capital and mobilize the necessary capital from the capital market in order to establish or administer industrial enterprises.

3.32     Consider other industry related policies such as the Textiles Policy, Jute Policy, and Silk Policy as supplementary to the Industrial Policy.

Chapter 4

Definitions and Classifications of Industrial Enterprises

4.1      Broadly speaking, industry includes manufacturing and service activities

4.2      Production, processing and assembling, and rehabilitation and fabrication of manufactured goods are included in   industry.

4.3