Industrial Policy 2010 Appraisal a. R. Bhuyan

8/3/2019 Industrial Policy 2010 Appraisal a. R. Bhuyan

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Thoughts on Economics

Vol. 20, No. 03

Bangladesh Industrial Policy 2010:

A Critical Appraisal

Ayubur Rahman Bhuyan1

[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 sectors 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 countrys total labour force. While manyof 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

1 Former Professor of Economics at the University of Dhaka.


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8 Bangladesh Industrial Policy 2010

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 sectors 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

countrys economic development.2 A densely populated country

with a population of around 150 million living on a land area of147570 square kilometer (56977 square miles),3 its economy is

2While 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.


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Thoughts on Economics 9

dependent mainly on agriculture, which accounts for a fifth of GDP

but provides employment to as much as 50 percent of the countrys

labor force. Since the countrys 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 countrys 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

countrys 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

governments 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


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thereafter. The policy reiterates the countrys 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 theindustry sectors 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 countrys total

labour force by 2021 from 16 percent now.


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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


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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 countrys 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


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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.


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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


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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


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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 thefifth 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 dutyrate 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.


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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)


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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.


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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.


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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.


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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.


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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


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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.


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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 inrunning 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 sectorin 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


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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.


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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 facilityproposed 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


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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.


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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-


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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, andprocedural 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


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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.


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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 structuralimpediments 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 countrys industrial sector.

5.2.5 Addressing Sector-specific Problems


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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


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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.


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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 sectors 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


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and move closer to achieving the target of raising the

industry sectors 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.

Industrial Policy 2010 Appraisal a. R. Bhuyan

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