Investors of economic zones seek PMO’s help to clear hurdles
The Bangladesh Economic Zones Investors Association (BEZIA) has sought intervention from the Prime Minister's Office (PMO) to help address some of the obstacles for investment in the country's economic zones.
A letter was sent to the PMO on 30 June in this regard, according to Safwan Sobhan Tasvir, association chairman and vice-chairman of Bashundhara Group.
Potential investors were recently blindsided by the implementation of a 15 per cent value-added tax (VAT) charge for a land lease at any of the various economic zones.
Besides, investors are unable to attain bank loans against rented land due to the unfavourable conditions of leasing policies, BEZIA said in a statement.
"Our confidence and expectations were shattered when we unexpectedly received letters from the Bangladesh Economic Zones Authority (BEZA) on the VAT issue," read the statement.
This will increase their outlay.
"Furthermore, we are keen to enjoy out tax holiday as provided for industrial units regardless of what they produce within the economic zones," it added.
BEZIA also said that investors are facing indefinite delays in the hand-over process for leased lands at economic zones and are also uncertain about whether the infrastructure and facilities present there will be as promised by BEZA.
This includes the construction of a port facility at the Bangabandhu Sheikh Mujib Shilpa Nagar in Mirsarai, Chattogram, a project which has already far exceeded its completion deadline.
While true that investors were exempt of VAT charges and were given a tax holiday for a certain period as well, the National Board of Revenue recently issued a notice declaring that 15 per cent VAT would be imposed on land leasing from now on, according to BEZIA.
The organisation also said that banks are uninterested in providing loans for investment in economic zones while using leasing agreements as collateral since the potential borrower does not own the land.
BEZA was created by law and is responsible for protecting investor interests, said BEZIA Vice-President Ashraful Haq Chowdhury.
However, BEZA's frequent policy changes discourage investors while other organisations, such as the National Board of Revenue and various banks, do not follow the Bangladesh Economic Zone Act-2010.
If BEZA does not ensure benefits for investors, it will fail to attract both domestic and foreign investment for the economic zones.
BEZA should incentivise investment in the economic zones more so than those outside, said Chowdhury, also the managing director of Star Infrastructure Development Consortium.
Meanwhile, BEZA Executive Chairman Paban Chowdhury told The Daily Star that before investors can even realise any adversities of the new policy, BEZA plans to provide generous incentive packages that will perk up the country's investment climate and attract more foreign investors for economic zones.
"We have submitted proposals to the PMO on how we can offer policy support and incentives to domestic and foreign investors."
Industrial units that will be set up in the economic zones within 2023 will be offered 100 per cent corporate tax exemption for 10 years, he added.
Similar to the export-oriented industrial units, local factories should also be entitled to bonded warehouse facilities, which allows exporters to import and store raw materials without paying customs duties for a certain period.
BEZA also called for VAT charges on land leasing to be waived for foreign companies looking to set up factories here as it erodes the country's competitiveness as a lucrative investment destination, he added.
Like India, Bangladesh's government should also provide 50 per cent of the cost to establish central effluent treatment plants at economic zones, BEZA said in its proposal.
In the existing global economic order, China is considered as the factory of the world as it hosts the skeleton of the global value chain, it added.
As of July, BEZA received investment proposals totalling $21.5 billion from 154 local and foreign business entities. Of the amount, about $3 billion has already been invested in different special economic zones.
A further $6 billion will come as foreign direct investment from companies originating in China, South Korea, Japan, India, Singapore, the UK, Australia, Malaysia and the US.
The remaining $12.1 billion will be invested by 60 local companies, including TK Group, Karmo Foam Industry, Mango Teleservices, BDCOM Online, Bashundhara Group, Siraj Cycle Industries, Abdul Monem, Star Consortium and Ayesha Clothing Co.
The domestic companies want to pour their allotted funds into the pharmaceutical, steel, garment, bicycle, automobile, tyre and tube, electronics and ceramic industries, according to BEZA.
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