ON

The views expressed in this paper are the views of the author and do not
necessarily reflect the views or policies of the Asian Development Bank Institute
(ADBI), the Asian Development Bank (ADB), its Board of Directors, or the
governments they represent. ADBI does not guarantee the accuracy of the data
included in this paper and accepts no responsibility for any consequences of
their use. Terminology used may not necessarily be consistent with ADB official
terms.

Submitted By Shamim Ahammed

Dhaka North City Corporation

1.Introduction

Bangladesh, the 9th largest (population 160 million) country in the world in terms of population
having only 144,000 sq. Km. of land area (94th in terms of area). Bangladesh is one of the world
most densely populated country (density is around 2600 sq. mile ). With such a huge population
and limited resources, Bangladesh is in the march towards economic development. It is doing
better in achieving Millennium Development Goals in most of the indicators, in comparison to
the neighboring countries. Bangladesh is a land mass bestowed with rich natural resources and
ecological and biological diversity. Expansion and intensification of agriculture, uncontrolled
industrialization, destruction of natural habitats, and increasing urbanization to satisfy the needs
of the growing population and economic development have been major threats to the its rich
heritage. The antagonism between population growth, resource depletion, and environmental
degradation is being widely deliberated in the recent years. Arguments, most of the times, are
between population growth as the main cause of increasing environmental pressures, economic
development, unsustainable agricultural and industrial practices, and excessive or wasteful
consumption. Some basic indicators of Bangladesh in terms of economy and employment are
given bellow:

GDP Growth Rate- 6.3% ( 2011)

GDP Per Capita Income- 948 (2012-13)
Inflation Rate- 7.39% (Aug, 2013)
Investment Contribution to GDP- 19.3% ( July 2011-May 2012)
FDI- 1292.56 Million (Jan-Dec 2012)
Export- 24.287Billion (2011-12)
Import- 35.44 Billion (2011-2012)
Remittance- 14.17 Billion ( Dec, 2012)
Source: Bangladesh Bureau of Statistics (BBS), available at www.bbs.gov.bd

(Source Labour Force Survey Report, 2010. Available at www.bbs.gov.bd)

2. Synergetic Linkages Among Industries

Agriculture and allied industries has been the main source of livelihood for about 60% of the
countries population. Mushrooming needs and preferences have forced the transfer of both labor
and other resources to the industrial and services sectors. Profitability and productivity tend to be
higher in industries than in agriculture, due to higher investments and advanced technologies.
Thus the relative contribution of agriculture to the total Gross Domestic Product (GDP) has
generally been declining as economies expand and diversify in Bangladesh. However, the
industries in Bangladesh are classified into seven categories in the Industrial Policy, 2010. These
are:
i.
Large Industry
ii. Medium Industry
iii. Small Industry
iv.
Micro Industry
v.
Cottage industry
vi.
Hightech industry, and
vii.
Reserved Industry.

3. Industrial Clusters Bangladesh: Practices and future plan

Industrial clusters are defined as geographic concentration of companies in a specialized field
that cooperate with local community to efficiently share resources leading to improved economic
gains and equitable enhancement of environmental quality. Present Practices of Industrial Cluster
of Bangladesh can be broadly divided by two types: (3.1) Formal Clusters and (3.2) Non-Formal
Clusters. Formal Clusters are developed and guided under government policy, rules and
regulatons, while non-formal are the agglomeration of industries in certain areas and developed
by the private entrepreneurs. Formal Clusters may again be divided based on their regulating
Authority, Which are
3.1.1 BEPZA (Bangladesh Export Processing Zone Authority): In order to stimulate rapid
economic growth of the country, particularly through industrialization, the government has
adopted an 'Open Door Policy' to attract foreign investment
to Bangladesh. The Bangladesh Export Processing Zones
Authority (BEPZA) is the official organ of the government
to promote, attract and facilitate foreign investment in the
Export Processing Zones. The primary objective of an EPZ
is to provide special areas where potential investors would
find a congenial investment climate, free from cumbersome
procedures. There are as many as 8 EPZs are functioning at
present. Location and name of the EPZs are shown in the
map. There are 352 industries are now functioning in those
EPZs. Based on investment type, theses industries could be
divided under the following way:
A - 100% foreign ownership 205 (58%)
B - joint venture 49 (14%)
C - 100% local venture 98 (28%)
(Source: ww.epzbangladesh.org.bd)

3.1.2 Bangladesh Small and Cottage Industries Corporation (BSCIC) provides a package of
services to private sector entrepreneurs in Bangladesh in the small and cottage industries sector.
It was created through an Act of Parliament in 1957 which was later amended in 1992. BSCIC
has country-wide institution network to provide door
step services for entrepreneurs. BSCIC has developed a
total of 74 industrial estates throughout the country to
foster the growth of SCIs in a balanced manner and also
construction works for good number of estates including
special type like Tannery, API (Active Pharmaceutical
Ingredients) and Garments Park are under execution.
BSCICs Vision-2025
BSCIC strives to create resilient and efficient SMCIs,
able to compete in a liberalized market environment.
SMCIs have to be efficient and knowledge-driven,
including using ICT to be globally connected and
accessible. The Corporation will promote SMCIs to be an integral part of the countrys industrial
development capable of producing high value-added manufacturing product & services. BSCIC
will serve as the national focal point for the over all development of SMCIs in the country. The
principal goal of the Bangladesh Govt. economic policy is to reduce poverty which is coherent
with the MDGs. (Details of BSCIC can be known from its website:http://www.bscic.gov.bd)
3.2 Informal Industrial Cluster
Besides the aforesaid government Industrial Cluster, another type of Industrial clusters might
found along with the highways of Major cities like: Dhaka, Chittagong and Khulna in
Bangladesh. Though, these industries might found as cluster, but initially they were not like that.
Private entrepreneurs set-up their industries based on communication facilities and afterwards, it
were developed as a cluster of industries along the high ways, due to lack of regulatory control
by the government. These industries are basically large/medium sized and labour intensive by
characterstics. Pattern of these industries are not unique in character, so it might not be possible
to ensure common treatment facilities (i.e. ETP) for those industries.
3.2.1Neighbourhood Industries
Another type of industries, which were come in seen after the BBS (Bangladesh Bearue of
Statistics) survey, 2012. A draft report shows that total number of economic units stands at
8075704 during the census period, which was 3708144 in 2001 & 03 and 2169419 in 1986. The
growth of economic units was 71percent during 1986 through 2001 & 03 and 118 percent during
2001 & 03 to 2013. This economic units includes mainly small and cottage industries. Findings
of the draft report are as follow:
i.
ii.
iii.
iv.
v.

Regional Variations Still Persistent in Economic Activities

Regions Experienced a Consistent Advancement in Trading and Industrialization
Base of Bangladesh Economy is Getting Stronger and Moving towards Formalization
Household Based Economic Activities are in Rapid Expansion
Rural Economy has Boosted up with Higher Growth in Northern Bangladesh

vi.

Service Sector Plays Dominating Role in Growth of Economic Units

(Source: Preliminary Report on Economic Census 2013, available at www.bbs.gov.bd)

CASE STUDY: Tanning Industry, Dhaka

Hazaribagh tanneries, an export-oriented cluster of industries, produce some 20,000 cubic
metres of toxic waste laden with chromium and at least 30 other toxins every day. The
treatment of chromium-containing leather waste, the major solid waste generated at the posttanning operations of leather processing, has the potential to generate value-added leather
chemicals.
The value-added chemicals could be segregated from the chromium-containing leather waste
when the central ETP is constructed in Savar, according to the experts. Government decided to
shift Tannery industries from Dhaka to Savar, where an estate is being built at an estimated
cost of Taka 545 crore on the outskirts of Dhaka located at two-km away from Dhaka-Aricha
highway on the bank of the River Dhaleshwari. This will enable the industries to share
common ETP. Government will also provide bank loans to tannery owners and residential
arrangements for the workers would be resolved through discussions with all stakeholders.
EU helps to set-up Central Effluent Treatment Plant (CETP) for this tanning industry. After
setting up the CETP, as many as 155 factories out of 195 would be relocated outside the capital
from Hazaribagh area. Bangladesh has earned $651.05 million US dollars by exporting leather
and leather goods during 2010-11 fiscal, according to the Ministry of Commerce.
The countries that imported leather and leather goods from Bangladesh during the period areAustralia, Brazil, South Korea, Italy, Hong Kong, China, Japan, Spain, Poland, Taiwan, UK,
USA, Vietnam, Belgium, Austria, France, Germany, Romania, Czech Republic, Canada,
Netherlands and United Arab Emirates. Experts say Bangladesh should have a central ETP not
only to meet the demand for 100 percent export-oriented leather industry, but also comply with
the rules of European Union (EU) countries, which import a sizable volume of leather and
leather goods from Bangladesh every year.
(Source:
http://www1.bssnews.net/newsDetails.php?cat=0&id=242888$date=2012-0419&dateCurrent=2012-04-25)

Foreign Investment Scenario

Local and foreign investment registered with BOI in October, 2013
Sl Type
Number
of Proposed Investment Values
Proposed
number
projects
Employment
1 Local investment
75
504.900
m
US$ 10922
(39255.977 m Tk)
2 Joint
&
100% 7
20.134
US$ 681
Foreign Investment
(1565.432 m Tk)
Local and foreign investment registered with BOI in September, 2013
Sl Type
Number
of Proposed Investment Values
Proposed
number
projects
Employment
1 Local investment 81
187.348
m
US$ 10102
(14566.334 m Tk)
2 Joint
&
100% 15
1931.076
m
US$ 4000
Foreign Investment
(150141.162 m Tk)
Local and foreign investment registered with BOI in August, 2013
Sl Type
Number
of Proposed Investment Values
Proposed
projects
mberEmployment
1 Local investment 57
158.765
m
US$ 5343
(12344.049 m Tk)
2 Joint
&
100% 5
30.039
m
US$ 1108
Foreign Investment
(2335.601 m Tk)
Local and foreign investment registered with BOI from July, 2012 to June, 2013
Sl Type
Number
of Proposed Investment Values
Proposed
projects
Employment
1 Local investment 1457
5599
m
US$ 268871
(446148 m Tk)
2 Joint
&
100% 219
2733
m
US$ 40838
Foreign Investment
(220721 m Tk)

Local and foreign investment registered with BOI from July, 2011 to June, 2012
Sl Type
Number
of Proposed Investment Values
Proposed
projects
Employment
1 Local investment 1735
6678.675
m
US$ 326535
(534769.057 m Tk)
2 Joint
&
100% 221
4470.000
m
US$ 124615
Foreign Investment
(344168.000 m Tk)
(Source: Board of Investment, (www.boi.gov.bd)