Industrialization is the key factor for the rapid growth of a country. National progress is not possible without industrialization. It creates employment opportunities, alleviates poverty, and makes the country financially stable.
Industrialization is the main driving force for Bangladesh's economic growth, particularly within the garment sector. It produces high-value products and increases the country's exports and income.
Investment in the industrial sector can increase this employment opportunity. For example, China and Vietnam were able to reduce poverty rates rapidly by creating a skilled workforce in the industrial sector. Similar improvements are possible in Bangladesh through proper infrastructure development that will strengthen the social security system for the government.
A robust infrastructure is essential to fully achieve the benefits of industrialization. However, the existing infrastructural facilities in our country are insufficient. Power supply, telecommunication, transport, gas, water supply, etc -- all these facilities are inadequate and have hindered progress in Bangladesh. This shortage increases the production costs of industrial enterprises and reduces accessibility.
Besides, investors have to spend more time and resources on logistics and supply chain management, which reduces overall productivity. As a result, investors lose interest in investing in Bangladesh.
Bangladesh has now set up various economic zones to encourage industrialization. These zones offer various incentives to attract foreign investment. However, many economic zones still lack infrastructure, which discourages investment. Further infrastructure development is needed to enhance the effectiveness of these zones. For example, the Matarbari Deep Sea Port project has not yet been fully implemented, which is a major obstacle for investors in investing in the economic zones in Moheskhali and Mirsarai.
The government recently took and implemented several steps for the environmentally friendly development of all industrial sectors. The government has been distributing industrial loans and providing other assistance through banks and financial institutions, to encourage the expansion of the investment sector along with large industries.
The amount of industrial loan distribution and recovery in the country is increasing gradually. As a result, it is having a positive impact on the pace of industrialization in Bangladesh and the creation of quality employment. As of February 2024, the cumulative export amount from 450 industrial enterprises operating in the eight EPZs in the country was $108.28 billion, and a total of 4,82,101 Bangladeshis were employed in these industrial enterprises. EPZs are playing a special role in the development of the industrial sector in Bangladesh, including attracting domestic and foreign investment.
Industrialization is the main driving force for Bangladesh's economic growth
According to Bangladesh Bank, Bangladesh received $3bn in net foreign direct investment (FDI) in 2023, compared to $3.48bn in 2022. The inflow of net FDI declined by 16% year-on-year due to various factors, such as investment uncertainties during an election year, weak industrial infrastructure conditions, and a volatile foreign exchange situation.
Better access to improved infrastructure services is one of the key components for a favourable investment climate. Good-quality roads, railways, ports, and airports provide the transportation of goods and reduce production costs. A reliable power supply and a skilled workforce are also attractive to foreign investors in the Bangladesh market.
Financing infrastructure projects through the PPP model and G2G framework is an effective method. In this model, the government and private sector investors jointly invest in a project. The main benefit of this modality is that large-scale projects can be implemented quickly.
Besides this, as private investors provide significant financial capital and share risks, this model reduces the pressure on the government's budget. As an example, the first Dhaka Elevated Expressway project in Bangladesh is an example of a successful PPP model in Bangladesh. It has reduced traffic congestion around Dhaka City by improving connectivity between the northern part of Dhaka City with the Central, South, and South-Eastern parts and a much-needed increase in traffic capacity. Such projects have created more opportunities for the industrial sector.
Another successful PPP project is the Hemodialysis Centre at National Institute of Kidney Diseases and Urology (NIKDU) in Dhaka. NIKDU services have continued to grow over the last 10 years for people suffering from various kidney and urological problems. Besides, it has increased public access to dialysis and improved the quality of dialysis services on an affordable basis by upgrading and refreshing the facilities and treatment offered for dialysis therapy.
A dedicated task force should be created to expedite industrialization and expedite its implementation. The task force's scope is to identify, implement, and monitor the necessary infrastructure developments. This task force may include government officials from RHD, BBA, or any other educational institutions, private sector representatives, and experts.
Shohel Mamun is a freelance journalist.