Research Report
Industrialization in Northwest Bangladesh
Md Abdul Wadud
Ph.D. (Newcastle, United Kingdom)
Industrialization in Northwest Bangladesh
Md Abdul Wadud, Ph.D. (Newcastle, United Kingdom)
Professor
Department of Economics
University of Rajshahi, Rajshahi -6205
Bangladesh
Email: [email protected]
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Industrialization in Northwest Bangladesh
Acknowledgement
This research gratefully acknowledges the financial support given by North Bengal Institute, RDRS
Bangladesh. Without this support, it was not possible to conduct this research. In particular, I would
like to express my sincerely humble thanks to Jasim Uddin Ferdous and Mahmuda Khander Bithi for
their time-to-time suggestions and good words. Many thanks go to Bithi for providing me a feedback
report which increases the arrangement and quality of this research. Professor Tariq Saiful Islam
deserves thanks for constructive and suggestive review report on this research that greatly helped to
enhance the quality. I would also like to thank data collectors and respondents for this study. I also
feel honour to thank the participants of the workshop on this research organized by RDRS at Rangpur
on June 22, 2008. However, any error and omission remain on the researcher.
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Executive Summary
Northwest Bangladesh consists of eight districts - Panchagarh, Thakurgaon, Dinajpur,
Nilphamari, Rangpur, Kurigram, Lalmonirhat, and Gaibandha.
This region is mainly
characterized by agro-based economy and poverty-ridden with surplus low-cost labour.
Monga affects some parts of this region with no job and no purchasing power during some
time in the year that make difficult for them to maintain livelihood during off peak times.
This labour force can be utilized in other sectors like industry with appropriate training.
The research aims to assess productive performance and identify factors associated with
productive performance based on scientific methods and provide policy implications as to
how industrialization and industrial growth could be facilitated in the Northwest Bangladesh
that could generate substantial amount of employment opportunities. In this regard, we
explore the potentials of Uttora export processing zone (EPZ) and land ports located in this
region that could help industrialisation. The study methodology involves collection of both
quantitative and qualitative data and information. Data have been gathered from both
secondary and primary sources; secondary data have been collected from published and
unpublished documents of relevant agencies and institutions and through field surveys, while
primary data and information have been gathered through field survey. We assess
performance of industries in terms of gross output, value added, employment status and
others. Tabular presentations have been used to evaluate different aspects closely related to
industrialisation. Further, we apply stochastic econometric frontier approach to assess and
estimate productive performance of industrial establishments.
Research reveals that there are no remarkable numbers of large and medium industries except
some small and cottage industries like, rice milling, bidi manufacturing industries, wooden
furniture manufacturing. Average number of industrial establishment and persons engaged,
average amount of gross output, value added are lower than those of the national averages. It
is implied from this analysis that there is scope of establishing industries in this region based
on at least available surplus labour, agro-products and natural resources. Research also shows
that although the economy of the region is agro-based that requires substantial amount of
fertilizer and pesticides, but there is no fertilizer industry in this region. Fertilizer industries
4
could be established in order to absorb some part of labour force and fulfill the demand of
fertilizer in this agro-based region.
Predicting the potentiality of effective industrialization a performance evaluation, that is,
productivity performance assessment of the industries is utmost important. We investigate
efficiency performance of industries using the Cobb-Douglas stochastic frontier model.
Results indicate that stochastic frontier model for the production technology and truncated
normal distributional assumption for the inefficiency effects are representative for the
dataset. We find that there is little opportunity of industry production gain through
improvement of efficiency of industries without resort to technological progress. Given the
level of efficiency performance of industries, this research would suggest introducing
policies that would lead to adoption of new technological progress and improvement of
existing level of technologies. This can provide technically, economically and socially
optimal level of industrialisation in northwest Bangladesh.
There is an EPZ in Nilphamari district called Uttora EPZ (UEPZ) among eight EPZs in
Bangladesh. Among thirteen land ports in Bangladesh, four land ports are located in
northwest Bangladesh. These are (1) Banglabandha in Panchagar, (2) Burimari in
Lalmonirhat, (3) Hili in Dinajpur and (4) Birol in Dinajpur. The Uttora EPZ is established
with a view to achieving employment, income, and hence reducing poverty through setting
up industries and utilizing benefits of land ports, airport and the Jamuna Bridge. There are
264 industries in the EPZs in Bangladesh with investment of US$11,48,986.4727 thousands
and employment of 2,02,752 persons. Unfortunately, UEPZ has only 3 industries with
investment of US$2,773.3209 thousands and employment of 1,430 people. Therefore, we can
say that this EPZ did not become able to keep contribution to the development in the region
because of reasons for not solving the existing problems defined by the industrialists and
entrepreneurs. On the other hand, foreign investors do not show interest to establish
industries if domestic counterparts do not establish. In the Mongla EPZ, all of 10 agro-based
industries are established, but in the UEPZ no such industry is established.
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Arrangement of connection of natural gas in the EPZ, bringing working mobility in Mongla
sea ports, arrangement of special toll system for Jamuna bridge for EPZ industrialists in order
to reduce import-export cost from Chittagong seaport and airport, taking steps to run cargo
biman from Shyedpur airport, arrangement of border connection from Bangladesh to India,
Nepal and China through development of four land ports, arrangement of direct rail
connection from Shyedpur to Dhaka and Chittagong, encouragement and special benefit to
entrepreneurs to build agro-based industries in this agrarian region could benefit
industrialisation in this region. We would emphasize full operation of the four land ports,
regional and international trade will increase between Bangladesh, India, Nepal and Bhutan.
Foreign investment should be attracted in the EPZs. For this, the government must take
immediate decisions. These will generate employment and income of the people of
Bangladesh and help alleviate poverty. Concerted efforts from all quarters can play a very
significant role.
The government may wish to set up general and sector specific Special Economic Zones in
order to support and facilitate exports. Further the Government may consider to formulate
separate industrial and export policies for this region. Moreover, the government may also
declare Stand-Alone EPZs to enable industries to operate from convenient locations while
enjoying EPZ benefits. This region has achieved a degree of growth in agriculture creating a
potential for export of agro-based products, in recognition of which the government may
declare Agro-Export Processing Zones.
Results further show that most of the respondents suggest to establish agro-based and food
processing industries. Power crises and lack of government initiatives are observed to be two
important problems of industrialization. Parameters like, transportation efficiency, and
efficiency in water and energy supply must be improved substantially. This research also
reveals that different strategies are required for promotion and marketing of different
products depending on the skill intensity, product type and the characteristics of buyers.
Given the available natural resources like coal and hard rock and human resource like labour
force, this area demands establishments of agro-based food processing industry, garments
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industry, leather industry, shoe industry, carpet industry, power industry, cement industry,
fertilizer industry, ceramic industry, light engineering, machinery parts industry.
Entrepreneurs and Industrialists in Dhaka and Chittagong, NGOs like RDRS, ASA,
PROSHIKA, Grameen Bank would have options to establish industries in this region and
build sales centres in different parts of the country and explore foreign markets as they have
their contact with donors and other agencies. These activities could be viewed as social
responsibility of them. NGOs along with local businessmen and civil society people could
take necessary steps in this regard. This research would emphasize establishing joint venture
industries along with fully foreign and domestic industries so that we can obtain technical
know-how and get help explore foreign markets.
For facilitation and effectiveness of industrialisation, we suggest establishing of Northwest
Export Promotion Council, Market Information Service Centre, Institute of Export
Development and Management, Industrial Growth Centre.
In a nutshell, we can conclude that Northwest Bangladesh possesses most of the resources
and inputs for industrialisation with some constraints. Given resources availability,
government patronization and necessary steps are required to utilize the opportunities for
setting up large, medium, small and cottage industries and hence generate employment and
income and thus reducing poverty in this region.
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Industrialization in Northwest Bangladesh
Contents
1. Industrialization in Northwest Bangladesh
1.1. Background
1.2. Aims and Objectives of the Research
1.3. Econometric Methodology for Data Analysis
1.4. Structure of the Research Report
2. Present Status of Industrial Establishments in Northwest Bangladesh
2.1 Introduction
2.2. Definitions
2.2.1. Establishment
2.2.2. Large scale establishment
2.2.3. Medium Scale establishment
2.2.4. Small Scale Establishment
2.2.5. Manufacturing
2.2.6. Unit
2.3. Product-and District-wise Industrial Establishment and their Performances
2.3.1. Product-and District Industrial Establishment, 1991 - 1992
2.3.2. Performance of Industrial Establishments, 1991 - 1992
2.3.3. Industrial Establishment, 1999-2000
2.3.4. Performance of Industrial Establishments, 1999 – 2000
2.4. Comparison of Performance among Northwest with Administrative Division
2.5. Conclusion
3. Efficiency Performance of Industries in the Northwest: An Econometric Approach
3.1. Introduction
3.2. Efficiency Performance: Some Theoretical Issues
3.3. Stochastic Econometric Frontier and Performance Measurement: Empirical Framework
3.4 Functional Forms of Production Function and Hypothesis Tests
3.4.1. Functional Forms
3.4.2. Hypotheses Testing
3.5. Empirical Results - Industry-specific Technical Efficiency
3.6. Conclusions
4. Uttora Export Processing Zones (EPZ) – Role for Industrialisation
4.1 Introduction
4.2. Uttora EPZ – An Overview
4.3. EPZs in Bangladesh
4.4. Investment and Employment in Industries of EPZs
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4.5. BEPZA in National Export and Employment
4.6. EPZ in the Northwest and Expectation
4.7 Conclusion and Recommendations
5. Problems and Prospects of Land Ports in Northwest Bangladesh
5.1. Introduction
5.2. Land Ports and Customs Houses
5.2.1. Location of Land Ports
5.2.2. Work Stations of Bangladesh Customs
5.3. Activity of Benapole Land Port
5.4. Potentials and Suggestive Steps
5.4.1. Advantages of Northwest in the Export Market
5.4.2. Relevance of an Export-Import Policy for Northwest Bangladesh
5.4.3. Industrial Policy
5.4.4. Northwest Export Promotion Council
5.4.4.1. Procedural Simplifications
5.4.4.2. Market Information Service
5.4.5. Physical Infrastructure in Land Ports
5.4.6. Institute of Export Development and Management
5.4.7. Industrial Growth Centres
5.4.8. Warehousing and Container Facilities and Air Cargo Facilities
5.4.9. Identification of Export Items
5.4.10. Special Economic Zone and Agro-Economics Zone
5.5. Conclusion
6. Problems and Prospects of Industrial Growth in Northwest Districts – An Analysis
based on Survey
6.1. Introduction
6.2. Definitions
6.2.1. Industrialization
6.2.2. Capital Intensity
6.2.3. Labor Intensity
6.2.4. Primary, Secondary and Tertiary Sector
6.3. Questionnaire Preparation and Data Collection
6.4. Industrial Policy towards Industrialisation in the Northwest
6.5. Components associated with Industrialization
6.5.1. Infrastructure
6.5.2. Energy
6.5.3 Trade Policies
6.6. Problems of Industries
6.6.1. Energy Crisis
6.6.2. Lack of Infrastructure
6.6.3. Lack of Basic Industries
6.6.4. Lack of Government Attention
6.6.5. Lack of Capital
6.6.6. Lack of Forward and Backward Linkage Industries
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6.6.7. Low Return of Working Capital
6.6.8. Risk
6.6.9. Lack of Insufficient Storage Facility
6.6.10. Transportation Problem
6.6.11. Other Problems
6.7. Prospects of Industrial Development and Growth – A Survey based Analysis
6.7.1. Agro-based Industries
6.7.2. Coal allied Industries
6.7.3. Cement Industry
6.7.4. Medicine Industry
6.7.5. Jute industry and Cotton Industry
6.7.6. Garments industry
6.7.7. Other Industries
6.7.8. Integrated industries (Sugar mill, paper mill and Distillery)
6.7.9. Trade with Neighbouring Countries
6.8. Conclusion
7. Potentials for Development and Expansion of Industries in Northwest
7.1. Introduction
7.2. Resources and Factor Endowments
7.2.1. Availability of Resources
7.2.2. Physical Infrastructure
7.2.3. Institutions
7.2.4 . Labour Resources
7.2.5. Natural Resources Endowments
7.2.5.1. Fulbari and Boropukuria Coal Mine project
7.2.6. Intermediate Inputs
7.2.7. Storage Facilities
7.3. Investment Opportunities
7.3.1. Large and Medium Industries
7.3.1.1. Agro-based Food processing industry
7.3.1.2. Light Engineering Industries
7.3.1.3. Machinery Parts
7.3.1.4. Ceramic Products
7.3.1.5. Leather Industry
7.3.1.6. Natural Gas-based Industries
7.3.1.7. Readymade Garmants and Textile Products
7.3.2. Small and Cottage Industries
7.4. Demand Pattern and Nature of Demand for Industrial Products
7.5 The Need for Differentiated Strategies
7.6. Conclusions
8. Summary, Conclusions and Recommendations
8.1. Introduction
8.2. Summary and Conclusions
8.2.1. Status and Performance of Industries, and Constraints
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8.2.2. Resource Availability and Demand Pattern
8.2.3. Entrepreneurship
8.2.4. Institutional Development
8.2.5. Supply of Materials
8.2.6. Organization Capacity
8.2.7. Supply of Credits
8.2.8. Training
8.2.9. Marketing
8.2.10. Technological Improvement
8.2.11. Organisation and Planning
8.3. Suggestions, Recommendations and Policy Implications
8. Bibliography
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1. Industrialization in Northwest Bangladesh
1.1. Background
Northwest Bangladesh consists of eight districts - Panchagarh, Thakurgaon, Dinajpur,
Nilphamari, Rangpur, Kurigram, Lalmonirhat, and Gaibandha. This region can be broadly
classified as greater Dinajpur district consisting of districts - Panchagarh, Thakurgaon,
Dinajpur, and greater Rangpur district consisting of districts - Nilphamari, Rangpur,
Kurigram, Lalmonirhat, and Gaibandha. This region is considered to be the most neglected
and deprived region of the country, excluded from mainstream development. This northwest
region is mainly characterized by agro-based economy and poverty-ridden with surplus lowcost labour. Some parts of this region are affected by monga with no job and no purchasing
power during some time in the year. This means that there are many unemployed people
and/or labour directly and indirectly and it becomes difficult for them to maintain livelihood
during off peak times in a year. This labour force can be utilized in other sectors like
industry with appropriate training. Many people migrate to Dhaka, Rajshahi and other cities
to maintain their livelihood.
Despite all efforts made in the past in order to alleviate poverty in this region, the incidence
of rural poverty is still significant. At national and international levels literature of poverty
focusing on its nature and causes is available, but unfortunately there is no general theory of
poverty. Different opinions and explanations have been given on nature and causes of
poverty. Among them, researchers exploded the neoclassical explanation of poverty as a
problem of inadequate capital accumulation. In line with the neoclassical explanation, it has
been observed that many of the resources needed are at hand unutilized and underutilized in
rural area in general and in northwest Bangladesh in particular. It is suggested that the
incidence and magnitude of poverty cannot be explained in terms of trends of average
income and food production either. Unequal distribution of income and assets, concentration
of economic surplus, fragmented allocative mechanisms and characteristic of the economic
structure tend to create and reinforce poverty through the process of private investment,
technological innovations and population growth. While there are debates regarding the
nature of the relationships between poverty and the specific factors mentioned, a somewhat
general agreement seems to exist that the problem of poverty is complex where nutrition,
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health, income, education and fertility are all closely interrelated. In order to understand the
problem of poverty clearly, interactions of these variables vis-à-vis their exogenous
determinants need to be clearly understood.
The state of poverty can be overcome effectively if proper utilization of land, labour and
capital can be ensured and equitable distribution of benefits can be provided to the poorer
sections of the population in this region particularly and in Bangladesh generally. This
requires far reaching changes in policies and institutions that govern processes through which
resources are utilized and benefits distributed in various sectors of the economy. Industrial
sector is one of such sectors which has potentials can be used as an effective vehicle to fight
against poverty, provided that the gradual decay in some of these industries are arrested and
constraints which inhibits the growth of other sector are removed.
There is an EPZ in Nilphamari district, northwest Bangladesh among 8 EPZs in Bangladesh.
This EPZ is established with a view to achieving employment, income, and hence reduce
poverty through setting up industries and utilizing benefits of land ports and airport and the
Jamuna Bridge.
There are four land ports located in the borders of the northwest districts among fourteen
land ports in Bangladesh. Trade between Bangladesh and India, Bangladesh and Nepal,
Bangladesh and Bhutan and perhaps Bangladesh and China can be done with special terms
and conditions. The benefits of the land ports situated in this region can be used to the
process of industrialization. The construction of Jamuna Multi-purpose Bridge has facilitated
the transportation infrastructure, which is one of the important preconditions for industrial
development. With this infrastructural facility, low-cost labour input supply and other
materials, industrialization along with agriculture should be developed properly to solve
unemployment problem, alleviate poverty and have sustainable livelihood.
Traditionally industrial establishments are classified as large-scale establishment, medium
scale establishment and small-scale establishment and cottage industries. Development of all
sorts of industries together can yield a balance development in the northwest Bangladesh.
Subsection 2 gives aims and objectives of this study; Subsection 3 provides econometric
methodology for data analysis and Subsection 4 outlines the organization of the research
report.
13
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Total Staff
2479 (24% female)
3,79,409 (76% female)
19,929
40 Kilometers
Total Group member
Total Group
21
512
Union Covered
Municipality Covered
59
11
Upazila Covered
District Covered
RDRS Basic Profile
(January 2008)
RDRS WORKING AREA
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Figure 1.1: Map showing Northwest Bangladesh
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RDRS Area in Bangladesh
1.2. Aims and Objectives of the Research
The aim of the research is to assess productive performance and identify factors associated
with productive performance based on scientific methods and provide policy implications as
to how industrialization and industrial growth could be facilitated in the Northwest
Bangladesh. This research works with the following broad objectives:
(i)
To gain an understanding and a concrete picture about the present status of
industrialization in the northern districts of Bangladesh;
(ii)
to assess productive performance of industrial establishments;
(iii)
to identify the mechanisms, bottlenecks, weaknesses, and positive factors of
the sector;
(iv)
to obtain present status of the industrial sectors of EPZ located in northwest
Bangladesh and explore potential of this EPZ with appropriate attention;
(v)
to assess present status of four land ports and find potentials in promoting
industrialisation in particular and overall development in general;
(vi)
to evaluate institutional interventions and policies, and programmes directed
towards upliftment of the sector;
(vii)
to ascertain the potential of the industrial sector in the broader context of
national development pursuits; and
(viii) to recommend appropriate policies, institutional arrangement and action
measures on the basis of the research findings to address the issue of poor
industrialization in the region.
1.3. Methodology for Data Analysis
Fruitful research results and policy conclusions based on research results depend on the use
of appropriate approaches and methodology of research. The study methodology, with a
view to fulfill the objectives of the study, involves collection of both quantitative and
qualitative data and information. Quantitative information has been collected from published
and unpublished documents of relevant agencies and institutions and through field surveys,
while qualitative information has been gathered through detailed discussions with producers,
traders, consumers, development agents, other relevant persons and from relevant documents.
Table 1.1 describes the type of data, collection method and sources/respondents of data.
Table 1.1: Data Types, Methods of Collection and Sources/Respondents
Types
Secondary
Methods
•
data
Sources/Respondents
Published
•
Publications of Bangladesh Bureau of Statistics
documents
•
Publications
of
Ministries
(Commerce
/Industry, Finance, Planning etc.)
Primary
•
data
Face
to
interview
•
•
Publications of BSCIC, BIDS, USAID
•
Publications of RDRS and other NGOs
•
Publications of Land Ports Authority
•
Publications of BEPZA
•
Internet and different libraries
face •
through
Industrialists,
entrepreneurs,
traders,
and
customers.
structured
•
Representatives of regulatory organizations
questionnaires
•
Teachers,
journalists,
and
civil
society
representatives
group discussion
•
Administrators like DCs, UNOs
•
Elected
representatives
like
Pourrashava
Chairman, local MPs and others concerned
A survey with structured questionnaires is carried out on to collect data and information. The
survey collects data information on factors, which affect industrial sectors positively
(favorable factors) and negatively (problems).
We conducted a questionnaire to 400 respondents of the study area, 50 from each district.
Among them, entrepreneurs and traders are 39 percents, administrators are 11 percent,
teachers are 28 percents, NGO officials are 7 percent, Civil society persons are 15 percent.
2
We apply stochastic econometric frontier approach to assess and estimate productive
performance of industrial establishments with inefficiency effects model. The Cobb-Douglas
specification of the stochastic frontier is applied. We also assess performance of industries in
terms of gross output, value added, employment status and others. Further, tabular
presentations are also used to evaluate different aspects closely related to industrialisation.
1.4. Structure of the Research Report
This research report is organized as follows. Section 2 takes a look at number of industrial
establishments in this region. The aim here is to assess performance of industries in terms of
gross output, value added of industries in each district. We provide a comparative analysis of
industrial establishments with performance of industries in Bangladesh on an aggregate basis.
Section 3 gives an econometric analysis of productive performance of industries in northwest
Bangladesh and Bangladesh as well. We detail the stochastic econometric frontier model
with inefficiency effects model to assess efficiency performance. Section 4 tries to find the
opportunity in investing in EPZ situated in northwest region assessing the present status of
the EPZ. We also provide a detailed picture of all EPZs in Bangladesh and compare with the
Uttora EPZ. This section also gives some suggestions on how this EPZ can be involved in the
northwest industrialisation process. Section 5 enlists problems and potentials of land ports.
We find that land ports have great potentials in industrialisation with proper attention from
government and responsible behavior from concerned quarters and civil society. Section 6
provides a description of problems based on survey information. This section also suggests
which industries could be included in the industrialization process in the northwest
depending on resources and factor endowments. Section 7 details development and
expansion potentials of industrialisation in the northwest Bangladesh based on both primary
survey information and secondary information and data. Section 8 gives a detailed summary
and conclusion of our research and a list of suggestions on what could be done by
government policy makers, NGOs and civil society people. We find that, development and
sustainable maintenance of natural resources like forest, mine, hard rock, water resources
along with livestock, poultry and agriculture are important for sustainable development of
industrialisation. Thus this section also identifies some areas of further research on this issue.
3
2. Present Status and Performance of Industrial Establishments in
Northwest Bangladesh
2.1 Introduction
Northwest Bangladesh, the northernmost area of the country, is known as greater RangpurDinajpur districts in Rajshahi Division. This northwest Bangladesh covers 8 of 16 districts in
Rajshahi division. The districts are Dinajpur, Thakurgaon, Panchagarh, Nilphamari,
Kurigram, Rangpur, Lalmonirhat and Gaibandha in the greater Rangpur-Dinajpur region of
Bangladesh. This area extends into the riverine belt to include the islands and sandbars in the
river Brahmaputra. The area is generally very low-lying, and crisscrossed by river systems.
The northwest Bangladesh is historically more neglected and poor. The soil tends to be
sandy-loam.
Bangladesh has flat, fertile alluvial land and sub-tropical monsoon climate. The temperature
in Bangladesh varies between 110 C- 190 C in winter and between 210 C- 360 C in summer.
The annual rainfall varies from about 127 cm to 508 cm.
Greater Rangpur district lies between 25-020 and 26-270 north latitude and 83-110 and 89-540
east longitude. Jolpaiguri and Coochbihar districts of West Bengal, India bounds this greater
district on the north. On the east it is bounded by the Garo hills of Assam, India and the river
Jamuna. On the west lies Dinajpur district and on the south Bogra district. Maximum and
minimum temperatures are about 32 and 100 celcious (Bangladesh Meteorological
Department). The average annual total rainfall is about 2689 millimetre and average annual
relative humidity is about 80 per cent.
Greater Dinajpur district lies between 250-140 and 260-480 north latitude and between 880-050
and 850-180 east longitude. This district is bounded on the north, south and south west by the
Indian districts of Jalpaiguri and West Dinajpur, on the east by the district of Rangpur.
General appearance of this district is flat, sloping gently south-west. The southern and
western parts are classed as old alluvium. The climate resembles more of Bihar that the
eastern district of the country. During the summer it is sometimes almost unbearable.
4
Monsoon stretches from July to early October. Maximum and minimum temperatures are
about 35 and 50 celcious respectively. Variation of rainfall in different parts of the district is
considerable. The average monthly recorded rainfall is about 4.2″. The average annual total
rainfall is 2359 millimeters and average annual relative humidity is about 80 per cent.
This area is vulnerable to frequent natural disasters. People face catastrophe like cyclones
during summer, floods and river-bank erosion in the rainy season, drought in summer and
spring and cold wave in winter. More specifically, Table 2.1 shows disasters in different
periods.
Table 2.1: Disasters in Northwest Bangladesh
January
Cold, Drought, Lean Season
April
Cyclone, Stroms
July
October
Monsoons, Floods, River erosion, Lean Season
Drought, Cold, Lean Season
We present a detailed account of number of sector-wise and district-wise industrial
establishments of northwest districts. We also present an account of persons engaged,
industrial costs, performance of industries in terms of gross output and value added of
industries in northwest districts. We provide a comparison of average values of these
values with national average. We collect data from two sources - Report on
Bangladesh Census of Manufacturing Industries, 1991-92 (Bangladesh Bureau of
Statistics, 1997) and 1999-2000 (Bangladesh Bureau of Statistics, 2004).
We
contacted different statistical offices like district and upazilla statistical offices,
BSCIC offices and Ministry of Industries but they fail to provide us as they do not
maintain any book of accounts. We faced considerable amount of difficulties in
obtaining these data and information.
This section is organized as follows. Subsection 2 provides some definitions used in
this research. Subsection 3 furnishes product-and district-wise list of industrial
establishments
in
this
region.
We
also
discuss
performance
of
industrial
establishments along with national values. Subsection 4 concludes the section.
5
2.2. Definitions
Definitions used in this research are given in below (Bangladesh Bureau of Statistics,
2004, Report on Bangladesh Census of Manufacturing Industries, 1999– 2000).
2.2.1. Establishment
An establishment is defined in operational terms as a unit combining activities and resources
directed by a single owning or controlling entity towards the production of a homogeneous
group of goods and services at a single physical location.
2.2.2. Large scale establishment
Large scale establishment means and includes those establishments which has more than 49
workers.
2.2.3. Medium Scale establishment
Medium scale establishment means and includes those establishments which have more than
9 workers and less than 50 workers.
2.2.4. Small Scale Establishment
Scale scale establishment means and includes those establishments, which have fewer than
10 workers.
2.2.5. Manufacturing
Manufacturing is defined as the mechanical or chemical transformation of organic or
inorganic substances into new products, whether the work is performed by power driven
machines or by hand, whether it is done in a factory or in a premise based location and
whether the products are sold wholesale or retail.
2.2.6. Unit
A unit or a reporting unit is an establishment where production of goods and services take
place.
6
2.3. Product-and District-wise Industrial Establishment and their Performances
2.3.1. Product-and District Industrial Establishment, 1991 - 1992
We need to have an account of product or sector wise industrial establishments to find which
industrial establishments are working and which are not. This will help find reasons for not
working industries and set up policies for action. Table 2.2 to 2.10 shows the number of
sector-wise industrial establishments located in the northwest districts in Bangladesh. These
tables are constructed based on information Report on Bangladesh Census of Manufacturing
Industries (CMI) 1991 – 1992, Bangladesh Bureau of Statistics, 1997. Tables show that,
except Lalmonirhat and Gaibandha, all other northwest districts have highest number of rice
milling establishments. Dinajpur has the highest number of rice milling establishments
followed by Thakurgaon. According to this Census, Saw and Planning Mills establishments
stand second in the northwest districts. Dinajpur has the highest number of industrial
establishments followed by Rangpur.
Lalmonirhat has the lower number of industrial
establishments.
Table 2.2: Sector-wise Industrial Establishments in Panchagarh Districts, 1991-1992
Serial No.
Name of Establishments
No. of Units
1
Rice Milling
28
2
Dist. Rectified Spirits
1
3
Jute Textiles
1
4
Bricks, Tiles and Clay Products
1
5
Electrical Apparatus
14
6
Wood, Bamboo Handicrafts
1
Total
46
Source: Bangladesh Bureau of Statistics, 1997, Report on Bangladesh Census of Manufacturing
Industries (CMI) 1991-92.
7
Table 2.3: Sector-wise Industrial Establishments in Thakurgaon Districts, 1991-1992
Serial No.
Name of Establishments
No. of Units
1
Rice Milling
60
2
Silk, Synthetic Textiles
1
3
Saw and Planing Mills
28
4
Wooden Furniture Manufacturings
28
5
Bricks, Tiles, Clay Products
1
Total
118
Source: Bangladesh Bureau of Statistics, 1997, Report on Bangladesh Census of Manufacturing
Industries (CMI) 1991-92.
Table 2.4: Sector-wise Industrial Establishments in Dinajpur Districts, 1991-1992
Serial No.
Name of Establishments
No. of Units
1
Grain Milling
1
2
Rice Milling
473
3
Bakery Products
28
4
Misc. Food Products
14
5
Bidies Manufacturing
1
6
Cotton Textiles
1
7
Silk, Synthetic Textiles
1
8
Jute pressing and Baling
1
9
Saw and Planing Mills
28
10
Printing of Book, Map etc.
14
11
Allopathic and Medicines
1
12
Ayure-Vedic Medicines
1
13
Bricks, Tiles, Clay Products
7
14
Furnitures and Fixtures
28
15
Bolts, Nuts and Rivets
7
Total
606
Source: Report on Bangladesh Census of Manufacturing Industries (CMI) 1991-92, Bangladesh Bureau of
Statistics, 1997.
8
Table 2.5: Sector-wise Industrial Establishments in Nilphamari Districts, 1991-1992
Serial No.
Name of Establishments
No. of Units
1
Rice Milling
28
2
Tobacoo Steww, Redrying
3
3
Tobacoo Manufacturing N.E.C.
1
4
Cotton Textiles
1
5
Saw and Planing Mills
28
6
Bricks, Tiles, Clay Products
1
7
Railroad Equipment Manufacturing
1
Total
63
Source: Bangladesh Bureau of Statistics, 1997, Report on Bangladesh Census of Manufacturing
Industries (CMI) 1991-92.
Table 2.6: Sector-wise Industrial Establishments in Rangpur Districts, 1991-1992
Serial No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
Total
Name of Establishment
Hydrigebated Vegetable Oil
Rice Milling
Bakery Products
Sugar Factory
Dist. Rectified Spirits
Bidies Manufacturing
Tobacoo Steww, Redrying
Silk, Synthetic Textiles
Saw and Planing Mills
Structural Products of Bamboo
Wooden Furniture Manufacturings
Ayure-Vedic Medicines
Polythene Products Manufacturing
Bricks, Tiles, Clay Products
Iron and Steel Foundries
Bolts, Nuts and Rivets
Agricultural Machinery Equipment
Electrical Appliances
No. of Units
1
47
7
1
1
63
4
7
28
1
14
1
3
9
1
14
1
1
204
Source: Bangladesh Bureau of Statistics, 1997, Report on Bangladesh Census of Manufacturing Industries
(CMI) 1991-92.
9
Table 2.7: Sector-wise Industrial Establishments in Kurigram Districts, 1991-1992
Serial No.
Name of Establishments
No. of Units
1
Rice Milling
28
2
Bricks, Tiles, Clay Products
4
Total
32
Source: Bangladesh Bureau of Statistics, 1997, Report on Bangladesh Census of Manufacturing
Industries (CMI) 1991-92.
Table 2.8: Sector-wise Industrial Establishments in Lalmonirhat Districts, 1991-1992
Serial No.
Name of Establishment
No. of Units
1
Bidies Manufacturing
7
2
Readymade Garments
1
3
Jewellery, Precious Metals
14
Total
22
Source: Bangladesh Bureau of Statistics, 1997, Report on Bangladesh Census of Manufacturing
Industries (CMI) 1991-92.
Table 2.9: Sector-wise Industrial Establishments in Gaibandha Districts, 1991-1992
Serial No.
Name of Establishments
No. of Units
1 Sugar Factories
1
2 Bidies Manufacturing
3
3 Manufacturings of Earthenwares
57
4 Bricks, Tiles, Clay Products
1
5 Metal, Trunks Manufacturing
3
Total
65
Source: Bangladesh Bureau of Statistics, 1997, Report on Bangladesh Census of
Manufacturing Industries (CMI) 1991-92.
10
9
10
11
12
Dist. Rectified Spirits
Electrical Apparatus
Furniture and Fixtures
Grain Milling
13
14
15
16
17
18
19
20
Hydrigebated Vegetable Oil
Iron and Steel Foundries
Jewellery, Precious Metals
Jute pressing and Baling
Jute Textiles
Manufacturings of Earthenwares
Metal, Trunks Manufacrurings
Misc. Food Products
21
22
23
24
25
26
27
28
29
30
31
32
33
Total
Polythene Products Manufacturing
Printing of Book, Map etc.
Railroad Equipment Manufacturing
Readymade Garments
Rice Milling
Saw and Planing Mills
Silk, Synthetic Textiles
Structural Products of Bamboo
Sugar Factory
Tobacoo Steww, Redrying
Tobacoo Manufacturing N.E.C.
Wood, Bamboo Handicrafts
Wooden Furniture Manufacturings
1
1
1
1
1
28
1
7
7
1
1
1
1
14
1
7
63
14
9
7
4
3
1
2
15
28
1
1
1
1
1
14
1
1
57
3
14
14
1
1
57
3
14
3
14
1
1
60
28
1
473
28
1
28
28
3
1
47
28
7
1
1
4
28
1
1
46
28
118
606
63
1
1
2
35
74
21
24
2
1
1
28
1
28
Total
Gaibandha
Lalmonirhat
Kurigram
Rangpur
Nilphamari
No of Establishments
Agricultural Machenary Equipment
Allopathic and Medicines
Ayure-Vedic Medicines
Bakery Products
Bidies Manufacturing
Bolts, Nuts and Rivets
Bricks, Tiles, Clay Products
Cotton Textiles
Dinajpur
Sl. No.
1
2
3
4
5
6
7
8
Thakurgaon
Panchagarh
Table 2.10: Sector-wise Industrial Establishment of Northwest Bangladesh,1991-1992
14
204
32
22
65
3
14
1
1
664
112
9
1
2
7
1
1
42
1156
Source: Bangladesh Bureau of Statistics, 1997, Report on Bangladesh Census of Manufacturing Industries
(CMI) 1991-92.
11
Tables show that this region does not possess those sort of industries which employs huge
number of labour force and hence flourish industrialisation. Neither fertilizer nor power
industry is recorded by this Census. Majority of establishments are rice milling
establishments which do not run the entire year and do not give permanent employment of
labourers. Except some bakery, there is no agro-based or food processing industry recorded.
This implies that this region is a neglected region and is excluded from mainstream
development of the country. Moreover, perhaps civil society people, businessmen and nongovernment organizations were not also so active to look at effectively.
2.3.2. Performance of Industrial Establishments, 1991 - 1992
In general, the growth of the industrial sector in the northwest Bangladesh is constrained by
the lack of infrastructure, low entrepreneurship knowledge and facility, credit facilities,
technology, capital, corruption, lack of political commitment, political instability, etc. The
industrial policies of Bangladesh have not given any particular emphasis on the industrial
development in this area. A picture of performance of industrial sector is inevitable to
provide policy suggestions to the policy makers.
Table 2.11 – 2.13 analyze performance of industrial establishments prevailing in northwest
districts in Bangladesh in terms of employment, assets, gross output and value added. Table
2.11 specifically provides number of establishment, persons engaged and present an average
comparison of establishments of northwest region with those of Bangladesh on an average
basis. This table is drawn based on the information given in Report on Bangladesh Census
Manufacturing Industries, 1991-92. It shows that average number of industrial establishment
in northwest districts is 145 whereas the national average of it is 413 industries. This implies
that average number of establishments in the northwest region is less than half of national
average. These eight districts possess only 4.37 percent of industrial establishments. This
table also tells that the average employment in eight districts is 7,009 that is slightly above
the one-third of the national average of employment of 20,381 persons. This indicates that
this region employs only 4.30 percent of persons engaged in all industrial establishments in
Bangladesh.
12
Table 2.11: Status of the Industrial Establishment, 1991 – 1992
No of
% of
No. of Persons
% of Persons
Establishment
Establishment
engaged
Engaged
Panchagarh
46
0.17
5858
0.45
Thakurgaon
118
0.45
1802
0.14
Dinajpur
606
2.29
13715
1.05
Nilphamari
63
0.24
6,518
0.50
Rangpur
204
0.77
21,103
1.62
Kurigram
32
0.12
608
0.05
Lalmonirhat
22
0.08
3,418
0.26
Gaibandha
65
0.25
3,047
0.23
1,156
4.37
56,069
4.30
Districts
Total
Average
Rajshahi Div.
Average
Bangladesh
Average
145
7,765
7009
29.36
485
26,446
222,128
17.03
13,883
100.00
413
1304,397
100.00
20,381
Source: Bangladesh Census of Manufacturing Industries, 1991– 92. Bangladesh Bureau of Statistics,
1997.
We prepare an account of assets, input cost, gross output and value added of industrial
establishments in Table 2.12 and 2.13. Assets and input cost of industrial establishments
show the bigness of these establishments. Assets also contribute to improvement of output of
industries. Total fixed asset of industrial establishments in northwest districts are tk.
44,14,785 thousands whereas in Bangladesh it is tk. 10,24,15,191 thousands. Thus assets of
northwest industrial establishments are more than 23-fold lower than total assets of
Bangladesh industrial establishments in 1991-1992 (BSS, 1997).
13
Table 2.12: Assets, Wages and Costs of Industrial Establishments, 1991 – 1992
Non-industrial cost and
Wages, salaries and
Fixed Assets
others
Input cost
indirect tax
Panchagarh
9,12,377
1,31,406
3,57,655
33,538
Thakurgaon
44,785
20,603
1,89,234
2,015
6,91,951
1,50,413
15,15,321
16,495
22,46,405
1,69,183
1,91,344
7,350
4,85,462
1,92,532
8,35,457
1,78,891
Kurigram
4,998
4,898
1,24,026
573
Lalmonirhat
2,206
4,224
10,581
4,073
26,574
60,973
1,93,658
80,850
Total
44,14,758
7,34,232
34,17,276
3,23,785
Average
5,51,844.8
91,,779
4,27,159.5
40,473.13
2,76,54,856 14,96,18,561
2,21,58,633
Dinajpur
Nilphamari
Rangpur
Gaibandha
Bangladesh
National average
10,24,15,191
16,00,237
4,32,107.1
23,37,790
3,46,228.6
Source: Report on Bangladesh Census of Manufacturing Industries, 1991-1992. Bangladesh Bureau
of Statistics, 1997. Figures are in thousands taka.
We get the picture of gross output, value added of industries based on Report on Bangladesh
Census of Manufacturing industries, 1991-1992 in Table 2.13 (BSS, 1997). Gross output,
value added of industries indicate the magnitude and strength of industrial establishments.
The table gives an average estimate of gross output of industries in northwest 8 districts of tk.
614896 thousands and an average estimate of gross output of industries in Bangladesh of tk.
3482307 thousands. This estimates that average gross output of northwest districts is 5.66fold lower than that of 64 districts in Bangladesh. We get an almost similar picture for gross
value added and value added at factor cost. Both are about 5-fold lower than those of national
averages.
14
Table 2.13: Gross Output, Value Added of Industrial Establishments, 1991 – 1992
Gross output
Gross Value Added
Value added at factor cost
Panchagarh
4,50,322
92,667
59,129
Thakurgaon
2,14,662
25,428
23,413
18,97,958
3,82,637
3,66,142
3,98,034
2,06,690
1,99,340
Rangpur
15,16,719
6,81,262
5,02,371
Kurigram
1,31,519
7,493
6,920
22,431
11,850
7,777
2,87,523
93,865
13,015
49,19,168
15,01,892
11,78,107
6,14,896
1,87,736.5
1,47,263.4
22,28,67,636
7,32,49,075
5,10,90,442
34,82,307
11,44,517
7,98,288.2
Dinajpur
Nilphamari
Lalmonirhat
Gaibandha
Total
Average
Bangladesh
National average
Source: Report on Bangladesh Census of Manufacturing Industries, 1991-1992. Bangladesh Bureau
of Statistics, 1997.
2.3.3. Industrial Establishment, 1999-2000
Table 2.14 to 2.22 are prepared based on information contained in Report on Bangladesh
Census of Manufacturing Industries (CMI) 1999-2000, Bangladesh Bureau of Statistics,
2004. These tables also show number of industrial establishments arranged sector-wise in
northwest districts during this period. Tables exhibit that the largest number of industrial
establishments is located in Dinajpur district followed by Rangpur and Thakurgaon and the
lowest number of establishments is located in Nilphamari district. According to this census
report, Dinajpur has the largest number of rice milling industrial establishments followed by
Rangpur and Thakurgaon. Among all districts, Rangpur has the highest number of Bricks,
Tiles and Clay Products establishments and bidi manufacturing establishments.
15
Table 2.14: Sector-wise Industrial Establishment of Panchagarh District, 1999-2000
Serial No. Name of Establishments
No of Establishments
1
Cotton Textiles except hand loom
8
2
Rice Milling
2
3
Sugar Factory
2
Total
12
Source: Bangladesh Bureau of Statistics, 2004, Report on Bangladesh Census of Manufacturing Industries (CMI) 1999-2000.
Table 2.15: Sector-wise Industrial Establishment of Thakurgaon District, 1999-2000
Serial No. Name of Establishments
No of Establishments
1
Bricks, Tiles and Clay Products
21
2
Rice Milling
88
3
Wooden Furniture Manufacturings
120
4
Manufacture of Knitwear
1
Total
230
Source: Bangladesh Bureau of Statistics, 2004, Report on Bangladesh Census of Manufacturing
Industries (CMI) 1999-2000.
Table 2.16: Sector-wise Industrial Establishment of Dinajpur District, 1999-2000
Serial No. Name of Establishments
No of Establishments
1
Bidies Manufacturing
4
2
Bolts, Nuts, Rivets and Wash
10
3
Bricks, Tiles, Clay Products
21
4
Cotton Textiles except hand loom
1
5
Misc. Food Products (other food)
30
6
Rice Milling
555
7
Sugar Factory
2
8
Mfg of cutleries
8
Total
631
Source: Bangladesh Bureau of Statistics, 2004, Report on Bangladesh Census of Manufacturing
Industries (CMI) 1999-2000.
Table 2.17: Sector-wise Industrial Establishment of Nilphamari District, 1999-2000
16
No of Establishments
Serial No. Name of Establishments
1
Tobacoo Stemming, Redrying
2
2
Tobacoo Manufacturing N.E.C.
7
Total
9
Source: Bangladesh Bureau of Statistics, 2004, Report on Bangladesh Census of Manufacturing Industries
(CMI) 1999-2000.
Table 2.18: Sector-wise Industrial Establishment of Rangpur District, 1999-2000
Serial No. Name of Establishments
No of Establishments
1
Agricultural Machenary Equipment
1
2
Bakery Products
16
3
Bidies Manufacturing
68
4
Bricks, Tiles, Clay Products
84
5
Dist. Rectified Spirits
2
6
Electrical Apparatus
2
7
Polythene Products Manufacturing
15
8
Rice Milling
92
9
Saw and Planing Mills
40
10
Structural Products of Bamboo
2
11
Tobacoo Stemming, Redrying
33
12
Cigarette Manufacturing
2
13
Mfg. of soap and detergents
10
Total
367
Source: Bangladesh Bureau of Statistics, 2004, Report on Bangladesh Census of Manufacturing Industries
(CMI) 1999-2000.
Table 2.19: Sector-wise Industrial Establishment of Kurigram District, 1999-2000
Serial No.
1
2
3
4
Total
Name of Establishments
Bidies Manufacturing
Bricks, Tiles, Clay Products
Cotton Textiles except hand loom
Rice Milling
No of Establishments
6
22
2
43
73
Source: Bangladesh Bureau of Statistics, 2004, Report on Bangladesh Census of Manufacturing Industries
(CMI) 1999-2000.
Table 2.20: Sector-wise Industrial Establishment of Lalmonirhat District, 1999-2000
17
Serial No.
1
No of Establishments
Name of Establishments
Bidies Manufacturing
6
6
Total
Source: Bangladesh Bureau of Statistics, 2004, Report on Bangladesh Census of Manufacturing Industries
(CMI) 1999-2000.
Table 2.21: Sector-wise Industrial Establishment of Gaibandha District, 1999-2000
Serial No.
1
2
Total
Name of Establishments
Bidies Manufacturing
Manufacturings of Earthenwares
No of Establishments
8
27
35
Source: Bangladesh Bureau of Statistics, 2004, Report on Bangladesh Census of Manufacturing Industries
(CMI) 1999-2000.
This Census does not record any fertilizer and power industries, although this region
possesses an agrarian economy and requires huge amount of fertilizer, and power is the
deriving force of industries and modern agriculture. In spite of a labour force surplus region,
according to the Census, there is not readymade garments industry recorded which is known
to be labour-intensive in nature.
Rice milling, Bidi manufacturing, wooden furniture manufacturing, Bricks, Tiles and Clay
manufacturing establishments are increased in number. Most of these establishments are
small and cottage industries in nature. Some industries like, Rice milling, Bricks
manufacturing does not provide employment the entire year. This happens perhaps that there
were no effective policies and steps for industrialisation from government or private or nongovernment institutions.
18
Agricultural Machenary Equipment
Allopathic and Medicines
Ayure-Vedic Medicines
Bakery Products
Bidies Manufacturing
Bolts, Nuts, Rivets and Wash
Bricks, Tiles, Clay Products
Cotton Textiles except hand loom
9
10
11
12
Dist. Rectified Spirits
Electrical Apparatus
Furnitures and Fixtures
Grain Milling
13
14
15
16
17
18
19
20
Hydrigebated Vegetable Oil
Iron and Steel Foundries
Jewellery, Precious Metals
Jute pressing and Baling
Jute Textiles
Manufacturings of Earthenwares
Metal, Trunks Manufacrurings
Misc. Food Products (other food)
21
8
4
10
21
1
1
1
16
68
16
92
10
148
11
84
6
6
8
22
2
2
2
2
2
27
30
Total
Gaibandha
Lalmonirhat
Kurigram
Rangpur
Nilphamari
Dinajpur
No of Establishments
Thakurgaon
Sl. No.
1
2
3
4
5
6
7
8
Panchagarh
Table 2.22: Sector-wise Industrial Establishment of Northwest Bangladesh, 1999-2000
27
30
21 Polythene Products Manufacturing
15
15
22 Printing of Book, Map etc.
23 Railroad Equipment Manufacturing
24 Readymade Garments
25 Rice Milling
2
88 555
92
43
780
26 Saw and Planing Mills
40
40
27 Silk, Synthetic Textiles
28 Structural Products of Bamboo
2
2
29 Sugar Factory
2
2
4
30 Tobacoo Stemming, Redrying
2
33
35
31 Tobacoo Manufacturing N.E.C.
7
7
32 Wood, Bamboo Handicrafts
33 Wooden Furniture Manufacturings
120
120
34 Cigarette Manufacturing
2
2
35 Mfg. of soap and detergents
10
10
36 Manufacture of Knitwear
1
1
37 Mfg of cutleries
8
8
Total
12 230 631
9
367 73
6
35
1963
Source: Bangladesh Bureau of Statistics, 2004. Report on Bangladesh Census of Manufacturing Industries,
1999-2000.
39
19
2.3.4. Performance of Industrial Establishments, 1999 – 2000
Table 2.23 provides the status of industrial establishments based on the information
contained in Report on Bangladesh Census of Manufacturing Industries, 1999-2000. This
table shows that although average number of industrial establishments has increased but the
average number of employment has gone down to about half. The northwest districts employ
only 2.2 percent of employed people in 1999-2000 as against 4.3 percent in 1991-1992.
While national average of industrial establishments has gone down from 413 in 1991-1992 to
386.75 in 1999-2000, average employment has gone up from 20381 to 40836.94 persons.
This implies that national average employment has gone double almost.
Table 2.23: Status of the Industrial Establishments, 1999-2000
Districts
Panchagarh
No of
Establishment
12
% of
Establishment
0.05
No of Person
Engaged
2,932
% of Persons
Engaged
0.11
Thakurgaon
230
0.93
6,133
0.23
Dinajpur
631
2.55
22,341
0.85
9
0.04
259
0.01
Rangpur
367
1.48
20,798
0.80
Kurigram
73
0.29
3,522
0.13
Lalmonirhat
6
0.02
327
0.01
Gaibandha
35
0.14
1,275
0.05
1363
5.51
57,587
2.20
Nilphamari
Total
Average
170.375
3,599.188
Rajahshi
6569
26.54
Average
410.56
1.66
Bangladesh
24752
100
Average
386.75
3,48,161
13.32
26,13,564
100
40,836.94
Source: Bangladesh Census of Manufacturing Industries, 1999– 2000.
20
Table 2.24: Assets and Cost of Industrial Establishments, 1999 - 2000
Panchagarh
Wages, salaries
Fixed Assets
and others
1,91,646
6,43,389
Input cost
4,46,681
Non-industrial cost and
indirect tax
78,115
Thakurgaon
1,08,983
1,34,136
15,91,726
68,200
Dinajpur
15,45,352
4,46,146
27,03,886
1,03,776
7,199
2,800
13,163
455
Rangpur
2,78,954
2,50,489
7,71,832
3,03,516
Kurigram
2,00,632
62,353
43,195
10,237
Lalmonirhat
4,633
2,556
4,858
5,242
Gaibandha
2,493
6,553
14,185
15,160
Total
23,39,892
15,48,422
55,89,526
5,84,701
Average
2,92,486.5
1,93,552.75
6,98,690.75
73,087.63
Bangladesh
24,38,04,966
7,22,84,450
40,37,77,567
7,96,22,999
National Average
38,09,452.60 11,29,444.531 63,09,024.484
Nilphamari
12,44,109
Source: Report on Bangladesh Census of Manufacturing Industries, 1999-2000. Bangladesh Bureau
of Statistics, 2004.
Assets and cost information of industrial establishments in northwest districts along with
national averages of these are given in Table 2.24 which is constructed based on information
contained in Reports on Bangladesh Census of Manufacturing Industries, 1999-2000.
Average fixed asset of industries in northwest districts is tk.292486.5 thousands whereas
average value of fixed asset in Bangladesh districts is tk.3809452.60 thousands which is
more than 13-fold larger. Table also reveals that although average asset is 13-fold larger but
average input cost is 9-fold greater than the value of average input cost of northwest districts
in Bangladesh.
Table 2.25 gives an account of gross output and value added of industrial establishments in
northwest districts based on information given in Report on Bangladesh Census of
Manufacturing Industries, 1999-2000. It also provides an estimate of national averages of
gross output and value added. It shows that where average gross output in each district in
21
Bangladesh is tk.9987818.45 thousands, the average gross output in each district of
northwest is tk.968677.50 thousands which is 10-fold lower than that of national average.
Similarly, average gross value added in northwest district is more than 13-fold lower than
that of national average of Bangladesh. This definitely expresses the lower output and
income generation capacity of industrial establishments in northwest Bangladesh.
Table 2.25: Gross Output and Value Added of Industrial Establishments, 1999 - 2000
Panchagarh
Gross output
7,65,102
Gross Value
Added
3,18,422
Thakurgaon
19,03,649
3,11,923
2,43,722
Dinajpur
34,57,475
7,53,589
6,49,813
17,816
4,653
4,198
Rangpur
14,63,031
691,198
3,87,682
Kurigram
89,392
46,197
35,961
Lalmonirhat
13,644
8,786
3,543
Gaibandha
39,311
25,127
9,967
77,49,420
21,59,895
15,75,193
Average
9,68,677.50
2,69,986.88
1,96,899.13
Bangladesh
63,92,20,381
23,54,42,813
15,58,19,815
National Average
99,87,818.45
36,78,793.95
24,34,684.61
Nilphamari
Total
Value added at factor cost
2,40,307
Source: Bangladesh Bureau of Statistics, 2004. Report on Bangladesh Census of Manufacturing Industries,
1999-2000. Values are in thousand taka.
2.4. Comparison of Performance among Northwest with Administrative Division
Table 2.26 provides a comparative statistics of number of establishments, persons engaged,
gross output and value of northwest districts with other administrative divisions in
Bangladesh. Table shows that 16 districts of Rajshahi division possess 6570 industrial
establishments. Among this, 8 northwest districts possess only 1363 establishments, which
are about one-fifth of industrial establishments in Rajshahi division. Although the number of
establishments in Chittagong division is smaller than Rajshahi division total persons
22
employed, gross output and gross value added in Chittagong division are much greater than
Rajshahi division. Even Sylhet division has only 404 establishments which are about onethird of industrial establishments in northwest districts, yet gross output and value added of
establishments of this division are greater those of northwest districts. It is evident from this
table that employment and income generation capacity of industrial establishments in
northwest districts are lower than those of other divisions.
Table 2.26: No. of Establishments, Persons Engaged, Gross Output and Value Added by
Administrative Divisions
No of Total Persons
Gross Gross Value
Value Added
Establishment
Engaged Output
Added
Factor Cost
Chittagong
3,831
4,92,229 1,24,027
48,979
38,229
Dhaka
11,588
Khulna
2,314
1,46,316
Rajshahi
6,570
Barisal
Sylhet
Northwest Bangladesh
Bangladesh
15,66,379 4,38,247
1,63,420
1,02,336
32,278
10,487
5,553
3,48,161
35,636
9,437
7,422
45
6,622
661
359
173
404
53,858
8,372
2,761
2,107
1,363
57,587 7,749.42
2,159.90
1,575
24,752
26,13,564 6,39,220
2,35,443
1,55,820
Source: Bangladesh Bureau of Statistics, 2004. Report on Bangladesh Census of Manufacturing
Industries, 1999-2000. Output and value added are in million taka.
2.5. Conclusion
We present in this section number of industrial establishments, amount of employment, value
added by industrial establishments, assets and costs of industrial establishments in northwest
districts - Dinajpur, Thakurgaon, Panchagarh, Nilphamari, Kurigram, Rangpur, Lalmonirhat
and Gaibandha in the greater Rangpur-Dinajpur region of Bangladesh. Research reveals that
average number of industrial establishment and persons engaged in these districts are lower
than the national averages. Furthermore, average amount of gross output, value added are
also lower. There are no remarkable number of large and medium industries except some
small and cottage industries like, rice milling, bidi manufacturing industries, wooden
23
furnitures manufacturing. It is implied from this analysis that there is scope of establishing
industries in this region based on at least available surplus labour, agro-products and others.
Employment generation and value added creation, performances of industrial establishments
are lower than those of other industries in Bangladesh. The economy of the region is agrobased that requires substantial amount of fertilizer and pesticides. There is neither fertilizer
industry nor leather product industries in this region. Labour-intensive garments industry did
not grow here to absorb the prevailing unemployed labour force. Poverty and monga are
regular picture in this region.
3. Efficiency Performance of Industries in the Northwest: An Econometric
Approach
3.1. Introduction
Predicting the potentiality of effective industrialization a performance evaluation, that is,
productivity performance assessment of the industries is utmost important. Productivity
performance is called success indicator. Further, it is also very important to identify and
quantity the factors which affect favourably and unfavourable the performance of the
industries. Measuring productivity, and separating its effects from the effect of the
production environment, can we explore hypotheses concerning the sources of productivity
differentials. Identification of sources is essential to the institutions of public and private
policies designed to improve performance. Moreover, macro performance depends on micro
performance. The ability to quantify productivity performance provides management with a
control mechanism with which to monitor the performance of production units under its
control.
Productivity advancement can be obtained through technological improvement and
efficiency advancement, which industries have achieved. Technological advancement
involves the introduction of new inputs like machinery, new production techniques, etc.
Efficiency enhancement implies the improvement of capability of an industry so that it best
utilizes available resources to produce maximum levels of potential outputs. Thus it implies
24
the ability of the producers to utilize the factor inputs properly. Ability can be improved
through training, learning by doing, etc. Variations in output among industries can be
explained through differences in technology and efficiency.
Therefore productive performance of an industry has technical change and efficiency
improvement component. With a view to quantify and estimate the efficiency component of
productive performance of industries, we apply stochastic econometric frontier model. This
will give an estimate of how much output could be increased if inputs and material, which
are in the production process, could be utilized properly in a cost-efficient way. These
results provide performance of the industries that will lead to suggestions for technically,
economically, socially optimum industrialization in this area.
The section is organized as the following subsections. Subsection 3.2 provides theoretical
issues of measuring efficiency performance of industries; Subsection 3.3 details the empirical
framework – the stochastic frontier model – of assessing technical efficiency performance of
industries; Subsection 3.4 describes functional form of the stochastic frontier model and
hypothesis tests; Subsection 3.5 gives efficiency results based on the stochastic frontier
model; we present a conclusion in Subsection 3.6.
3.2. Efficiency Performance: Some Theoretical Issues
This section discusses production functions and some related concepts, which form the basis
of measuring the efficiency of industries. The measurement of efficiency begins with Farrell
(1957). The failure to produce the maximum output from a given input mix at minimum cost
results in inefficiency. Inefficiency is explained by, inter alia, restricted access to technology,
a lack of knowledge, restricted access to extension services, an inappropriate scale of
production and sub-optimal allocation of resources. The efficiency of an industry consists of
two components: technical and allocative efficiency. Technical efficiency concerns the
25
ability of an industry to produce maximum output from a given set of inputs using existing
technology.
To explain diagrammatically the concept of technical efficiency consider the production
activity of an industry, following Kopp and Diewert (1982). In Figure 3.1, assume that the
industry uses two inputs x1 and x2 to produce a single output y, and that the production
technology is summarized by a linearly homogeneous production function following Farrell.
The frontier unit isoquant for this technology and an inefficient production activity are
depicted by II ′ and B respectively. Along the ray OB , the production activity, denoted by T
and defined by the intersection of line segment OB with the isoquant II ′ , represents a
technically efficient input combination as it lies on the frontier isoquant. The technical
inefficiency of the industry producing at point B is represented by the distance TB because
this is the amount by which both inputs could be proportionally reduced producing the same
level of output. In percentage terms, this is usually written as the ratio TB OB .
Figure 3.1: Measures of Technical Efficiency
x2
y
I
•
B or
x B ≡ (x1B , x 2B )
P
•
T or
x T ≡ (x1T , x 2T )
•
A
or
x A ≡ (x1A , x 2A )
•
I′
O
P′
26
x1 y
The technical efficiency of the industry operating at point B is expressed as:
TE =
OT
TB
=1−
= 1 - Technical inefficiency
OB
OB
(0 ≤ TE ≤ 1).
The industry operating at point T is fully technically efficient industry because it is located
on the efficient and frontier isoquant and TE = 1 .
Farrell's radial measures of efficiency are originally characterized by constant returns to scale
and these measures have been generalized to less restrictive technologies by Fare and Lovell
(1978) and Forsund and Hjalmarsson (1979).
3.3. Stochastic Econometric Frontier and Performance Measurement: Empirical
Framework
This section aims to specify the empirical framework for this research project with a
comprehensive review of literature. The seminal paper of Farrell (1957) on efficiency
pioneered the development of different approaches to efficiency measurement. The stochastic
econometric frontiers is one of the two main methods of measuring efficiency.
The
econometric approach includes both the stochastic econometric frontier (SF) and the
deterministic frontier. The deterministic frontier approach does not allow for a stochastic
random error component in the error term and hence is subject to the criticism that all
deviations from the frontier are attributed to inefficiency. Accordingly, this section focuses
on the stochastic econometric frontier approach to measuring efficiency.
27
Production function models estimated by OLS assume that industries maximize expected
profit so that a stochastic error term, with zero mean, accounts for the difference between
observed and expected output and are ascribed to factors outside the control of the farmers
(Zellner et al., 1966). Thus, all industries are equally efficient. However, it is unlikely that all
industries are equally efficient. Productivity differs because of differences in technology, the
efficiency of the production process, and the environment in which production process
happens (Lovell, 1993), and managerial ability (Dawson and Lingard, 1982). A frontier
production function relaxes the assumption of equal efficiency and hence relaxes the
assumption of stochastic error terms with zero means.
The approaches to the measurement of efficiency and the analysis of productivity stem from
Farrell (1957) who measured technical efficiency by estimating a fully-efficient frontier
production model using linear programming. The general stochastic frontier production
function model, independently proposed by Aigner et al. (1977) and Meeusen and van den
Broeck (1977), decomposes the composed error term into two components: a stochastic
random error component and a technical inefficiency component. This approach is closer to
the theoretical production function, which gives the maximum output from a given input
mix, than the average production function and is more realistic than the deterministic
frontiers of Farrell (1957) and Aigner and Chu (1968).
The stochastic approach attempts to distinguish the effects of stochastic noise from the
effects of inefficiency. Addressing the stochastic noise problem associated with the
deterministic frontier, and statistical hypothesis testing are the main strengths of the
stochastic frontier approach; assumptions regarding the parametric functional form for the
frontier technology and the distributional assumptions for the technical inefficiency term are
its major drawbacks. Coelli (1995) provides a review and critique of the recent developments
28
and applications of frontier techniques of efficiency measurement. Comprehensive reviews
of the various stochastic frontier functions and econometric estimation of frontiers are
provided also by Førsund et al. (1980), Schmidt (1985), Bauer (1990), Battese (1992),
Brevo-Ureta and Pinheiro (1993), Fried et al. (1993), and Greene (1993).
Most empirical applications of stochastic frontiers have investigated the sources of technical
inefficiency of industries using a two-stage approach (for example, Tadesse and
Krishnamoorthy, 1997; Hallam and Machado, 1996; Parikh and Shah, 1994). The first stage
estimates a stochastic frontier by maximum likelihood techniques and calculates the technical
efficiency for each industry under the assumption that these inefficiency effects are
identically distributed. It ignores the fact that the technical inefficiency is a function of
industry-specific variables. Once technical inefficiency is estimated, it is further regressed in
the second stage on a set of industry-specific factors
that may explain differences in
technical inefficiency among industries using OLS. The OLS results in the second step
contradict the assumption of identically distributed inefficiency effects in the stochastic
frontier model since the technical inefficiency - the dependent variable - is one sided
(Kumbhakar et al., 1991). Thus, in the second stage, the estimated technical inefficiency
effects are modelled as a function of some industry-specific characteristics which imply that
inefficiency effects are not identically distributed unless the coefficients of the industryspecific factors are simultaneously equal to zero (Coelli et al. 1998). This two-stage
approach, using a stochastic frontier, has been applied by Kalirajan (1981) and Pitt and Lee
(1981) and by Heshmati and Kumbhakar (1997) for pseudo panel data, and Sharma et al.
(1999) for cross sectional data. Timmer (1970) was one of the first to apply this approach
albeit using covariance analysis in stage one.
The problems of this two-stage method can be addressed using a one-stage formulation. This
specifies the technical inefficiency effects (Kumbhakar et al., 1991) and estimates the
29
stochastic frontier and the inefficiency effects simultaneously, given appropriate
distributional assumptions (Battese and Coelli, 1995). The simultaneous estimation of the
stochastic production frontiers and models of technical inefficiency using maximum
likelihood techniques has been proposed by Kumbhakar et al. (1991), Reifschneider and
Stevenson (1991), Huang and Lui (1994), Battese and Coelli (1995). This one-stage approach
is statistically consistent and leads to more efficient inference with respect to the parameters
(Coelli and Battese, 1996). The approach has been applied empirically by, among others,
Coelli and Battese (1996), Coelli (1996), Battese and Broca (1997), Ajibefun et al. (1996),
Seyoum et al. (1998), Wadud and White (2000) and Wadud (2003).
The general stochastic frontier production model is defined as:
yi = f (xi ; β )e ui
(3.1)
ui = ξ i − ζi , i = 1,2,3,..., q , − ∞ ≤ ξ i ≤ ∞ and ζi ≥ 0 .
where yi represents the output of the ith industry, xi denotes a vector of q inputs, and β
denotes the parameters. The error term, ui , is decomposed into a stochastic random
disturbance and an asymmetric non-negative random error term. The stochastic random
disturbances, ξ i , the symmetric random errors, take account of measurement error and
capture exogenous shocks and other factors not under the control of the farmers; ξ i can take
any real value and when added to the deterministic frontier, f (xi ; β ), gives rise to the
stochastic frontier. The asymmetric non-negative random errors, ζi , which are called
technical inefficiency effects, account for technical inefficiency in production. When ζi = 0 ,
the production function is the best-practice frontier, which yields the maximum output given
the inputs; and when ζi > 0 , output is less than this maximum due to technical inefficiency.
The greater the quantity by which the actual output falls short of the stochastic frontier
30
output, the higher the level of technical inefficiency. The observed differences in output can
be attributed to either technical inefficiency or stochastic disturbances or both. A model
without ζi is the average frontier model criticized by Farrell (1957). Further, a model without
the random component, ξ i results in a deterministic or full frontier model and can be
estimated by linear programming techniques.
Assuming a probability density function for both ξ i and ζi , we can estimate (3.1) by
maximum likelihood methods. This approach yields a means by which we can statistically
examine the sources of differences between the farmer's output and the frontier output by
calculating the variance parameters which relate the variance of ξ i to the composed variance
of ui (Kalirajan, 1981).
The variance parameters are expressed as:
σ u2 = σ ξ 2 + σ ζ 2 ,
γ = σ 2ζ σ 2u and 0 ≤ γ ≤ 1
(3.2)
Battese and Corra (1977) define γ as the total variation of output from the production
frontier which can be attributed to technical efficiency. If γ → 0 then σ ζ2 → 0 and
σ ξ2 → σ u2 , which implies that the symmetric error term ξ i dominates the composed error
term and output differs from the frontier output mainly due to measurement errors and the
effect of other external factors on production. If γ → 1 then σ ξ2 → 0 and σ ζ2 → σ u2 which
indicates that the asymmetric non-negative error term ζi dominates the composed error and
the differences between output and frontier output can be attributed to differences in
technical efficiency.
Figure 3.2 shows the stochastic frontier production function in which the activities of two
industries, denoted by i and j, are illustrated following Battese (1992). The inputs are
31
presented on the horizontal axis and the output is on the vertical axis. The frontier output,
production function and observed outputs are also shown. The deterministic component of
the frontier model is y = f (xi ; β ). Industry i utilizes inputs xi to produce output yi . The
frontier output, y*i , of this industry exceeds the deterministic production output f (xi ;β )
because the systematic random error is associated with favourable firming conditions, i.e.,
ξ i > 0 . Industry j obtains output y j using inputs x j . The stochastic frontier output of this
industry y*j is less than the corresponding deterministic output f (xi ;β ) because of
unfavourable firming conditions and the systematic error component, ξ i < 0 . For both
industries, the observed outputs are less than the corresponding frontier outputs, but the
Figure 3.2: Stochastic Frontier and Technical Efficiency
y
Deterministic production function:
Stochastic frontier output
y = f ( x; β )
*
i
y if ξ i > 0
×
×
×
×
Observed input-output
values
×
×
yj
yi
O
×
Stochastic frontier output
×
y *j if ξ j < 0
xi
x
xj
32
(unobservable) frontier outputs lie around the deterministic production function. The
stochastic frontier outputs are of course not observed because the random errors are not
observed. The observed outputs may be higher than the deterministic part of the frontier if
the random errors are higher than inefficiency term. 1
The technical efficiency of the ith industry is defined as the ratio of the observed output to
the corresponding frontier output, given the levels of the inputs. The industry-specific
technical efficiency, ϕ i , can be measured as:
yi
f ( xi , β )e (ξ i −ζ i )
−ζ
= e i
ϕi = * =
ξi
yi
f (xi , β )e
0 ≤ ϕi ≤ 1
Alternatively, ϕ i is defined as the ratio of the mean of production (given xi and ζi ) to the
corresponding mean of production if there is no technical inefficiency (Battese and Coelli
1988):
ϕi =
E(yi xi , ζ i )
E (yi xi , ζi = 0)
Again the systematic random error, ξ i , is assumed to be independently and identically
distributed with mean zero and variance, σ ξ2 . The probability density function of the
symmetric random error, ξ i , is defined as:
1
−
ξ i2
1
2σ 2
f (ξi ) =
e
σ 2π
We can assume that the technical inefficiency term is half-normally distributed, a special
case of the truncated normal distribution, so that:
1
If
ξi > ζ i ,
both the observed and frontier values of output,
y i and y * = f ( xi ; β )e ξi , would lie above the
corresponding value of the deterministic production function which can be easily shown.
33
f (ζ i ) =
−
1
1
σζ
π
2
e
1
2 σ 2ζ
ζ 2i
The industry-specific technical efficiencies and mean technical efficiency are obtained
respectively as:
ϕ i = E e

− ζ i ui 

1 *2
σi
e2
( )
=1−Φ
σ *i
and
1 *2
σ
e2
( )
ϕi = 1 − Φ σ
*
(Jondrow et al., 1982).
Again the systematic random error, ξ i , is assumed to be independently and identically
distributed with mean zero and variance, σ ξ2 ; and ζi are non-negative truncations of the
(
)
N µ ,σ ζ2 distribution,
where: µ = zi δi
(3.3)
and zi is a (k × 1) vector of variables which may influence efficiency and δ i is an (1 × k )
vector of parameters.
−ζ
Measurements of the industry-specific efficiency, e i , depends upon the decomposition of
−ζ
ui , which is derived from the conditional expectation of e i given ui . Thus the technical
efficiency of each industry is given by
34
{
(
)}

1

 1 − Φ σ i* − µ i* σ *i   − µ*i + 2 σ *i 2 

ϕi = 
e
*
*

 1 − Φ − µ i σ i
∴
(
)
(3.4)
which produces the measure of technical efficiency given the specification of the frontier
production function model and the inefficiency effects model. Technical inefficiency is
estimated by 1 − E e −ζ i ui . The mean technical efficiency of all industries in the sample, ϕ ,
{
}
is obtained as:
{
(
1 − Φ σ * − µ* σ *
ϕ =
*
*
 1 − Φ − µ σ
(
)
)}e
 * 1 *2 
 −µ + σ 
2

.

The Frontier 4.1 program (Coelli, 1996) calculates the maximum likelihood estimator of the
predictor for the technical efficiency that is based on the conditional expectation of e −ζ i
given the composed error term of the stochastic frontier production model (Battese and
Coelli, 1988). The parameters of the coefficients of stochastic frontier model, β , and the
technical inefficiency effects model, δ i , along with the variance parameters are also
estimated.
The log-likelihood function for the sample observations is:
n
L(Ω ,y ) = ∑ ln 1 − Φ −µ
*
i =1
[ (
1 n * *
+ ∑ µ i σ iζ
2 i =1
(
(
where Ω* ≡ β ′, σ ξ2 , σ ζ2 , µ
*
i
2
σ
*
iζ
1
′
1 n 
 1
− ∑ {y i − f (xi ; β )} {yi − f (x i ;β )} σ ξ2  − n µ σ ζ
 2
2 i =1 
)]
(
1
) − 2 n ln(2π ) − 2 n ln(σ
′
)
35
2
ζ
)
[ (
+ σ ξ2 − n ln 1 − Φ − µ σ ζ
)]
2
)
The principal drawbacks of this approach are assumptions about the distributions of technical
inefficiency and the random term and the nonexistence of an a priori
justification of
choosing the distributional form of the random noise (Coelli, 1995).
3.4 Functional Forms of Production Function and Hypothesis Tests
3.4.1. Functional Forms
Cobb-Douglas Production Function: Several specifications of the production function, e.g.,
Cobb-Douglas, CES, translog, etc. have been developed. The Cobb-Douglas production
function has been widely used in econometric analysis. We use the Cobb-Douglas production
approach in our analysis:
q
ln yi = β 0 + ∑ β i ln xi
(3.5)
i =1
where yi = output, β 0 is an "efficiency parameter", i.e., an indicator of the state of
technology, xi = inputs of production, ln = natural logarithm, β i
(i = 1,2,3,..., q ) are the
output elasticities with respect each input and the production function is homogeneous of
n
degree
∑β
i
. Differentiating (3.5) yields the marginal product for input i, for example:
i =1
∂y β i yi
=
∂xi
xi
which is strictly positive for xi > 0 . The marginal rate of technical substitution is:
MRTSi, j =
∂yi ∂xi βi x j
=
∂yi ∂x j β j xi
36
The elasticity of substitution is σ = 1 for any input combination and all levels of output,
n
which restricts the flexibility of this functional form. The returns to scale is
∑β .
i
i =1
3.4.2. Hypotheses Testing
The standard OLS function assumes that all industries operate on the technical efficient
frontier and non-negative technical inefficiency effects are zero (Coelli, 1996). We test the
hypothesis of no productive inefficiency effects against the alternative hypothesis as:
Ho : = no technical inefficiency exists
(3.6)
HA : = technical inefficiency exists
If the null hypothesis is not rejected, the technical inefficiency error term, ζi , is removed
from the stochastic frontier production model in (1). This is equivalent to imposing the
restriction that δ i = 0 (i = 0,1,2,3,..., n ) in (3.3) and γ = 0 in (3.2) and shows that the
average production function (standard OLS function) is an adequate representative for the
data. This joint hypothesis test also tests if both random and deterministic components of the
inefficiency error term are not significant and specifies if the inefficiency effects are nonstochastic.
We test the hypothesis about the distribution of the random variable associated with the
existence of technical inefficiency. The technical inefficiency component requires a
distributional assumption for estimation. The most commonly used distributional forms are
half-normal and truncated normal. The generalization of the half-normal distribution is the
truncated normal distribution, which is derived by the truncation at zero of the normal
distribution with mean µ and variance σ 2 . If the normal distribution is truncated at µ = 0,
then it is a half-normal distribution. Given the specifications of truncated normal or half-
37
normal distribution for the technical inefficiency effects, half-normality of the technical
inefficiency effects is tested by formulating the null and alternative hypotheses as:
Ho : µ = 0
(3.7)
HA : µ ≠ 0.
If the null hypothesis is not accepted, the half-normal distributional assumption is an
inadequate representation for the technical inefficiency effects term.
The null hypotheses are tested using the generalized likelihood ratio ( LR) statistic. This test
requires the estimation of the model under both the null and alternative hypotheses and is
defined as:
LR = −2 ln[L(H0 ) L(HA )]
where L(H0 ) and L(HA ) are the values of the likelihood function under the null and
alternative hypotheses respectively. If the null hypothesis is true, then LR has an asymptotic
χ 2 - distribution with degrees of freedom equal to the number of restrictions imposed under
the null hypothesis (Coelli, 1996).
3.5. Empirical Results
3.5.1. Hypothesis Testing Results
Results show that average production technology and normal distributional assumption for
inefficiency effects are not representative for the dataset. Rather, the stochastic frontier
model for the production technology and truncated normal distributional assumption for the
inefficiency effects are representative for the dataset of this northwest region.
3.5.2. Industry-specific Technical Efficiency
38
The predicted technical efficiencies show substantial variability among industries ranging
between 0.6683 and 0.9998 for the Cobb-Douglas frontier model with the mean technical
efficiency of 0.8812 and standard deviation of 0.1371 for the data set 1991 - 1992.
Variability in efficiencies of industries is also observed for the data set 1999 – 2000.
Efficiencies for this set range between 0.8984 and 0.9979 with the mean efficiency of 0.9583
and standard deviation of 0.0338. The frequency distributions of the predicted technical
efficiencies and the summary statistics for the efficiencies are presented in Table 3.1. It is
evident from Table 3.1 that range of efficiency in 1991-1992 is larger than range of
efficiency in 1999-2000. Mean efficiency of industrial establishments is also higher in 19992000. This also implies that there is still a room for increasing industry revenue and welfare
through efficiency improvement and industry could reduce about 10 per cent of production
costs if they could operate at full technical efficiency levels.
Table 3.1: Technical Efficiency Estimates of Industrial Establishments in Northwest
Districts
Efficiency scores, 1991 - 1992 Efficiency scores, 1999 - 2000
Districts
Panchagarh
0.6683
0.9802
Thakurgaon
0.8387
0.9426
Dinajpur
0.9811
0.9979
Nilphamari
0.956
0.9522
Rangpur
0.9985
0.8984
Kurigram
0.9998
0.9766
Lalmonirhat
0.9243
0.9294
Gaibandha
0.6832
0.9888
Mean
0.8812
0.9583
Standard deviation
0.1371
0.0338
Minimum
0.6683
0.8984
Maximum
0.9998
0.9979
Northwest total
0.8675
0.9086
Bangladesh
0.9048
0.9879
0.8822
Mean Efficiency
0.9563
The overall mean efficiency performance of industrial sector in Bangladesh is 0.8822 in 199-
1992 and 0.9563 in 1999-2000. These values are almost same with overall mean efficiency
39
values of industrial establishments. On an average in Bangladesh, the industrial sector has an
opportunity of increasing production about 5 to 11 percent if they could operate at full
technical efficiency levels without resort to technological progress, given the available
factors of production. This suggests that policies should be taken to improvement of level of
technological progress and quality of existing technological progress so that production of
industrial sector could be increased significantly.
3.6. Conclusions
We investigate the level of efficiency performance of industries in northwest Bangladesh
using the Cobb-Douglas stochastic frontier model. The model is estimated with the
specification of the technical inefficiency effects model in a single stage estimation method
applying the maximum likelihood estimation technique using data set for two periods. One
set is for the period 1991 – 1992 and the other set is for the period 1999 – 2000. For both
periods, we found an opportunity of industry production gain through improvement of
efficiency of industries without resort to technological progress. Given the level of technical
efficiency of industries, this research would humbly suggest introducing policies that would
lead to adoption of new technological progress and improvement of existing level of
technologies. This can provide technically, economically and socially optimal level of
industrialisation in northwest Bangladesh.
4. Uttora Export Processing Zones (EPZ) – Role for Industrialisation
4.2 Introduction
Export Processing Zones (EPZs) are areas in which various only export-oriented industries
are allowed to establish with some benefits to investors so that export commodities are
produced and processed. Foreign importers could visit EPZs and choose products to buy.
Export processing Zones are established with aims and objectives to attract and
develop foreign capital investment, develop labour management and generate
40
employment, use foreign and modern technology in production, increase and diversify
exports, establish and expand backward linkage industries, develop marketing in
foreign markets, increase foreign earnings through rise in exports. Thus EPZs can play
significant part in export arena and contribute to national income and employment and hence
reduce poverty. This section describes the present status of all EPZs in Bangladesh with
special focus on UEPZ and tries to find ways how to establish increased number of industries
in EPZ area in northwest Bangladesh.
The objectives also include assessment of
problems and prospects of the Uttora EPZ, situated in northwest Bangladesh, and
provide some policy conclusions on how to reduce problems in this EPZ.
Industries located in the EPZs enjoy the following facilities:
a) Income tax exemption for 10 years and 50 percent income tax rebate on export
earning after that period.
b) b) Duty-free import of raw materials, machinery, construction materials and other
materials used in manufacturing process.
c) Income tax exemption, subject to existing conditions on salaries of foreign
technicians, for three years.
d) Tax exemption on interest on foreign loans.
e) Tax exemption on royalties, technical know-how and technical assistance fees.
f) Tax exemption on profits on account of transfer of shares by foreign companies listed
with the stock exchange. Relocation of running manufacturing units from EPZs
abroad.
g) Permission to units in the EPZs to supply linkage materials for manufacture of
exportable items to industries operating in domestic tariff area, through bonded
warehouse and/or back to back L/C.
h) Off-shore banking facilities.
i) Establishment of backward linkage industries for supplying inputs in EPZs.
However trade union activities are prohibited to avoid any unrest in the industries located in
the EPZs.
41
This section is structured as follows. Subsection 2 gives a description of UEPZ; Subsection 3
provides number of EPZ-wise, product-wise and country-wise industrial units with special
emphasis on UEPZ; Subsection 4 describes investment and employment in EPZs including
UEPZ; Subsection 5 delineates contribution of EPZ to total export earnings; Subsection 6
accounts expectations of UEPZ in northwest Bangladesh; and finally Subsection 7 concludes
this section.
4.2. Uttora EPZ – An Overview
Rajshahi division, which consists of 16 districts among 64 districts in Bangladesh, is the
largest division of Bangladesh with an area of about 34,500 square kilometers.
Unfortunately, lack of government commitment and geonatural location, this area has lagged
behind industrialisation. In particular, the northwest region, consisting 8 of 16 districts in
Rajshahi division and 64 districts in Bangladesh, lacks industrialisation. This region is
labour-surplus. Amount of production remains almost the same although excess labour force
is employed. Many parts of this region are plagued with flood, draught, river erosion
and cyclone, and severity of these has caused the Monga, which weakens the economy in
this area. Lack of other sources of income, lack of employment, low productivity etc. except
seasonal agricultural employment in this poverty-ridden region accelerate the miseries of the
Monga. People in this region lead to deplorable life. Establishment of an Export
Processing Zone (EPZ) is quite rational because of the availability of raw material and labour
force and the positive effects of the infrastructural development – the Jamuna Bridge.
An EPZ is established in the Shongalshi at Shyedpur thana of Nilphamari district in July 01,
2001. This EPZ is known as the Uttora EPZ (henceforth UEPZ). It is situated 10 kilometers
away from Nilphamari by road, 18 kilometers away from Shyedpur air port, 360 kilometer
away from Dhaka and 640 kilometers away from the Chittagong Sea Port. It is connected
with Dhaka, and Chittagong seaport by road, rail and air directly and indirectly. This EPZ is
established for domestic and foreign investors covering an area of about 230 acres with a
view to creation of employment of about 35,000 labourers. Interaction of UEPZ with land
ports and Mongla Sea Port can affect industrialisation positively in this region.
42
It starts its journey with 155 industrial plots. Table 4.1 provides a brief account of these
industries. Figure 4.1 shows the location of UEPZ.
Table 4.1: Uttara EPZ – Entreprises, Country, Products, Investment and Employment
Sl
No
Name of
Enterprises
Country
Type- A (100% Foreign)
1 Uttara Sweater
Manufacturing Hong Kong
Company
Total
Type- B (Join Venture)
Kapric
2 Electronics
INDIA
(BD) Ltd.
Total
Type- C (100% Local)
Quest
3
Bangladesh
Accessories
Total
Grand Total
Products
Knitting &
other
Textile
Electronics
and
Electrical
Garment
Accessories
Investment
(000'US$)
Proposed Actual
Employment
Proposed
Local Foreign
Actual
Local Foreign
4000
716.3209
1588
54
1186
7
4000
716.3209
1588
54
1186
7
1744
950
167
--
32
1
1744
950
167
--
32
1
1900
485
80
--
53
--
1900
485
2151.32
09
80
--
53
--
1835
54
1271
8
7644
Source: BEPZA Bulletin (Internet versions), July 2007.
Table 4.1 shows that there are only 3 industries established so far in UEPZs. Among
these, Uttara Sweater Manufacturing Company, which produces knitting and other
textile products, is 100 percent foreign run by Hong Kong. There is only one joint
venture industry with India that produces electronic and electrical products.
Bangladesh has only one industry in this UEPZ that produces garments accessories.
Proposed investments have not been achieved in these three industries. Except the
joint venture industry in which about half of the proposed investment is realized,
realization of investments of other two industries is much lower which is about onefifth of proposed investment. Hence employment target is not achieved. Uttara
Sweater Manufacturing Company invests only US$716.3209 against an investment
target of US$4,000.00 thousands and employs only 1,193 persons (both local and
foreign) against a proposed employment target of 1,642. There is room for realizing
the proposed investment and hence employment in these industries in operation.
43
Figure 4.1: Map of Bangladesh Showing Uttara EPZ
Legends
Districts
Nilphamari
UEPZ
44
Profile of Uttara Export Processing Zone
Location
Shongalshi, Nilphamari. 18 kms from Syedpur Airport, 360 kms from Dhaka, 460 kms from
Chittagong Port.
Profile Of Zone
Zone area:
107.18 hectares (264.99 acres)
Number of industrial plots : 221 (first phase)
Size of each plot : 2000 sqm.
Tariff:
US $ 1.00 / sqm / year.
Space of Standard Factory Building: 18000 sqm.
Tariff:
US $ 1.25 /sqm /month.
Utility Services
Water Supply: Own water supply system.
Tariff:
Tk. 17.71 / cm.
Gas Supply: Gas Transmission Company Ltd.
(Western Zone Project, Proposed).
Tariff:
Tk. 5.43 / cm.
Power Supply: 11 kv, 3 phase, 50 cycles/sec. Tariff :
Tk. 4.18 / kwh.
Although there was a great possibility of establishing garments industry, lather industry etc.
including agri-based industries using the infrastructural facilities of Jamuna bridge, and
Shyedpur domestic airport, but that did not materialize in this UEPZ.
4.3. EPZs in Bangladesh
Table 4.2 provides us total number of industries and EPZ-wise number of industries, which
are in operation. Location of EPZs in Bangladesh is shown in Figure 4.2. Table 4.2 is
important in that it gives a comparative picture of industries of UEPZ with other EPZs in
Bangladesh. As is evident in Table 4.2, there are 264 industries in 8 EPZs in Bangladesh.
Among these, 156 industries are owned and run by foreign investors, 42 industries are joint
venture and 66 industries are owned and run by domestic investors. Among 8 EPZs, except
45
Karnaphuli EPZ, which is established later than other EPZs, UEPZ has the lowest number of
industries. This is unexpected. In Adamjee EPZ, three industries are in operation. On the
other hand, in Karnafuli EPZ, only one industry is in production. Where there are only 3
industries in UEPZ.
Table 4.2: Number of Industries in Operation in EPZs in Bangladesh
Unit
Serial Number Zones
Type - A
Type - B
Type - C
Total
1
Chittagong-EPZ
81
20
34
135
2
Dhaka-EPZ
57
14
20
91
3
Mongla-EPZ
7
2
3
12
4
Ishwardi-EPZ
1
1
1
3
5
Comilla-EPZ
6
4
6
16
6
Uttara-EPZ
1
1
1
3
7
Adamjee-EPZ
3
0
0
3
8
Karnaphuli-EPZ
0
0
1
1
156
42
66
264
TOTAL
Source: BEPZA Bulletin (Internet versions), July 2007..
The government could give special eye to increase the number and scale of industries
to raise the level of investment and generate income considering the poverty -and
monga -ridden
status
of
this
region.
The
government
and
non-government
organizations would encourage domestic and foreign investors to invest in this UEPZ.
We find the number of industrial units in EPZs invested by countries and want to find why
countries are not investing in UEPZs. Table 4.3 gives an account of country-wise industrial
units in EPZs of Bangladesh.
46
Table 4.3: Country Wise Industrial Units in EPZs
Serial Country
No.
1 Australia
2 Bangladesh
3 Belgium
4 Br. Virgin. Is
5 Canada
6 China
EPZ- EPZ- EPZ- EPZ- EPZ- EPZ- EPZ- EPZCTG DAK MON COM UTR ADM KAR ISD
------34
20
3
1
6
1
-1
--------1
-2
-----3
4
-1
1
--
7 Denmark
1
8 France
1
9 Germany
-10 Hong Kong
7
11 India
1
12 Indonesia
-13 Ireland
1
14 Italy
-15 Japan
19
16 Malaysia
5
17 Nepal
-18 Netherland
-19 Pakistan
5
20 Panama
-21 S. Korea
37
22 Singapore
-23 Spain
-24 Srilanka
-25 Sweden
-26 Switzerland
-27 Taiwan
2
28 Thailand
1
29 U.S.A.
11
30 United Kingdom 5
Total
135
--4
9
3
1
-2
4
2
-3
1
1
22
2
--1
1
4
-1
5
91
----8
-----1
-------------12
----1
-------------------3
Source: BEPZA Bulletin (Internet versions), July 2007.
47
---1
1
---1
1
----1
-----3
---16
---1
1
-------------------3
Total
-66
1
2
3
9
1
1
4
18
16
1
1
2
24
8
1
3
6
1
60
2
--1
1
9
1
12
10
264
It is shown in Table 4.3 that among foreign countries, South Korea has invested in 60
industrial units, the highest number followed by Japan, 24 industries and Hong Kong, in 18
industrial units. Unfortunately, there are about 66 domestic industrial units in EPZs. Our
policy is to encourage these countries to invest in UEPZ as well. Investigation on why these
countries are not encouraged to invest in UEPZ is important but this is beyond the scope of
this research. Because of increased production cost and increase in wages many
countries in Asia are discouraged in investing in foreign capital markets. So
availability of low wage labour in Bangladesh can attract new foreign capital
investment.
Table 4.4 gives an account of industries in EPZs in Bangladesh and products which are
produced in EPZs. Table 4.4 exhibits that 58, the highest number of industries, are garments
industries. Among 58 industries, 33 are located in Dhaka EPZ and 23 are in Chittagong EPZ
and only 2 are in Comilla EPZ. There is no garments industries in Uttora EPZ. There are
about 32 garment accessories industries in EPZs, but Uttora EPZ has only one.
Although this region is agro-based, unfortunately there is no agro-product industry
established in this EPZ. Neither is the fertilizer industry, although fertilizer is an important
input of agricultural production. All 10 agro-product industries are located in Mongla EPZ.
The government could take initiatives to establish agro-based industries which could
contribute to both agricultural and industrial development and generate employment and
income. This in turn helps reduce poverty and effect of monga on rural economy of the
region.
48
Table 4.4: Product -wise Number of Emtreprises (industry in operation)
Sl no. Name of Category
EPZ- EPZ- EPZ- EPZ- EPZ- EPZ- Total
CTG DAK MON ISD COM UTR
10
10
1
Agro Poducts
2
Caps
3
Chemical & Fertilizer
4
Electronics & Electrical goods
12
5
Fishing Reel & Golf
1
6
Footwear & Leather goods
8
4
7
Furniture
8
Garment Accessories
11
17
9
Garments
31
23
2
10
Knitting & other Textile pdt.
9
6
7
11
Metal Products
8
2
12
Miscellaneous
8
10
13
Paper Products
1
1
14
Plastic goods
7
6
15
Power Industry
16
Ropes
2
17
Service Oriented Industries
2
18
Tent
5
5
19
Terry towel
16
16
20
Textile
11
15
135
91
Total
3
3
6
1
1
2
1
1
16
1
12
1
2
1
58
1
1
1
1
32
25
11
2
22
2
1
14
2
1
Source: BEPZA Bulletin (Internet versions), July 2007.
49
3
2
12
3
16
28
3
264
Figure 4.2: Location of EPZs in Bangladesh Map
Uttora EPZ
Ishwardi EPZ
Dhaka EPZ
Comilla EPZ
Mongla EPZ
Chittagong EPZ
Karnafuli EPZ
50
An analysis of which country has invested how much on what sectors can perhaps
help us find a policy direction which could be of help to policy makers. This may
predict the comparative advantage of a country to produce here in Bangladesh than in
other countries. It can also be found which industries could be established in UEPZ.
Table 4.5 to 4.10 show countries which invested in our EPZ and their product. It is
evident from 4.8 that South Korea has the highest number of industries in EPZ and
among 60 industries, 17 industries are garments. It is South Korea which has the
highest number of 7 textile industries in EPZs of Bangladesh. Unfortunately, this
country neither has any Garments nor any Textile industries in the UEPZ.
Table 4.5: Product- and Country-wise Industries in EPZs
Bangladesh Belgium Br. Virgin Island
Agro Poducts
2
Chemical & Fertilizer
1
Electronics & Electrical goods
1
Footwear & Leather goods
6
Garment Accessories
12
Garments
12
Knitting & other Textile pdt.
5
Canada China
1
1
2
2
Metal Products
1
1
1
Miscellaneous
8
Paper Products
2
Plastic goods
2
Service Oriented Industries
1
Terrytowel
5
Textile
9
Total
66
3
1
1
1
1
Source: BEPZA Bulletin (Internet versions), July 2007.
Table 4.6: Product- and Country-wise Industries in EPZs
51
2
3
9
Denmark
France Germany Hong Kong
India
Agro Poducts
7
Caps
2
Electronics & Electrical goods
2
Garments
1
1
8
2
Knitting & other Textile pdt.
3
6
Metal Products
2
Miscellaneous
2
Plastic goods
2
Textile
2
Total
1
1
4
18
16
Source: BEPZA Bulletin (Internet versions), July 2007.
Table 4.7: Product- and Country-wise Industries in EPZs
Indonesia Ireland
Italy
Japan
Caps
1
Footwear & Leather goods
3
Garment Accessories
1
Garments
Knitting & other Textile pdt.
4
2
6
3
1
Metal Products
1
Miscellaneous
1
Plastic goods
2
Service Oriented Industries
1
Tent
1
Terrytowel
3
Textile
Total
Malaysia
1
1
Source: BEPZA Bulletin (Internet versions), July 2007.
52
1
1
3
1
2
24
8
Table 4.8: Product- and Country-wise Industries in EPZs
Nepal
Agro Poducts
Netherlands Pakistan
Panama
S. Korea
1
Caps
4
Chemical & Fertilizer
Electronics & Electrical
1
goods
Footwear & Leather goods
4
Garment Accessories
3
Garments
7
1
1
17
Knitting & other Textile pdt.
4
Metal Products
1
Miscellaneous
6
Plastic goods
5
Tent
4
Terrytowel
4
Textile
1
Total
1
3
6
7
1
60
Source: BEPZA Bulletin (Internet versions), July 2007.
Table 4.9: Product- and Country-wise Industries in EPZs
Singapore
Sweden Switzerland Taiwan
Footwear & Leather goods
Garment Accessories
1
2
Garments
1
1
2
1
Knitting & other Textile pdt.
2
Plastic goods
1
Textile
2
Total
Thailand
2
1
Source: BEPZA Bulletin (Internet versions), July 2007.
53
1
9
1
1
Table 4.10: Product- and Country-wise Industries in EPZs
U.S.A
U.K.
Garment Accessories
1
1
Garments
2
3
Knitting & other Textile pdt.
2
Miscellaneous
1
Plastic goods
1
Service Oriented Industries
1
Tent
1
Terrytowel
5
1
Textile
2
1
Total
12
10
Source: BEPZA Bulletin (Internet versions), July 2007.
4.4. Investment and Employment in Industries of EPZs
All the rich countries in the world are industrially developed. Unfortunately,
Bangladesh has lagged behind industrialisation in spite of having huge possibilities.
Different geographical potentials like, seaports, land ports, available naval
communication, road transport system, huge cheap labourers can play positive role in
industrialisation. With these facilities, EPZs are established to attract domestic and
foreign investment in order to reduce poverty through creation of employment and
generation of income. In particular, in northwest Bangladesh the main strategy should
be to invest capital in order to create employment and source of income rather than
moving people from the monga-ridden area. For this, new industries should be
established; old industries should be modernized, with proper credit facilities, tax
rebate, and various investment facilities. Besides taking development activities in all parts
of the problem-ridden area, these activities should be run in some suitable places through
improving investment facilities and hence develop the whole area.
Bangladesh Export Processing Zone Authority has evolved as an independent autonomous
institution through the ‘Bangladesh Exports Processing Zone Authority Act -1980 with a
54
view to attract and accelerate investment. Here we shall give an analysis of investment and
employment in various ways.
Table 4.11 gives an estimate of investment and employment in EPZs with a comparative
picture of UEPZ and other EPZs. Number of people employed is 2,02,752. Most of
labourers employed are female.
Table 4.11: Zone-wise Investment and Employment (industry in operation)
Serial
Zone
No.
1
Chittagong-EPZ
2
Industries in Investment.
Employment
Employment
Operation
(Local.)
(Foreign.)
(000 US$)
135
5,41,437
1,17,740
480
Dhaka-EPZ
91
5,19,775.90411
74,750
625
3
Mongla-EPZ
12
3,320.42
286
6
4
Ishwardi-EPZ
3
824.439
47
1
5
Comilla-EPZ
16
64,835.29352
6,420
23
6
Uttara-EPZ
3
2,773.32094
1,422
8
7
Adamjee-EPZ
3
13,139.71879
1,933
12
8
Karnaphuli-EPZ
1
2,880.37629
154
--
2,02,752
1,155
264
Total
11,48,986.4726
5
Source: BEPZA Bulletin (Internet versions), July 2007.
If we look at Table 4.11, we find that, except Ishwardi EPZ which has equal number of
industries of UEPZ, UEPZ has lower amount of investment of US$ 2,773.3209 thousands.
This is about 0.24 percent of total investment of US$ 11,48,986.47265 thousands.
Employment is also very low.
Table 4.12: Country-wise Investment and Employment (industry in operation)
Serial Country
No of Investment (000 US$)
55
Employment
Employment
No.
Unit
Total
Average Total Local Average
1
Bangladesh
66
197360.8
2990.315
40577
2
Belgium
1
1170.398
1170.398
3
Br. Virgin. Is
2
8253.182
4
Canada
3
5
China
6
Foreign
614.80
52
192
192
--
4126.591
689
344.5
7
13258.2
4419.4
708
236
8
9
20940.71
2326.746
5923
658.11
35
Denmark
1
1030
1030
243
243
7
7
France
1
803.42
803.42
170
170
--
8
Germany
4
14500.6
3625.15
5489
1372.25
48
9
Hongkong
18
118214
6567.444
29692
1649.56
321
10 India
16
6991.501
436.97
2073
129.56
11
11 Indonesia
1
3592.497
3592.497
2078
2078
15
12 Ireland
1
27
25
1
13 Italy
2
16769.4
8384.7
1131
565.5
6
14 Japan
24
161821.5
6742.563
6355
264.79
37
15 Malaysia
8
75572.73
9446.591
6674
834.25
178
16 Nepal
1
50
17 Netherland
3
12941.7
4313.9
841
280.33
12
18 Pakistan
6
4247.062
707.8437
2958
493
1
19 Panama
1
2714.477
2714.477
2324
2324
17
20 S. Korea
60
295703.3
4928.388
65541
1092.35
199
21 Singapore
2
3321.683
1660.842
163
22 Srilanka
27
25
50
1488.736
81.5
6
4564
24
10
--
70
23 Sweden
1
6956.368
6956.368
4564
24 Switzerland
1
2043.263
2043.263
10
25 Taiwan
9
50022.77
5558.086
4587
509.67
55
26 Thailand
1
513.2
27 U.S.A.
12
44134.35
3677.863
9492
791
61
28 Untd Kingdom
10
30285.05
3028.505
10183
1018.3
54
Local Investment
(B Type)
Total
513.2
54258.54
264
1148986
4352.22
202752
768
1155
Source: BEPZA Bulletin (Internet versions), July 2007.
Table 4.12 estimates how much different countries have invested in our EPZs. Table
4.12 shows that Malaysia has the highest amount of investment in Bangladesh
56
followed by Italy’s investment, then by Sweden and Japan. Average amount of
investment by industries in EZPs is US$4,352.22 thousands. Average investment of
Malaysia, Italy, Sweden, Japan, Hong Kong, Taiwan, S. Korea, Canada is above the average
investment of US$4,352.22 thousands and other countries have investment below the
average investment. Nepal has the lowest amount of investment and India has an
average investment of US$436.97 thousands. Unfortunately, Malaysia, country with
the highest investment is not convinced to invest in UEPZ. Neither are Japan, Hong
Kong, and other countries.
Although Malaysia’s average in Bangladesh EPZs is the highest but it does not
provide with highest average amount of employment. The highest average amount of
employment is provided by Sweden. This amount is 4,564. The average amount of
employment provided by industries in Bangladesh EPZs is 768 persons.
Table 4.13: Type Wise Investment and Employment
Type Industries
in
Operation
A
156
8,45,119.73158
Employment
Local
Average Foreign
Local
5,417.43418 1,43,896 922.41 1,045
B
42
1,06,505.95789
2,535.85614 18,279
435.21 58
C
66
1,97,360.78318
2,990.3149 40,577
614.80 52
Total
264
11,48,986.47265
4,352.22149 2,02,752
Investment (000 Average
Investment
US$)
768 1,155
Source: BEPZA Bulletin (Internet versions), July 2007.
Table 4.13 shows investment and employment by ownership. As we know that Type A
industries are 100 foreign, Type B industries are joint venture industries and Type C
industries are owned by domestic entrepreneurs. Table 4.13 exhibits that average investment
in foreign industries is larger than both the average investment of joint venture and local
industries. Per industry employment rate is also higher than that of both joint venture and
domestically owned industries. Both average rate of investment and employment of joint
venture industries are lower than both foreign owned and domestically owned industries.
This warrants an analysis or investigation on reasons of low average investment and
57
employment in domestically owned and joint venture industries that foreign-owned
industries.
Table 4.14: Product wise Employment and Investment
Investment (000
Employment
US$)
No of
Total
Sl
Unit
Average Total Average Foreign
no. Name of Products
Local Local
1 Agro Poducts
10 2972.028 297.2028 158
16
4
2 Caps
6
40791.77
6798.628 8811
3 Chemical & Fertilizer
1
410.0071
410.0071
4 Electronics
16
52688.84
&
Electrical
1469
69
-
--
3293.053 3227
202
19
31480 626
626
1
4422.336 6234
520
15
-
--
--
Fishing Reel & Golf
Equipment
6 Footwear & Leather goods
1
31480
12
53068.03
7 Furniture
--
--
8 Garment Accessories
32
130458.5
4076.828 7743
242
87
9 Garments
58
292927.9
5050.481 113517
1957
406
10 Knitting & other Textile pdt.
25
114377.2
4575.088 22984
919
192
11 Metal Products
11
21256.23
1932.385 889
81
15
12 Miscellaneous
22
28653.32
1302.424 4192
191
14
13 Paper Products
2
837.1699
418.585 124
62
--
14
14
21443.63
1531.688 855
61
7
Plastic goods
15 Power Industry
--
--
-
--
16 Ropes
2
6134
3067 375
188
2
17 Service Oriented Industries
3
5693.292
1897.764 477
159
2
18 Tent
5
23623
4724.6 4856
971
26
19 Terrytowel
16
38555
2409.688 5720
358
16
20 Textile
28
283616.6
10129.16 21964
784
280
264
1148986
768
768
5
Total
--
--
--
--
4352.224352.22
Source: BEPZA Bulletin (Internet versions), July 2007.
Table 4.14 gives an account of product-wise number of industries, investment and
employment of EPZs in Bangladesh. It is evident from Table 4.14 that the largest
58
amount of investment, US$292927.9 thousands, is in garments industries followed by
textile industries and garments accessories. Average number of employment is larger
in Garments industries, followed by Cap industries; although Textile industries have
the highest amount of investment, followed by Cap industries, Garments industries,
Knitting and Other Textile Product industries, Footwear and Leather Product
industries and Garments Accessories industries respectively.
But EPZs has not become able to achieve its full potentials. Investors are more
encouraged to invest in Chittagong and Dhaka EPZ because of their locational
benefits and other facilities.
Government and non-government organization, like RDRS, ASA, PROSHIKA,
Grameen Bank etc can establish in the UEPZ as outside the EPZ on non-profitable
basis at least on humanitarian ground to create ample amount of employment and
reduce the severity of poverty in this region. These products can fulfill local demand
and can be exported. Foreign donars are expending huge amount of money on
humanitarian grounds. People want employment and they can help in investing and
generating employment and income.
4.5. BEPZA in National Export and Employment
Despite different difficulties, BEPZA tries to attract foreign investment that is
praiseworthy.
Table 4.15: Export Contribution of BEPZA in National Export (million US$)
Financial Year
Total Export
Export from EPZ
59
Contribution of BEPZA
1999-2000
5752
891
15.49
2000-2001
6467
1068
16.51
2001-2002
5986
1077
18.00
2002-2003
6548
1200
18.33
2003-2004
7603
1354
17.80
2004-2005
4655
1546
17.90
2005-2006
10052
1836
17.44
Source: BEPZA Bulletin, various issues.
It is evident from Table 4.15 that the share of exports earnings from EPZ is gradually
increasing but the total volume of exports is greater than the volume of exports from
EPZs.
4.6. EPZ in the Northwest and Expectation
Export Processing Zone can create an opportunity of generating income through
creation of employment in this economically backward region in Bangladesh and
hence can contribute to reduction of poverty.
Plot rate and tariff are kept 50 per cent lower than other EPZs to attract investors, but still
there is no remarkable response from investors, although there are facilities of Jamuna
bridge, train and road communication, and cheap labourers.
There is no gas supply in UEPZ. Majority of local industrialists mention that agro-based
industries, leather product industries and garments industries could be most advantageous in
this region because of availability of agricultural commodities and huge cheap labourers,
provided that prevailing problems in EPZ are solved.
We identify the following problems as major problems of UEPZ consulting
Industrialialists and others concerned.
60
1. Lack of gas connection and distance of seaport from UEPZ. The former
increases costs of production while the latter rises the carrying costs because of
increased diesel price.
2. Insufficient uncongenial airport facilities to send commodities to foreign
buyers with special emphasis.
3. Inappropriate transport facility as well as no direct rail connection to seaports.
4. Lack of government patronisation, and lack of fair and congenial transaction
with foreign buyers.
Therefore foreign investors do not feel encouraged to establish industries in this
UEPZ.
Agro-based industries, garments, textiles industries, lather and lather products are in
advantageous positions according to entrepreneurs in this region.
4.7. Conclusion and Recommendations
During the regime of the British and Pakistani government, the governments managed to
undertake development activities in certain places in the country for their own interests.
During the last three decades after independence the same tradition of development remains
active. Disparity in regional development has been increasing, that is, disparity is mainly
centered in development.
UEPZ is established in order to make employment of the mass population through
industrialisation along with agricultural development in the neglected northwest region of the
country. Unfortunately, after five years of establishment of the UEPZ, it did not become able
to keep contribution to the development in the region because of reasons for not solving the
existing problems in the UEPZ defined by the industrialists and entrepreneurs. On the other
hand, foreign investors do not show interest to establish industries if domestic counterparts
do not establish.
61
Establishment of industries in a region happens mainly based on the availability of raw
materials (Smith, 1970). From this viewpoint, it was expected that industries based on
agriculture would be established in this agrarian region. Unfortunately, in the Mongla EPZ,
all of 10 agriculture-based industries are established, but in the UEPZ no such industry is
established. We would like to provide following suggestions in order to bring mobility in this
EPZ:
1. Arrangement of connection of natural gas in the EPZ
2. Making different industrial planning in this region
3. Bringing working mobility in Mongla sea ports
4. Arrangement of special toll system for Jamuna bridge for EPZ industrialists in order
to reduce import-export cost from Chittagong seaport and airport.
5. Taking steps to run cargo biman from Shyedpur
6. Arrangement of border connection from Bangladesh to India, Nepal and China
through development of four land ports in this region.
7. Arrangement of direct rail connection from Shyedpur to Dhaka and Chittagong.
8. Encouragement and special benefit to entrepreneurs to build agro-based industries in
this agrarian region.
9. Establishment of joint stock enterprises and coordination of local entrepreneurs with
foreign importers.
Northwest Bangladesh includes Monga-ridden areas where Monga is created because of
mainly lack of employment during lean agricultural seasons. Establishments of productive
entrepreneurs in this region can generate employment, provide income and hence reduce the
severity of Monga. A concerted effort from government, private organizations and donars is
a must to reduce this problem through effective measure.
Foreign investment should be attracted in the EPZs. For this, the government must take
immediate decisions. There must have clear directives to the government officialts regarding
62
this. There should have awarding options to the active officials. Trade and foreign investment
are best ways to generate employment in this area and thus reduce poverty. The process of
taking decision should be accelerated.
Export-oriented small and medium industries can be also established along with large
industries because these industries can produce commodities employing people that can
fulfill local demand for commodities in the area also as large industries requires large amount
of funds and decisions.
We find out problems associated with industrialisation. The special characteristics, problems
and constraints faced by large, medium and small and cottage industries are not discussed
separately in detail in the performance analysis section.
The government may wish to set up general and sector specific Special Economic Zones in
order to support and facilitate exports from the northwest Bangladesh. Further the
Government may consider it necessary to formulate a separate industrial and export policy
for this region.
Stand-Alone EPZs
These are industries on which EPZ status is conferred wherever they locate to accommodate
resource-based activities. This is a highly flexible tool enabling industries to operate from
convenient locations while enjoying EPZ benefits.
5. Problems and Prospects of Land Ports in Northwest Bangladesh
5.1. Introduction
The Government of the People’s Republic of Bangladesh has established Bangladesh Land
Port Authority vide S.R.O.-166-Act/2001 dated: 16-06-2001 (Act no-20 of 2001) to develop,
manage, run, extend and maintain cargo handling at land ports in order to ease movement of
import and export items through land ports. It is also expected that trade and commercial
63
activities between Bangladesh and neighbouring countries will increase manifold through
land ports.
This section is arranged as follows. Subsection 2 points out locations of land ports with
possible trade between Bangladesh and neighbouring countries and location of customs
houses; Subsection 3 gives a brief description of activities of Benapole land port with
comparison of northwest ports; Subsection 4 provides trade potentials with neighbouring
SAARC countries and some suggestive steps so that trade through land ports becomes
facilitated; Subsection 5 gives concluding remarks.
5.2. Land Ports and Customs Houses
5.2.1. Location of Land Ports
There are 13 land ports in Bangladesh. Among these four land ports are located in northwest
Bangladesh. The northwest shares land boundaries with India. These are (1) Banglabandha in
Panchagar, (2) Burimari in Lalmonirhat, (3) Hili in Dinajpur and (4) Birol in Dinajpur.
There are some other land ports in Bangladesh. These are (1) Sonamasjid in
Chapainawabganj, (2) Darsana in Chuadanga, (3) Bhomra in Satkhira, (4) Haluaghat in
Mymensingh, (5) Tamabil in Sylhet, (6) Akhaura in Brahmanbaria (7) Bibir Bazar in
Comilla, (8) Benapole in Shatkhira, and (9) Teknaf in Cox’s Bazar. Bangladesh Land Port
Authority has decided to develop and operate land ports at border points by private sector.
Table 5.1 lists the land ports situated in northwest districts in Bangladesh and possible trade
with neighbouring countries.
Table 5.1: List of Land Ports in Northwest Districts
Name of Land Port
Banglabandha
District
Panchagar
Trade with
India, Bhutan, Nepal and perhaps China
Hili
Dinajpur
India, Bhutan, Nepal and perhaps China
Birol
Dinajpur
India, Bhutan, Nepal and perhaps China
Lalmonirhat
India, Bhutan, Nepal and perhaps China
Burimari
Table 5.1 shows that there is great possibility of Bangladesh to trade with India, Bhutan, Nepal and perhaps
China. While the sea ports at Chittagong and Mongla and Zia International Airport are playing an important role
64
to the growth of exports, the border trade through different land ports may become crucially important in
promoting exports to the neighbouring countries viz. India, Nepal and Bhutan.
Banglabandha land port in Panchagar has been established in September 01, 1997 with transit
between Bangladesh and Nepal to expand bilateral trade between Nepal and Bangladesh.
Because of the easy communication of Nepal, Bhutan and China with Bangladesh, the
government of Bangladesh and Land Port Authority arranged warehouse, track parking, yard
and HBB road, office bhaban, police barak, Sonali Bank branch, customs branch,
immigration, telephone exchange, electricity and water supply and sanitation facilities in the
port arena. In May 22, 2004, ‘soft opening’ starts and it is told that the activities of the port
will start in full swing with trades between Bangladesh, Nepal, India and Bhutan.
Unfortunately, the activities have not yet been started fully. Still in 2006-2007 fiscal year,
one crore taka import revenue is obtained from this port and commodities worth 36 crores
and 23 lacs taka have been exported through this port. Trucks with commodities cannot enter
into Bangladesh because of lack of bilateral treaty between India and Nepal.
If the ports were fully operated, employment facilities would be increased. Imports of inputs
and exports of products could be traded between Bangladesh and India, Bangladesh and
Nepal, Bangladesh and China, Bangladesh and Bhutan. Commodities could be moved easily
at a relatively cheap cost. Because Banglabandha is located at a very advantageous and
profitable position in case of trade and business with India, Nepal and Bhutan. Industries
could also be established and worked fully and hence poverty could be reduced in the
Northwest region of Bangladesh.
Effective diplomatic efforts from the part of the government are imperative to bring the ports into full work.
Transit treaty with India should be done to bring mobility of these ports.
Figure 5.1 shows the locations of land ports situated in northwest districts. The land ports here are
Banglabandha (Tetulia), Burimari, Birol and Hili.
5.2.2. Work Stations of Bangladesh Customs
There are four Custom houses and thirty active land customs stations for import and export activities and for passenger movement
across Bangladesh. Chittagong Custom house is the biggest station in terms of revenue and volume of cargo. Chittagong and Mongla
custom house deals with sea cargo where as Benapole custom house deals with cargo carried by truck. Dhaka custom house deals
65
only air freight cargo. Besides cargo handling a significant number of passengers is also handled by these custom houses and stations.
There is no customs house in northwest districts in Bangladesh.
Figure 5.1: Land Ports, Custom Houses and Stations in Northwest Bangladesh and
Others
66
5.3. Activity of Benapole Land Port
Benapole land port is operated at present by Bangladesh Land Port Authority. It has got
about 45 acres of land which has 30 godowns having capacity of receiving 21,500 metric
tons of cargo. It has a Truck-Terminal, which can keep 1000 trucks. Loading and unloading
of cargo from 100 trucks at a time could be done at the transhipment yard.
67
Table 5.2: Cargo Handling at Benapole Land Port
Year
Goods
received
Goods
delivered
Total
tons)
2002-2003
8,58,694
8,65,329
17,24,023
9,55,23,351.02
2003-2004
9,09,081
9,00,974
18,10,055
10,10,28,563.60
July’04-Feb.’05
8,74,595
8,70,908
17,45,503
7,18,26,389.77
(Metric Income (Taka)
(Provisional)
We present this table of activity of Benapole land port in order to have a comparison of the
performance of this port with northwest land ports. Northwest has four land ports and
possibility of trade connection with Bhutan and China with existing land trade relation with
India and Nepal. But still the performances of these ports are not as good as performance of
the Benapole land port.
5.4. Potentials and Suggestive Steps
5.4.1. Advantages of Northwest in the Export Market
The northwest Bangladesh has distinct advantages in its geographical location in terms of
export potential. It is flanked by Bangladesh’s SAARC neighbors viz. India, Nepal and
Bhutan. Its potential is strengthened due to its proximity to the large markets of the SouthWest Asian countries. With South Asia Preferential Trade Area becoming a reality and
South Asia Free Trade Area on the anvil in 2003, northwest districts are prospective gateway
for Bangladesh to expand trade with India, Nepal and Bhutan. The possibility of land trade
with China may offer new opportunities for export growth. Northwest could serve as the
main trading hub and land ports as the satellite for Bangladesh’s trade with these neighbors.
Moreover, availability of infrastructure, skilled labour and raw materials for manufacture of
exportable commodities can be used to create a permanent base for exports from northwest
Bangladesh.
5.4.2. Relevance of an Export-Import Policy for Northwest Bangladesh
Export-Import Policy is a subject in the domain of industrial development. It lays out
specific provisions that are meant to promote exports and provide certain benefits to which
68
exporters are entitled. Therefore, the government can provide exporters with necessary
infrastructure and appropriate support in order to give a boost to exports both directly and
indirectly. Most importantly, the government would perform the role of a facilitator for
exports. Based on global export trends and in recognition of the importance of exports as an
engine of economic growth, the government should see exports as a priority area for
development. With a view to achieving the objectives of land ports and EPZs, the
government could take the following steps:
(i)
To take necessary and effective steps in coordination with the Government
Departments, Chambers of Commerce & Industries, Export Promotion Bureaus,
Commodity Boards, Land Port and EPZ authorities to create a favourable
environment for export growth using facilities of land ports and UEPZ in this
region;
(ii)
To monitor the status, problems and prospects of traditional and non-traditional
exportable items and to ensure that the problems regarding exports are solved at the
local levels;
(iii)
To take up issues concerning exports with the concerned authorities;
(iv)
To formulate export plans where export possibilities remain untapped;
(v)
To create appropriate infrastructure with modern facilities for promotion of exports
through land ports particularly.
(vi)
To promote scientific research and development in industries and land ports with
export potential;
(vii)
To disseminate information regarding export and import policies and prospects on
the export front;
(viii) To collect and disseminate information on trade in goods, trade in services, trade
related investment measures and trade related intellectual property rights.
69
(ix)
Entrepreneurs who have industries in Dhaka and Chittagong EPZs could be
encouraged to establish at least a same type of industry like other EPZs in UEPZ.
This could be viewed as corporate social responsibility.
5.4.3. Industrial Policy
In order to compete favourably in the global market, export units need to improve quality,
adopt new technology and undertake skill upgradation, diversification etc. which will have a
significant impact in the overall industrial climate.
Against this backdrop, the Government sees exports as a priority area and in recognition of
the export potential the Government would announce “Northwest Export Policy”. However,
the Policy may be amended as and when needed within its period of validity.
5.4.4. Northwest Export Promotion Council
A Northwest Export Promotion Council would be set up in the Directorate of
Industries,
with the participation of Commodity Boards, Export Promotion Bureau, Chambers of
Commerce and Industry, Land Port and EPZ in order to provide a forum for exchange of
views, information sharing and removing hindrances and obstacles faced by exporters. This
council will take care of problems of land ports and coordinate with all other agencies related
to this so that smooth trade through northwest land ports with neighbouring countries could
be performed without any hurdles.
Northwest Export Promotion Council would like to introduce award for exporters for their
excellence in exports, viz., Best Exporter Award, Award for Quality and Best Exporter.
Member of Parliaments (MPs) can play an effective role in this regard.
5.4.4.1. Procedural Simplifications
Procedural formalities could be reduced for export transactions by way of faster processing
of export related documents by different agencies of the government, and speedy redressal of
exporters’ grievances etc. through the northwest Export Promotion Council.
5.4.4.2. Market Information Service
70
In order to obtain comprehensive and up-to-date information about international markets,
prices of inputs and outputs, foreign visits, trade fare, variety of products, etc. market
information service centre could be established so that prospective entrepreneurs and
industrialists feel encouraged. Further, the government must also provide cooperation to
collect information so that entrepreneurs and industrialists can easily visit foreign industrial
establishments, participate in the foreign trade fare.
5.4.5. Physical Infrastructure in Land Ports
Improvement of physical infrastructure in the land ports in northwest districts is very
important for export-import transaction through these ports. This could be done through
interaction with the concerned ministries of the government and other related agencies.
Emphasis will be given to the integrated development of the land ports at Bandarbandh,
Burimai, Birol and Hili with the emerging possibilities of trade with India, Nepal, Bhutan
and China.
5.4.6. Institute of Export Development and Management
We would like to suggest establishing an institute of export development and management,
which will offer courses on how export quality, quantity and diversification, can be enhanced
and exports can be management in a cost-effective way. The institute will also provide
research facilities for product development and packaging and delivery.
5.4.7. Industrial Growth Centres
Industrial growth centres could be set up in places where growth potential exists. Export
units would be given preference in allotment of land in these growth centres.
5.4.8. Warehousing and Container Facilities and Air Cargo Facilities
Warehousing and Container Facilities and Air Cargo Facilities could be properly improved
so that there are no difficulties in cargo storage, customs clearance and container availability
at these locations.
71
5.4.9. Identification of Export Items
Potential specific export items could be identified for special focus based on an analysis of
the import baskets of major importing countries of the world and possibilities of exports to
the neighbouring countries. Identified potential items can be grouped into subsectors, like,
agro-based industries; Food processing industries, Leather and Leather Products; Gems &
Jewellery; Garments; Chemicals & Plastics etc.
5.4.10. Special Economic Zone and Agro-Economics Zone
Based on subsectors above, the Council could suggest announcing a policy for setting up
Special Economic Zones and Agro-Economic Zones as a part of the EXIM Policy. Policy
could be also taken to convert UEPZ into an Special Economic Zone (SEZ).
5.5. Conclusion
As and when all the four land ports will be fully operated, regional and international trade
will increase between Bangladesh, India, Nepal and Bhutan. This will generate employment
and income of the people of Bangladesh and help alleviate poverty. Moreover, if ports are
developed, growth will be higher to the national economy. Concerted efforts from all
quarters can play a very significant role.
The northwest Bangladesh has a large scope for exports particularly in view of its
geographical and locational advantages and good connectivity with India, Nepal, Bhutan and
China. This region has a large and diversified industrial base producing a number of
commodities those can be converted into exportable items.
It has achieved a high degree of growth in agriculture creating a potential for export of agrobased products, in recognition of which the government may declare Agri-Export Processing
Zones.
6. Problems and Prospects of Industrial Growth in Northwest Districts –
An Analysis based on Survey
6.1. Introduction
Bangladesh is an agrarian country and hence its economy is mainly based on agriculture. Per capita cultivable
land is decreasing because of population growth. Contribution of industrial sector to national economy is
increasing. In order to obtain sustainability in development and economic growth, industrialisation is
72
indispensable. Both agricultural and industrial improvement together could bring economic development, create
employment, generate income and reduce poverty in northwest Bangladesh. In order to survive as a nation, and
to prosper in the 21st century, Bangladesh will have to shift from an agrarian economy to an industrial
economy. Consequently, the power generation will have to increase drastically to achieve that goal.
Industrialization is a process of social and economic change whereby a human society is transformed from a
pre-industrial (an economy where the amount of capital accumulated is low) to an industrial state (see Preindustrial society). This social and economic change is closely intertwined with technological innovation,
particularly the development of large-scale energy production and metallurgy. Industrialization is also related to
some form of philosophical change, or to a different attitude in the perception of nature, though whether these
philosophical changes are caused by industrialization or vice-versa is subject to debate.
Northwest region of Bangladesh possesses few large-scale industries and their contribution to creation of
employment, generation of income, improvement of socioeconomic condition of the people is not significant as
is seen in Section 2. This region produces a lot of agricultural products, which could be used for industrial
production. No effective steps had been taken to utilize primary agricultural products and available human
capital either by the private sector or the public sector.
A link between agriculture and industry could flourish a strong industrial base that could bring overall economic
growth and development with improvement of quality of life. Without industrial growth the manpower could
not be utilized, and the unemployment problem could not be eliminated. This region produces rice, sugarcane,
tea, jute, cotton tobacco, spice, ginger, garlic, onion, potato, chilly and turmeric as agricultural products, and
mango, banana, water-melon and various types of fruits. With appropriate policy initiatives those products
could be brought in utilization in industrial production.
Industrialization starts with basic industries and mining. Infrastructural development, essential consumer goods
industries have to be established simultaneously in order to have fair industrial development in a region
(Shrivastava 1998). Labour quality and quantity, transport and communication, site and premises, government
aid, environmental factors are general factors that affect industrialisation in a region (Glasson, 1974). Presence
of basic industries in a region is important to attract other large, medium and small industries (Field and
MacGeorge, 1992).
Literature documents that lack of capital, lack of technology, lack of energy, political clash and corruption, lack
of planning, dependence on imported raw materials, lack of development of backward linkage industries,
inadequate infrastructure and supported services, lack of capacity building, weak and inadequate government
apparatus are major causes of industrial backwardness of Bangladesh in general and northwest in particular.
73
The objective of this section is to discuss problems and constraints for development of
industrialisation in northwest district and identify possible industries to be established with
some policy recommendations and implications.
This section is organized as follows. Subsection 2 give some useful definitions used;
Subsection 3 gives a brief idea about questionnaire design and data collection; Subsection 4
talks about industrial polices towards industrialization; Subsection 5 describes components
associated with industrialization; Section 6 give an to problems of industries in this region;
Subsection 7 prospects of industrialization; and Subsection 8 concludes the section.
6.2. Definitions
6.2.1. Industrialization
Industrialisation is a process of social and economic change whereby a human group is
transformed from a pre-industrial society (an economy where the amount of capital
accumulated per capita is low) to an industrial one (a fully developed capitalist economy). It
is a part of wider modernisation process, where this social and economic change is closely
related with technological innovation, particularly the development of large-scale energy and
metallurgy production. The lack of a large industry sector is widely seen as a major handicap
in a country's economy, pushing many governments to encourage or enforce industrialisation
through artificial means. The world's industrialisation starts with the Industrial Revolution in
the 18th century in northwest England.
6.2.2. Capital Intensity
Capital intensity is the term in economics for the amount of fixed or real capital present in relation to other
factors of production, especially labor. Since the use of tools and machinery makes labor more effective, rising
capital intensity (or "capital deepening") pushes up the productivity of labor, so a society that is more capital
intensive tends to have a higher standard of living over the long run than one with low capital intensity. The
degree of capital intensity can be measure in nominal terms. It is simply the ratio of the total money value of
capital equipment to the total amount of labor hired.
6.2.3. Labor Intensity
Labor intensity is the relative proportion of labor (compared to capital) used in a process. The term labor
intensive can be used when proposing the amount of work that is assigned to each worker/employee (labor),
74
emphasizing on the skill involved in the respective line of work. By the labor-intensive technology or low
capital-output ratio criterion indicates that investment criterion should be chosen which utilizes the human
power optimally. If labor-intensive technology is developed on widespread pattern, the urban centers develop.
Under the labor-intensive technology the capital consumption, waste and depreciation rates is low.
6.2.4. Primary, Secondary and Tertiary Sector
Joint development of primary, secondary and tertiary indicates the level of development in a region. Primary
sector refers to the agricultural sector; secondary sector the industrial sector and tertiary sector the business and
service sector. Simultaneous improvement of these three sectors can ensure employment, income and welfare of
the people.
6.3. Questionnaire Preparation and Data Collection
For collecting primary data questionnaire preparation is an important. At first, we prepare a draft questionnaire.
According to the objectives of this research, the questionnaire focuses on the following issues:
(1) The questionnaire highlights the industrial activity.
(2) It picks up problems of industries.
(3) It is designed in such way that it can pick up prospects of industrialization.
We apply purposive sampling technique to gather information. We collect information from each district of the
northwest. Primary and secondary source are used to gather data.
6.4. Industrial Policy towards Industrialisation in the Northwest
An evaluation of industrial policies reveal that Industrial policy of 1973 – 1991 does not adopt any policy
towards industrialisation in northwest Bangladesh. The policy of 1999 first takes initiatives to develop the
country on regional basis, but it does not have any clear indication of developing infrastructures which are
preconditions for economic development (MoF, Various industrial policies).
This policy selects 16 sectors, which are to be specially emphasized. These are agro-based industries, freezing
food, jute related products, computer software and information, electronics, jewelry, lather, oil and gas,
garments, tourism, gifts goods and artificial flower and others. In order to reduce regional imbalance, this policy
provides special incentives like 7 year tax remission if industries are set up in this region. Unfortunately, no
fruitful responses were observed.
6.5. Components associated with Industrialization
Main components, which facilitate industrialization, are, among other, infrastructure, energy and trade policies.
Let us now talk about these.
6.5.1. Infrastructure
75
Infrastructural deficiencies are primary deterrent to industrialisation and economic growth. Long years of underinvestment has taken a toll and resulted in poor access to basic infrastructure for this large part of Bangladesh’s
population. Since Bangladesh opened its gas and power sectors for private investment, there has been a strong
response from international energy developers. Bangladesh is now in the process of conducting international
procurement for large power plants and gas development concessions. Interest in water, transportation, and
telecommunications projects is also growing and investment opportunities in the sectors are likely to develop
faster in open economic policy.
6.5.2. Energy
Sources of energy for industries are mainly electricity and gas. Unfortunately, we do not have gas supply in
northwest Bangladesh. This hinders establishment of certain industries. This area receives energy from
electricity. Gas can be used in producing electricity and fertilizer etc. Lack of proper, mature and effective
infrastructural development creates constraints to industrialisation.
6.5.3 Trade Policies
Bangladesh has made significant progress in liberalizing its trade regime. Customs duty rates have been
compressed to a range of 0.0-40.0%. The 2.5% import permit fee is the only other protective instrument for
most imports (a trade neutral 15% value-added tax is also applied). The import permit system is now automatic.
The cumbersome procedure for opening letters of credit has been simplified.
Customs duties are levied on all imports except raw cotton, textile machinery, certain machinery used in
irrigation and agriculture, animal feeds used by the poultry and dairy industries, and certain drugs and medical
equipment. Northwest Bangladesh should have special package of trade policy.
6.6. Problems of Industries
Sugar mill, Rice mill, Flour mill, saw mill, ice factory, oil mill, match factory, Bidi factory, cold storage, Soap
factory, Iron and Equipment factory, Biscuit factory, Milk processing factory, Handicraft are some of industries
in operation in northwest districts. Most of medium and small-scale industries are agro-based industries. Those
industries create lot of employment. To find problems of those industries, explore prospects and provide policy
suggestions, specialized research on this issue is required to be conducted.
An analysis based on questionnaire survey and interview reveals the following problems, which are more or less
responsible for low industrial development.
6.6.1. Energy Crisis
Energy is the main problem that inhibits the industrial growth. Industries in Dhaka and Chittagong use two
sources of energy - gas and electricity - where industries in these districts use electricity only. Electricity
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dependent industries incur higher production cost and hence price of these product go up. As a result, electricity
dependent industries do not become able to contest with industries in Dhaka and Chittagong. Crises of
electricity supply make people find alternative sources of power, which increases cost, and discourage people to
invest. Irregular flow of electricity is also a problem of those industries. Industries requiring cooling facility
suffer from irregular flow of electricity. Availability of spare parts and high prices also increase costs.
In sum, supply of gas in Dhaka and Chittagong has made production cost low and lack of its supply made
products expensive in northwest region. Thus northwest region is comparatively not in a good position.
6.6.2. Lack of Infrastructure
Lack of infrastructure is another problem, which inhibits the industrial growth of the region.
6.6.3. Lack of Basic Industries
Industrial growth of an area depends on the basic industry. A basic industry performs the major role to
industrial development. A basic industry influences the growth of non-basic industry within its buffer area.
Basic industry creates demand for various types of products to meet the demand various types of non-basic
industries setup.
6.6.4. Lack of Government Attention
Traditionally this region lacks government attention. Lack of government attention is one of the major problems
of industrial growth of the area. For example, appropriate government attention could bring natural gas in this
region that could provide basis of industrialization in this region.
6.6.5. Lack of Capital
Industrial development depends on the capital. To setup an industry needs lot of capital support. Most of the
rich people live in Dhaka and invest there.
6.6.6. Lack of Forward and Backward Linkage Industries
Forward and backward linkage among the industries may ensure the industrialization of an area. If forward and
backward linkage is established among the industries of an area, then product of an industry use as a raw
materials of another industry. In this way one industry may be sustained by others. After processing of each
stage value adds with products. This area lacks proper forward and backward linkages of industries.
6.6.7. Low Return of Working Capital
When any entrepreneur invests in industrial sector then he requires waiting for return. But if he invests in trade
or business then the return rate is fast than that of industry. In the term of economics the gestation period is long
in industries than in trade and business. These problems create pressure on industrialists specially those who
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established industries taking loan from bank or financial institutions. Sometimes they need to pay loan
installment before starting production. For that the entrepreneurs do not prefer investing in industrial sector.
6.6.8. Risk
Risk is a problem of industrialisation. Industrial investment is a risky investment compared to trade or stock
business. People of middle income prefer trade and stock business to industrial investment. Failure of market
may collapse industry. Potential entrepreneurs do not feel encouraged to invest.
6.6.9. Lack of Sufficient Storage Facility
Industries based on wheat and maize require storage facilities at peak season when storage of commodities can
be done. They are not able to continue production over the year. If the storage capacity is ensured then
industries could be run over the year.
6.6.10. Transportation Problem
Local road network system has not yet developed properly. Collection of inputs from rural area and distribution
of final products to local markets become difficult. Specially small and cottage industries located at thana and
village levels faces transportation problem.
6.6.11. Other Problems
Survey results show that the following problems also prohibit the process industrialisation and industrial
growth.
(1) Weak urban economy does not influence the industrial growth
(2) Lack of skill manpower
(3) Political clash
(4) Lack of knowledge of the entrepreneur
(5) Corruption process in the boarder area in imported goods
(6) Dependency on the natural production
(7) Corruption in production of the industries
(8) Difficult to contract with the foreign buyers
(9) Marketing problem
(10) Lack of government incentives
6.7. Prospects of Industrial Development and Growth – A Survey based Analysis
78
There is availability of natural resource that could be used in industrialization of this area. This could influence
future industrial growth if energy and other problem are eliminated. Various types probable industries that could
be established. Survey results suggest that there are opportunities to establish agro-based and food-processing
industries on high priority based on availability of raw material and human capital. Those are:
6.7.1. Agro-based Industries
Northwest districts produce lot of agricultural products. But no large-scale agro-based industry is located. As a
result, these agricultural products are sold without adding any value. Various types of agro-based industries like
Jam, Jelly, Automatic biscuits, Chips and other types of industries could be setup with existing industries
properly utilized.
6.7.2. Coal allied Industries
Fulbari and Boropukuria of Dinajpur possess coal mines. Power industry could be established using coal, which
will lead to the basis of industrialisation.
6.7.3. Cement Industry
Northwest possesses hard rock mine. At present, hard rock is imported from India. Thus possibilities of cement
industries are very bright along with other facilities from government. Process of urbanization leads to increase
in demand for cement. Establishment of cement industry will be able to meet domestic demand, and cement can
also be exported through land ports located in northwest.
6.7.4. Medicine Industry
Northwest districts also possess some medicinal products that could be used in medicine industry. There is
potential for establishing medicine industries with proper arrangements. Cheap labor could be used in these
industries with appropriate training.
6.7.5. Jute industry and Cotton Industry
Large amount of jute and cotton is produced in this region but no industry is located in the area. Jute and cotton
processing industries and cotton-allied industry along with backward linkage industries could be setup that will
create employment. Cotton and jute are also used as inputs in textile and garments industries.
6.7.6. Garments industry
Garments industry is labor-intensive industry and cheap labours are available in northwest. Living expenses in
this regioin is comparatively lower than those in Dhaka and Chittagong. Establishing garments industries in this
area would lead to generation of employment and income and provide a better life to the people in this area.
6.7.7. Other Industries
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Handicraft, soap factory, cloth industries, paper mill and various types of industries could be
setup. Availability of resources will support all types of industries.
6.7.8. Integrated industries (Sugar mill, paper mill and Distillery)
Sugar mills located in northwest can properly be utilized as integrated industry. Sugar mills produce sugar,
paper and distillery products. Sugarcane is used as inputs to produce sugar, husk used to produce paper,
chittagur to produce distillery products. Sufficient production of sugarcane and efficient use of sugar mills can
yield these joint products.
6.7.9. Trade with Neighbouring Countries
Northwest districts possess four land ports, which can be infrastructured for trade with neighbouring countries.
This region is flanked by neighbouring India, Nepal and Bhutan. If proper transit facilities are achieved from
India, trade between Bangladesh and Nepal and Bangladesh and Bhutan could be happened with existing trade
Bangladesh and India. Further, possibility of trade Bangladesh and China could be explored. This could lead to
establishment of trade-oriented industries through importing inputs and exporting outputs. Figure 7.1 shows
locations of neighbouring countries India, Nepal and Bhutan.
Figure 7.1: Map Showing Location of Neighbouring Countries
80
6.8. Conclusion
This section presents a survey-based analysis of problems of industrialization in northwest. It also identifies
sectors on which new industries could be established or existing industries could be improved to have benefit in
a socially and economically efficient manner. We conduct survey on identification of problems of
industrialization in each district. Most of the respondents suggest to establish agro-based and food processing
industries. Power crises and lack of government are observed to be two important problems of industrialization
in this region. Industrial development depends on some parameters, which help to enhance successful
industrialization. Parameters like, transportation efficiency, and efficiency in water and energy supply must be
improved substantially.
Every developed country has gone through a specific process of development. W.W. Rostow’s theory of
development has classified the process into five stages. Among the stages we are at the third stage, which is
called “Take-off” stage. In order to cross the stage and reach the next, mass level of industrialization is
important. Emphasis on the industrialization is not only important for employment creation but also for reaching
the fourth stage, which is called “Drive to Maturity”. Northwest region could be an industrial zone if
infrastructural conditions are improved and energy crisis is solved and investment would be strengthened by
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local and outer entrepreneurs. In this process this area would flourish as an industrial area. In order to get
balanced development, regional imbalance should be removed.
7. Potentials for Development and Expansion of Industries in Northwest
7.1. Introduction
Opportunities of productive investment in any area depend mainly on availability of
resources and pattern of demand. Compatible with prevailing demand and supply conditions
is imperative for investments in industries in order to be financially viable. This section
presents a profile of resource availability, demand pattern and investment opportunities in the
northwest Bangladesh consisting of Panchagarh, Thakurgaon, Dinajpur, Nilphamari,
Rangpur, Kurigram, Lalmonirhat, and Gaibandha. We use data on the pattern of resource
availability mainly from secondary sources.
This section follows the structure below. Subsection 2 discusses resources and factor
endowments in northwest Bangladesh in particular and Bangladesh in general; Subsection 3
talks about investment potentials of large, medium, small and cottage industries in northwest
Bangladesh; Subsections 4 and 6 discuss demand pattern and nature of demand and need for
differentiated products respectively and Subsection 7 concludes the section.
7.2. Resources and Factor Endowments
7.2.1. Availability of Resources
Being the term resource very broad, depending on the purpose of analysis it can be defined in
different ways. For industrialisation in general, the availability of physical and institutional
infrastructures, factors of production particularly labour, capital and entrepreneurship and
intermediate inputs, that is, unprocessed and semi-processed materials are relevant and
important as determinants of investment opportunities. Although different scale of industries,
viz., large scale industrial establishments, medium scale establishments, small and cottage
industries require different levels of resources endowments. The northwest has UEPZ, coal
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mine, hard rock resources and agro-based cash crops, food crops, vegetables and spices. This
area possesses substantial amount of livestock and poultry resources as well.
4.2.2. Physical Infrastructure
Among physical infrastructure, transportation network is the most important. Resource
mobility and access of producers and consumers to various markets depend on this
infrastructure. In northwest districts in Bangladesh, the transportation infrastructure is not yet
well developed. It is hard to believe that these districts are not directly connected by rail,
airport to the Chittagong and Mongla seaports. In northwest districts, transport systems are
fragmentary and districts do not have good network of road and rail connections. Poor
infrastructure of road and rail impedes speed and hence increases the cost of transportation in
terms of time as well as money. This area has infrastructure like, airport, EPZ and land ports.
Implementation of effective interaction between airports, EPZ and land ports can lead to
facilitation of export-oriented industrialisation.
7.2.3. Institutions
Local level institutions, both government and non-government are important to facilitate
need identification, local level planning and implementation of development projects. Lack
of these can lead to failure of policies and project of rural industrial development. This is as
much true for policies adopted to develop industries as it is true for agriculture. Viable local
institutions can act as vehicles for introducing new physical, social technologies, people
participation and training, resources mobilization, planning and goal setting and facilitating
provisions of services. Field visits and discussion with local people find out that this region
possesses colleges, university, renowned NGOs, youth development and training centre
although there are no effective specialized government or non-government training
institutions for industries in the northwest districts to serve above purposes.
7.2.4 . Labour Resources
For expansion of all types of industries - large, medium and small and cottage industries –
physical capital plays a critical role among the factors of production along with tools and
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equipments to industrialisation and development. Achievement of desired growth of
industries would require labour along with capital. It is therefore important to assess the
magnitude of surplus labour that exists in an area for a planned expansion of industrial
activities. Reliable and latest data are yet to be available for private research. Not much can
be inferred from data except that the extent of participation in economic activities.
Data on pattern of labour force is available from Agricultural Census 1977, which classifies
labour occupation into agriculture, nonagriculture and nongainfully employed. All activities
related to cultivation such as planning farm work, supervising the agricultural workers,
keeping livestock records, rearing and feeding of poultry birds etc. are classified as
‘agriculture’. The category ‘nonagriculture’ includes service, business etc. and the
‘nongainful’ category includes students, housewives, etc. Agriculture employs the largest
proportion of labor force.
Survey results indicate that substantial amount of surplus human resources exists in the
northwest districts with some seasonal variations. Even during the Kharif season, there are
some disguised labour unemployment. However, during the rabi season, a surplus larger than
the national average is available in these districts. Industrial production activities are not
likely to face any labour shortage problem in a quantitative sense in any of these districts.
7.2.5. Natural Resources Endowments
7.2.5.1. Fulbari and Boropukuria Coal Mine project 1
Fulbari and Boropukuria Coal Mine projects are located in the northwest districts. These
mine industries can provide a basis for energy source. Energy is the main power of
industrialisation and agricultural development. The Boropukuria Coal Mine starts its journey
in 1994. With many ups and downs, the commercial production of coal starts after twelve
years in September 2005. Target of exploiting coal per year is ten lakh tones.
1
The five-year project implementation contract was signed with the Chinese contract institution,
China National Machinery Import and Export Corporation in 1994. The project implementation cost
was Tk. 1600 crores against a fixed budget of Tk. 900 crores. Mentionable that there happened an
accident on September 23, 2006 that stopped production of this mine because 80 lakh dollars valued
machinery was under clay of the mine.
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The two-unit Boropukuria power station (electricity generating center) of 250 megawatt is
established with a view that the coal of the Boropukuria Coal Mine would be used in this
station as fuel. The daily requirement of coal to run these units is more than two thousands
tones. Unfortunately, from the one of the two wells now gives only one thousand to one
thousand and three hundreds coal every day. According to the contract, Bangladesh would
take the responsibility of production and administration of the mine after three months of
successful commercial production of coal. For that, there is a provision of training the
manpower. But because of the inability of producing trained manpower a contractor is
appointed for production, management and maintenance.
This research would find that efficient management and proper utilization of this resource
with trained human capital could lead to generation of infrastructures that could help flourish
large, medium, small and cottage industries in this region. This would also attract domestic
and foreign investors to build industries.
7.2.6. Intermediate Inputs
Successfulness of any industrialisation programme depends on availability of raw material.
Natural resources endowments and production structure of an economy determine the pattern
of raw material availability. Agriculture is the major form of production activity in all the
northwest districts. Paddy dominates within agricultural production. Other crops such wheat,
jute, cotton, tobacco, sugarcane, pulses, fruits etc. are important as potential source of supply
of raw materials for crop based rural industries.
Permanent crops, livestock and fisheries apart from agricultural crops, also constitute
important source of raw materials. There are few rural tanning industries in Dinajpur and
Rangpur. Capacity utilization of these is found to be not satisfactory. Moreover available raw
materials from livestock are not likely to be fully utilized. Establishment of new industrial
units and development and expansion of existing units should not therefore face any raw
material constraints.
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Fuller utilization of beels, hoars, ponds, rivers and canals would be ensured to make available
fish based raw materials that would create employment opportunity and help alleviate
poverty. Policies as well as strong and efficient local institutions are important in this regard.
7.2.7. Storage Facilities
Storage facilities in this region are mentionable. There are 51 cold storages located in
northwest districts among 336 cold storages in Bangladesh. Average number of cold storage
is about 6, which is larger than the national average of 5 cold storages. Table 7.1 shows the
number of cold storages and their capacity.
Table 7.1: Number of Cold Storage and their Capacity, 2003-04
Number
Capacity (Metric tons)
Panchagarh
1
5,000
Thakurgaon
6
22,000
Dinajpur
6
37,080
Nilphamari
8
35,300
Rangpur
4
30,600
Kurigram
23
1,72,055
Lalmonirhat
2
19,000
Gaibandha
1
4,500
51
3,25,535
6.375
40,691.88
Bangladesh
336
18,58,965
Average
5.25
29,046.33
Total
Northwest
Source: Bangladesh Bureau of Statistics, 2005, Compendium of Environmental Statistics of
Bangladesh, 2005.
Capacity of cold storages in the northwest region is on an average about 40692 metric tones,
national average of cold storages is about 29046 metric tones. It shows that capacity of
storages in northwest is greater than national storages on an average. These facilities can be
expanded and utilized to industrialisation in this low-industrially developed region in
Bangladesh.
7.3. Investment Opportunities
86
7.3.1. Large and Medium Industries
7.3.1.1. Agro-based Food processing industry
Northwest in particular is mainly an agrarian region. Besides, food grains like rice, wheat and
barley, and cash crops like sugarcane, cotton, tobacco and jute, this region produce various
kinds of fruits like mango, pineapple, guava, jack-fruits, banana, coconut, papaya, and
vegetables like potato, tomato and beans. This reveals that food-processing industry has great
prospects and potential. Unfortunately, this industry has not yet developed sufficiently,
perhaps due to lack of technology, training and investment fund. Food processing industries
in this region are mainly rice husking mills, flour mills, dairy farms, poultry, bakery and
confectionery, sweet making, cheese making and handmade pickles industry. These
industries produce goods mainly for the local markets. Agro-based products with high levels
and specialized training that can occupy domestic and international markets are not yet
produced. Investment interests in this line are highly encouraged.
Northwest districts have supply of raw materials for the agro-based industry. Production
fruits and vegetable has increased significantly in recent years. Subject to regular and
specialized training programs in creating skilled manpower for this industry by government
and non-government institutions, we suggest to invest in industries to canned juice, dairy and
poultry to occupy foreign market and attract domestic affluent customers. It appears that
there is a substantial demand supply gap in the agro-based food products.
Moreover, this region has basic attributes for agro-based industries, namely, rich alluvial soil,
year-round frost-free environment, adequate water supply and abundance of cheap labour.
Cultivation of vegetables, spices and tropical fruits can supply raw materials to local agroprocessing industries for both domestic and export markets.
Sugarcane is the input of sugar industry. Exiting sugar industries not fully utilized in a profitmaximizing way. Survey results indicate that utilization of existing industries and
establishment of new sugar industries can not face input constraints. Jute products can be
used to set up industries to produce caps, carpet, bags etc. in EPZ and outside EPZ. Export-
87
oriented cigarette industries can be built in and Textile industries could be established to
fulfill local and foreign demand.
Improvement of quality and expansion of production of these industries can be implemented
through progressive agricultural practices and extension services, improved marketing
technique and modern processing technology, facilities and training.
7.3.1.2. Light Engineering Industries
Light industries in Bangladesh produce a multitude of labour intensive goods including toys,
consumer items, small tools and paper products for the domestic market. Further
development for these industries offers various investment opportunities. Export-oriented
products in light industries have gained momentum in the past few years. Entrepreneurs from
Hong Kong, Japan and Korea are taking advantage of Bangladesh's cheap and easily
trainable labour and its infrastructure facilities to manufacture products for the export market.
Given cheap labour resources, there is great potential of setting up light engineering
industries.
7.3.1.3. Machinery Parts
A growing and increasingly affluent middle class creates demand for consumer durables.
There are some industries engaged in simple electronic goods. Export-oriented machinery
parts in light industries can be set up in this region.
7.3.1.4. Ceramic Products
Ceramic products includes, among others, tableware, sanitaryware, insulator. Tableware
industry is labor-intensive and even after spending billions of dollars on automation,
developed countries could not reduce the number of workforce according to their
expectations. As a result, the cost of production will always remain extremely high in
developed countries and the premium brands are only surviving because they are charging
huge price to the consumers for their brand equity (BoI, 2007).
88
Northwest Bangladesh, being a gas-rich and low-labor-cost economy, could offer to be a
strategic partner in production and supply of ceramic products. Investment interests in this
sector are strongly welcomed.
Figure 7.1 shows the growth of export earnings from ceramic tableware exports. With
urbanization demand for sanitarywares and insulators are increasing in domestic and other
foreign markets. Northwest is a potential place to invest and produce these goods.
Figure 7.1: Growth and projection of Ceramic Tableware Exports from Bangladesh 1995-96 to 2002-2003 (in million US$)
Source: Board of Investment (November, 2007), Government of the People’s Republic of
Bangladesh. Web: www.boibd.org.
7.3.1.5. Leather Industry
Leather Industry includes finished leather and leather goods. The labor-intensive leather
industry is well suited to northwest Bangladesh having cheap and abundant labor.
Bangladesh has a domestic supply of good quality raw material, as hides and skins are byproducts of large livestock industry. Adequate government support in the form of tax
holidays, duty free imports of raw materials and machinery for export-oriented leather
market will lead to improvement of this industry. The industry lacks domestic technology
and expertise and local support industries such as chemicals are still under-developed.
Domestic technology and expertise and local support industries such as chemicals must be
improved properly in order to run this labour-intensive industry efficiently.
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The leather includes some ready-made garments and footwear. Footwear is more important
in terms of value addition. This is the fast growing sector for leather products.. Presently
Bangladesh produces between 2 and 3 percent of the world's leather market. Most of the
livestock base for this production is domestic which is estimated as comprising 1.8 percent of
the world's cattle stock and 3.7 percent of the goat stock. The hides and skins (average annual
output is 150 million sq.ft.) have a good international reputation. Foreign direct investment
(FDI) in this sector along with the production of tanning chemicals appears to be highly
rewarding.
Northwest Bangladesh could be a potential off shore location for leather and leather products
manufacturing with low cost but quality products, having the basic raw materials for leather
goods as well as for the production of leather shoe, a large pool of low cost but trainable
labour force together with tariff concession facility to major importing countries.
Northwest Leather Zone could be set up relocating existing industry sites to an wellorganized place. New FDI inflow is highly encouraged and foreign investors are welcome to
have the opportunity.
7.3.1.6. Natural Gas-based Industries
Electricity, fertilizer, and petro-chemicals can be produced using natural gas. Bangladesh has
a substantial amount of gas reserve of about 20 trillion cubic feet (BoI, 2007). There is a
huge demand for fertilizer in northwest Bangladesh in particular and Bangladesh in general
as the agriculture is the principal sector of the economy.
The private sector power generation policy is announced in 1996 under which private power
companies are exempt from income tax for 15 years. Several barge-mounted power plants are
in operation. But an extensive demand gap for electricity is crucial. Opportunities exist in
developing new plants (barge-mounted and other, large, small and mini), constructing
transmission and distribution system, rehabilitating or upgrading existing plants and
supplying a variety of support services. Northwest Bangladesh can be potential place to
invest in these fertilizer, electricity and petro-chemical industries if natural gas can be made
available.
7.3.1.7. Readymade Garmants and Textile Products
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Readymade garments and Textile industry are fastest growing industry in Bangladesh
accounting for more than 75% of total exports. Bangladesh is best placed for garments and
textiles because of cheap labor and trade status with the EU. Government incentives for the
spinning and weaving industries include a 15% cash subsidy of the fabric cost to exporters
sourcing fabrics locally. There is a huge fabric demand-supply gap in the RMG industry,
which is being met by imports. Thus the potential for backward linkage industry is enormous.
The phenomenal growth in RMG is experienced in the last decade. With about 2,600
factories and a workforce of 1.4 million, RMG jointly with knitwear accounted for more than
70% of total investments in the manufacturing sector during the first half of the 1990's.
Figure 7.2 exhibits the growth trend of readymade garments industry in Bangladesh.
Figure 7.2: Growth of RMG Exports from Bangladesh (1980-81 to 1999-2000)
In million US$
Source: Board of Investment (November, 2007), Government of the People’s Republic of
Bangladesh. Web: www.boibd.org.
It is evident from Figure 7.2 that starting from 1980-81 its growth performance is
encouraging. Therefore we would strongly suggest that some rules and regulations could be
made regarding investment in northwest districts in that entrepreneurs who have a substantial
amount of RMG share in Bangladesh must invest in this poverty-ridden and monga-ridden
areas, in particular in UEPZ.
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7.3.2. Small and Cottage Industries
Resource availability and demand patter in this region conclude that opportunities for
investment in small and cottage industries do exist in all the districts in varying degrees.
Prospect of small and cottage industries in processing different primary materials produced in
these districts are substantive in view of unemployed labour, particularly during the off-peak
seasons. Fisheries resources management and processing of raw materials and wastages from
livestock and permanent crops can offer opportunities in investing small and cottage
industries. Agricultural raw materials and their wastage processing in small and cottage
industries can provide opportunity in employment and income generation, given the
comparatively low land man ratio in small and cottage industries. Opportunities perceived by
Local people for Small and Cottage Industries are given in Table 7.1.
Table 7.1: Potential Investment Opportunities of Small and Cottage Industries
Perceived by Local People
Panchagarh
Thakurgaon
and
Dinajpur
Supply based Potentials
Demand based Potentials
Grain and paddy processing, oil
milling, poultry, duckery, cattle
rising, bakery, sweetmeats and
confectionary, handloom, weaving
and dyeing, jute products, fish net
making, bamboo, cane, grass and
reed products, bidi making.
Bakery and sweetmeats, rice
processing, mustard oil, cheera,
muri, etc., cloth, soap, wood
products,
plough
threshers,
spray, spade, power pumps, deep
tube wells, bicycle, motor cycle,
radio, rickshaw, TV and watch
repairing services.
Cloth, soap, bidi, rice products,
oil, bakery, hosiery, pottery,
cartwheel,
plough,
spade,
carpentary, and wood products,
cycle repairing, radio repairing,
motor
cycle
repairing,
Electronics Products
Bamboo, cane, grass and reed
Nilphamari products, bidi, handloom, weaving
Rangpur
and dyeing, jute rope and twine, fish
Kurigram
net making, bakery, sweetmeat,
Lalmonirhat confectionery, grain and paddy
and
processing, oil milling, poultry,
Gaibandha
duckery
and
cattle
rising,
carpentering, wood products.
7.4. Demand Pattern and Nature of Demand for Industrial Products
92
Expansions of industries, apart from the supply of raw materials, depend on the demand
pattern of industrial products. The lacks of demand sometimes act as a major constraint to
development and expansion of industries.
Products of large, medium, small and cottage industries comprise of a large variety of items
whose production needs various levels of skill. In order to show the type of products and
their market ramification, skill-based classification of these products is useful. Products can
be classified into four categories in terms of skill:
a) Commodities produced with primary skill by family labour without any formal
training;
b) Commodities produced with secondary skill which is obtained through family or
general training;
c) Commodities produced with higher level of skill which is acquired through
formal general or specialized training; and
d) Commodities produced with specialized skill, which is obtained through
specialized training.
In general, goods produced with primary skill are demanded and sold in local markets.
Secondary skill based commodities are sold in markets of urban towns and metropolitan
cities. Products of high levels of skill and specialized skill are exported and demanded by
affluent people. All these four categories products have their demand locally and
internationally.
7.5 The Need for Differentiated Strategies
Production and marketing of industry utility products serving rural local markets do not
require much skill, as these do not face any real competition from modern industries and
imports. These goods are slow moving items sold to individual consumers. These include
articles made from grasses, leaves, reeds and fibres like mates, baskets, boxes, bags etc. The
handicraft commodities, which are also utilitarian in nature, however cater primarily to the
urban markets. These include cane, bamboo, willow products, jamdani, bell and brass works,
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jute products, products of sericulture and some items of coir and pottery products. Skill
requirement for both production and marketing of these products may be substantial.
Quality and design tend to become very important for the type of handicraft products
mentioned above because they command wide and expanding markets where they have to
compete effectively with products of large firms. The artistic commodities of high unit value
are produced mainly for foreign markets. Their production requires sophisticated skill.
Marketing is thus complicated because quality, technology, design, shape and finish of the
product assume great importance. However, these products are generally not in direct
competition with products of large industrial units. The product in this category are ethnic
crafts of items like Nakshi kantha, Sitalpati, Satranjee, handwoven carpets, wall hanging
made of jute or coir, glazed pottery and leather products.
It may also be recalled that there exist some production clusters specializing in particular
products in Rangpur and Dinajpur districts. Satranjees and Jute bags are produced in Rangpur
and Dinajpur. This type of production concentration facilitates input and service delivery,
supervision of quality, design and cost and helps in the marketing of specialized products.
7.6. Conclusions
We can therefore conclude that different strategies are required for promotion and marketing
of different products depending on the skill intensity, product type and the characteristics of
buyers. Failure to make this distinction and adoption of a uniform strategy may lead to the
neglect of market for some commodities. It is not surprising in Bangladesh to find a situation
where the government emporium, export houses and traders put too much emphasis on the
marketing of high value artistic commodities and neglect to push traditional goods of
utilitarian character in the market.
Northwest Bangladesh possesses most of the resources and inputs for industrialisation with
some constraints. Given resources availability and government patronization and necessary
steps there are opportunities for setting up large, medium, small and cottage industries.
8. Summary, Conclusions and Recommendations
94
8.1. Introduction
Northwest Bangladesh, most neglected and deprived region of the country, lacks
industrialization. This region is characterized by agrarian economy, poverty and monga with
surplus labour force and it has a variety of agricultural cash, food crops, vegetables and
spices. The region also possesses four coal mines and three hard rock mines along with EPZ
and land ports. This research discusses status and performances of industrial sectors, role of
EPZ and land ports to industrialization, and identifies problems of industrialisation and
prospects for development. The objective of this section is to present conclusion and advance
some recommendations for industrialisation and industrial development. Development
experience indicates that industrialization must begin from developing and strengthening an
industrial base compatible to domestic physical and human resource endowments, physical
infrastructure, domestic and foreign markets and foreign exchange position. This section
follows this organisation. Subsection 2 gives summary and conclusion; and Subsection 3
gives some suggestion and recommendation.
8.2. Summary and Conclusions
8.2.1. Status and Performance of Industries, and Constraints
Number of industrial establishments and persons employed are on average lower in
northwest districts than national averages. Economic performance of existing industries is
measured in terms of gross output and value added. Results show that average values of gross
output and value added are lower than national values. Analysis of value added and
efficiency performance excludes demand and prices of other outputs and inputs and many
other structural and institutional constraints that may affect performance of industries.
Availability of raw materials in time and in right quantity, high price of raw material,
shortage of working capital, machinery and tools, lack of organized markets, competition
from imported and mill made goods and low selling prices relative to costs are some of
factors that constraint performance of industries. Among these, rising input prices and
shortage of working capital appear to be the major constraint on capacity utilization and
performance. Marketing of products of small and cottage industries and price support system
95
on the input and output sides and credit facilities must be included in any programs for
development of industries. Moreover, proper policies could be taken to upgrade skills of
labour and technology used in production.
8.2.2. Resource Availability and Demand Pattern
Analysis of existing resource endowments and production pattern in the districts revealed as
expected that raw materials for food processing industries in the districts are locally
available. There exists considerable potential of utilizing agricultural and livestock waste
materials if efficient organizational mechanisms can be devised for their collection, storage
and distribution. The northwest has the particular advantage of a relatively developed
transport and communication infrastructure linking it closely with the capital city of Dhaka
and port city of Chittagong. Labour force in all the districts appear to be substantially
underutilized indicating that labour availability from a quantitative point of view may not be
a constraint on expansion of industries. However, availability of skilled labour force in these
districts in particular may be a limiting factor on expansion of skill intensive products. These
two districts however have potentials for improving the supply and quality of livestock.
Demand conditions appear to be particularly favourable for industrial commodities. There
exist considerable demand for fertilizer and textile products, which presently are being met
by suppliers form outside in all the districts. Raw materials for this product group is not fully
available locally and there may be short of supply of skilled workers. Chemical products also
seem to have some prospects though to a limited extent. Importance of these products in the
consumption basket of local people will perhaps increase with increase in income levels.
Although existing demand pattern appears to be particularly conducive for consumption
goods, capital goods like agricultural implements may also find a ready market given the
dominance of agriculture in all districts. These sort of items need to be emphasized much
more than what has traditionally been done because of their forward linkage effects which
would feedback upon industries in a positive manner by increasing agricultural productivity
and income which in turn would increase raw materials supply as well as demand for
industry products. However, lack of knowledge about alternative product types that are
functionally more efficient than the existing ones and are within the means of small farms in
96
terms of price and lack of access to technical and financial facilities for producing items that
are being used now may sap initiatives for setting up industries of this kind.
8.2.3. Entrepreneurship
Available literature on the nature and determinants of entrepreneurship indicate that both
demand and supply factors are important. On the demand side, it appears that special policy
interventions are necessary to insulate entrepreneurs in rural industries from the inhibitive
effects of the product, factor market imperfections, and ensure a favourable cost-price
structure as economic incentive for entrepreneurial growth. On the supply side, it is
necessary to identify specific groups of individuals on the basis of particular sociodemographic, psycho-cultural and economic characteristics determining entrepreneurship
potential. The literature provides some evidence with respect to the possibility that
entrepreneurship potential is higher in people who are relatively young male with moderate
education and have trading/business experience and access to family labour. Additional
weightage may be put on people who possess some, relatively scarce, resources such as small
amount of saving, membership in social institutions such as cooperatives and some technical,
administrative, financial and marketing capabilities.
Various efforts undertaken in Bangladesh in the past did not make any conscious attempt to
approach the task of entrepreneurship development systematically keeping in view the multidimensional nature of the problem. Some programmes emphasized only training, some on
credit while some others took a many sided and a relatively comprehensive approach failed
to identify correctly the target groups and make appropriate assessments of their needs.
Another problem has been management of institutions engaged in promoting rural
entrepreneurship.
What is therefore needed is a complete package consisting of training, information, financial,
technical, and administrative support and appropriate macro-economic policies to ensure the
survival and growth of entrepreneurship in large, medium, small and cottage industries.
8.2.4. Institutional Development
97
The role of institutional development is to be viewed mainly from the perspective of aiding
and accelerating the process of development by removing some of the structural inadequacies
of the subsector.
8.2.5. Supply of Materials
For all the districts there is need for improving productivity of the existing industries.
Industries, which are doing relatively, better can be expanded further. As pointed out these
industries in general need assistance in respect of constraints arising from both factor and
product markets. Regularity of supplies and prices of raw materials along with provision of
credit are identified as major problems on the supply side. Raw materials consumed by these
industries are mostly locally available (agro-based or natural resources like clay). Others
such as chemicals, weaving and fishnet making, meta works, cycles and radio repairing and
tailoring units, however, use materials procured from outside the locality. In supplying these
raw materials to industries middlemen extract significant margins which raises the cost of
these materials to the enterprises. Being weak in bargaining, final prices paid by the units are
usually higher than what they should be. In these circumstances, we recommend setting up of
some institutional arrangement to procure, store and supply essential raw materials to
selected industries in all the districts. Logistics, however, will pose to be as difficult tasks.
For raw materials procured from outside the locality storage facility needs to be arranged. In
this respect, facilities already developed by BRDP, BADC and food department may be
shared with suitable arrangements by entrepreneurs. Since the guiding principle in providing
logistics is regularity of supply with minimum cost of distribution other alternatives such as
utilizing the existing wholeselling and retailing outlets may also be examined for supplying
some of the materials to some of industries. Upazilla complexes developed as facilitating
centers for rural industries may be used to provide logistical support in respect of raw
materials for small and cottage industries specially. For locally available raw materials such
services need to be arranged at respective union levels where there are concentrations of
certain small and cottage industries like paddy and other food grain processing, oil seed
crushing, jute products, wood works and pottery. Once again the physical facilities that are
being developed by other agencies at union level may be shared by entrepreneurs. This of
98
course, raises an important issue on the changing role of active participation in procurement,
production and distribution related functions.
8.2.6. Organization Capacity
For growth and development of industries, users organization would receive delivery of
supplies and other services. They can act as contact point between public officials and their
member units for receiving inputs and output related assistances.
They can contribute to
improvement of technological base of industries along with upgradation of skill of workers
and quality of their products. On the supply side, besides raw material, supply of equipment
and spare parts, in particular, new ones has to be ensured by institutional arrangement.
8.2.7. Supply of Credits
Credit constraint is identified as a constraint for all sorts of industries. There are specialized
banks – Bangladesh Shilpa Bank to provide credit for large and medium industries and
BSCIS has been established to take care of small and cottage industries. These institutions
provide procurement, storage and marketing credit to industries under different terms and
conditions. For developing physical facilities and acquiring transport equipments, funds
might be obtained from aid-giving agencies and countries. Misuse of credit, although
rampant, and has become a sensitive issue in Bangladesh.
8.2.8. Training
On the input side, for skill development, which is linked with development of technology
training is important. We can aim at improving upon traditional methods of production,
processing, packaging and preservation, and some of the managerial skills relating to
accounting and costing, pricing and marketing at the levels of users organization through
skill development efforts. Physical facilities for training that are available (BDB, local govt.
and schools) at Thana level can be used for organizing training programmes. Ministry of
LGRD and Cooperative, Ministry of Women’s affairs, Ministry of Youth Development and
Ministry of Commerce and other voluntary and charitable organizations may adopt integrated
steps for Skill development programmes. Non-government organizations may be given a
greater role to play in medium, small and cottage industries.
99
8.2.9. Marketing
Marketing support for selling output of industries is probably more acute. It is needed,
therefore, to set up some organizational arrangement to procure, store and distribute products
of industries in northwest districts. In fact, the best strategy will be to provide inputs and
marketing assistance under the same administrative set up so that there is coordination
between the functions and economy in providing those services.
Prices charged for inputs and paid for outputs should be reasonable to encourage production
and sales and thereby help generate revenue surplus for the enterprises so that progressively
they can acquire improved technologies for these industries. For maintaining employment
around the year for those who are now partly engaged in most of these industries and to
create new off-farm employment opportunities in rural areas input-output price subsidies to
some of the industries may have to be provided. Given the overall shortage of nonagricultural employment opportunities, subsidizing rural industries may be desirable from the
point of view holding down the rate of migration to urban areas. The question of price
support may be important only for some of the industries.
Besides procurement, storage and distribution of industry products, assistance in improving
the design, quality and packing of products through research and development activities is
required especially for small and cottage industries. Once the supply of production and
distribution networks are established through the proposed organizational setup attempt, may
be made to enter into subcontracting deals with various government and semi-government
and private organizations to supply some of their requirements manufactured by industries
utilizing available materials and skills.
8.10. Technological Improvement
With rising input and other costs, production of industrial section must be increased.
Improvement in technological base is very important to increase productivity and production
of various industries as we observe that efficiency performance of industrial establishments
can not be increased much. For this, we should first take initiative to conduct research and
100
development to identify and choose suitable technological options for large, medium, small
and cottage industries and encourage their planned adoption. Second, identification of
products to be manufactured which have sufficient domestic and international market
demand and which will contribute to development in agriculture, rural transport and other
rural economic activities should be carefully implemented. It is argued that technological
advancement may be taken spontaneously by entrepreneurs if a relative price of input and
output is set right. Technological improvements will not take place in industries of northwest
districts in particular and Bangladesh in general without proper institutional support given the
imperfect market and other conditions in which industries operate. Government and other
institutions could take up to date initiatives in this regard.
8.2.11. Organisation and Planning
Organizations are poorly equipped with technological set-up and know-how. Organizational
capability of manager will have to be raised to recommend suitable plans and policy projects
appropriate for rural industrialisation. Bureaucratic hindrances must be eliminated so that
activities under a program of developing large, medium, small and cottage industries can be
pursued speedily. Official procedures must be placed by a system of managerial control
based on sound information system.
8.3. Suggestions, Recommendations and Policy Implications
In this research we assess productivity performance of industries in Northwest Bangladesh
applying econometric model – the stochastic frontier approach using secondary data. As
productivity performance is success indicator. The model estimates quantitatively the
contributions of efficiency improvement to industrial output. This helps us predict how much
productivity gain could be obtained if industries were run efficiently in a cost-minimizing
way. In other words, we could predict how much production cost could be reduced if we
could run industries efficiently in a cost-minimizing way. Results indicate that efficiency
performance of industrial establishments is about 95 per cent. This implies that we can not
increase output much through improvement of efficiency of industries. Therefore we have to
adopt technological progress.
101
Coal Mine: Energy as an input of production acts as the basis of industrial establishments
and development. Required availability of energy and low-cost energy supply reduce
production costs, attract domestic and foreign investments and thus facilitates
industrialisation in a region. Northwest Bangladesh is fortunate having natural resources Fulbari Coal Mine and Boropukuria Coal Mine, Dighipara Coal Mine and Khalaspir Coal
Mine. These resources can be utilized properly to the development process of
industrialisation in the northwest. Coal fields should not be leased out to any foreign
company. Bangladesh should maintain its sole ownership and its products to get optimum use
of it.
Hard rock: Maddhapara in the Dinajpur district possesses an unlimited reserve of hard rock
consisting of granodiorite, quartzdiorite and gneiss of the Pre-Cambrian. Hard rock deposits
are also recorded in Ranipukur and Pirganj in Rangpur district (Rahman, 1997). Besides
these, there are surface deposits of construction materials such as boulders, gravels etc. at
Tetulia-Panchagarh in Dinajpur district. As there is a huge deposit of hard rock, it is expected
that it will be possible to extract this rock for about 64–70 years at the rate of 2.0 million tons
of stone per year. These projects can provide more than 30,000 new jobs opportunities both
at mine sites and later on in industrial sectors which can help alleviate poverty and monga in
the northwest and give substantial benefit to the economy of northwest and to the national
economy. The discovery of such huge deposits of coal and hard rock is a blessing, and proper
development of these resources will open a new era for the country to enter the industrial
world. In the modern world, the sustainable economic conditions of any nation depend on
how developed that country's industrial sector is, especially in the field of mineral resources.
So, minerals based industries are an important factor for accelerating the economic growth of
a country. Now, northwest has an opportunity to build up mineral-based industries as this
region has sufficient mineral resources on which industries can develop. All these together
will accelerate the country's economic development (Akhtar, 2000).
Hard rock can be used as construction materials to build housing apartments, bridges, roads,
highways, dams, embankments, to control flooding and river erosion and will also be used as
railway ballast, decoration pieces, tiles, etc.
102
Gas for fertilizer: Northwest is an agrarian region. Agriculture is the main source of income
and way of livelihood of people. Proper fertilizer application is very important in order to
sustain and increase agricultural production. Agricultural products provide among other
inputs of production of agro-based and food processing industries. This region suffers from
fertilizer crisis also. Therefore this region demands establishment of fertilizer industries at
least to ensure required supply of fertilizer in this region to obtain maximum benefit form
agriculture. For that, gas supply must be ensured.
Textile and Garments: Textile industry is a demanding industry in this region. This is
required for both meeting demand for cloth and employment. People could be encouraged to
use locally produced textiles products. Establishment of readymade garments industries can
get comparative advantage of cheap labour and has both domestic and international markets.
NGOs can play a vital role to encouraging foreign partners and donars to invest in this region
and finding market for these products. I wonder if NGOs, Banks, and other financial
institutions can directly invest in this sector of this region.
Investment in UEPZ: EPZ provides a great opportunity and infrastructure of investment.
Proper investment can provide employment of thousands and help alleviate poverty and
reduce the severity of monga.
What to do: Local civil society people, business community, government institutions and
non-government organizations devoted to development this area must always remain alert
about proper utilization of these resources. Resources should be prohibited to be taken away.
They should also make people aware of the proper utilization of these resources. People are
the owner and at the same time protector of resources.
The government should come forward to taking necessary steps first. Government can act as
facilitator in this regard. A powerful commission can be formed to look at every aspect of
industrialization. We would like to suggest that the government and donor agencies could
give proper attention to coal, hard rock available in this region and to bring gas here which
could give the basis of industries and help develop industrialisation. We would like to
103
emphasize that people do not want cash help or help in kind from the government or any
other agencies. They want honourable job and position, they want to live on their own, they
want to stand on themselves. The government or donors in time of crises help people in kind
or in cash or the government run the food for work program. These do not provide them
sustainable employment.
Non-government organizations along with civil society and business community devoted to
development like RDRS should also come forward to taking initiatives to proper utilisation
of these resources under the privatization policy of the government.
Entrepreneurs and Industrialists who have substantial amount of investment in industries
such as, garments, textile, etc. at Dhaka and Chittagong could be encouraged to invest in
northwest Bangladesh. NGOs can play a vital role to encouraging foreign partners and donars
to invest in this region and finding market for these products Even I wonder if NGOs like
RDRS, ASA, PROSHIKA, Grameen Bank would have options to establish industries and
build sales centres in different parts of the country and explore foreign markets as they have
their contact with donor and other agencies. These activities could be viewed as social
responsibility of them. NGOs along with local businessmen and civil society people could
take necessary steps in this regard.
Research and development are closely related to each other. Research should be continued by
research institutions and NGOs on socio-economic and environmental issues. Environment
is associated with development. Drought, floods, river erosion and deforestation are some of
environmental factors, which affect productivity negatively. Utilisation of natural resources
requires a proper account of these resources. This region possesses beel, haor, rivers, forest
etc. Farm power, farm production, livestock, fisheries etc. are some of the factors
development of which is related to development of industrial sector. Comprehensive research
requires to be conducted on these issues. Along with their usual programs, NGOs like RDRS,
ASA, PROSHIKA, Grameen Bank etc. must keep some research component in their program
lists. We should remember that balance development requires not only credit but also
research to find relationship between development and other socioeconomic, environmental
and natural resources factors.
104
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Financed by RDRS Bangladesh
Questionnaire: Problem Identification of Industrialisation in this Region
Researcher
Md Abdul Wadud
M.S.S. (Rajshahi)
Ph..D. (Newcastle, United Kingdom)
Professor
Department of Economics
Rajshahi University
Rajshahi 6205, Bangladesh
Email: [email protected]
This research is solely for academic reasons and all your responses will remain confidential.
We will try our best to share the results of our research with you once completed. We will
be extremely grateful if you agree to collaborate with us and give some of your time to
109
1. Name of the respondent
Profession Code
2. Profession of the respondent
01= Former Member of Parliament
02= Unversity teacher
03=D.C.
04=Pourashava Chairman
05=TNO
05=Entrepreneur
06=NGO official
07=Civil society member
08= Members of Chembers of Commerce
09= Banker (Govt & Private)
10= Others (specify)
3. Would you think that the followings are problems in industrialisation in this region?
3.1 Concentration mentality of Entrepreneurs in Dhaka
01=yes, 02=no
01=yes, 02=no
3.2 Dependence on imported raw materials
01=yes, 02=no
3.3 Inadequate demand of Products
3.4 Inadequate infrastructure and supported services
01=yes, 02=no
01=yes, 02=no
3.5 Inadequate Supply of Raw Materials
01=yes, 02=no
3.6 Insufficient Loan Facilities
01=yes, 02=no
3.7 Irregular Supply of Raw Materials
01=yes, 02=no
3.8 Lack of Backward Linkage Industries
01=yes, 02=no
110
3.9 Lack of capacity building
01=yes, 02=no
3.10 Lack of Commitment of the Government
01=yes, 02=no
3.11 Lack of Entrepreneurships
01=yes, 02=no
3.12 Lack of Implementation of Commitment
01=yes, 02=no
3.13 Lack of Skilled Labour
3.14 Long away from Dhaka that raises transport cost
01=yes, 02=no
01=yes, 02=no
3.15 Problems in Marketing Products
01=yes, 02=no
3.16 Scarcity of Raw Materials
3.17 Scarcity of Technical Service and Training
01=yes, 02=no
4. The Jamuna Bridge
How do you evaluate the role of this bridge in industrialisation in the Northwest Bangladesh?
4.1. The price of inputs and raw materials has increased because of easy mobility of them
01=yes, 02=no
4.2. The price of output has not increased remarkable because of low quality
01=yes, 02=no
Your opinion
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5. Land Ports
How do you think that land ports can contribute to the industrialisation in this region?
5.1. Land ports can easy access of inputs and raw materials to Bangladesh from India and other
01=yes, 02=no
countries
5.2. These can help export commodities to India and other countries
01=yes, 02=no
5.3. Do you think that quality of commodity will be a barrier to export
01=yes, 02=no
Your opinion
112
6. Uttora EPZ
Do you think that the followings are problems to develop the EPZ
6.1. Long away from Dhaka that does not attract investors and increases cost:
6.2. Lack of an integrated effort from the government:
6.3. Lack of improved infrastructure from here to Sea Port:
01=yes, 02=no
01=yes, 02=no
01=yes, 02=no
Your opinion
7. Which types of industries do you think more suitable in this region in terms of generating
employment and thus reducing poverty and why?
Food and Allied Products
Textile, Wearing Apparel and Leather Industries
Wood and wood products including furniture
Chemicals, Petroleum, Coal, rubber and Plastic Products
Basic metal Industries
Fabricated metal products
Other manufacturing industries
Name and signature of the Interviewer
113