The Bangladesh Export Processing Zones Act of 1980 was aimed at boosting industrialization and higher employment rate through promotion of trade and investment. While it was successful in terms of contributing $24.17 billion in export earnings from July to January of FY 2018-2019 and also creating more than 450,000 jobs in the process, EPZ, however, provides weaker domestic linkages and hence the government tried to move towards economic zones that cater to both domestic and export markets. With the aim of more private participation in developing and operating zones, the Bangladesh Economic Zones Authority Act and the Bangladesh Hi-Tech Park Authority Act were both formulated in 2010. Now, like BEPZA, there are two other agencies that have overlapping mandates.

Bangladesh Economic Zones Authority (BEZA) and Bangladesh Hi- Tech Park Authority (BHTPA) are two semi-autonomous agencies with the objective of expanding special economic zones (SEZs) and hi-tech parks (HTPs) across Bangladesh. While the two agencies work under different regimes in comparison to BEPZA, they also tend to focus on production for both the domestic and foreign markets. BEZA aims to develop 100 SEZs by 2025 while focusing on underdeveloped regions of the country. The reliance for builiding SEZs is mostly on private capital and private expertise, while the government oversees the progress. As of today, there are 66 special economic zones among which 55 are owned by government and 11 are privately owned.

Incentives for export led thrust sectors

The government’s industrialization policy focuses heavily on thrust sectors that are primarily export oriented such as agro-based industries and manufacturers that specialize in ICT, artificial flower-making, electronics, frozen food, jute goods, and jewelry. Leather, oil, gas, textiles, construction and tourism are also included in the list.

  • Concessionary duty as per Special Revenue Order (SRO) is allowed on import of capital machinery and spare parts while setting up export-oriented factories or for expanding or refurbishing existing manufacturing plants.

  • A simplified duty drawback system such that exporters can directly receive rebates from concerned commercial banks

  • Warehouse facilities for 100% export-oriented companies with back-to-back letter of credits. VAT exemption facilities are also available as part of SRO

  • Export earnings from handicraft and cottage industries are exempted from income taxes. For other sectors, proportional income tax rebates in the range of 30-100% are provided on export earnings.

  • Goods and services supplied to local projects under international tenders are treated as indirect exports and suppliers are entitled to receiving necessary export incentives and tax rebates.

  • Manufacturers of indigenous fabrics (such as woven, knit, hosiery, grey, printed, dyed, garment check, handloom, silk and specialized fabrics) supplying to 100% export-oriented apparel factories are entitled to a cash subsidy equivalent to 25% of the value of their fabrics, provided the apparel manufacturers are currently not enjoying and other preferential benefits like duty drawbacks or bonded warehouse facilities.

  • Leather factories exporting at least 80% of their products are treated as 100% export-oriented. Tax holiday for up to 10 years is provided for companies currently operating within the confines of Export Processing Zones (EPZs)