The Rise of an Industrial Hub

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Gazipur industrial belt offers the respite necessary to take the load off Dhaka city
While crossing the Dhaka-Mymensingh highway, someone who went abroad many years back, might be confused if s/he has lost the road to destination. Everything has changed — new establishments have been put in place with some replacing the old. ‘It’s just glittering and I am amazed to see the changes. This probably symbolises Bangladesh’s development and growth, and yes, in a bit of unplanned manner. I celebrate the victory of personal initiatives,’ said Mohammed Jamil, an immigrant in the United States, who went there in the 1990s. So, the changes are remarkable to him.

Twenty years ago, many businessmen purchased vast tracts of land to set up factories and rest houses and new or young entrepreneurs bought plots in variety of sizes from different parts of Gazipur. Once famous for forest, lean population, and zigzag roads, Gazipur has silently turned into a zone that accommodated a wide range of industrial units.

But who would have imagined that this would be a major industrial belt near Dhaka, the capital city, which has been crowded with mills and factories and many facilities of the country. Gazipur is the location that shelters the factories and industrial parks of Beximco, Walton, My One, Ibn Sina Pharmaceuticals, Nasir Group, Viyellatex, Epyllion Group and many other heavyweight RMG exporters. All these businesses started in Gazipur as they perceived it to be a viable location for setting up their businesses.

‘I started here in Gazipur with a 4000 sq ft factory in 1992,’ said Reaz Uddin Al-Mamoon, Managing Director of Epyllion Group,’ Twenty years later, our products cater to the world from east to west — Europe, America, Africa and Asia. The links among Epyllion members made it possible for the world to witness the unique ability of its entities to turn the lives of otherwise ordinary citizens into local talents.’

 

Current Overview

Some say it’s Chittagong, but Bangladesh’s most formidable economic zone lies in Gazipur, an often-ignored fact. Despite what statistics tell us, it has been chosen by businessmen and investors as the most recommended site for setting up their businesses and factories. And even here, statistics show a bright picture. Last year, revenue authorities in Gazipur exceeded target of revenue collection by Tk 272 million during the concluded fiscal year. A total of Tk 2.42 billion was collected against the target of Tk 2.15 billion in the fiscal, said the data which added that the largest amount of revenue came from land registrations.

Although Gazipur is an industrial zone, revenue collection from the sector is not very significant as, sources said, most of the industrialists have their tax files registered in Dhaka. ‘The majority of the industrialists have their tax files in Dhaka,’ SM Badiruzzaman, deputy commissioner of taxes, Gazipur tax commissioner’s office, told ICE Business Times.

Pascal Lamy, Director General of the World Trade Organisation (WTO), during his visit to Bangladesh in 2012, visited the manufacturing facilities of Beximco Pharmaceuticals Ltd. located at Tongi in Gazipur. ‘I am quite impressed by the state-of-the-art facilities which manufacture drugs for the poor people of the country at prices that suit their pockets.’ He also appreciated Bangladesh’s exports to African countries. ‘It is good to see that these facilities are set up for producing medicines for the people living in other poor countries also,’ he said referring to Beximco Pharma’s medicines export to Myanmar and many African countries.

Divine Group, an organisation that has a daily production capacity of over 25 tons of knitted fabric, 30 tons of dyed fabric, 80 tons of finished fabric, 6 tons of yarn dyeing and 60,000 pieces of complete garments, chose Gazipur as it had been center of Textiles and garments in this region ever since the middle ages – a time when it was world famous forts ethereal muslin-and has continued in that tradition as the happening place for Knitwear. A busy area, availability of skilled artisans, and a range of other facilities and possibilities rendered it the ideal ground for them.

Newer industries are also eying Gazipur to bolster their fortunes. Nitol Niloy Group, for example, plans on launching an assembly plant for Hero Motor Corp Ltd in Gazipur. Under the deal, the two companies will set up a plant in Gazipur at an investment of $ 40 millon or Tk 311 crore to produce 1.5 lakh motorcycles annually by 2016. Hero will hold majority stake of 55% in the new joint venture while the Nitol Niloy Group will hold the rest 45% stake. There will be a total equity injection of $12.6 million in a ratio of 55:45 over a period of two years.

Pawan Munjal, CEO of Hero Motor Corp Ltd, said in a recent press briefing in Dhaka, that ‘the commencement of our operations in Bangladesh is a significant milestone in our strategic global expansion plan. In addition to being our first overseas joint venture, this is also where our first manufacturing plant outside of India will come up.’

 

Backward linkage establishments

Ranging from local RMG suppliers to ISO-certified exporters, Gazipur has also been the hot-bed for the backward linkage industries, such as textiles, dyeing/chemical industries, etc. The textile dyeing and washing industry plays an important role in the economic growth as well as the environmental sectors of Bangladesh. Although condoned as one of the worst polluters responsible for Bangladesh’s industrial pollutions, the textile industry in Bangladesh accounts for 45% of all industrial employment and contributes 5 percent to the total national income. The industry employs nearly 4 million people, mostly women.

Mahmud E. Alam, Managing Director at Famano Textile Mills Ltd., said about 20% of existing mills in Bangladesh are large-scale mills, roughly 30 percent are medium-scale mills, and the remaining 50 percent are small-scale mills, most of which are located in Gazipur, the rest in Narayangonj. Although the industry is one of the largest in Bangladesh and is still expanding, it faces serious problems, principally because the country does not produce enough of the raw materials necessary for the industry to expand. The primary materials used in the spinning sector are raw cotton and man-made fibers such as viscose and polyester staple fibers. Unfortunately, none of these raw materials are produced in Bangladesh.

Most spinning mills in Bangladesh produce low-grade yarn. Available figures show that current yarn production satisfied only 22-percent of the total yarn demand. In spite of this drawback, as many as 116 new spinning mills, each having the capacity of 25,000 spindles, will be established in the near future.

‘The success of the garment industry very much depends on how effectively RMG sector linkages may operate backward and forward,’ said Reaz Uddin Al-Mamoon. ‘Only for accessories, Bangladeshi garment industry is in a good position, as 80% of such accessories such as zippers, buttons, threads, etc are available locally and meet the requirements of the international buyers. A considerable amount of backward linkage has already been established in this export support sector,’ he added. ‘Do you know why this was possible – only because the majority of the accessories sector was located conveniently in Gazipur.’

 

Challenges for Gazipur

The government plans to provide temporary tax relief to the entrepreneurs just for relocating their industries outside the capital. As Dhaka had recently scored top as the worst livable city in the world, National Board of Revenue Chairman Md Ghulam Hussain requested the businesses to address this issues, bringing some change in their business policy.

He assured the business of ensuring all the facilities for relocating their industries outside of Dhaka, which could also be helpful for the workers to work in a hygienic atmosphere, which is totally absent in Dhaka. He inferred on how regions such as Tongi and Gazipur were also facing the brunt load of the Bangladesh economy and how people should start thinking of setting up in other regions. ‘Businesses have started to go outside the capital as major investors like Globe, Lalmai Group, Partex Group have already moved to Noakhali region. If you shift your industries, you will get benefits, which will be increased further in case of the new investors,’ he clarified.

 

Hospitality – the new industrial prospect

Four months of the year, from December to March, are considered the prime time for tourism in Bangladesh. Businessmen engaged in this sector usually earn huge profits that help keep their businesses afloat all year round. Only now, the first impression does not lie in Cox’s Bazar or Bandarban, it can also be found near Dhaka, in Gazipur.

Misi Construction has leased Gazipur National Park from the forest department this year at Tk 73 lakh. Masudul Haq of Misi Construction said there are more than 50 picnic spots in Gazipur. ‘Our construction company used to earn Tk 10 lakh to Tk 15 lakh during December to March. That amount is earned just from the entrance fee of tourists and vehicles.’

Nurul Islam, manager of Sea Gull picnic spot located in Singardighi area of Sripur upazila of the district, said during peak season they usually do not have enough space to accommodate the huge rush of picnic clients. Manager of Puspodam resort and picnic spot Biplob, said the spot had the capacity to provide space for two parties daily. The monthly income of the spot, during the prime season, was minimum of Tk15 lakh.

The Bangabandhu Sheikh Mujib Safari Park in Gazipur has emerged as one of the most gorgeous destinations of the country. By this time it has become a focal point for entertainment, bio-diversity, tourism, particularly eco-tourism, education, research and employment. In 2010, the park’s work started with a projected costing of Tk 63.99 crore. On February 2, 2011, work on the park started, formally and on October 31 the same year, Prime Minister Sheikh Hasina inaugurated the park. Currently, the entry fee for the safari park is Taka 50 for adults, Taka 20 for children under 18 and Tk 10 for students. Besides, fees for educational groups of 40 to 100 are Tk 400, while it is Tk 800 for groups of over 100. For foreigners the charge is $5 or equivalent to Bangladesh currency.

 

What next?

With the construction of Kaliakoir hi-tech park underway, it will be considered as a special economic zone (SEZ) to attract foreign and local investors where they could utilise vast potential of young educated and technically skilled work force. Eventually country’s economy will be substantially augmented by increasing foreign exchange. The total cost of the project now stands at Tk 2.2 billion.

Dhaka is going to become a ‘waste land’ soon — that we all know but we all are rushing towards it. People are coming here for business, job, education, healthcare etc., but we are sure that at least 25% among the people who came here from outside Dhaka are here without any meaningful reason. Hence the need for decentralisation into areas such as Savar, Narayangonj and Gazipur are necessary for easing the pressure off Dhaka’s industries. Shifting them from Dhaka to such locations may also be done through NBR’s tax exemptions, financial incentives, obtainable bank loans, etc.

Bangladesh wants to stimulate the private sector to invest in infrastructure. If cities want to be centres of economic development, they need infrastructures in and outside. Gazipur has grown an industrial belt and infrastructures should be put in place to streamline the industrial units providing them with required facilities.

 

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