Post-partition era

The then East Pakistan inherited very few industries from the British Colonial Rulers. Apart from the handful of Textile mills, Setabganj Sugar Mills was established in 1933 and Chatak Cement Factory was established at Chatak in 1941.

During the 1947-72 period i.e. during the Pakistan days industrial development took place in the private sector with the active support of the Government. The largest Jute Mills was established in Narayanganj in the year 1952 by the Adamjees which at one time used to be the pride of this country.

The Pakistan Industrial Development Corporation PIDC created in 1952 and later bifurcated as WPIDC and EPIDC in 1962 was one of the major organizations which boosted the economic activities of the country by giving support to the private sector in establishing industries in various fields.

The EPIDC during its one decade of existence (1962-1971) had established 74 manufacturing units. Out of these there were 27 chemical industries as enumerated below:

Paper Industries 4

Cement Industries 3

Fertilizer Industries 2

Chemical Industries 5

Pharmaceutical Inds. 2

Sugar Industries 11

Role of chemical engineers

With the development of the chemical industries the need for the services of the chemical engineers were realized sharply and the EPIDC became one of the major employers of chemical engineers in Bangladesh. With the development of increasing number of chemical industries, the chemical engineering education gained momentum and attracted increasing number of students. Also the curriculum and courses have been up dated and designed to meet the need of the time. Very soon, the potentials of the chemical engineers have been well recognized by the industries.

In the 1962-1971 period a few chemical industries in the private sector came up with the manufacture of cosmetics, toiletries, detergents, glycerine, etc. Prominent among those were: Kohinoor Chemical Co., Commander Soap Co. Ltd., Albert David, Pharmadesh Limited.

Simultaneously, some new industries also emerged in other sectors like Glass and Ceramics, Machine Made Bricks, etc. The following industries were quite prominent in those days: Usmania Sheet Glass Industry, Hardeo Glass Factory, Hyesons Glass Industry,Ali Glass Industry, Peoples Ceramic Industsries, Mirpur Ceramic Works,Bengal Glass Industries.

Those industries made positive contribution to the economy of the country. Besides, a good number of small size industries had been set up under the East Pakistan Small and Cottage Industries Corporation (EPSCIC) which used to produce organic and in-organic salt and compounds (intermediaries) for other industries.

Reforms in government policies and process of privatization.

In view of the recurring losses and serious sloth in the economy of the country, the government of Bangladesh in 1975 realized the need for denationalizing some of the SOEs and involving the private sector to run the industries. The Bangladesh Chemica1 Industries Corporation (BCIC) was formed by merging three smaller corporations dealing in chemicals, Fertilizer and Pharmaceutical. During the same period, further reforms were made and following sector corporations became effective from 1976.

Bangladesh Jute Industries Corporation

Bangladesh Textile Mills Corporation

Bangladesh Chemical Industries Corporation

Bangladesh Steel and Engineering Corporation

Bangladesh Oil Gas and Natural Resources Corporation named as Petro Bangla

Bangladesh Forest Industries Corporation

After reorganization BCIC disposed of a few sick industries and at the same time, developed new industry in the fertilizer sector. There are six Urea Fertilizer Complexes under BCIC. BCIC also established one TSP plant in Chittagong producing about 180,000 tpy: TSP Fertilizer. The first Sanitary Ware and Insulator Factory was established by the BCIC in 1975 which is running profitably. It subsequently added a tiles factory.

Private sector initiative in the chemical industries

With the changes in the investment policy and backing of the government private sector initiative was encouraged and a number of industries developed in the private sector specially for the manufacture of: Pharmaceuticals, Ceramic Tablewares, Ceramic Bricks and Tiles, Urea Fertilizer (KAFCO), Sulfuric Acid and other Chemicals, Edible Oil, Refractories, Cement, Paints and Varnishes, Battery, Specialised papers and Packaging Materials.

Thus, with the open minded policies of the government towards privatization and free market economy, a new era of development of knowledge based, technologically sound and economically viable chemical industries have opened up in Bangladesh. The success and failure of the private enterprises would depend not only on the managerial and marketing skill of the entrepreneurs but also on external forces and factors beyond control of the enterprise. To evaluate privatization, one has to consider the overall economic environment of the country.

Although the Bangladesh economy is still struggling there are some encouraging signs, enunciating from the new private sector. Apart from the traditional industries the non- traditional items produced by the chemical industries bear testimony of the high rate of the success the private sector have achieved through export of their products in the developed countries. The porcelain, stoneware and bone china products and also the floor tiles and glaze tiles are glaring examples in this respect. The ceramic sector has attained an export of nearly US$ 50.00 million and given due support, it would soon reach US$ 100 million.

Financial problems faced by the industries

Although the government has adapted strategy of export led growth by the private sector and progressively liberalized the macro-economic policies, there has not been proper reforms in the banking sector. The Nationalized Commercial Banks, over burdened with age-old debts and liabilities and inefficiencies of the management, have very little resources to service the emerging new private sector industries. On the other hand, the private banks established in the country are over cautious and would not take any risk in long term investment. Most of them would only finance trading and shall not come up for investment in manufacturing sectors.

Two Development Financial Institutions (DFIs) namely Bangladesh Shilpa Bank and BaI1gladesh Shilpa Rin Sangstha which have for long been remaining dornant neither support their existing clients nor make any new investment, despite having sufficient reserves.

Stock market

The Stock Market which is an alternative source of funds for investment are being re-organized to boost investment, and the SEC has been engaged to ensure transparency in the transactions in order to attract more investors.

Foreign direct investment

Foreign Direct Investment are essential for rapid industrial growth and also for technological development in the country. Both the government and the private sectors are working hard to avail the opportunities created due to globalisation and the free market economy.

There are enormous opportunities provided by the government in the Export Processing Zone (EPZ) established by the government. In the EPZs there is no duty on the capital machinery and the returns and profits can be repatriated freely and free from income tax. Other than in the EPZ too, the government has been encouraging FDI in large chemical and petrochemical industries, power generation, and other infrastructure schemes with similar facilities.

The investments which already took place in the EPZs from Japan, Korea, Singapore and other countries have proved to be very profitable, and they have encouraged many other investors to come forward with new investments.

However, Bangladesh being an LDC and founding member of the WTO, is obliged to a wide range of commitments in the areas of trade and investment. The country has to adopt policies to ensure:

I. WTO compatibility,

II. improvement of conditions for enhancing quality, environment and control of pollution and health hazard,

III. the rights and privileges of the working class as per ILO, and

IV. elimination of child labour

Some industries in the private sector have already attained international standard and achieved the above conditions successfully by introducing ISO-9000 and ISO-14000.

Investment prospects and opportunities

With the positive and daring moves taken by the entrepreneurs and also the progressive policies of the government. it is quite heartening to observe that there has been some worthwhile investment in the country. In the period from 1981-90 some 414 units came into existence mostly in the EPZs in the country. Between 1991 and 1994 about 2300 industrial units have been registered with the BOI having a total investment of US$ 2241 million. Out of those, 253 units were direct foreign investment at a cost of US$ 1102 million. Some of the potential sectors of investment are: 1) Energy, Oil and Gas, 2) Fertilizer and Gas based industries, 3) Leather and Leather goods industries, 4) Food and Allied industries, 5) Insecticides and Pesticides.

There are encouraging prospects for investment in a number of other allied industries having know-how from the developed countries. Both local and foreign investors would enjoy the benefits and facilities that Bangladesh as an LDC would receive from developed countries in Europe, Canada, Australia and BIMST -EC Countries.

Recommendations

To augment the growth of the chemical industries and to make the best use of our available resources and qualified manpower, the following measures must be taken:

- The tariff on industrial raw materials must be rationalized to make production competitive and profitable.

- Tariff on the use of gas as fuel, and electricity for industrial use shall be minimized and the supply must be made available removing all complexities of terms and conditions.

- Import of capital machinery and spare parts for at least 3 years must be made free of duty and taxes.

- Interest on capital loan must not exceed 2 percent above the Libor or the rate at which the Government receives the fund.

- Tax Holiday must be allowed to the industry for a minimum period of 5 years from the date of commencement of commercial operation.

- Working Capital must be provided at a rate of interest not exceeding 6%.

- Repatriation of technical know how design and engineering fees where applicable shall be allowed without any hastle.

With worldwide globalization and competition by both the developed and developing countries, we would be able to attract investment only if we are able to offer increased facilities and also ensure an enabling environment by way of establishing the rule of law and ensuring a healthy atmosphere.

Conclusion

We can avail raw materials and know-how from countries like Thailand and we may have access to their markets and also with their joint investment, we may compete in the developed countries' market. Hydro-electricity can also be generated jointly with Myanmar or with Nepal and we may avail power at a cheaper rate, and can share and exchange other industrial products with them.

Development of Dyes and Chemicals with indigenous raw materials and production of organic fertilizers would be environment friendly and free from health hazard. Those may be developed in order to attract foreign buyers.

The development of small and medium sized industries in the country in the private sector would give rise to the creation of employment and help in poverty alleviation. Besides, large chemical plants should be set up in the public sector with natural gas as the basic raw material and fuel for the production of ammonia based chemicals and chemical fertilizers which have tremendous potential.

Continuous research and evaluation of appropriate technology have to be carried out jointly by the Research Institutions, Universities and the local Industries in order to minimize pollution, reduce wastage, enhance the quality and ensure competitiveness.

The author is President, Chemical Engineers' Alumni Association