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Employment growth is a primary economic development goal of most small

communities. More jobs generally mean more residents, more spending at local
businesses, and more tax revenues for local governments. Thus job growth permits the
expansion and improvement of public goods and services, leading to an improved local
quality of life and enhanced prospects for future employment growth. In addition, a
vibrant job market provides an incentive for local students to continue their education
since the rewards for such are evident in better local employment opportunities. And an
expanding job market encourages local workers to upgrade their skills in order to qualify
for available higher wage jobs. Sustained job growth stimulates improvements in the
education and skills of the local labor force, making the community a more attractive
location for businesses in the future.

Community leaders generally are well aware of the immediate and long term benefits
resulting from employment growth. As such, most communities or counties have
economic development authorities with the responsibility of stimulating or attracting new
economic activity. Much of the economic development efforts of these local authorities
is focused on attracting manufacturing facilities. Yet employment growth, and local
economic development, also can result from alternative strategies, such as local business
retention and expansion, entrepreneurship and small business development, expansion of
nontraditional agricultural activities, development of local service and trade businesses,
and attraction of tourism and/or retirement activities.

Economic development theories suggest that community efforts should be based on


first determining what is the local comparative advantage and then developing new
economic activities that take advantage of that competition edge. Within these broad
guidelines, six employment generation strategies are popular in nonmetropolitan areas.
The potential advantages and disadvantages of each alternative and strategies for
community action follow.

A) Recruit new basic employers from outside the community, primarily branches
of multi-plant manufacturing concerns.

Advantages:

1) Branch plants are generally export oriented, thus, the community's economic
base is strengthened.
2) Rural areas have a competitive advantage for the more standardized production
processes undertaken at many branch plants.
3) Branch plants often provide a large number of employment opportunities from
the outset.

Disadvantages:

1) Branches have weak backward linkages to the local economy, and thus,
small multiplier effects.

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2) The locational stability of branch plants is low, that is, they are more
likely to relocate than locally-owned plants if economic conditions
change.

3) Branch plants generally provide relatively few employment opportunities


for professional and skilled labor.

4) The competition for branch plants is intense, and multi-plant firms often
demand extensive incentive packages.

5) Manufacturing is increasing as a source of employment in the BD., thus


the employment growth potential of this sector is likely to be large.

B. Support Entrepreneurial Activity and the Development of New Small


Businesses

Advantages:

1) Small businesses are responsible for much of the nation's recent job growth and
product innovation.

2) Locally owned firms purchase many of their inputs from other local businesses, thus
increasing multiplier effects.

3) Locally owned firms have more stable employment over the business cycle than
branches of multi plant operations.

4) Locally owned firms provide greater opportunities for managerial and professional
employment.

Disadvantages:

1) Small independent firms have relatively low survival rates during the early years of
their existence.

2) Small businesses score low in many measures of job quality: stability, full-time
status, wages, pension plans,
and health insurance coverage.

3) Small business employment growth in rural areas has been disappointing. The rate
of employment expansion in nonmetro counties is about one-half the metro rate.

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C. Increase income and employment in local agribusiness industries by further
processing of local production or the development of new agricultural products for
the area.

Advantages:

1) Rural areas have a comparative advantage in many of these industries since the
principal inputs are located nearby.

2) New agribusiness firms may stimulate the demand for locally produced goods
(backward linkages), and thus encourage expansion in these supplying industries.

Disadvantages:

1) Little is known about many of these businesses, therefore, they should be considered
high-risk ventures.

2) Increasing local agriculture processing may be a Abeggar thy neighbor@ policy.


Increased production or processing in community A may simply lead to a decrease in
activity in community B.

3) Employment opportunities in some alternative agricultural activities (e.g. catfish


processing) may be characterized by low-pay and poor working conditions.

4) Many alternative agriculture activities will face competitive markets with high risks
of rivalry and retaliation by competitors.

D) Expand local service and trade activity to reduce


leakages of spending outside the community.

Advantages:

1) Service industries provide greater employment stability than manufacturing during


fluctuations in the business cycle.

2) Employment in the service-producing industries is growing more rapidly than that in


manufacturing for the nation as a whole, thus the likelihood of success is higher in trade
and services than in the more stagnant sectors.

3) Services and trade industries generally create few demands on community services
(such as water and sewage systems) and minimal environmental impacts.

4) An increase in local service employment would increase the local multiplier by


decreasing imports (import
substitution).

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Disadvantages:

1) Business and producer services (the most rapidly growing members of this industry)
have been reluctant to locate in rural areas.

2) Employment in the nonmetro service sector is low wage relative to jobs in the
traditional manufacturing sectors.

3) Rural communities have had little success in attracting or developing the high wage
export-oriented service industries (e.g., warehousing, transportation, research and
development, legal and business services).

4) Attempts to increase retail and service spending within the community may be a
Abeggar thy neighbor@ policy. That is, an increase in sales in community A may result
in a decrease in sales in neighboring community B. For the region, no net increase in
economic activity has occurred.

E. Develop tourism, recreation, and retirement industries to the extent that


significant outside spending is attracted to the community.

Advantages:

1) Tourism, recreation, and retirement sectors bring outside dollars to the community
thus they serve as basic industries to the local economy.

2) Tourism is a clean industry with relatively few demands on public services and, if
properly controlled, little impact on the environment.

3) Development of tourism and recreation facilities also may benefit local residents.

4) Tourism facilities are often significant users of local inputs.

Disadvantages:

1) Jobs in the tourism sector are generally seasonal and low wage.

2) The tourism/retirement industry is highly competitive, thus, the product must be of


high quality and competitively priced.

3) The tourist attractions must be carefully managed to prevent overuse and


degradation.

4) A large influx of "outsiders" may create social stress between long-term residents
and visitors/retirees.

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5) This alternative is not practical for communities with few natural amenities.

F) Develop programs which will aid in the retention and expansion of existing
businesses.

Advantages:

1) Improving the efficiency of existing firms will enhance the area=s comparative
advantage.

2) Assisting local firms should have greater short -run employment benefits for the
community than recruiting outside firms or fostering new start -ups through
entrepreneurial development.

Disadvantages:

1) Local retention and expansion programs will benefit primarily those industries that
are healthy or marginal.

2) Firms whose profits can be increased greatly by relocating are unlikely to be


convinced to remain in the community because of the availability of these programs.

Bangladesh And its History


Since its independence in 1971, Bangladesh has made some important strides towards
growth and poverty alleviation. However, given the relatively vast size of the population
and existing levels of investment and growth, the current pace of economic and social
progress does not leave much room for complacency. Nearly two fifths of the population
still live below the poverty threshold, and its per capita income is still among the
lowest in the world. The development goals and “ends”, encapsulated in the Five
Year Development plans, remain a far cry. This has called into question whether the
instruments and policy “means”, currently in practice, are truly adequate in achieving
those development goals. There have indeed been major policy shifts during the
mid-1980s and 1990s, when stabilization and structural adjustment programmes came
into force, and diminished the large presence of the State and controls, and arguably,
even weakened their functional roles towards a development agenda. The policy shift
has indeed been designed to move the economy towards greater liberalization, that
would potentially encourage allocative efficiency and stability. The achievement of
development “ends” came to be predicated on the means and instruments of the “self-
regulating market”. While stability of markets and prices is indeed critical to growth
and and development, it must still be considered as means, rather than end goals
of policy plannings.

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Bangladesh has seen an impressive decline in poverty over the last twenty years, but a
large number of households still live below the poverty line. About 35 million people
live in extreme poverty. The national poverty rate declined at roughly one percentage
point per annum over the last 15 years. Yet according to the 2009 Household Income and
Expenditure Survey (HIES) 40 percent of the population still lives in poverty and 25
percent of the population in extreme poverty (HIES 2009). Only 40 percent of household
heads among the poor has received more than 5 years of education and only 6 percent
more than 10 years (HIES 2009). Literacy rates for poor male workers aged 15 and older
stand at 52 percent; 33 percent for poor female workers. Besides being less educated, the
poor are also less healthy.

Bangladesh’s poverty profile is further complicated by the need to employ a large and
growing labor force. While open unemployment rates are low, serious under-employment
exists, especially among young men. Female employment levels have remained low,
despite increasing levels of education and low levels of fertility. Most women are
employed in household enterprises as unpaid workers. Even women from poor
households, who would be expected to engage in manual labor, are unlikely to be
employed for a wage. They do not seem to find casual employment either. Out of the
total unemployed people, according to a survey report by the Bangladesh Bureau of
Statistics (BBS), the number of jobless female in Bangladesh increased by over 11
percent to one million in 2009.. Unemployed population in Bangladesh went up from 2.1
million in 2006 to 2.7 million in 2009, up over 28 percent. The report finds that the
country's labor force increased from 49.5 million in 2006 to 53.7 million in 2009 with a
2.7 percent growth rate a year on average. Although unemployment picture of
Bangladesh depicts a very low level (5.1 percent), the real situation is reflected in the
high underemployment rate (28.7 percent)," revealed the BBS survey report titled
"Monitoring of Employment Survey-2009”.Each successive government realizes the
importance of the employment agenda, and there is continuous political pressure to come
up with policies and programs that will protect vulnerable workers and promote
employment. Against this backdrop, unemployment increased from 4.3 percent in 2006 to
5.1 percent in 2009.

In 2009, the Employment Generation Program for the Poorest (EGPP) was launched
close on the heels of the 100 Day Employment Program. The EGPP, which IDA purports
to support, is intended to run during two lean season phases –60 days from October to
December and 40 days from March to May. During the first phase of year one of the
program (FY09-10) the GOB rolled out the program in the 16 districts affected by
Cyclone Aila. In the first phase (October to December 2009), the program created
16,555,325 person days of employment. The second phase (March-May) has just been
concluded. Based on the success of the EGPP, the GOB has allocated Tk. 10 billion to
the EGPP in the current fiscal year (2011). The program is now expected to extend
nationwide/

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In 2010 The second Project is taken under consideration namedly BANGLADESH
EMPLOYMENT GENRAITION PROGRAM and its pros and cons are described below :

PROJECT INFORMATION DOCUMENT (PID)


Report No.: AB5828
Project Name Bangladesh Employment Generation Program
Region SOUTH ASIA
Sector Public administration- Other social services (100%)
Project ID P118701
Borrower(s) GOVERNMENT OF BANGLADESH
Implementing Agency Disaster Management Bureau, Ministry of Food and Disaster
Management
Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared August 24, 2010
Date of Appraisal July 12, 2010
Authorization
Date of Board Approval November 30, 2010

I. DESCRIPTION

Component 1: The Main Program Component (MPC) (US$ 144.75 million) would
support expansion and reform of the existing program through three Focus Areas:

i. Focus Area 1: Rigorous Targeting. Reaching the poorest is the cornerstone of


the EGPP. This includes both the poorest areas and the poorest households. There
is a three-fold targeting methodology in the program to ensure money does reach
the poorest. Wages are set such that only the poorest will want to work.
Geographical targeting will distribute the bulk of the resources to the poorest
Upazilas. Finally, household targeting allows only individuals from those
households where the head is a manual laborer and the household has less than ½
acre of land to be eligible for the program. In addition, one third of the program
benefits are mandated to go to women workers.
ii. Focus Area 2: Improved governance through clearer rules and enhanced
transparency. IDA support to EGPP is meant to improve its design and
implementation in a way that enhances the governance of Bangladesh’s largest
safety net program. Wages will be paid through formal financial channels; part of
the government’s funding will be earmarked for non-wage costs; supervision
capacity will be built up; public disclosure will be improved, and a grievance
redress system will be put in place. This strengthening will build on existing
systems and structures.
iii. Focus Area 3: Better Capacity for Monitoring and Evaluation. The proposed
project would provide support to develop the monitoring capacity of the MoFDM
at the upazila level and at the center. The project would support the development
of a set of standardized indicators and monitoring reports and would provide
financing for critical staffing at the central and local levels and investments in

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MIS. In addition the Bank will undertake an impact evaluation, and sponsor a
series of independent validation exercises, to gain further insight into how the
program is functioning and could be improved.

Component 2: The Operational Support Component (OSC) (US$ 5.25 million)


would provide direct support to the MOFDM for implementation support and capacity
strengthening to deliver the EGPP with enhanced efficiency through better targeting, a
better benefit delivery mechanism, greater transparency and improved monitoring.
Specifically it will:

i. Strengthen reporting and monitoring of the EGPP operations


ii. Provide training to staff engaged in EGPP to enhance their capacity in
targeting beneficiaries and delivering benefits

The MPC can be viewed as a component that reimburses the GOB for results, while the
OSC can be seen as a financing instrument for the inputs needed to achieve the results
indicated in the MPC. The support through the OSC is also expected to percolate to other
social protection initiatives implemented by the MoFDM, including Food for Work
(FFW) and Test Relief (TR).

II. FINANCING

Source: ($m.)
BORROWER/RECIPIENT 0
International Development Association (IDA) 150
Total 150

III. IMPLEMENTATION

The Disaster Management and Relief Division (DMRD) of the MOFDM will implement
the program along existing institutional structures and implementation arrangements, but
with a strong focus on strengthening its systems for a more effective implementation and
monitoring of the program. A program implementation team led by a full-time Project
Director, not below the rank of Joint Secretary, will support the program. An Office of
the Project Director (OPD) will be established in the DMRD for the duration of IDA
support to the program, to ensure efficient and timely implementation. One full-time
Deputy Project Director, not below the rank of Deputy Secretary, will assist the PD in the
implementation of the project. The OPD will comprise of a Project Director, Deputy
Project Director, Financial Management Specialist, Procurement Specialist, MIS
Specialist, Payment Systems Specialist, Training Specialist, 334 Field Supervisors and
the support staff. The Project Director will be responsible for overall management of the
program, providing guidance on planning, implementation, operation, monitoring and
supervision. He will be assisted by a Deputy Project Director, who will be responsible for
field supervision and coordination, administration, finance and monitoring.

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The OPD will be advised, guided and supervised by a National Steering Committee
(NSC), headed by the Secretary DMRD. The NSC will provide policy advice and
oversight to ensure the effective implementation of the program. A Technical Project
Review (TPR) Committee, headed by the Project Director, will further assist in
implementing the program. This Committee will oversee overall program implementation
as per the GOB and IDA rules and regulations. The Project Implementation Officer (PIO)
of every upazila will be the focal point for the implementation of the program at the
upazila level. S/he will be assisted by a Field Supervisor, hired on a contractual basis by
the program. At the upazila level, the Upazila Committee (UC) - headed by the Upazila
Nirbahi Officer (UNO) - will be responsible for the implementation and supervision of
the program. At the Union Parishad (UP) level, the Union Committee - headed by UP
Chairman - will have this responsibility. Union Committees may form Project
Implementation Committees (PICs) for each community sub-project. These will be
responsible for the day-to-day implementation of the community sub-projects, in close
collaboration with the Union Committee. In order to deal with the grievances and
complaints of workers under the EGPP, a Grievance Redress System will be set up at the
national, district and upazila levels.

IV. SUSTAINABILITY

IDA is supporting an ongoing GOB program, and the program is expected to remain a
key priority of the Government beyond the duration of the proposed program. The 100
Day Employment Program was started by the previous government, and was scaled up
after some redesign as the EGPP by the current government. There is strong political
support for and ownership of the program across the political spectrum. The current
government is keen to make the EGPP a flagship program of the GOB. Finally, the
EGPP is in keeping with the priorities of the GOB as reflected in the National Strategy
for Accelerated Poverty Reduction II (NSAPR II).

The recent strengthening of the implementing agency supports the institutional


sustainability of the program. The GOB recently restructured the MOFDM to create
DMRD under which the Ministry’s cash-based safety net programs have been
consolidated. Although the Ministry is still limited in its staffing and technical capacity,
the DMRD has significant experience in implementing public works programs. This
project would further strengthen the institutional capacity of the DMRD through the
technical assistance provided through the OSC.

The project design includes mechanisms that will assess the EGPP’s progress and
impacts as well as ensure that future decisions incorporate the information from these
assessments. These include external assessments of the institutional arrangements during
each program phase, and a thorough impact evaluation to measure the impact of the
EGPP on households’ net incomes and their ability to cope with shocks. The program
monitoring mechanisms would provide accurate information of the financial flows and
actual expenditures to track program progress. Together they would provide timely
information about the program to support measures that would further improve its
functioning.

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V. LESSONS LEARNED FROM PAST OPERATIONS IN THE
COUNTRY/SECTOR

Two sets of lessons have informed the design of the EGPP. The first set of lessons draws
from recent experiences in Bangladesh, especially the 100 Day Employment Program
that preceded the EGPP. The second set of lessons draws from international experience in
the design and implementation of public works programs.

Bangladesh experience: In addition to assessments of other food for work and public
works programs in Bangladesh by the World Bank (del Ninno, 2003) and IFPRI (2009),
there have been three independent assessments of the 100 Day Employment Program.
These were done by: the World Bank (2009), the Centre for Policy Dialogue (CPD)
(2009) and Bangladesh Rural Advancement Committee (BRAC) (2008). Broadly they
are in agreement and outline the need some refinement to ensure that errors of exclusion
and inclusion in targeting are minimized. The assessments also showed that
communication of the program rules to the local level was lacking, and that the program
guidelines were too generic and needed to be made more concrete. In particular, the CPD
(2009) exhorted government to communicate better with the communities and to enable
the latter to voice their needs. The other lessons focus mainly on the need to improve
accountability, payment mechanisms, and monitoring and evaluation. Almost all the
recommendations from the CPD assessment have been included in the design of IDA
support to the EGPP. In addition, data from the 2005 HIES has been used in the poverty
maps that are being used for the geographical targeting of the EGPP.

Within the constraints of a rapid project preparation the team undertook some rapid
assessments of the first two phases of the EGPP. Real time wage data being absent, the
team commissioned telephone interviews of Union Parishad Chairpersons to understand
whether the wages set under EGPP were below the prevailing market wage. The
assessment showed that at the current rate of 120 Tk. per day, wages are well below the
market level. The team also commissioned an assessment of options for paying wages
through formal financial channels and found that this is both feasible and desirable but
will need to be sequenced, given the number of steps needed before it can be rolled out
nationally.

International experience: The following are the lessons from international experience:

• Monitoring and evaluation mechanisms, such as this project proposes, have


proven useful in strengthening the functioning of programs as well as in
sustaining support for programs through different political cycles;
• Wages should be set slightly below than the prevailing market wage for unskilled
labor to promote self-selection;
• If rationing becomes inevitable, use poverty mapping for geographical targeting
and then use communities for individual selection;
• Reasonable labor intensity, generally not lower than 40 percent;

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• Launch during times when the opportunity cost of labor is low (agricultural slack
seasons);
• Community involvement in selection of projects;
• Adapt design features to encourage female participation;
• Keep transaction costs of participation low;
• Maintain assets created.

Most of the principles that emerge from international learning have been incorporated in
the design of the EGPP.

VI. SAFEGUARD POLICIES (INCLUDING PUBLIC CONSULTATION)

Based on the nature and the scale of the activities that will be funded by the project, the
project interventions are not expected to cause any large-scale, significant and
irreversible adverse impacts on the environment. Still, to avoid any potentially adverse
environmental impacts and enhance environmental outcomes of the activities
implemented under individual subprojects, the safeguard policy on Environmental
Assessment (OP 4.01) is triggered. The project has been identified as Category ‘B’, since
the specific sub-projects’ environmental impacts cannot be precisely identified before
sites are selected. The sub-projects may also have environmental impacts if not properly
designed, executed or if mitigation measures are not implemented.

An Environmental Management Framework (EMF) has been developed for the project,
taking into account the implementation experiences of Social Investment Program Project
(SIPP) and Local Governance Support Project (LGSP). A simplified approach has been
adopted in the EMF to suit the small-scale nature of the sub-projects. The EMF
prescribes the environmental management parameters to be included in the project
monitoring and evaluation plan, and environmental audits to periodically evaluate the
adequacy of the EMF, modifying where required.

No major adverse social impact is expected to ensue from the project activities, and in
fact the social impacts are expected to be salutary. Although no land acquisition or
significant displacement of squatters is anticipated under this project (as most projects
will take place in rural settings where squatters are not widely found), some sub-
projects may require limited land acquisition or encounter encroachers and squatters
who would be displaced due to project works. The project has hence triggered
safeguards policy on involuntary resettlement (OP4.12). Additionally, given the nation-
wide approach that the project is based on, it is probable that the project will touch upon
areas with indigenous people (IPs), thereby triggering safeguards policy Indigenous
Peoples (OP 4.10).

A Social Management Framework (SMF) has been prepared that includes a


Resettlement Policy Framework (RPF) and an Indigenous Peoples Planning Framework
(IPPF). The implementing agency will use the screening procedures outlined in the
SMF to identify, assess, evaluate, mitigate and monitor social impacts of each sub
project. The SMF indicates all actions needed and processes required for implementing

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the safeguards approach for the project and includes a check-list to identify possible
impacts related to either land acquisition, resettlement or the presence of IPs in the sub
project areas as well as guidance on how to implement the approach described above in
line with the nature and scale of impacts. The Social Management Framework (SMF)
approach complies with World Bank policies as well as national policies, while
considering the practical aspects of the program’s implementation.

Safeguard Policies Triggered by the Project Yes No


Environmental Assessment (OP/BP 4.01) [X] []
Natural Habitats (OP/BP 4.04) [] [X]
Pest Management (OP 4.09) [] [X]
Cultural Property (OPN 11.03, being revised as OP 4.11) [] [X]
Involuntary Resettlement (OP/BP 4.12) [X] []
Indigenous Peoples (OP/BP 4.10) [X] []
Forests (OP/BP 4.36) [] [X]
Safety of Dams (OP/BP 4.37) [] [X]
Projects in Disputed Areas (OP/BP 7.60)* [] [X]
Projects on International Waterways (OP/BP 7.50) [] [X]

The Sectors Contributing and as well as the Prospects in Bangladesh


economy:

I. Agricultural sector of Bangladesh:

Agricultural activities dominate the national economy and account for 38% of gross
domestic product (GDP). The scarce land resource is subjected to continuously increasing
pressure by a growing population. Considering the size of the agricultural population, the
availability of arable land per capita is less than 0.1 hectares. This level of population
pressure has made it difficult to make land use allocations based on land capability. The
BBS survey shows that the number of people employed in the agriculture sector declined
from 22.8 million in 2006 to 22.2 million in 2009. According to the report, the highest
job generating agriculture sector in 2009 saw a decrease in employment by 2.63 percent
compared with that in 2006 while mining, electricity, gas, water, hotel, and restaurant
sectors remained stable in terms of job creation. Total 70% of the population is directly or
indirectly employed with agriculture

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Farm Size and Farming Intensity - Farm land distribution is quite skewed, average
property size is about 0.8 hectares. This average, however, camouflages great unevenness
in land distribution. About 40% of the rural population is classified as landless. Small
groups of affluent land owners hold land much in excess of their family needs. Some of
this excess lands is share cropped by landless labourers. In the case of small and medium
land holders, fragmentation of land holdings is increasing alarmingly and impedes
efficient utilization.

2003-2008 official data indicate that 57% of the total number of rural households is
landless and more than 50% of their income comes from non-farm activities. Therefore,
economic development and poverty alleviation must focus on increasing intensity of
farming and on increasing non-agricultural income. Forestry could play a much more
important role.

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II. Forest SECTOR :
III. The contribution of the forestry sector to GDP is small (2.32%) but is very important
for rural people and environment. This percentage does not reflect the true
importance of the forestry sector due to the non-valuation of many of its non-
marketed goods and services. The share of sectors other than "agriculture" are slowly
increasing.However, the agriculture sector continues to make the maximum
contribution to the GDP (Fig. below) even when it is being pulled down by the other
sectors. Around .1 million people are employed within this sector .

Bangladesh land use distribution

IV. Garment Industry in Bangladesh:


Garment Industry Large-scale production of organized factories is a relatively new
phenomenon in Bangladesh. The sector rapidly attained high importance in terms of
employment, foreign exchange earnings and its contribution to GDP. In 2009, the
industry employed directly more than 1.4 million workers, about 80% of whom were
female. In 2003-2004, Garment exports earned only $0.9 billion, which was 3.89% of the
total export earnings of Bangladesh. In 2008-2009, the export earnings of the Garment
sector were $5.51 billion, which was 75.67% of the total export earnings of the country.

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The garment industry of Bangladesh has been the key export division and a main source
of foreign exchange for the last 25 years. At present, the country generates about $5
billion worth of products each year by exporting garment. The industry provides
employment to about 3 million workers of whom 90% are women.
However, the workers are facing many problems. Most workers come from low income
families. Low wage of workers and their compliancy have enabled the industry to
compete with the world market. Even though trade unionization is banned inside the
Export processing Zones (EPZ), the working environment is better than that of the
majority of garment industry that operates outside the EPZs. But, pressure from buyers to
abide by labor codes has enabled factories to maintain satisfactory working conditions in
recent times, garment workers have protested against their low wages. The first’s protests
broke out in 2006, and since then, there have been periodic protests by the workers. This
has forced the government to increase minimum wages of workers.

Spinning & Textile Industry in Bangladesh:


• Spinning is the first stage of the four major processes of the textile
industry. At present, there are 118 spinning mills in the country of which
30 units are under the public sector and remaining 88 units are under the
private sector. The important problems of the spinning sub-sector are
obsolete technology (about 45 spinning mills are aged more than 25
years), frequent failure of electricity supply, scarcity of raw materials and
high import duty on raw materials and spares, high percentage of wastage,
lack of proper maintenance of machinery and slow progress of
privatization of public textile mills. 4.5 million people are associated with
in this sector.

V. Leather Industry:
Bangladesh is capable of producing 180 million square feet of leather per year. The
Bangladeshi leather remains one of quality. There exist a number of leather industries in
Bangladesh far above the standard of cottage industry. More than 80% of the country’s
annual production is exported throughout the world. The products manufactured can

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either be finished or semi-finished such as gloves, sports shoes, bags/accessories,
suitcases etc. Total population within this sector accounts for .2 million.

The country counts on 25 shoe industries being able to produce in large quantity and
another 2500 small units throughout the country. The local leather industries export their
products to 53 countries across the world, and the declared profits in 2008-2009 were
$230 million.

VI. Jute Industry:


AT the time of every budget, proposals are floated for addressing the problems of the jute
sector. Many arguments are advanced for assisting the jute sector. The main thrust of this
proposal is on providing financial assistance to the jute sector. It is forcefully pointed out
that given the government assistance, the jute sector can stand on its on legs.

It is said that 30% loss of the jute sector is caused by power shortage and another 30% is
attributed to interest charges. Jute sector itself is responsible only for another 30% of the
losses. This is nice arithmetic. Readymade garments, ceramics, cement and many other
sectors are operating profitably inspite of power problem and high interest rate. It is
argued that coordinated initiative can solve the problem of the jute sector. But the details
of this initiative are not known.

It is true that jute industry is associated with livelihood of many people. Even if these
mills are closed, the government will have to pay to many agencies. But this will be one
time payment. Public sector jute mills are assisted by the government and no assistance is
available to the private sectors mills. Farmers lost interest in jute for not getting fair price.
There was a minimum price of jute in the past but now it is not enforced because of open
market economy policy. Bangladesh Jute Mills Corporation (BJMC) can not buy jute in
July for lack of money which becomes available in September / October. Farmers got
good prices during the last two years. It is time that India is getting the market for jute
goods and Bangladesh is losing. This is because India is competitive. Environment

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friendly products are wanted by international buyers but we do not have enough research
and capability to produce such goods.

In order to have a balanced jute policy public sector mills may be privatised. This will
eliminate the loss of the government. There is no chance of improving the operational
efficiency of public sector mills. The government can adopt a uniform policy for the
private sector if all the jute mills are in the private sector.

VII. Sugar Industry:


Sugar Industry From time immemorial places in and around Bangladesh has been
growing SUGARCANE for making GUD or sucker or khandeswari. Such sweeteners are also
produced from date and palm juice. Bengal was well known for quality sugar in the 16th
century. The EAST INDIA COMPANY exported large quantities of sugar from Bengal every year
In the 1980s, the industry employed 15% of the labor force and had 30% of the fixed
assets of the food industry as a whole. With 1.5% of world production, Bangladesh
ranked 67th among the 130 sugar producing nations. In 2008, the country had 15 sugar
mills at Panchagarh, Thakurgaon, Setabganj, Rangpur, Shyampur, Rajshahi,
Mahimaganj, Jaipurhat, Darshana, Kushtia, Mobarakganj, Jamalpur, Kaliachapra,
Narsingdi, and Pabna. The estimated total annual production capacity of these mills was
about 215,000 tons but the mills did not work in full capacity and, therefore, the
production remained far less than the country's total estimated annual demand of about
400,000 tons. A major reason for the mills to work below full capacity is the shortage of
cane as farmers often find it more rewarding to use land for production of Rabi and kharif
crops. 15% of the total labor force are associated within the sugar industry.

VIII. Tea Industry:


Tea Industry was pioneered in the 19th century by the British planters. Later, some Indian
entrepreneurs purchased tea gardens from their European owners. Indian entrepreneurs
also came forward to develop new plantations

17
Tea industry of the country faces serious problems and the economic condition of about
80 gardens is critical. In the 1980s, some 40 gardens became sick and their workers
became 'surplus'. Sick tea gardens now number at about 48. Some have large overdue
loans of BANGLADESH KRISHI BANK and do not have adequate funds or earnings to repay or
service the debt. Average tea production in sick gardens per hectare is 274 kg, compared
to the national average of more than 1100 kg. Irregular power supply is also a major
cause of production loss. The tea sector contributes about 0.8% of the GDP in
Bangladesh. About 0.15 million people are directly employed in the tea industry, which
constitutes about 3.3 percent of the country's total employment. Many more people are
indirectly employed in other sectors related to tea.

Bangladesh ranks tenth among the ten largest tea-producing and exporting countries in
the world. In the year 2009, the country’s tea production was 1.80% of the 2,939.91
million kg produced worldwide.

IX. Handloom Industry:


The handloom industry plays an important role in the economy of Bangladesh. It is the
second largest source of rural employment next only to agriculture. About 50 lakh people
are directly or indirectly engaged in this industry. The handloom industry accounts for
about 60 percent of the total fabric production of the country. As per the World Bank
Report of 2006, production capacity of handloom is 105.50 crore meters, but due to
various reasons actual production level ranges between 55-60 crore meters per annum.

X. Sericulture & Silk Industry:


Sericulture exists in wide areas in Bangladesh, particularly in the North-Western region.
About 4000 hectares of land is now under mulberry cultivation. Nearly 29,000
households having population of 1, 50,000 are engaged in it. Women of the low income
group in the village form a significant portion of manpower engaged sericulture.
This sub-sector is labor-intensive and its value addition is high. In spite of its enormous
prospect, production of cocoons, yarn and finished fabrics in this sub-sector did not
exceed 8, 00,000 kg. 39,000 kg. And 6, 47,000 meters respectively duty to various

18
problems. Since Bangladesh is capable of producing quality silk, the proper development
of this sub-sector in order to cater to the vast international market, has now become very
important.

XI. Tourism Industry:


“Bangladesh tourism industry and its market have failed to grow properly not merely
because it lacks enough attractions. Its tourism appears to have suffered mostly due to
inadequate infrastructure, insufficient facilities at the destinations, and inaccessibility to
the destinations by road, rail and air transports.” Bangladesh also suffers from an image
problem. Many foreigners still know Bangladesh as country of poverty, beggars, floods,
and political unrest. Besides, the main providers of tourism services in Bangladesh like
Bangladesh Parjatan Corporation and other private sector tour operators lack in
marketing orientation in their business activities. Almost 60% of foreign tourist arrivals
are for business or official purposes, and the number of leisure tourist arrivals is
insignificant.

XII. Foreign Investment:


The melancholy performance of the manufacturing sector is partly explained by the state
of foreign investment in the country. The net foreign investment, including foreign direct
investment (FDI), portfolio investment and foreign investments in the Export Processing
Zones (EPZs), registered as jump in FY98 recording a net flow of $ 320.82 million. This
measure took into account cash flow through bank channels as well as investments in the
form of equipment brought in, particularly in the energy sector. The figures obtained
(using the same estimation technique) recorded a fall in the flow to $ 262.61 and $ 228.68
during FY08 and FY09 respectively.
While the anarchic state of affairs in portfolio investment may be partly blamed for the
emerging situation, it is also true that there had been slowdown in the flow of FDI during
the last two years. The net FDI figures for FY78, FY08 and FY09 were $ 273 million, $
200 million and $ 184.4 million respectively.
These estimates clearly contradicts the periodic claims made by the Board of Investment
(BOI) about billions of dollars of FDI being invested in Bangladesh. The BOI has

19
historically tended to confuse the registered intention of investors to invest with actual
realisation of this investment.
However, one of the most worrisome developments in the foreign investment scenario
relates to the EPZs. FDI (including local investments in joint-ventures) in the EPZs in
FY09 had almost been half (about $ 35 million) of that recorded in FY08 ($ 70.6
million). The corresponding figure for the first quarter of FY10 is only $ 7.84 million.
One is inclined to believe that the prospect of introduction of traditional trade union
activities in the Bangladesh EPZs has already started to take its toll.

Import:
After, a long spell of sluggish import growth (6.6% and 4.8% in FY08 and FY09
respectively), imports seem to be picking up in FY01. Statement on opening and
settlement of letters of credit (L/Cs) during July-September, 2009 indicates an import
growth (in dollar term) of 22.2% and 25.9% over the matching figures for FY09.
However, one should not miss the strengths and weaknesses of the emerging import
composition while analysis the recent trends in import scenario.
Regarding the strengths, one may observe (as per opening of new L/Cs) the fall in
foodgrain import (by more than 45%) and increase in imports of capital machinery (more
than 52%) and “other machineries” (more than 76%). Perceptible upswing is also
observed in case of imports of intermediate goods (12.7%) and industrial raw materials
(10.4%).
The evolving pattern of imports is corroborated by the disbursement figures relating to
both term loans and industrial working capital loans which increased by 22.3% and
35.1% respectively during FY00. (Information on industrial credit disbursement for the
first quarter of FY01 was not available.)
The major weakness of the import composition relates to increase in payments by more
than 81.4% (as per fresh opening of L/Cs) on account of import of petroleum and
petroleum products subsequent to price like in the world market. Needless to mention,

20
given its strategic nature, the government will have to continue underwriting the import
demand of petroleum and its products, irrespective of global prices.
Whatsoever, the upsurge in imports during the first quarter of FY09 by more than 20%
has also given rise to a number of concerns. The first relates to the prospect of over-
invoicing of the imports as a conduit of capital transfer. If that really be the case, then one
is dealing with a phenomenon of “investment illusion” driven by over-priced imports.
Secondly, real imports or not, the current surge in import payments is definitely creating
a debilitating pressure on the foreign exchange reserve situation. Under the circumstances
the enhancing the inflow of foreign exchanges to the will increasingly gain in priority in
the coming months.

Exports:
During FY08 exports stood at $ 5312.86 million which grew to $ 5752.20 million in
FY09 showing an increase of 8.27%. Thankfully, in the face of robust import surge, the
growth in exports during July-September 2010 had been also impressive. During the said
period, the export target was overachieved by 10.6%, recording a growth of 25.4% over
the corresponding figure for FY09.An analysis of the export basket reveals that apart
from raw jute and jute goods, almost all other items have registered an increase in export
value during the first quarter of FY10. While the case of tea (105%) is to be particularly
noted, the recovery of frozen food (54.6%) is also spectacular. More importantly, after a
long recess, the woven-RMG has recorded an impressive growth (20.5%) along with
RMG knitwear and hosiery (31.2%).

Foreign Remittances:
During the last couple of years, the current account balance of the economy has enjoyed
increasing flow of private transfers, particularly in the form of remittances by migrant
workers. In FY00 the country received, $ 1.95 billion on account of workers’ remittances
which was about 14.2% higher than matching figure for the preceding year.
Initial figures on FY09 indicate that a total amount of $ 460 million has been remitted by
the migrant workers during July-September 2008. This amount is 8.5% more than that of
the corresponding figure for FY08. However, one notices from the monthly data, a

21
declaration in the rate of growth of foreign remittances. For example, from the year
closing monthly figure of $ 196 million in FY08, the flow has subsequently declined to $
165 million, $ 148 million and $ 147 million during July, August and September
respectively.

Some Other Sectors:

Shipbuilders may change Bangladesh economy:

Shipbuilding, which is a very labor-intensive industry, has the potential for generating a
huge foreign currency and developing extraordinary skills in the field of engineering. Our
country has skilled and semi-skilled professionals as well as necessary ingredients to be a
shipbuilding nation. So the industry holds the potential for transforming Bangladesh into
a middle-income country in near future.Some private companies are now doing ship
building business. Ananda is one of them. Earlier Ananda exported its first ship Stella
Maris to another Danish company at $6 million on May 5, 2008 and six others to the
Mozambique government at $6.2 million on November 13, 2008.
Recently the company sold Stella Moon, at $7.5 million to a Danish buyer. The company
has so far secured export orders for 34 ships at $373.50 million. It has received export
proceeds and advance payments of $48.54 million. Denmark, Germany, Norway and
Mozambique have placed the orders.
This sector can be one of the most foreign currency earnable sectors of Bangladesh. It
finds that employment in manufacturing, construction, finance and business and real
estate sectors witnessed 33 to 50 percent falls.

a. Crocodile exporting sector:


Recently Bangladesh has started exporting crocodile. A private firm started crocodile
cultivation. The firm launched crocodile cultivation on 15 acres of land at Uthura of
Valuka in Mymensing after bringing 75 salt water reptiles of crocodiles porous species
from Malaysia on Dec 2009 .As a result at present in our country we are able to produce
crocodile. Bangladesh will export the skin, bone, teeth and meat of crocodile from a

22
commercially run firm. The firm will export 100 crocodiles from the first batch. One
crocodile can be sold up to $ 1500.
The firm wants to grow 15,000 crocodiles by 2015 with export of 5,000 crocodiles a year.
If the firm can export such an amount of crocodile, Bangladesh government will receive a
huge amount of tax .That will help to develop our economy.

b. Fisheries & livestock sector of Bangladesh:


In recent years, the fisheries and livestock sector has been playing an increasingly
important role in the economy uplift efforts of Bangladesh. It is a labour-intensive and
quick-yielding sector which augments growth and alleviates poverty. Around 1.3 million
people are directly employed in the fisheries sector alone.
The country has immense natural potential for developing the fisheries sub-sector. The
sector contributes 3.3% of the GDP and 10.33% of the agriculture sector. The sector
includes open water bodies such as rivers, canals,lakes, etc. And closed water bodies such
as ponds and flood-control polders totalling 4 million hecteres. Almost 80% of the
country's protein requirement, around 70% of exports in the primary commodity category
and almost 9% of toral exports come from this sub-sector. The sub-sector marked a
continuous annual growth of 8.6% since 2006. This increase is due to both Government
and private initiatives. Fish production increased to over 1 .4 million during 2007-98.
The Government is providing various incentives to the sector like offerings infrastructure,
credit, research and extension facilities. Different NGOs are also undertaking programs to
motivate and train fishermen and thereby raise production. Hatcheries are being set up
through private initiatives. Bangladesh Fisheries Development Corporation is providing
marketing and storage facilities to the fishermen and fish traders.

With an annual growth rate of over 8% since 2007, the contribution of the livestock sub-
sector to GDP and the agriculture sector as a whole is currently 3.2% and 10.11%
respectively. Showing much potential to develop as a commercial sector with
employment and income generating opportunities both in the rural and urban areas. A
large number of enterprises-cattle, poultry and dairy farms have grown in the private
sector in recent years.

23
BANGLADESH AS AN EMERGING MARKET

The external impression of Bangladesh is that of a populous and poor country – 128
million people with little purchasing power. Such an impression needs to be balanced by
several considerations. In the first place, there is a middle class with some purchasing
power in Bangladesh as in the rest of South Asia. As economic growth has begun to pick
up, in significant measure as a consequence of the opening up of relatively closed
economies, this class and its purchasing power are beginning to grow. And in a country
with 128 million people, even a small middle class may constitute a significant market.
One might also note that the purchasing-power-parity figures for GDP are more than
three times as high for Bangladesh as GDP figures at the market exchange rate.
Bangladesh is in the process of a transition from a predominantly agrarian economy to an
industrial and service economy. The private sector is playing an increasingly active role
in the economic life of the country, while the public sector concentrates more on the
physical and social infrastructure. There have been significant structural shifts in the
economy over the past two decades. The share of value added by agriculture in
Bangladesh’s GDP has fallen from 34 per cent in 2000 to 28 per cent in 2009. The
service sector’s contribution has increased during the same period from 42 to 49 per cent.
Industry’s contribution has increased from 24 to 28 per cent.
In recent years, there has been a substantial improvement in the overall macroeconomic
performance in Bangladesh and maintaining macroeconomic stability has been the
cornerstone of economic policy. The Government pursues an active policy, resorting to
periodic depreciation of the currency on the basis of the trade-weighted currency

24
movements of its major trading partners. (It is worth noting that Bangladesh fared
relatively well during the Asian financial crisis.) The exchange rate of the taka against the
dollar was 54.25 to 1 in mid-2000.

Monetary management has been relatively tight until recently as the Government has
tried to improve the quality of credit creation and remained vigilant about public
expenditure control. Inflation has been low, at 3-4 per cent over FY 2008 and FY 2009,
with a rise in the past two years to 6-7 per cent.
TA

Investment Climate: Key Factors for Foreign Investors

Strengths
• A largely homogeneous society with no major internal or external tensions and a
population with great resilience in the face of adversity(e.g., floods).
• Broad non-partisan political support for market-oriented reform and perhaps the most
investor-friendly regulatory regime in South Asia.
• Trainable, enthusiastic, hardworking and low-cost (even by regional standards) labour
force.
• Potentially significant market, especially with potential access to South Asia.

Weaknesses
• Large perceived gap between good policies and weak implementation (as illustrated,
for example, by the pace of privatization).
• Low levels of skills and training in the workplace.
• Unreliable power supply and poor transport and communication infrastructure.

Opportunities

25
• Natural gas exploration – proven reserves of 11 trillion cubic feet and estimated
reserves of up to 50 tcf.
• Infrastructure, including power generation, transmission and distribution;
telecommunication, including cellular telephony; and upgrading of ports, railways and
airports.
• Fisheries, agro-processing, textiles, leather goods and light manufacturing generally.
• Health, education and other services including software services.
• Multilateral and bilateral financing may be available for infrastructure projects.

Threats
• Periodic flooding and cyclones.
• Law and order problems, including hartals (political strikes).
•Anticipated end in 2009 to the export quotas provided under the Multi-Fibre
Arrangement (MFA) to the ready-made-garment (RMG) industry, currently the principal
foreign-exchange

BUSINESS STRATEGY OF TEXTILE INDUSTRY


• Cheap Labor: - Bangladesh is best placed in the region for textiles and garments
because of cheap labor.
• Government Incentive: - Government incentives for the spinning and weaving
industries include a 15% cash subsidy of the fabric cost to exporters sourcing
fabrics locally.
• Investment Opportunity: -There is a huge fabric demand supply gap in the
RMG industry which is covered by imports. Thus the scope for investment is
enormous.
• Fastest Growing: - The textile industry is the fastest growing industry in
Bangladesh with RMG accounting for more than 75% of total exports.

26
Our Review and suggestions:

Unemployment problem has been one of the vital issues in Bangladesh that needs to be
focused very specifically and quickly. Creating more employment opportunities should
be one of the vital agenda of the new elected government. Now question is whether we
have opportunities for more employment or what we should do to create more
employment opportunities. The first thing comes in our mind is to create more
entrepreneurship. How we can get more entrepreneurs? It is obvious that there is a
correlation between small scale business and entrepreneurship. Here we are talking about
self employment that we can easily create.

An effective policy focusing on access to technology, training, credit, marketing and


distribution channels can significantly accelerate self-employment, particularly in the
informal sector and rural areas, and among women. Here we would like to mention about
hand-made goods or handicrafts that are very famous in the USA or in the UK. In the
USA, these products are sold with a very high price. If we try to find out the market,
these products can bring lots of foreign currencies for our country and through these
products we can create more employment opportunities.

Since agriculture has been one major sector of our economy, we need to focus on it more
emphatically. We have already seen that the new government will be providing farmers
with fertilizers at the lowest price to help accelerate productivity. We know the reduction
in agricultural subsidies to farmers in industrial nations, called for in the recently signed
GATT trade agreements, will generate far higher international demand for agricultural
exports from developing countries. To take this advantage, we need to augment
agricultural productivity and to shift to commercial crop that could spur economic
growth, create jobs, generate higher incomes and increase rural purchasing power.

Supportive policies have enabled trade, transport and other services to generate more
than 50 per cent of all jobs in Japan, Hong Kong, South Korea and Singapore. In our
country, we can increase some sectors like private day-care centers, computer training
institute, nursery schools etc., to create employment. Particularly computer training
institutes have great potentialities to expand and many people can be employed through
this center if we could train them properly.

We have to improve marketing, especially for agricultural goods. We have to take steps
for reducing the gap between rural producers and urban or overseas markets. Rural
producers do not have any idea regarding foreign or urban market and they do not know
how to take their products to proper market. We should take steps to expand export-
oriented markets by building foreign collaboration and overseas subsidiaries, attaining
technology, creating an attractive commercial environment for foreign investment, and
continuously building the skills of the labor force. Many people in our country believe
that they have opportunity of employment in garments sector, because garment products

27
have demand in the foreign market. But there are some other agricultural products that
also have great demand in many countries. For example, we can produce more
mushroom in our country and can engage many people to this sector. Mushroom has
great demand in the USA, Australia and the UK.
Cox's Bazar and the Sundarbans have been identified as the great tourist spots. But there
are still some infrastructural developments that are necessary to make such spots truly
spectacular. We can develop these spots and can develop tourism that could ultimately
generate employment and can also help develop our economy.

We believe we should overhaul our overall education that could also help reduce
unemployment. We have so many educated unemployed people merely because of the
type of knowledge and attitudes revealed through our education. Our education only
motivate us about salaried employments, it does not motivate us for self employment. We
need to reorient the curriculum, especially for higher education, and should impart
knowledge and the right attitude to the students to promote self employment.

The Awami League (AL)-led grand alliance has now formed the government very sooner
there may be another but who ever the government remains they should put the objective
of employment generation, high on the national agenda, and advance a comprehensive
plan to achieve full employment by identifying the yet-untapped growth potentials in
agriculture, industry, exports and service sectors. They should launch a nationwide
programme to implement all employment-related strategies on an utmost priority basis.

____________X_____________

28
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