Government of Bangladesh has updated the national industrial policy by approving the “National Industrial Policy 2022” on August 11, 2022, which was subsequently gazetted on September 29, 2022. This policy document lays down a government’s roadmap aimed at accelerating industrialization, fostering innovation, and creating a dynamic economic landscape.
Core Objectives and Strategic Thrusts#
The policy outlines ambitious targets, including increasing the industrial sector’s contribution to national income to 40% by 2027, in line with the government’s broader Vision 2041. This is envisioned through enhancing the skills and productivity of the workforce and boosting employment. Key objectives underpinning this vision include:
- Fostering Sustainable and Inclusive Growth: Accelerating inclusive growth through sustainable and environmentally friendly industrialization to improve the socio-economic conditions of the populace.
- Adapting to Technological Shifts: Developing governmental and private sector capabilities to sustain long-term industrial growth by adapting to rapid technological changes, including the Fourth Industrial Revolution.
- Strengthening Light Engineering: Building a robust foundation for Bangladesh’s light engineering sector through the acquisition of sustainable and advanced technology and the development of existing technologies.
- Promoting Entrepreneurship and Innovation: Creating an environment conducive to the emergence of new entrepreneurs by safeguarding, developing, and expanding domestic industries, and encouraging the invention of new technologies through research and development, along with protecting local technology and intellectual property.
- Export Diversification: Encouraging the establishment of industries that support the diversification of exportable goods.
- Empowering CMSMEs: Developing cottage, micro, small, and medium enterprises (CMSMEs) as the main driving force of industrialization by creating a supportive ecosystem.
- Attracting Investment: Accelerating local and foreign investment in the industrial sector by further improving the investment climate and simplifying administrative and legal frameworks.
To achieve these objectives, the policy delineates several strategic actions. These include implementing a time-bound action plan, developing export-oriented industrial infrastructure with a preference for backward areas based on local raw materials, and enhancing the capacity of both public and private sectors to address the challenges and opportunities of the Fourth Industrial Revolution. A significant emphasis is placed on human resource development through coordination between various ministries and institutions involved in education and training, aligning skills with modern technology and international market demands. Furthermore, strengthening export-related institutions for market exploration and diversification, and enhancing the international acceptability of testing laboratories and quality control organizations are key strategic components.
Reclassifying Industries and Defining Scope#
The National Industrial Policy 2022 provides a detailed classification of industries. The term ‘industry’ broadly encompasses manufacturing activities (production, processing, assembling, and subsequent reprocessing) and service industries that utilize significant machinery, permanent assets, or intellectual property.
The classifications include:
- Large Industry: Defined by investment in permanent assets (excluding land and factory buildings) exceeding BDT 50 crore, or employing more than 300 workers (with a threshold of over 1000 workers for readymade garments/labor-intensive industries). For service industries, the asset threshold is over BDT 30 crore, or more than 120 employees.
- Medium Industry: For manufacturing, assets between BDT 15 crore and BDT 50 crore, or 121-300 workers (up to 1000 for garments/labor-intensive sectors). For services, assets between BDT 2 crore and BDT 30 crore, or 51-120 workers.
- Small Industry: Manufacturing assets from BDT 75 lakh to BDT 15 crore, or 26-120 workers. Services assets from BDT 10 lakh to BDT 2 crore, or 16-50 workers.
- Micro Industry: Assets from BDT 10 lakh to BDT 75 lakh, or 1-25 workers. For services, assets below BDT 10 lakh, or up to 15 workers.
- Cottage Industry: Predominantly family-member-based enterprises with assets below BDT 10 lakh and a maximum of 15 personnel including family members.
The policy also introduces or refines categories such as Handicrafts and Craftsmanship, High-Tech Industry (knowledge and capital-intensive, IT, biotech, renewable energy, R&D-based industries), Heavy Industry (large-scale ventures like shipbuilding, petroleum refining, steel, automotive, cement), and Creative Industry (advertising, architecture, design, film, music, software).
The policy has Reserved Industries and Controlled Industries, where investment is either reserved or controlled.
Key provisions related to investment and incentives include:#
- Incentives for Underdeveloped Areas: The policy prioritizes industrial establishment in underdeveloped regions, offering specific incentives such as subsidies on capital investment, tax and duty exemptions on manufactured products, reimbursement of accreditation certificate fees/charges and insurance scheme premiums, and subsidies on working capital interest. Tax holidays and depreciation benefits will be available as per income tax regulations.
- Support for Export Diversification and Priority Sectors: These sectors will receive special consideration for incentives like tax exemptions, relief from double taxation, and reduced tax rates, in accordance with existing laws such as the Income Tax Ordinance, The Customs Act, and the Value Added Tax Act. Cash incentives for these sectors will be updated.
- Raw Material Import Rationalization: Customs duties on imported raw materials for industrial production will be rationalized, ensuring that the duty and tax rates on locally produced goods using imported raw materials are lower than those on fully finished imported goods.
- Incentives for Non-Resident Bangladeshis (NRBs): NRBs will enjoy the same facilities as foreign investors, including full repatriation of invested capital and transferability of profits and dividends. Reinvestment of repatriable dividends or earned profits by NRBs will be treated as new investment. The existing quota facility for NRBs in primary public offerings will continue as per securities laws.
- Foreign Direct Investment (FDI) Promotion: The policy aims to encourage FDI, particularly in green/high-tech, innovative industries, those facilitating technology transfer, adding higher value to local industries, diversifying industrial production, and supporting a circular economy. Special financial incentive packages will be available for such investments. Foreign investors can access working capital loans from local banks subject to prevailing regulations. A significant provision allows foreign investors investing USD 1 million or transferring USD 2 million to a recognized financial institution to be considered for Bangladeshi citizenship; permanent residency may be granted for a minimum investment of USD 200,000, and multiple-entry visas for up to five years for prospective foreign investors.
- Export Expansion Strategies: The policy emphasizes expanding export-oriented industrial production and diversification. It identifies potential in sectors like footwear and leather goods, plastic products, light engineering (bicycles, electronics), pharmaceuticals, ceramics, jute products, bio-products, and ocean-going vessels. Strategies include encouraging the production of diversified exportable goods, supporting backward linkage industries, identifying and removing barriers to export competitiveness (customs, trade infrastructure, power, finance), and facilitating integration into global value chains by producing intermediate goods.
Start-ups, Women Entrepreneurship, and Skills Development#
The policy places a strong emphasis on fostering a vibrant start-up ecosystem. Measures include providing pre-investment advice, project formulation support, and training for new entrepreneurs. Business registration and start-up processes are to be simplified through one-stop services and other financial and non-financial assistance. Business incubation centers will be established across relevant sectors, with institutions like the Hi-Tech Park Authority, SME Foundation, and BSCIC playing key roles. Bangladesh Bank is slated to introduce a ‘Start-up Financing Scheme’ and may form venture capital funds for start-up CMSME financing.
The development of women entrepreneurs is a distinct priority. The policy aims to increase their participation in industrialization, with a focus on service sector expansion. Specific actions include separate training programs, specialized loan facilities, banker sensitization programs for financing women entrepreneurs, and ensuring a minimum of 25% of total SME sector allocations for women entrepreneurs. Efforts will be made to simplify banking policies for women and ensure women-friendly banking services in coordination with financial institutions. A minimum of 15% of plots in economic zones, hi-tech parks, export processing zones, and industrial parks will be reserved for women entrepreneurs, subject to availability of experienced and qualified candidates.
Skill development to meet both domestic and international labor market demands is a critical component. A ‘Skilled Manpower Demand and Supply Database’ will be established. Training centers will be developed for key industries to address post-LDC graduation challenges and 4IR requirements, with an emphasis on market-demand-based curricula developed in collaboration with industry entrepreneurs and technical training centers. The policy also supports apprenticeship programs and the Recognition of Prior Learning (RPL).
The National Industrial Policy 2022 is a forward-looking document that seeks to transform Bangladesh into a modern, industrialized nation. Its success will depend on effective implementation, robust public-private partnerships, and the ability of businesses to adapt to and capitalize on the evolving landscape. For MNCs, legal firms, and corporate leaders, a deep understanding of this policy is not merely beneficial but essential for strategic decision-making and sustainable success in the dynamic Bangladeshi market. The emphasis on a structured implementation framework involving high-level government bodies suggests a serious commitment to achieving the policy’s ambitious goals.