Special Economic Zones in the OIC Region:
Learning from Experience
64
Box 22 - SEZ Development in Bangladesh
4.5.1.5 Achieving Positive Economic Impacts
Like global trends in SEZ development, many zones in OIC Member Countries are established to
achieve economic objectives such as increasing FDI flows, diversifying exports and encouraging
spill over or linkages with the domestic economy.
Perceptions of the host country as a location for doing business can be a significant barrier to
attracting investment to zones within OIC Member Countries. It is acknowledged that without a
marketable product to sell to foreign investors then investment is unlikely to localise itself in a
Zone. Negative perceptions of business environments include regulatory uncertainty, poor
intellectual property protection and legal frameworks, inadequate infrastructure provision and
perceptions of corruption.55
Box 23 - Dakar EPZ – Challenges to Investment56 57
55 Moran, T (2011) International Experience with Special Economic Zones – Using SEZs to Drive Development in Countries
Around the World.
56 FIAS (2008) Special Economic Zones: Performance, Lessons Learned and Implications for Zone Development.
57 Cling, J and Letilly, G (2001) Export Processing Zones: A Threatened Instrument for Global Economy Insertion?
Bangladesh has seen great success in terms of attracting investment to the EPZs located within
the main cities of Dhaka and Chittagong, as well as the recently established Dhaka-Chittagong
corridor. However the three zones within the northern (Uttara EPZ) and western (Ishwardi and
Mongla EPZs) parts of the state have struggled to attract investment and suffer from poor
economic performance. All of these EPZs are located more than 600km from the nearest
international port and hundreds of kilometres from major centres such as Dhaka. A combination
of poor quality transport and utilities infrastructure have compounded the comparative
disadvantages of these locations and has resulted underdevelopment of the manufacturing
clusters and poor access to supplies and imports.
Dakar faced some challenges with regards to its attractiveness to investment and its bureaucratic
procedures. At the time the zone was closed in 1999 it accommodated just 14 active enterprises
after 25 years of operation. Cling and Letilly (2001) identify the following problems:
 Excessive bureaucracy involving different institutions in the country, especially
customs;
 Unnecessarily long delays in obtaining necessary permits (often more than one
year);
 Unrealistic goals imposed on potential investors, both with regard to jobs to be
created (each company was required to employ at least 150 people) and to initial
investment;
 Elevated cost of other factors of production (energy, water, communications).