Topic of Assignment:

In order to attract Foreign Direct Investment (FDI), Bangladesh like many other
developing countries decided to set up Export Processing Zone (EPZ) in various
parts of the country. Accordingly many EPZs were established in some areas of
the country. The trade unions in those EPZs were not allowed as a condition to
various business entities (foreign and local) including the joint ventures. Few
years ago workers started agitation in all EPZs to allow trade unionism.
Government was in a big problem to allow unionism in EPZs. What are your
considered views on this? Do you think trade union should be allowed in EPZs
also? Or do you think government should not allow it as it will be a breach of
trust to foreign investors?

Economic supremacy is the foremost feature of the current world. In order to

survive, Bangladesh has no other options but to attain economic development.
Foreign Direct Investment (FDI) is recognized as a key component for
economic growth for Bangladesh. Being one of the Least Developed Countries
(LDC) with insufficient domestic savings rate for investment after fulfilling its
basic

needs,

the

importance

of

foreign

investment

is

unquestionable. Foreign Direct Investment (FDI) will create employment, incre

aseefficiency of labor, encourage technology transfer and develop new
exportable sector.
To attract more and more FDI the government of Bangladesh has been trying
to establish private investment friendly environment.
A number of opportunities have been given by the Government of Bangladesh
(GOB) to attract foreign investors to invest in the country in some prospective
sectors.

Sponsoring

agencies

responsible

for

private

sector

industrialdevelopment are Board of Investment (BOI), Bangladesh Export Proce

ssing ZonesAuthority (BEPZA), Bangladesh Small and Cottage Industries
Corporation

(BSCIC),

Financial Institutions (FI) and Commercial Banks (CB) including DevelopmentFi

nancing Institutions (DFI) and Nationalized Commercial Banks (NCB) etc. In
late 70s when individual ownership economy revived in our country, EPZ was
created to attract capital investment, employment generation and rapid
industrialization. As a matter of fact, the main objective of setting up EPZ is to
create individual industrial entrepreneurs and thereby to achieve the other
objectives.

The

economy

of

Bangladesh

is basically agro-

based. The habitants of agro-based economy are generally remainshabituated

in a risk less life. In other way, business investment particularly
industrial investment brings solvency and dynamism in human life but
it is risky and hazardous. Therefore, to create industrial entrepreneurs
some

institutional

businessmen.

EPZ

support

must

ensures

be

this

extended
institutional

to

the
support

individual
to

the

potential business entrepreneurs in Bangladesh.

A brief Economic review of Bangladesh:
Bangladesh separated itself from Pakistan and embarked on a Liberation War 43
years ago. A valid question may arise: Does our present economic performance
justify the decision of our great leaders to be separated from Pakistan in 1971?
While independence is always a basic right and has no alternative, this question
may be answered from a purely economic point of view. Today, Bangladesh has
a rising economy. It is no more a basket case .Because, economic growth of
Bangladesh has been estimated to be impressive at 6.12 per cent in the current
financial year (FY) 2013-14 despite having some internal and external shocks.
The per capita income (Gross National Income) of the country has also risen
remarkably to US$ 1190 which was $1044 in the last FY 2012-13, in the current
fiscal year. In the past decade, the economy has grown at nearly 6 percent per
year, and human development went hand-in-hand with economic growth.

Poverty dropped by nearly a third, coupled with increased life expectancy,

literacy, and per capita food intake. More than 15 million Bangladeshis have
moved out of poverty since 1992.While poverty reduction in both urban and
rural areas has been remarkable. The expectation is that the country will be
graduated to a middle-income country by 2021. Behind these all achievements
EPZs of Bangladesh have greate contribution.
In addition, over the past 5 years, revenue collection has increased from 10.7
percent to 13.3 percent of GDP. At the same time, the size of public spending
has increased from 15.7 percent to 18.3 percent of GDP. The target over the
next 5-years would be to augment resource mobilization to 17 percent and
increase the size of the budget to 22 percent of GDP.

Governments core

objective to transform Bangladesh into a middle-income country by 2021

through structural and other reforms, especially in the areas of strengthening
local government, land management, institutional development and good
governance.
BEPZA at a glance:
In order to stimulate rapid economic growth of the country, particularly through
industrialization, the government has adopted an 'Open Door Policy' to attract
foreign investment to Bangladesh. The Bangladesh Export Processing Zones
Authority (BEPZA) is the official organ of the government to promote, attract
and facilitate foreign investment in the Export Processing Zones. The primary
objective of an EPZ is to provide special areas where potential investors would
find a congenial investment climate, free from cumbersome procedures.
Vision
To build a stronger and economically prosperous Bangladesh

Mission

Promotion of Investment

Diversification of Export

Generation of Employment
Bangladesh EPZ's:

An export processing zone (EPZ) is defined as a territorial or economic enclave

in which goods may be imported and manufactured and reshipped with a
reduction in duties / and/or minimal intervention by custom officials (World Bank
1999). There are eight EPZs in Bangladesh. They are 1. Chittagong EPZ
2. Dhaka EPZ
3. Mongla EPZ
4. Ishwardi EPZ
5. Comilla EPZ
6. Uttara EPZ
7. Adamjee EPZ
8. Karnaphuli EPZ
EPZs Provide Plots/factory buildings in custom bonded area
Infrastructural facilities
Administrative facilities
Fiscal & non-fiscal incentives
EPZ attracts: foreign & local investment

 Objectives of EPZs:
(i)

To foster and generate economic development of Bangladesh by

encouraging and promoting foreign investments in a zones.

(ii)

To diversity the sources of foreign exchange earnings by increasing

export of Bangladesh through a zone

(iii)

To encourage and foster the establishment and development of

industries and commercial enterprises in a zone in order to widen and
strengthen the economic base of Bangladesh

(iv)

To generate productive employment opportunity and to upgrade labor

and management skills through acquisition of advanced technology

The reasons the foreign investors are attracted to our country

to invest Infrastructure facilities
Reduction of lead time
Cost of doing business
Friendly policy of government
Incentives
Signatory of MGA, ICSID, WIPO, OPIC
Asias low cost production base
Lower labor cost

 Nationwide transportation facilities as well as access to the sea ports

etc.
Reason for setting EPZs in Bangladesh
EPZ set up in Bangladesh due to various reasons Major reason among them is
expedites export activities and stimulates rapid economic growth.
These reasons are:

Stimulate rapid economic growth

Enhance industrialization

Adopted with Open door policy i.e. Globalization

Attract foreign investment

Provide

special

areas

where

potential

investor

would

get

congenial investment climate.

Smooth export procedure, free from cumbersome procedures

Development export promotion strategy

More employment generation

Development of export oriented industries

Proper use of domestic available raw materials

Contribution of EPZs to the national Economy of Bangladesh:

After independence, the stagnant economy of the war-ravaged country was

desperately seeking private capital and technical know-how to facilitate the
industrialization process to achieve economic growth. Unfortunately, this
could not be achieved in the initial years. In late 70s Bangladesh EPZ has
emerged to attract capital investment in EPZ and made a remarkable
progress in multiple sector of social, political, cultural and economic
development of the country. Number of steps has also been taken to attract
Foreign Direct Investment (FDI) and facilitate further industrialization in order
to boost up economic development.
EPZs have been making significant contribution to the gradual empowerment
of women which supports the objective of Millennium Development Goal
(MDG).This financial and social empowerment of women has far reaching
effect on the countrys poverty reduction initiatives as the increasing number
of young girls and woman are joining the productive workforce of EPZs
migrating from poverty prone remote rural areas of Bangladesh linking the
rural economy with industrialization process. BEPZA has also accelerated the
privatization effort of the government successfully by converting two loss
making State Own Enterprises (SOEs) of the country namely Chittagong Steel
Mills and Adamjee Jute Mills Ltd in to EPZs. Once abandoned projects are now
vibrating with activities. Mention may also be made that investors from thirty
three countries have already invested in the EPZs of Bangladesh. The leading
nations among them include South Korea, Japan, China and the host
Bangladesh.
History of Trade Union in Bangladesh:
The British rulers introduced Trade Union Act, 1926. The main purpose of the
Act was to provide registration for trade unions and in certain respects. The
East Pakistan Trade Unions Act, 1965 was enacted repealing the Trade Unions
Act, 1926. The Labor Disputes Act, 1965 was enacted and Industrial Relations
Ordinance, 1969 was enacted integrating the above two Acts.

Government of Bangladesh declared a labor policy in 1972. The right to strike

and collective bargaining in the nationalized industries was prohibited for six
months by Presidential order no. 55 in May 1972.
In 1973, the right to strike and lockout, as granted by IRO, 1969 was
withdrawn.
In 1974 Act completely suspended the democratic rights of workers by
prohibiting trade union activities such as strikes, lock-outs, and collective
bargaining.
The military regime of 1975 imposed restrictions on the rights of collective
bargaining.
The Industrial Relations (Amendment) Ordinance, 1977 liberalized the Rights
of Freedom of Association.
The Labor Policy of 1980 restored the right to freedom of association to a
considerable extent.
In 1982 the military regime banned trade union activities, strikes, and right of
freedom of association.Full trade union activities were restored by the
democratic government in 1991.
In 2006, an updated, consolidated and unified version of labor laws was
enacted.
During the Emergency in 2007-2008 that lasted for 23 months, trade unions
and collective bargaining were prohibited and the determination of collective
bargaining agent could not be made. However, full trade union activities were
restored by the democratic government in 2009.

Bangladesh Labor Law 2006 chapter XIII completely describes how a trade
union will be formed and registered in Bangladesh. Any trade union in
Bangladesh must be registered and regulated under this law.

The functions of Labor Union

A trade union or labor union is an organization of workers who band together
to achieve common goals in key areas such as wages, hours, and working
conditions, forming a cartel of labor. The trade union, through its leadership,
bargains with the employer on behalf of union members (rank and file
members) and negotiates labor contracts with employers. This may include the
negotiation of wages, work rules, complaint procedures, rules governing hiring,
firing and promotion of workers, benefits, workplace safety and policies. The
agreements negotiated by the union leaders are binding on the rank and file
members and the employer and in some cases on other non-member workers.
These organizations may comprise individual workers, professionals, past
workers, or the unemployed. The most common, but by no means only, purpose
of these organizations is "maintaining or improving the conditions of their
employment"
Over the last three hundred years, many trade unions have developed into a
number of forms, influenced by differing political and economic regimes. The
immediate objectives and activities of trade unions vary and include:

Provision of benefits to members: Early trade unions, like Friendly Societies,

often provided a range of benefits to insure members against unemployment, ill
health, old age and funeral expenses. In many developed countries, these
functions have been assumed by the state; however, the provision of
professional training, legal advice and representation for members is still an
important benefit of trade union membership.
Collective bargaining: Where trade unions are able to operate openly and are
recognized by employers, they may negotiate with employers over wages and
working conditions.

Industrial action: Trade unions may enforce strikes or resistance to lockouts in

furtherance of particular goals.
Political activity: Trade unions may promote legislation favorable to the
interests of their members or workers as a whole. To this end they may pursue
campaigns, undertake lobbying, or financially support individual candidates or
parties (such as the Labour Party in Britain) for public office. (wikipedia)

Why Labor Union should be allowed in industries of EP in Bangladesh?

No Freedom of Association for Bangladesh's EPZ Workers. EPZ workers denied

their basic human rights. The ongoing battle between the Bangladesh Garment
Manufacturers and Exporters Association (BGMEA) and the Government of
Bangladesh over the rights of workers to form unions, organize and collectively
bargaining the Export Processing Zones (EPZ's) of Bangladesh will do nothing
to assist and advance the rights of workers in these zones. The Government of
Bangladesh is under increasing pressure from the Government of the USA to
allow workers to unionize in the EPZ's. While the Government of Bangladesh
and the BGMEA may disagree over the detail, neither is in favor of
unconditional Freedom of Association. The basic premise of the argument
advanced by the BGMEA is that unions should not exist in the Zones. Their
compromise is that a referendum should be held amongst workers of the EPZ's

in which Management, the employers, would explain to workers the idea of a

Workers Welfare Committee (WWC).
Should workers vote in favor of such a committee, then, the Bangladesh
Export Processing Zone Authority would select workers to serve on these
committees. Workers would at no stage have the opportunity to elect
representatives to advocate for their rights. This proposal is seriously flawed
and seeks to manipulate and increase control over workers rather than allow
them their basic human rights. A similar system to the one proposed by the
BGMEA was introduced in SriLanka in 1992, this system has been a failure for
workers, who have now organized democratic and independent trade unions
in the Zones.
TIE-Asia urges the government to allow workers full freedom to form unions of
their choosing, organize and collectively bargain at the factory, Zone, Regional
and National Level, in accordance with ILO Conventions and the Constitution of
Bangladesh. The recent tragic series of fires in garment factories in
Bangladesh highlight this urgent need for workers to have assay in the
workplace and for their rights and lives to be protected.
The maintenance of a climate of good Industrial Relations in society depends
largely on the role-played lay the State as an actor in the industrial relations
system. Because it is the duty of the State to formulate labor laws and policies,
to administer them and also to uphold justice so that neither the worker nor the
employers should suffer. Thus in any society the State acts both a planner and
an administrator in the industrial relations systems. The Development of
healthy labor management relations, Bangladesh government should allow
worker to form union in export processing zones (EPZ) in progress on improving
workers rights.

Readymade garments, for the last couple of decades, have

been the lifeline of Bangladeshs economy. At the last count, the sector
accounted for nearly 80 percent of export earning that drives the economy
further forward and it also provides jobs for hundreds of thousands of semi-

skilled workers, mostly, who in turn provide livelihood for millions. But the
alarming fact is that, Bangladeshs garments exports were down as political
turmoil and labor unrest wreaked havoc on the sector, which is crucial to the
impoverished nations economy. The industrys immediate response was to
allege instigation by political conspiracy or international competition. The
answer does not lie in merely apportioning blame to the external actors or
seeking hidden clues, but the reason may be deeply routed in the owner-labor
relations. It was assumed that the negotiating agents could not reduce the gaps
between the workers and the owners in most of the affected industries, as trade
unionism was virtually absent. None of the studies has been done so far about
the issue. So it is very important to find out the real fact behind the role of labor
union in the recent labor unrest to evaluate the necessity of labor union to
reduce the risk of labor unrest.

Prospects of trade unions in Bangladesh

The experts discussed the problems and prospects of the trade unions in
Bangladesh
Today therere trade union activities of Bangladesh where the politicians,
representatives of the state apparatus, MPs, the businessmen and journalists
gathered under the auspices of the discussion.
In Dhaka, there was the regular meeting of the discussion on the theme Trade
unions in Bangladesh: the role of the social modernization.
The panelists discussed the role that trade unions must belong to the effective
model formation of the social and labor relations at the present stage. They
discuss the issues of trade union for the prevention of the social and labor
conflicts, the role of unions in improving the labor law of the country, in
particular the adoption of the New Law About Trade Unions, the subject to
collective bargaining.
The panelists also discussed the initiative of on the establishment of Trade
Unions Council. The Council is the standing advisory body to the fund, which
aims are to facilitate the tasks implementation for the social partnership
development and collective bargaining regulation of the social and labor
relations for the group fund.
The meeting of the trade union experts was attended by Chairman, Federation
of Trade Unions of Bangladesh. After limited time duration a general meeting is
held at different places. Here governing bodies of central trade union attend

with president and general secretary as well as organizing secretary. Sometimes

representatives of government attend the meeting and plays roles to maintain
the workers right. Different online, print, and electric medias journalists gather
there.

References:
http://shailallb.blogspot.com/2010/02/trade-union-should-be-allowed-in.html
http://epzbangladesh.org.bd
http://en.wikipedia.org/wiki/Bangladesh_Export_Processing_Zone_Authority