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Monday, October 30, 2017
http://dailyasianage.com/news/92740/competitiveness-of-dhaka-city
Competitiveness of Dhaka City Part 2 M S Siddiqui
Although Dhaka has a dynamic and vibrant economy, it is one of the poorest megacities in the world. GDP per capita is low by international standards, but GDP per hectare is high because of the intensity of urban development and business activities. but still lacking in international competitiveness, a more in-depth study of its economy was made to find out how it can improve.
Poor planning and management of land use and utilities has led to high congestion and underperformance of assets and service delivery, reducing the returns to businesses and government from their capital investment. More and more business activities have migrated away from the central area to the periphery as a result. Identifying improvements that can be made in the functional and spatial productivity of industrial areas in Dhaka is important in attaining a more sustainable and prosperous economy for the megacity. The economy of the greater Dhaka is dynamic, but it is controlled by activities in and around the central business district. There is significant variation in economic output and activities in the DCR and the surrounding municipalities, and therefore also in the spatial distribution of poverty and the quality of infrastructure, utilities, and government services. These patterns and variations in the spatial geography of the economy are explained below. The half of industrial units is in the Dhaka metropolitan area. The next-largest concentrations of manufacturing units in the DCR are in Narayanganj, Narsingdi, and Gazipur. Manikgonj has the lowest concentration. Within Dhaka District (see footnote 2), there is a major concentration of industries in the central city area. Most of these are textile manufacturing units, located primarily in Mirpur and Savar, and along the Airport Road. one of the largest concentrations of micro industries is in Keranigonj Thana,4 south of the Buriganga River. Most industry units function as feeder firms in the supply chain for a fewlarge-scale industries. Two export processing zones in Savar, northwest of Dhaka city, contain many textile manufacturing units. outside Dhaka District, the major concentrations of industries are in Narayanganj. Narayanganj wastraditionally an industrial town engaged in jute processing and hosiery production. It is still an industrial town, although jute processing is no longer a major economic activity. Apparel, especially knitwear, industries are gradually moving to Narayanganj. The greatest concentration of labor is found in Dhaka District, Savar, and fringe areas; the next largest, in Narayanganj and then Gazipur. Gazipur is expanding because of its flat and generally flood-free land. Land is also available in Narsingdi for the expansion of industries, and many manufacturing industries are moving into this area. There is a small concentration of industries, mainly food processing and other agricultural business activities, in Munshiganj and Manikganj. The textile and RMG industry has been the country's export leader for the last 30 years. The industry generates an estimated 1.2 billion jobs in the DCR and, in 2009, exported more than $3.6 billion worth of textiles and garments. This sector has gained comparative advantage because of (i) its large pool of low-cost labor; (ii) its low transportation costs, resulting from the co-location of industrial establishments; and (iii) policy support from the government, including the establishment of economic enterprise zones and other taxation, foreign ownership, and infrastructure inducements for exporters and investors. The sector was named one of the "thrust sectors" of the government in its industrial and export development policies. The successive governments in Bangladesh have encouraged and supported the development of the textile and RMG industry since the late-1980s. Industry entrepreneurs set up factories anywhere they could secure land or buildings, including houses when these were available. The factories are geographically concentrated in these districts because of the ready access to skilled labor, and the lower transportation and other business transaction costs. Government did not seek to impose any restrictions on the location of factories.
Supply industries grew rapidly to meet the demand for raw materials and fabricated products. There were instances of setting up RMG factory at costly Motijheel commercial Area. The factory set up without much investment for fixed capital like land and building etc. In their advantage, many of the supporting industries are close to the main production houses, but the intensity of the development in these areas has added to the traffic congestion and overtaxed the utility services. Despite these disadvantages, many well-established family businesses with expanded operations elsewhere in the DCR maintain premises in the inner city, partly because of the numbers of skilled people who live in this area and also because of the economies of scale resulting from the agglomeration. In course of time these entrepreneurs became solvent enough to set up on factory and expand the production facilities by move out of city but within the 30 km of Dhaka centre to avail all facilities of city. On the other hand the buyers also imposed compliance issues like safety and labor rights as precondition of buying garments. A study of few years back revealed that more than 8,000 factories and SMEs of varying sizes are involved in the production of textiles and ready-made garments in the DCR. More than 60% of these are in the Dhaka metropolitan area, with around 8% in Narayanganj and 17% in Gazipur. Most of the textile and RMG industry units are in central Dhaka, where factory buildings are multistory and not well designed for efficient production. For this reason, some factories that have expanded have relocated to areas where there is more land and vertical (same-level) production systems. In general, integrating backward and forward supply chains will add value. The backward supply chain consists of eight stages: (i) cotton ginning or raw-fiber making, (ii) spinning, (iii) yarning, (iv) knitting or weaving, (v) dyeing, (vi) cloth making, (vii) the turning of cloth into ready-made garments, and finally (viii) the sale of the garments in the domestic or export markets. Each stage involves some form of value addition. opportunities exist to add further value to products, especially if supporting industries-such as (i) lining and the production of buttons, zippers, and other accessories; and (ii) integration of design and marketing services-were to join the value chain. Mapping the supply chain helps the industry to understand the production systems within the cluster, the valueadding elements, and the linkages to supporting industries and services. The supply chain for the textile and RMG industry shows that the industry cluster has a strong multiplier effect on employment and production.The structure of the textile and RMG industry cluster in the DCR. The five core industries in the cluster are cotton textiles, knitwear, woolen textiles, jute textiles, and hand looms. The backward and forward linkages supporting the industry cluster are government (in policy and strategy matters), utility services, industry associations and interest groups, educational establishments, labor unions, national and international markets, and R&D and design support services. Many components of the cluster are poorly developed, inefficient, or missing Dhaka is competitive than it competitive cities in Asia. It is interesting that cities in other part of Bangladesh, are much less competitive than those in the east. The availability of energy and the comparatively better infrastructure in Dhaka has significant contributors to the disparities with other part of the country. Other cities of Asia like Ho Chi Min and Yangun will challenge Dhaka due to absence of viable spatial policies like physical or spatial planning, since the policy makers in those cities are investing and reforming their rules and regulations. Bangladesh should develop other cities like Chittagong, Rajshahi, Khulna, Barishal, Rangpuretc to face the new challenge of other cities of Asia. (Concluded).
The writer is a Legal Economist. mssiddiqui2035@gmail.com