Bangladesh: Export Competitiveness for Jobs (IDA 6042-BD) Implementation Support Review January 14-21, 2018 Aide Memoire

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1 Bangladesh: Export Competitiveness for Jobs (IDA 6042-BD) Implementation Support Review January 14-21, 2018 Aide Memoire 1. During January 14-21, 2018, a World Bank Task Team 1 conducted an Implementation Support Review of the Export Competitiveness for Jobs Project (EC4J). This Aide Memoire (AM) summarizes the findings on the status of project implementation and presents the recommendations and agreements reached with the implementing agency (IA) during the mission. The AM was discussed at a wrap-up meeting on January 21, 2018, chaired by the Additional Secretary, Mrs. Mahmuda Begum, from the Economic Relations Division (ERD). The Task Team is grateful to the Ministry of Commerce (MoC) for its collaboration and organization of the mission and facilitating meetings with key stakeholders, including the Business Promotion Council (BPC), and the Bangladesh Economic Zones Authority (BEZA). As agreed, this AM will be classified as public under the World Bank s Access to Information policy. OVERALL STATUS AND KEY PROJECT DATA 2. The project was approved by the World Bank Group s Boards of Governors on June 1, It was subsequently approved at the Executive Committee of the National Economic Council (ECNEC) on August 9, The project was signed on November 5, 2017, and it was declared effective on December 11, The Project Implementation Unit (PIU), led by the Additional Secretary of the MoC as Project Director (PD), and comprising of two Deputy Project Directors (DPDs), is currently in the process of establishing a project office and recruiting technical and support staff for key positions in the PIU. Several of the agreed actions from the previous Implementation Support Mission (on September 2017), including some of the covenants per Schedule 2 Section 1.A.2 of the signed Financing Agreement, are yet to be achieved. However, the overall progress is satisfactory since the project has been effective only for one month. Table 1: Project Data Board Approval June 1, 2017 Effectiveness date December 11, 2017 Closing Date of IDA Credit June 30, 2023 IDA Credit Amount US$100 million Amount Disbursed so far US$0 KEY POINTS DISCUSSED AND AGREED ACTIONS Component 1: Market Access Support Program 3. The PIU, BPC and the mission agreed upon specific implementation activities required under Subcomponents 1.1 and 1.3, and the distribution of responsibilities for undertaking each activity. For example, the PIU, in coordination with BPC, will prepare action plans for selected activities (see Annex 2 1 Hosna Sumi (Private Sector Specialist/TTL), Thomas Farole (Lead Economist), Yasuo Konishi (Consultant), Mrinal Kanti Sircar (Consultant), M. Masrur Reaz (Senior Economist), Arafat Istiaque (Procurement Specialist), Hasib Ehsan Chowdhury (Financial Management Specialist), Sabah Moyeen (Senior Social Development Specialist), Nadia Sharmin (Environmental Specialist), Dr Khaliquzzaman (Environmental Consultant), Mostofa Hamza Mehedi (Program Assistant),Mehar Akhter Khan (Program Associate) and Nahid Sharmin (Team Associate). Michael Engman (Sr. Economist/TTL) supported the Mission from Washington, D.C.

2 for the detailed list). In addition, the mission provided technical comments at a review of the draft Grant Manual for the Export Readiness Fund (ERF). The template to be used for Environmental, Social and Quality (ESQ) compliance assessment is currently being drafted by technical expert and will be shared with PIU by Feb 28, Request for Expression of Interest (REOI) for ERF manager was reviewed by the Bank. Issues arising and actions proposed during the mission were as follows. In coordination with the PIU, the BPC will prepare draft action plans and prioritize detailed activities identified under Subcomponents 1.1 and 1.3 (see Annex 2). BPC to take stock and prepare an itemized list of ESQ compliance activities currently undertaken by member associations in the light engineering, plastics and leather sectors. The list should include: title of the activity; key issues covered; number of participants; and duration of each activity. For training, seminars and awareness raising activities, member associations will be required to provide copies of materials used for these activities, and for BPC to develop a physical and/or digital library (searchable) of the materials. BPC to develop an itemized list of data currently collected by the member associations, and identify how the data are collected and updated, stored, analyzed and disseminated. PIU to prepare draft strategic communication plan and activities to implement national ESQ awareness raising. PIU to submit the draft ERF Grant Manual for clearance from the Bank. Task team to finalize draft of the Export Road Map, which is being supported by the complementary advisory project, for review and comments. Task team to finalize template for ESQ assessments and share with PIU and industry associations for review and comments. Component 2: Productivity Enhancement Program 4. Understanding the long term functional value of Technology Centers (TCs) in industrial zones, BEZA expressed their interest and support to allocate lands for TCs, following the lease-agreement procedure. Two potential locations, Mirsarai (Chittagong) and Keraniganj (outskirt of Dhaka), for general engineering TCs within the economic zones were discussed. The PIU was advised to formally apply for land allocation at the economic zone in Mirsarai and submit a formal proposal for Keranigonj (pending decision to allocate land to plastics and associated industries) highlighting potential economic contribution of such TCs. 5. The feasibility study for the leather goods and footwear TC has been initiated by the firm Consulting Services International (CSI). Key informant and expert (local and international) interviews have been completed. The PIU was advised to follow up with the Prime Minister s Office and ERD for confirmation of available land options, which is essential for the feasibility assessment to proceed. The draft assessment result is expected by April The REOI for the feasibility assessment of general engineering TCs has been cleared by the WB, awaiting advertisement. Advisory Committee for TC was formed by PIU. Component 3: Public Investment Facility for Infrastructure Constraints (PIFIC) 6. The draft operating guideline for PIFIC has been discussed in detail during working session with PIU. The mission agreed to discuss and review the draft guideline further regarding the core content, including adjustment to the selection procedures; use of industry associations for outreach; the technical assistance agreement between PIFIC and the sub-project sponsors; and management firm selection. The final draft is expected by Feb 28, 2018 for the Bank s clearance. The REOI for the PIFIC TA firm has been reviewed by the Bank.

3 Component 4: Project Management, Monitoring and Evaluation 7. The PIU is currently staffed with one PD and two DPDs, pending appointment of the third DPD. The Project Steering Committee (PSC) and the Project Implementation Committee (PIC) have been formed. The Project Implementation Manual (PIM) has been drafted and reviewed by the Bank and the PIU will submit a final version for Bank clearance by January 31, Office space for the project is yet to be finalized, which until date has impeded daily work. Terms of References (ToR) for all technical staff has been prepared and cleared by the Bank and they should now be advertised. Having the PIU only partially staffed, added with key selections pending advertisement, results in significant delay to initiate on-theground implementation of key components of the project. The PIU was advised to fast track the selection process to have the fully functional PIU team in place. 8. The PIU requested the mission to provide technical support to develop project management skills with required tools and techniques. The task team plans to conduct a 3-day technical implementation workshop, preferably during early March 2018, to develop a detailed action plan, finalize and establish priorities required for implementing the project components, and provide the PIU with project management training. The session may also include capacity building on monitoring and evaluation, financial management and procurement, and safeguards issues. FIDUCIARY COMPLIANCE 9. Procurement Performance: During the mission, project procurement was discussed thoroughly. The PIU is advised to prepare the procurement packages for all the procurements that are expected to be tendered in the year 2018, and upload in STEP by Feb 15, PIU is advised to expedite the hiring of the Procurement Specialist, as several bids are ready to be advertised. To this end, the ToR for the Procurement Specialist was reviewed and cleared by the Bank, and the PIU has agreed to advertise this position by end of January Overall, the project s progress in procurement is limited since effectiveness, and the PIU is advised to initiate the key procurements at the earliest. 10. Financial Management (FM) Performance: The project has opened a CONTASA, with Janata Bank, which will be the Designated Account to receive Bank financing. Authorized specimen letters, with alternative signatory arrangement between the PD and the DPD, will be sent to the ERD on January 17 for endorsement. The project will follow up with the ERD to ensure that the endorsed signatory letter reaches the Bank by January 22. The mission requested the PIU to initiate the recruitment process for the Financial Management Specialist (FMS), as well as the accountant at the earliest. Meanwhile, the Bank has reviewed and provided comments to the TOR for the recruitment of the FMS. The mission informed that to ensure efficient management of IDA financing, a robust set up of financial management should be in place at the very outset. 11. Disbursements Status: The project is effective as of December 11, 2017, and awaiting ERD s letter on designated signatory. First disbursement of fund will be made soon after receiving the withdrawal application from the client. SAFEGUARD MANAGEMENT 12. Environmental Safeguards: Each sub-project will need to be screened for potential environmental impact and subjected to appropriate Environmental Impact Assessment (EIA) prior to implementation as outlined in the Environmental Management Framework (EMF). The mission recommended and it was

4 agreed that PIFIC Guidelines will include expected environmental impact and associated management plan of proposed projects as one of the considerations for project selection. The PIU will be responsible to obtain the site clearance for the technology center from the Department of Environment (DoE). After obtaining the site clearance, the PIU will share the ToR of the EIA for the technology center for the World Bank clearance. The mission reiterated that it is urgent to appoint an environmental specialist (consultant) with appropriate qualifications at the earliest, as implementation of sub-projects will otherwise be delayed. For example, site selection for the technology centers cannot be finalized without preliminary environmental screening, and the PIFIC cannot incorporate appropriate environmental guidelines. The ToR for hiring the environmental specialist was reviewed and cleared by the Bank and the specialist is expected to be on board by February 28, Social Safeguards: Although the project has been declared effective, no sub-projects have been taken on board yet. The project will not fund any activities that require land acquisition and/or resettlement, or impact indigenous communities. The main social issues to be assessed and mitigated for (where necessary) are labor standards, redundancy of workers due to new technology (and relevant HR policies), gender issues, worker health and safety issues, influx management (as and where necessary) etc. The client will develop in-house capacity for the screening process, preparation of documents/mitigation plans, operation of the grievance redress mechanism, monitoring and evaluation, amongst other activities such as training delivery, review and assessment of sub-project proposals etc. The ToR for hiring social and environmental specialist was reviewed by the Bank and the relevant specialists are expected to be on board by Feb NEXT REVIEW 14. The next regular Implementation Support Review Mission is scheduled for July Table 2: Summary of Agreed Actions Actions Responsibility Agreed timeline 1 A central data storage system with official addresses created for the project PIU Feb 28, Final PIM sent for Bank clearance PIU Feb 07, ERF manual revised and shared with PIU WB Feb 15, PIFIC operating guideline revised and shared with PIU WB Feb 20, BPC shared detailed action plan for sub-component 1.1 and 1.3, list of current ESQ activities with industry associations 6 List of activities for national level ESQ awareness activities prepared 7 Draft template for ESQ assessment finalized and shared with PIU BPC, PIU Feb 20, 2018 PIU Jan 31, 2018 WB Feb 28, Letter to BEZA for TC land in Mirsharai sent PIU Jan 31, Draft application shared with BEZA for TC land in Keranigonj PIU Jan 31, Decision obtained from PMO for leather TC land option MoC Feb 15, Project management workshop organized WB, PIU Feb 28, Procurement plan updated in STEP for all procurements initiated PIU Mar 07, 2018

5 in STEP training organized for PIU staff WB Feb 07, PIU will form evaluation committee and share with Bank PIU Feb 10, Procurement consultant hiring process completed PIU Feb 28, Training conducted on World Bank Procurement Regulations for PIU staffs WB April 25, Authorized signatory letter (ASL) sent to ERD PIU Jan 17, ASL reached from ERD to the Bank (PIU to follow up) ERD Jan 22, Financial Management Specialist s hiring process completed PIU Feb 28, Accountant hiring process completed PIU Feb 28, Environmental and Social safeguards specialist hiring process completed PIU Feb 28, Project office hire/ lease process completed PIU March 31, REOI for ERF manager and PIFIC manager submitted for the Bank clearance PIU Jan 31, 2018

6 Annex 1: List of persons met Economic Relations Division Mrs. Mahmuda Begum, Additional Secretary Mr. Zahid Hossain Munshi, Deputy Secretary Ministry of Commerce Mr. Shubhashish Bose, Secretary Mr. Munshi Shafiul Haque, Additional Secretary Mr. Md. Obaidul Azam, Additional Secretary, PD, EC4J Project Mr. Musleh Uddin, Deputy Chief Mr. Khaled Mamun Chowdhury, Deputy Secretary, DPD, EC4J Project Mr. Md. Abu Sayed Joarder, Deputy Secretary, DPD, EC4J Project Business Promotion Council Mr. Fakir Firoz Ahmmad, Coordinator Mr. Noor Md. Mahbubul Haq, Deputy Coordinator Ms. Ishrat Jahan, Executive Officer, LSBPC Ms. Fathama Nargis, Executive Officer, MPHPBPC Mr. Md. Kamruzzaman, Executive Officer, LEPBPC Department for International Development Ms. Narissa Haider, Deputy Team Leader, Growth and Private Sector Development Mr. Mashfique Ibne Akbar, Private Sector Development Advisor Bangladesh Economic Zones Authority (BEZA) Dr. M. Emdadul Haque, Executive Members Mr. Md. Harunur Rashid, Additional Secretaries Consulting Service International Ltd. Mr. Joseph Strasser, Consultant