EPZ project delays: A masterclass in missing FDI and exports

Infograph: TBS

A one-time investment of Tk466 crore has the potential to unlock Tk420 crore in new investments, generate Tk840 crore in annual export earnings, and create 14,000 desperately needed jobs. 

Any rational mind would seize such an opportunity without a second thought. Who, in their right mind, would delay such a high-return investment and let the opportunity cost slip away?

But this is Bangladesh – where project delays and cost escalations are as inevitable as monsoon floods. This time, the setback is in the construction of eight factory buildings in four export processing zones (EPZs), intended to cater to foreign investors. 

The plan was simple: build, attract investment, and fuel economic growth. Instead, execution has become another case study in bureaucratic inertia and inefficiency.

Launched in 2022 with a Tk466 crore budget, the project was supposed to be completed in three years. Now, it's limping behind schedule, bogged down by sluggish contractor work, unresolved foundation issues, and a gas pipeline that refuses to be relocated.

The numbers are telling. In Chattogram EPZ, where two of the buildings are being constructed, physical progress on Building-2 stands at a meagre 33%, while 83% of the allocated time has already elapsed. The contractor, who bagged the Tk42.21 crore deal in October 2023, was meant to complete construction by March 2025. 

But delays in gas pipeline removal – thanks to Karnaphuli Gas Distribution Company – and additional work on water reservoirs have turned the deadline into a moving target.

The story is the same across the board – whether in Ishwardi, Uttara, or Mongla EPZs – raising serious concerns about whether these factories will be operational anytime soon.

According to the Bangladesh Export Processing Zones Authority (BEPZA), once completed, these buildings will bring in $35 million in new investment, add $70 million in annual export earnings, and employ 14,000 people. 

But for now, those figures remain just that – numbers on paper, lost in the labyrinth of delays that Bangladesh knows all too well.

The project will also add 127,272 square metres of industrial space and boost BEPZA's revenue.  

According to BEPZA data, the first building under construction in Chattogram EPZ was scheduled for completion by July 2024. However, by January, only 30% of the work had been completed despite 67% of the project duration having passed.  

Other buildings in Chattogram EPZ also lag behind, with completion rates at 33%, 34%, and 38%, while deadlines were set for March-April 2024.  

Progress in Mongla EPZ stands at 20.05%, requiring the remaining 80% to be completed by June.  

The Uttara EPZ building has attained 44% completion, while the Ishwardi EPZ buildings have progressed to 60% and 50%, with targets set for March and April, respectively.  

BEPZA officials, speaking anonymously, acknowledged the delays but assured that measures are being taken to expedite construction.  

Communication with contractors and zone engineers has been intensified, and meetings are being planned to accelerate the pace of work.  

The initiative aims to provide ready-built spaces for foreign investors, who prefer pre-constructed facilities over handling their own construction.  

Project Director Md Mizanur Rahman told The Business Standard, "We have set a work completion target for June, keeping some time in hand, although the project officially runs until December 2025. The contractor may be given an additional three months if necessary."  

He added that two buildings in the Ishwardi EPZ and one in the Uttara EPZ would be completed within six months, while all four buildings in the Chattogram EPZ would be finished by December 2025. Rainfall and gas pipeline delays have contributed to the slow progress.  

According to BEPZA sources, demand for these buildings remains high, particularly in the Chattogram EPZ, where four structures are under construction.  

Some investors have already expressed interest in leasing space. If completed as planned, the Chattogram EPZ alone will provide 54,672 square metres of space, generating $164,000 in monthly rental revenue.  

Md Ashraful Kabir, member (Investment Promotion) at BEPZA, recently said EPZs played a significant role in attracting foreign direct investment (FDI), contributing 29% of the country's total FDI in the fiscal 2023-24.  

He said although EPZs and the BEPZA Economic Zone occupy only 13.95 square kilometres, they attracted $424.29 million of Bangladesh's total FDI of $1,468.17 million during the fiscal year.  

Currently, 449 industrial establishments operate in eight EPZs, including 256 foreign-owned enterprises, 49 joint ventures, and 142 domestic businesses. Another 108 industrial units are under implementation.  

These EPZs manufacture a wide range of products, including bicycles, cosmetics, mobile parts, energy-saving bulbs, and safety equipment.  

Since its inception, BEPZA has facilitated investments worth $6.91 billion and exports amounting to $114.91 billion as of 2024.  

However, the timely completion of the ongoing factory buildings is crucial for sustaining this momentum and meeting growing investor demand.