Infrastructure, utility shortages erode investor confidence in economic zones

Investors in Bangladesh's economic zones are losing confidence after paying substantial amounts for plot allocations without receiving promised infrastructure and utility services, particularly uninterrupted gas and industrial water.

Many companies have yet to begin production because of utility shortages and slow infrastructure development, Bangladesh Economic Zones Investors' Association (Bezia) Chairman MA Jabbar said.

He raised the concerns at a meeting between the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and BEZIA at the BGMEA Complex in Uttara, Dhaka, yesterday. The meeting discussed the progress of plots allocated in five government economic zones prioritised for full operationalisation in the first phase, as well as policy barriers faced by investors.

Photo: Courtesy

According to a press release, only 27 companies are currently in production across the five government economic zones, covering 39,000 acres. Only 37% of the total allocated land is currently operational.

The meeting stressed the need to urgently resolve shortages of uninterrupted gas and industrial water. The two organisations also decided to jointly urge the government not to impose additional service charges before factories become fully operational.

To improve the investment climate, BGMEA and Bezia agreed to jointly raise several policy issues with the government. They called for a complete waiver of Beza-imposed service charges on utility bills until the promised uninterrupted utility supply is ensured.

They also sought equal sector-based cash incentives for investors inside economic zones, matching those available to businesses outside the zones.

The organisations termed the requirement for both master leaseholders and subsequent sub-lessees to pay Vat at 15% as double taxation and demanded a complete waiver of VAT on lease tariffs.

The meeting also called for allowing deemed exports to domestic bond-licence holders without EXP and EP documentation to reduce administrative complications and time loss.

Other priorities included making mutation of 99-year leases bankable and fully implementing one-stop services in economic zones.

Jabbar said 41 BGMEA-affiliated units have invested in the National Special Economic Zone in Mirsarai, Chattogram. This creates scope for BGMEA and Bezia to jointly address national and policy issues affecting the garment sector, he said.

He proposed including a BGMEA representative on BEZIA's board to strengthen coordination and promote sustainable industrialisation in economic zones.

BGMEA President Mahmud Hasan Khan welcomed the proposal and said the association would soon nominate a qualified representative.

The Bezia delegation was led by Jabbar and included Vice-President Md Halimuzzaman, Director Delwar H Titu, CEO Aparup Chowdhury and member Md Mustafizur Rahman. The BGMEA delegation was led by Khan and included Vice-President (Finance) Mizanur Rahman.

At the end of the meeting, the two organisations expressed hope that their joint policy advocacy would encourage the Bangladesh Economic Zones Authority to take swift and effective measures to resolve infrastructure challenges and policy complications in the economic zones.