The government of Bangladesh is committed to the establishment of a minimum of 100 public and private Special Economic Zones (SEZs) nationwide, under the ambitious Vision 2041. In line with the prevailing trend, the Government of Bangladesh (GoB) and the Japan International Cooperation Agency (JICA) have entered into a Loan Agreement for the Foreign Direct Investment Promotion Project (FDIPP).
As part of this collaboration, GoB has made the decision to establish Japanese Economic Zones (EZ) on the outskirts of Dhaka, the capital city, through a joint venture under the provisions of the Bangladesh Economic Zones Act 2010, in partnership with JICA. Bangladesh Economic Zones Authority (BEZA) has already chosen Sumitomo Corporation as the developer for this zone.
Construction is in full swing at the Bangladesh Special Economic Zone, situated on 1,000 acres of Araihazar, Narayanganj, aiming to kickstart production by early next year. Japan Ambassador to Bangladesh Ito Naoki urged the responsible officials to foster an environment conducive to investments in the country.
Singer Bangladesh Ltd Begins Factory Construction
A multinational electronics and home appliance company, Singer Bangladesh Ltd., as announced by officials has already commenced constructing its factory on a 33.4-acre land lease within the economic zone, as announced by officials. Production is expected to begin by March 2024.
“Four more companies have commenced factory construction within the zone, and an additional four are presently in the contract-signing phase. In addition to this, 22 prospective companies have expressed their intent to invest in this high-potential economic zone,” disclosed Shaikh Yusuf Harun, executive chairman of the Bangladesh Economic Zone Authority (Beza).
Infrastructure Development for Uninterrupted Services
Beza authorities have conveyed their commitment to delivering consistent power and essential services to the Bangladesh Special Economic Zone, also recognized as the Japanese Economic Zone. According to authorities, the Power Grid Company of Bangladesh plans to build a 230 kV substation within the economic zone, with a targeted completion date of 2025. This substation is going to satisfy future power demands of the country.
Saleh Ahmed, the Director of Infrastructure Development at the Japanese Economic Zone Project, has confirmed that a 33 kV power transmission line is currently active within the economic zone, supplying electricity for various purposes. Singer Bangladesh Ltd is one of the entities leveraging this power source for their factory setup.
Additionally, government authorities have announced their determination to swiftly obtain the necessary land for the construction of a gas transmission line in Haripur. The deputy commissioner of Narayanganj is overseeing the acquisition process.
Water drainage and canals
The gas line from Haripur is all set with the purchase of the necessary pipes, but the next step involves acquiring the land for its installation. During the PIC meeting, the decline in water retention capacity in the surrounding areas due to soil filling in the economic zone was discussed. Consequently, the zone is at risk of waterlogging unless canals are dug to drain the excess water.
Saleh Ahmed stated, “Our intention is to excavate three canals during the upcoming dry season, and we’ve had talks with the Water Development Board regarding this plan.” The committee has opted to initiate the re-excavation of canals surrounding the economic zone.
Progress and Cost of the Japanese Economic Zone Project
In June 2023, the Japanese Economic Zone project achieved financial progress of 85.82%, with physical progress nearly reaching 100%. Notably, the project’s land acquisition activities have also achieved nearly 100% completion.
An estimated budget of Tk3,195.81 crore has been allocated for the ongoing land acquisition and development projects for both economic zones. This project is slated to be completed by June 30, 2024, which commenced on January 1, 2017. The anticipated financial outlay for the acquisition and enhancement of land for the Bangladesh Special Economic Zone is estimated at Tk2,400 crore.
Other Companies’ Ventures in the Economic Zone
Up to this point, the Bangladesh Economic Zones Authority has finalized land lease agreements with five companies for the establishment of factories in the Narayanganj economic zone.
Shareholders and Expectations for the Economic Zone
Shaikh Yusuf Harun, the executive chairman of the Bangladesh Economic Zones Authority (Beza), specified that the Bangladesh Special Economic Zone (BSEZ) will have its shares divided as follows: Beza (24%), Jica (15%), and Sumitomo Corporation (61%).
It is anticipated that the zone will draw in $1.5 billion in investments and generate employment opportunities for approximately 100,000 individuals once it reaches full operational capacity. According to information from Beza, a range of sectors, including automobile assembly, motorcycle manufacturing, mobile handset production, agro-food processing, light engineering, garment production, and pharmaceuticals, will establish their factories in the economic zone.
Japanese corporations such as Toyota, Mitsubishi, and Sumitomo have already expressed keen interest in investing in this region.
In summary, the establishment of the Japanese Economic Zone in Bangladesh reflects a concerted effort by the government to promote economic growth, attract foreign investment, and create jobs. The progress made in infrastructure development and the commitment of multinational companies and international partners signal positive prospects for the economic zone’s success in the future