The quiet industrial zones | The Daily Star
12:00 AM, March 04, 2008 / LAST MODIFIED: 12:00 AM, March 04, 2008

Investment

The quiet industrial zones


The entrance of Mongla Export Processing Zone (left). While EPZs in Dhaka and Chittagong have been great successes, several of the zones away from the large metropolitan areas have struggled to attract investments. The new SG Oil factory at the Mongla EPZ (right). Photo: STAR

The first thing you notice is the lack of tea stalls, buses and hurrying workers that normally crowd the roads outside the country's industrial zones….. ..then there is the quiet.
Seven years since it opened, promising thousands of new jobs in shinny new factories large parts of the Mongla Export Processing Zone remain a wasteland, over run by wild trees and bushes.
Only 11 factories are up and running and of the hoped for 22,000 new jobs, only 250 have materialized.
“We are in trouble because of the absence of a gas connection and a proper road infrastructure. Investors initially prefer the EPZ, but leave the place due to these shortcomings,” said Hafizur Rahman, general manager of Mongla Export Processing Zone.
“We have lost many potential investors in the last seven years,” he said.
The Mongla EPZ is one of the eight export-oriented industrial enclaves set up in the country. It started operation in 2001 with the aim of generating employment in the southwestern part of the country.
It is a product of a policy introduced in the 1980s, when the EPZs were introduced to promote local and foreign investment, diversify exports, generate employment and transfer technology, offering various facilities to investors such as investment guarantee, 10 years tax holiday, duty free import and export of products and relief from double taxation.
But while there have been notable successes in Dhaka, Chittagong and Comilla, other EPZ's remain largely unused. In Uttara EPZ in Nilphamari, Rangpur and Iswardi EPZ in Pabna, Rajshahi hoped for investments have not arrived. In the case of Uttar, set up five years ago to provide employment in the monga-prone area, only 8 of the 154 plots have been allocated.
These failures have put into question the usefulness of establishing EPZs outside the main metropolitan areas, where some suggest their location has been chosen to solve regional employment problems rather than to satisfy the needs of potential investors.
“The site selections were not proper to attract the investors,” said Zaid Bakht, research director of Bangladesh Institute of Development Studies. “These EPZs were developed to encourage the establishment of agro-processing industries but infrastructures such as transport and support services were not developed properly to woo investors,” he added.
Bakht suggested the creation of storage facilities, adequate electricity supplies and special fiscal incentives to make the EPZs vibrant.
“In future, the government should select the site on a commercial basis,” he said. “Apart from the EPZs, the government should also go for setting up special economic zones so that it can meet the demand for both the domestic market and global market.”
Theorectically the Mongla EPZ is well situated, located less than a kilometer away from the Mongla Sea Port. Yet so far it has received just US$ 3.56 million in investment with only 27 out of 124 plots allocated on the 460 acre site.
Out of total export earnings from EPZs of $2063 million in the fiscal year 2006-07, earnings from Mongla stood at $1.31 million..
“I am a bit frustrated. The EPZ suffers from a number of limitations. There are not enough facilities to attract investors. I am here because all my businesses are in Khulna,” said Ghalib Kapadia, owner of the Tara Exim Corporation that has started to weave terry towel at the EPZ recently.
Ghalib said one major problem is the lack of decent links with commercial hubs such as Dhaka and Chittagong. “The port is virtually inactive. Besides, there is no airport so the journey for buyers is arduous and they cannot visit and return in a day, “ he said.
However Hafizur Rahman, general manager the EPZ is hopeful of receiving increased investments in the coming days with an India-based edible oil refinery, SG Oil, to start production this month.
Hafizur also pinned hopes on Tara Exim and other units processing locally available raw materials such as coir (rough material made from the shells of coconuts) and shrimp shells, a byproduct of the shrimp industry.
“I believe, all these units will have a significant impact on bringing new investments to the EPZ,” he said, “Now if the gas connection is put in place and Padma Bridge is constructed, the EPZ will see an investment boom.”
Chief Adviser Fakhruddin Ahmed, last month, announced the construction of 5.58km railway-cum-road based Padma bridge next year to establish a direct road link between the southwestern region and other parts of the country.
Rajeev Ranjan, chief executive of SG Oil, said. “It's an attractive investment site. It's the nearest place to India. Besides, rents for water, electricity and land are lower compared with the other EPZs,”
BEPZA executive chairman Brig Gen Ashraf Abdullah Yussuf said investment in the smaller EPZs is coming at a higher rate compared with the previous days. “You cannot expect these to attract investment like Dhaka EPZ,” he said.,
The BEPZA chairman said the tariffs for using land, electricity, water and other utility services at Mongla and Ishwardi have already been reduced to encourage investment.
He said Mongla and Uttara EPZ suffered from the lack of gas connection. Moreover in Mongla the water had high levels of salinity, while in Uttara the water had too much iron.
“But we are not sitting idle. We are encouraging those industries that are immune to such problems,” he said.
In his clean, well ordered office just in from the EPZ gates, Hafizur is keen to stress the positive. “It's your choice. You can take a photograph of the wild trees grown here or look into the industrial units, many of which are running based on local raw materials,” said Hafizur.
sohel@thedailystar.net

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