Bold initiatives are being launched in Bangladesh aimed at spurring investment and enticing foreign direct investment (FDI). Among these plans is the establishment of a defence industrial park in Mirsarai, along with the creation of the nation’s first free trade zone (FTZ) in Anwara.
These strategic decisions were sanctioned on January 26 during a joint meeting that included various governing boards associated with investment, all under the leadership of Chief Adviser Professor Muhammad Yunus.
During this significant gathering, additional measures were approved, including efforts to rejuvenate the Kushtia Sugar Mill, permit economic zones within city limits, offer a cash incentive of 1.25% on FDI brought in by expatriate Bangladeshis, and solidify plans to consolidate six investment promotion agencies into one.
After the meeting, Chowdhury Ashik Mahmud Bin Harun, who serves as the executive chairman of the Bangladesh Investment Development Authority (Bida), shared with reporters at the Foreign Service Academy that several pivotal resolutions have been made to streamline investment processes and attract international investors.
He pointed out the challenges posed by the coordination required among numerous investment boards, stating, "It often takes a considerable amount of time to convene these meetings. This has been only the second such meeting during this government's term."
Defence Industrial Park in Mirsarai
A major highlight of the meeting was the decision to convert land originally designated for a foreign economic zone into a defence industrial park. Ashik indicated that approximately 850 acres in the Mirsarai area of Chattogram would now be allocated for this purpose. Initially, this land was set aside for an Indian economic zone, but with the cancellation of that project, it became available for a new use.
This area will now be incorporated into the master plan of the Bangladesh Economic Zones Authority as a defence industrial park. He emphasized, "In today’s global landscape, the demand for defensive products is increasing, and the constraints on supply have underscored the need for domestic production capabilities."
Addressing inquiries about investments and operations, Ashik noted that Bangladesh currently possesses one state-run arms manufacturing facility. However, the new zone is expected to be developed by private sector entities, attracting both local and foreign investments. He further added, "The defence equipment manufactured here will be exported internationally."
First Free Trade Zone Planned in Anwara
Additionally, the board of Beza has granted policy approval to introduce free trade zones in Bangladesh for the very first time, as the country currently lacks an FTZ framework.
A free trade zone permits goods to be stored, processed, manufactured, and re-exported without incurring customs duties, thereby functioning as a quasi-overseas territory.
Ashik explained that establishing an FTZ would enhance Bangladesh's position within global supply chains. For this inaugural FTZ, around 600 to 650 acres in Anwara, Chattogram, has been earmarked for development. Following this policy endorsement, the proposal will be presented to the cabinet for final approval.
To illustrate its significance, he referenced the importation of cotton for the garment industry.
"Currently, cotton sourced from the United States experiences long shipping times, which constrains its utilization in the garment sector. If we could store that cotton in a free trade zone in Bangladesh, it could be swiftly re-exported as needed, either to Bangladesh or other countries," he elaborated.
He also mentioned that Jebel Ali Free Zone (Jafza) in Dubai was cited as a successful global model during the meeting, handling approximately $190 billion in annual trade and contributing about 36% to Dubai's GDP. Policymakers are optimistic that Bangladesh's free trade zone will evolve into a thriving center for trade and economic activity.
Reviving the Kushtia Sugar Mill
Another important resolution from the meeting was the decision to revive the Kushtia Sugar Mill. Ashik remarked that several of the nation's sugar mills have faced years of financial losses, leading to discussions regarding their effective utilization. The area surrounding Kushtia Sugar Mill already has the necessary gas, electricity, and road infrastructure, making it ideal to be integrated into an economic zone for new industrial ventures.
Policymakers believe that this initiative could generate jobs in the south-western region while ensuring the productive use of over 200 acres of land.
Moreover, a significant decision was made to permit the establishment of economic zones within municipal areas. The Bida executive chairman highlighted that previous legislation from 2012 had barred economic zones from municipal regions. However, as the number of municipalities has reached 331, the pressure to set up zones outside urban areas has led to increased competition for agricultural land.
Consequently, policymakers decided to enable the establishment of economic zones within municipal boundaries by repurposing closed or abandoned industrial facilities for economic activities.
1.25% Cash Back on Diaspora-led FDI
The governing board of Bida also endorsed a policy that offers a 1.25% cash incentive on FDI initiated by expatriate Bangladeshis. Ashik explained that the goal is to harness the international networks of expatriates to draw foreign investors into Bangladesh. "Expatriates can help by introducing their business contacts to our country," he stated.
To clarify, if an individual facilitates the inflow of $100 million in foreign investment, the government would provide a cash incentive of $1.25 million, structured similarly to existing incentives for remittances.
Additionally, there are plans to establish Bida sub-offices abroad, including locations in China, South Korea, and Japan. "These offices will be staffed by local nationals from those countries, operating more like agencies. Should they successfully attract FDI, the 1.25% incentive provided by the government will cover their operational costs," he noted.
The meeting also reaffirmed the ongoing commitment to merge six investment promotion entities—Bida, Beza, Bepza, the Hi-Tech Park Authority, the PPP Authority, and Bscic—in the future. An independent third-party consultant will be appointed to design the framework for this merger.
