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Download PDF The government has taken a fresh decision to award operating licence to the country’s biggest private export zone– Korean Export Processing Zone (KEPZ)– by dropping some terms and conditions that clashed with the law, sources said.
In September last, after dilly-dallying over the matter for five years, the Khaleda Zia- led alliance government had taken the same decision but imposed some terms and conditions that contradicted the government’s original promises to the foreign investor.
Moreover, the alliance government ultimately did not issue the licence during its tenure, and the official process of issuing it dragged on for the last seven months.
The fresh decision was taken at a meeting of the Private EPZ Board of Governors, headed by Chief Adviser of the caretaker government Dr Fakhruddin Ahmed, at his office on Sunday.
Meeting sources said Fakhruddin noted at the meeting that the new terms imposed on the KEPZ in September contradicted the EPZ law. He mentioned that while inviting foreign investors, ‘we make some promises and then we shift to other terms and conditions when they finally arrive. Such shifting of decisions harms national image in international arena,” he said.
The Khaleda government had modified licence fee and pushed it up to $100,000 from the original fee of $ 10,000. Besides, it had asked the KEPZ to annually pay the government $20 royalty for each acre of the land. The KEPZ has purchased about 2,500 acres.
Afterwards, this decision was sent to the law ministry for vetting. The ministry did not clear it since it did not comply with the private EPZ law.
Sunday’s decision will also be sent to the law ministry for vetting. Sources said they expect clearance within seven days.
“We hope licence will be issued this month, and the KEPZ authorities will be able to start inviting investors next month,” said one source.
Meanwhile, the KEPZ authorities are concerned about Karnaphuli bridge.The present bridge is not suitable for heavy cargo vehicles, and construction of the third Karnaphuli bridge does not promise an early completion.
“The KEPZ investors will surely want to see a functional infrastructure, and consider lack of it as a disincentive,” the source pointed out.
Another problem is a lack of fresh water supply in the KEPZ area, which is located close to Karnaphuli Fertiliser Company (Kafco). The Kafco uses eight deep tube wells and has been heavily using water for fertiliser production for the last one decade. This has reduced availability of underground water.
Water of the nearby Karnaphuli river is highly saline and it cannot be used for industries at the KEPZ, sources mentioned.
However, Koika, a Korean non-government organisation (NGO), along with the World Bank has already planned a project to develop fresh water resources at the KEPZ site.
The KEPZ, by its size and investment profile, stands out from all other EPZs in the country. It plans to install 500 industrial units with an investment of one billion dollars. KEPZ sources said they plan to set up a whole range of garment and textile units plus electronics, software, scientific and optical tools, machine tools, automotive parts and various other units there. To set up its infrastructure, Korean company Youngone will separately invest $200 million. The zone is expected to start export within two years of award of licence.
The KEPZ would directly employ about 100,000 people and another 200,000 indirectly.
Between 1999 and 2003, the KEPZ spearheaded by Youngone had invested about Tk 100 crore to procure 2,500 acres of land for the export zone and develop it. But it could not open the zone as the BNP-led alliance government declined to give it operating licence without any explicit reasons.
From early 2002, the Prime Minister’s Office (PMO) formed several committees to look into ‘irregularities’ in the KEPZ and the private EPZ Act that was framed during Awami League rule. The first committee verbally asked the KEPZ why it needed an area as huge as 2,500 acres and hinted that it could do away with 500 acres.
Then in November 2003, a high-powered committee headed by the principal secretary to the PM recommended that there is no need to change the Private EPZ Act and said, “In the interest of national image and foreign investment”, the KEPZ should be allowed to function without any delay.
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