New site selection planned for economic zone in Sylhet

Bangladesh: A donor supported pre-feasibility study has recommended for selecting a new site for establishing an economic zone in Sylhet as the current site does not allow a profitable public-private partnership (PPP) due to its high developing costs.

“The high development costs for the Sylhet site do not allow for a profitable PPP structure. (But) demand for an economic zone in Sylhet does exist, so a new site should be considered,” said the study, funded by IFC-BICF (International Finance Corporation-Bangladesh Investment Climate Fund).

The findings of the study were revealed at the launching programme of a report on 'Special Economic Zones: Performance, Lessons Learned and Implication for the Zone Development'. The programme was co-hosted by Bangladesh Institute of Planners and Board of Investment (BoI) in Dhaka.

BoI Executive Chairman Kamaluddin Ahmed at the programme said the Council of Advisers has approved in principle a draft ordinance on economic zones.

“The government is going to promulgate the ordinance very soon to encourage investment in the country,” Kamaluddin said, adding that the government is also trying to find out some new areas for economic zones.

The BoI, which had earlier identified a site for establishing an economic zone in Sylhet for encouraging non-resident Sylhetis' investment, initiated the pre-feasibility study.

The study, considering four PPP scenarios, observed that the project generates an internal rate of return lower than the cost of capital, making it a poor investment choice.

“The results of the financial modelling show that the Sylhet economic zone at that particular site is not a financially feasible project for a developer/ operator unless capital costs can be reduced substantially,” the study said.

The BoI initially chose an area of 961 acres of land in Sylhet. The land, comprising low and wetlands, rivers and a lake, is situated five kilometres south of Sylhet, and has direct access to the highway and adjacent rail corridor.