Corporate interests and political influence may lead to unfair allocations of land to preferred investors, some of whom are land speculators says the World Bank
Ten years ago, the Bangladesh Economic Zone Authority (Beza) started with a target of developing 100 special economic zones in 15 years.
But, not a single economic zone has been able to start its full-fledged operation.
The World Bank, which is providing various supports to the Beza, has expressed its concerns about the economic zones authority's operational capacity about the successful implementation of 58 investment proposals from Europe, the Asia-Pacific and many Bangladeshi textiles and garments producers – estimated to be worth $18 billion.
To strengthen the operational capacity of the Beza and the development of about 500 acres of land at Bangabandhu Sheikh Mujib Shilpa Nagar at Mirsarai in Chattogram, the global lender has expressed its initial willingness to give the authority a loan of $500 million.
Sources at the finance ministry's Economic Relations Division (ERD) said the division was looking for a foreign loan for the proposed "Bangladesh Private Investment & Digital Entrepreneurship Project" to be implemented by the Beza.
For creating a proper market of land in economic zones, the World Bank expressed its willingness to provide financial assistance to the project while ensuring good governance and administrative efficiency of Beza.
The bank prepared a concept paper in this regard and sent it to the ERD in August.
The global lender said in the paper proper utilisation of industrial land was a high priority for the government of Bangladesh.
But, there are challenges in implementing the agenda due to a complex political economy, says the paper.
Corporate interests and political influence may lead to unfair allocations of land to "preferred investors", some of whom are land speculators, thinks the World Bank.
The proposed project will introduce some mitigation strategies to promote good governance and reduce land speculation.
About $300 million of the loan will be used to develop the project area in Mirsarai as a green economic zone, which would cover approximately 40,000 acres of land by 2040.
The project will focus on the creation of a dynamic private market for industrial land that serves investors unaffiliated with the developer or operator.
At least 50 percent of the space in a private economic zone must be rented out to unaffiliated investors, according to Beza rules.
However, only a few of the 11 private economic zones, which received licenses in the last three years, have got unaffiliated investors while two out the 11 have attracted credible foreign investors.
Beza Executive Chairman Paban Chowdhury declined to make any comment about this project.
A Beza official seeking anonymity said Development Project Proposal (DPP) of the project was just being formulated and none from Beza would comment on it before the approval of the DPP at the Executive Committee of the National Economic Council.
Dr Zahid Hussain, former World Bank Dhaka office lead economist, said the Beza should complete its reforms to ensure proper services to the investors.
The economic zone authority is attached with the Prime Minister's Office and is responsible for establishing, operating, managing and controlling the economic zones.
Beza becomes the largest land bank of the country with 18,000 acres of land to help domestic and foreign investors in setting up factories in Bangladesh.