Bangladesh is today one of the most competitive apparel manufacturing nations in the world and among the two major manufacturing hubs in the country – Dhaka and Chittagong. Dhaka is positioned as one of the cheapest manufacturing destination in the world according to a survey conducted by Japan External Trade Organization (JETRO) in April 2011. Presently, both these centres are suffering from rising labour wages, acute shortage of power, rising real-estate prices and over-burdened logistic channels. The growing handicap of working in these hubs has become a blessing for many new EPZs, which are coming up in Bangladesh that have now started attracting a lot of attention as viable production alternates.
An Export Processing Zone or EPZ as they are popularly known as, are territorial or economic enclaves where raw inputs may be imported, used for manufacturing and then reshipped internationally without the burden of taxes and minimal intervention by custom officials. The first EPZ in Bangladesh was established in 1983, in Chittagong, as a concrete step by the Bangladeshi Government to develop the garment manufacturing industry flourishing in the country. The EPZ attracted a lot of foreign investors, as well as domestic industries as the units in the EPZs enjoy 100% tax holiday for 10 years and foreign ownership is possible while enjoying MFN status to the USA.
Since then Bangladesh has developed 8 operational EPZs – in Dhaka, Chittagong, Mongla, Ishwardi, Comilla, Uttara, Adamjee and Karnaphuli. All the 8 EPZs together account for combined exports of US $ 28,136.81 million, comprising a 17% share in the country’s total exports and employing a total of 3,23,654 workers, out of which 64% are female. In the FY 2011-12, exports from the 8 EPZs increased by 31% and the employment increased by 56%, in comparison to the period of 2010-11. In the meanwhile, during the same time frame the total investment from more than 33 countries made in all the 8 EPZs increased by 41%.
The most successful EPZs have been those, which are positioned near Chittagong and Dhaka, as they were the first two of their kind in Bangladesh. The Chittagong EPZ alone exported goods worth 50% of the total revenue generated by all the 8 EPZs and the same was in case of generating employment. Following in the same pattern, the Dhaka EPZ generates revenue worth 42% of the total revenue share of the EPZs and employment of 26% of the total employed workforce.
Having a combined strength of 842 plots, expansion in these two successful EPZs is becoming almost impossible, though the Government is thinking of extending both the EPZs by another 500 acres of land each. But with restriction in the availability of land also of power shortage, which after many efforts of the Government has not been solved the final decision is pending. Further, increasing labour scarcity and wage rise is also a growing concern of industries in these EPZs. These changing dynamics at the leading EPZs has made it important to move out and explore other EPZ options with comparable benefits for growth.
No doubt, establishing a unit in a totally unexplored territory is easier said than done, but with many of the EPZs and garments hubs developing around Dhaka and Chittagong, companies can expect to retain the benefits of Dhaka and Chittagong, which make them the most successful hubs in Bangladesh, while overcoming the growing problems. Hubs and EPZs in areas like Comilla, Mongla, Ishwardi, Nokhali, Gazipur and Narayanganj, are a viable option, and among them Comilla, Narayanganj and Gazipur are developing fast into garment manufacturing hubs. An analysis shows that Comilla may in fact be the next big find for garment manufacturers.
Comilla EPZ has the Infrastructure to support growth
The most potential export processing zone since the inception of Dhaka and Chittagong EPZ has been the Comilla EPZ established in 1997. Situated 97 km from Dhaka, 167 km from Chittagong and on one of the oldest highways of the Indian sub-continent, ‘The Grand Trunk Road’ that passes through the city, Comilla’s location is strategic for swift development. Comilla is also well connected by road to the eastern part of Bangladesh. The accessibility of the EPZ is very sound with roads, railway and waterways passing through the region. The most important Dhaka-Chittagong highway bypasses the city from the cantonment to Poduar Bazar; the Akhaura-Laksam-Chittagong railway line also passes through the city.
Besides easy accessibility, Comilla has abundance of labour and middle management employees due to presence of various universities, polytechnic and training centres within the city. Being among the oldest cities of Bangladesh, industries in the EPZ are supported by already striving ancillary units and service providers all over the city. Being a developing apparel manufacturing hub real estate prices are very competitive in comparison to the same in the cities of Dhaka and Chittagong. The value of land in Comilla of first grade land is 13,500 Taka per 0.01 hectare while the same in Chittagong is 17,000 Taka. Though land in Dhaka (Savar Upzila) is officially available for 10,000 Taka, but because of the saturation, it is difficult to find land open for sale.
Currently, the EPZ is spread across 267.46 acres of area and has 211 industrial plots; however massive expansion plans are in the pipeline to make it the biggest EPZ in Bangladesh. Since the establishment of the EPZ, investments of significant value have been made by companies like Brandix Sri Lanka ($ 14 million), Star Carpet Turkey ($ 2 million), BTM International France ($ 2.98 million), Italia KnitWorks Italy ($ 2.42 million), Golden Moon Netherlands ($ 1.22 million), Kadena Sportswear UK-China ($ 6.15 million), CAT Garment Company Japan-Hong Kong ($ 3.5 million), Soorty Textiles Pakistan ($ 22.52 million)and other Bangladeshi firms like Brand Brother’s Apparels Limited ($ 5 million) and Lyceum Fabrics Limited ($ 8.2 million). Apart from the above mentioned companies, other successfully running garment and textile manufacturers in the EPZ are R N Spinning Mills, Nor Pearl Knitwear, Whitex Garments, Nassa Denim, Royal Denim, Oasis Sportswear Limited, Paban Textile Mills and Vihrea Com Limited.
Goods worth US $ 655.95 million were exported in the current financial year, employing 11,873 people and investment of US $ 151.04 million has been made till February 2012. Keeping in mind the power shortage faced by industries in Bangladesh, the Comilla EPZ has an in-house power plant initially producing 10 MW of electricity, but will be upgraded to 50 MW soon. Indeed, the opportunity for expansion that the EPZ provides is too advantageous to be ignored.
