Exports are the lifeblood of any economy, and this is especially true for Bangladesh. The earnings contribution of export processing zones (EPZs) is however declining gradually, from 14.8 per cent in FY19 to 11.6 per cent in FY23.

Despite enjoying special facilities such as tax holidays and one stop service (OSS), earnings from the EPZs have slipped as well, from $6.90 billion in FY22 to $6.46 billion in FY23, show Bangladesh Bank data.

Bangladesh currently has eight EPZs in operation – located in Chattogram, Dhaka, Mongla, Cumilla, Ishwardi, Uttara, Adamjee and Karnaphuli.  Another one called BEPZA Economic Zone is under development, according to the Bangladesh Export Promotion Zone Authority (BEPZA).

Export Promotion Bureau (EPB) data shows that the country earned $55.56 billion in FY23, $52.08 billion in FY22, $38.75 billion in FY21, $33.67 billion in FY20 and $40.53 billion in FY19 through goods exports.

EPZs contributed 11.63 per cent to the overall exports in FY23, which was 13.25 per cent in FY22, 13.7 per cent in FY21, 14.67 per cent in FY20 and 14.88 per cent in FY19. The data clearly indicates that EPZs’ contribution to the total exports is on a steady decline.

BEPZA officials say factories under their jurisdiction cannot expand due to land shortages, but factories located elsewhere can do this easily. Besides, due to the Covid-19 crisis, some BEPZA factories postponed production.

This is why EPZs contribution to total exports and year-on-year earnings growth declined, they added.

Officials pointed out that BEPZA in recent times had taken a number of initiatives to expand factories – including the construction of new floors in existing buildings. These initiatives will help increase export earnings from BEPZA’s factories.

Speaking to TFP, BEPZA Executive Director (Public Relation) Nazma Binte Alamgir said, “Along with constructing new floors, we are setting up the BEPZA EZ, and the construction of some factories have already begun. Many of those will launch production this year.

“When these factories will come to production, our contribution to the overall exports will increase.”

Nazma added, “BEPZA’s export values are higher than the figures posted in the central bank report. When a factory, operating under BEPZA, sells goods to other entities in Bangladesh, we consider it export. But the Bangladesh Bank does not consider it as such.”

BEPZA’s annual reports show that they exported $7.84 billion in FY23, $8.65 billion in FY22, $6.64 billion in FY21, $6.49 billion in FY20, $7.51 billion in FY19.

What is BEPZA?
To meet the growing need of attracting Foreign Direct Investments (FDI), local investments, industrialisation, export growth and employment generation, the government established Bangladesh Export Processing Zones Authority (BEPZA) under the Act 36 of 1980, and set up Export Processing Zones (EPZs) in the different parts of the country.

The authority’s vision is to become a significant contributor for economic development of Bangladesh, and it’s administered under the jurisdiction of the Prime Minister's Office.

The primary objective of an EPZ is to provide special areas where potential investors would find a congenial investment climate free from cumbersome procedures.

According to the BEPZA, the country has three types of factories in EPZ – 100 per cent foreign ownership, joint venture between Bangladesh and foreign investors (no limit on extent of equity share) and 100 per cent Bangladeshi ownership.

In 1983, the BEPZA set up Chittagong Export Processing Zone (CEPZ), the first and one of the eight export processing zones in Bangladesh. After ten years of the CEPZ establishment, the government set up Dhaka EPZ.

Later, the government set up Mongla EPZ in 1999, Cumilla EPZ in 2000, Ishwardi and Uttara EPZ in 2021, and Adamjee and Karnaphuli EPZ in 2006. The authority is currently developing a BEPZA Economic Zone (BEPZA EZ) at Mirsharai.

What’re the EPZ facilities?
Every EPZ is a fully export-oriented zone, and their investors are enjoying many facilities than the other factories. The zones are also fully bonded.

The government had provided tax holiday for the Industries established before January 1, 2012 and the rate was 100 per cent holiday for first three years, 50 per cent for next three years, and 25 per cent for next year.

The same level of tax holiday was provided to Mongla, Ishwardi and Uttara EPZ’s industries.

Factories that were set up after January 1, 2012 in the Chittagong, Dhaka, Cumilla, Adamjee, and Karnaphuli EPZs are enjoying 100 per cent tax holiday for the first two years, 50 per cent for next two years, and 25 per cent for next years.

All factories under BEPZA are enjoying duty free import of construction materials, machineries, office equipment and spare parts, raw materials. The factories are enjoying relief from double taxation, exemption from dividend tax.

The factories are getting no UD, IRC, ERC and renewal of Bond license facilities, work permits issued by BEPZA, Secured and protected bonded area, off-Shore banking availability, import on Documentary Acceptance (DA) basic allowed, import and export on CM basis allowed, import from DTA (Domestic Tariff Area).

They are also getting 10 per cent sale to DTA (Domestic Tariff Area), customs clearance at factory site, simplified sanction procedure, sub-contracting with export oriented industries inside and outside EPZ, relocation of foreign industries facility, one window same day service and simplified procedures.

What’s the current situation?
In the nine EPZs, including one yet to be operational, 449 factories are in operation and 91 are on the way to be ready. These factories already invested $6.47 billion, and employed 483,981 people.

Since their journey in 1983, they have already earned $103.71 billion through exports.

The authority already allocated all plots of Chittagong, Dhaka, Cumilla, Adamjee, Uttara and Karnaphuli EPZs to the entrepreneurs, and a few plots are left for allocation in Ishwardi and Mongla EPZs.

Besides, BEPZA is planning to prepare 539 industrial plots in BEPZA EZ. Among those, the authority already prepared 140 plots, while 105 plots were allocated to the investors. Among the 105, 21 are getting ready for operation with $11.53 million in investments.

The special EPZ has already recruited 60 employees, insiders say.

So far, Chittagong EPZ received $2.04 billion investments and employed 1,69,940 manpower, Dhaka EPZ received $1.74 billion, and generated 78,594 employments, Cumilla EPZ received $565.97 million investment and employed 44,607 persons, Mongla EPZ received $175.54 million investment and generated 14,466 employments.

Uttara EPZ received $234.18 million investment and created 32361 job opportunities, Ishwardi EPZ received $147.45 million investment and generated 17966 employments, Adamjee EPZ received $723.92 million investment and employed 55,963 people, and Karnaphuli received $724.91 million investment and employed 69,994 human resources.