Experts on Thursday observed that the prices of apparel products decreased significantly on the international market in last couple of years as the global buyers controlled the market and mounted pressure on suppliers to lower the prices.
They suggested that the governments of the supplier countries should break the monopsony power of the global buyers as the power instigated unfair competition among the suppliers.
They also urged the US government to play a role in raising the prices of the Bangladeshi apparel products in its market.
Their observation and suggestion came at the launch of a study ‘prices and development in the global apparel industry: Bangladesh in comparative perspective’ conducted by Mark Anner, an associate professor at Pennsylvania State University.
The Bangladesh Garment Manufacturers and Exporters Association launched the study report at its office in the city.
In the research paper, Mark said the prices of apparel declined on the global market due to monopsony power of the global buyers.
He said that the prices of RMG decreased by more than seven per cent in the world market in last couple of years.
Mark said, ‘Monopsony helps big buyers to put pressure to reduce the prices of products.’
In the research he showed that the prices of Bangladeshi cotton trouser in the US market decreased by 40.89 per cent in last 14 years.
Bangladesh is the number one exporter of the cotton trouser to the US market. China is the second largest exporter of the item while Mexico is the third.
According to the research by Mark, the prices of apparels also declined below the level required to ensure worker rights.
He said the buyers were getting benefits of the decreased prices of apparel products not the consumers.
Saying that continuous fall in the prices of products has put pressure on the suppliers and exporting countries, Mark suggested that suppliers should reach a consensus on price per unit.
Bangladesh Institute of Development Studies senior research fellow Nazneen Ahmed said that it would not possible to reach a consensus among the suppliers as competing countries would try to garb more market share.
Bangladesh government has nothing to do in this case but the US government has some role to pay in lifting the prices of apparel products, she said.
Nazneen said that the bargain power of exporting countries was very low as the number of suppliers was much higher than that of buyers.
‘The US government has a role to play in raising prices of the Bangladeshi RMG products as the buyers are offering lower prices to the manufacturers and selling the products at higher prices to the consumers,’ she said.
Khondaker Golam Moazzem, additional research director of the Centre for Policy Dialogue, said once the Trans-Pacific Partnership Agreement between US and Vietnam is signed, Bangladesh would have to face tough competition as 10 products of Bangladesh matched with that of Vietnam.
He urged the US not to change the rules of origin saying that if the US changes its rules of origins following the TPPA, Bangladesh would be affected.
Policy Research Institute executive director Ahsan H Mansur, BGMEA president Md Atiqul Islam, former BGMEA president Shafiul Islam and vice-presidents Shahidullah Azim and Reaz-Bin-Mahmood were present, among others, in the programme.

The government has completed its part of inspecting 1000 ready-made garment (RMG) factories to oversee structural, fire and electrical safety initiatives taken by owners and its progresses, the International Labour Organisation (ILO) said on Wednesday. The ILO is monitoring implementation of post-Rana Plaza collapse restructuring of the RMG industry, aiming to improve compliance status of international standard.   Following the Rana Plaza collapse, the ILO says, the immediate priority was to carry out safety inspections of all 3,508 export-oriented RMG factories in Bangladesh. To date, some 2,904 RMG factories have been inspected of which 1,000 fall under the government’s National Initiative under the Tripartite Plan of Action, supported by the ILO with backing from Canada, the Netherlands and the United Kingdom. A further 1,904 factories have been inspected by the Bangladesh Accord on Fire and Building Safety and the Alliance for Bangladesh Worker Safety. “This is a significant milestone as we seek to create a safer RMG sector for Bangladesh. We are now making concerted efforts to complete as many inspections as possible by the 31 July deadline. We will not compromise on the safety of workers. After this date, factories will no longer receive inspections for free and will need to meet the costs themselves if they wish to continue exporting,” said Syed Ahmed, Inspector General of the Department of Inspection of Factories and Establishments. Srinivas Reddy, ILO Country Director for Bangladesh, said that the scope of the government goes far beyond carrying out factory inspections. “The national initiative has seen an intensive process of cooperation and collaboration on areas such as the harmonization of inspection standards and reporting. Considerable efforts have also been made to establish management processes within regulators to effectively follow up on inspection reports in a systematic and transparent manner,” he said. As of now, only 604 factories from the original list remain to be inspected, an ILO statement said. Inspection of factories under the national initiative has been hampered due to the number of factories having closed, moved or changed contact details. Significant efforts involving Department of Inspection for Factories and Establishments (DIFE), the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and ILO are underway to create a comprehensive and accurate list of actively exporting RMG factories. This will be a valuable tool and will form the basis for follow-up activities and knowledge management systems, the ILO said.

Seeking support from the government and the people of the country as well, Kihak Sung, chairman of Youngone Corporation of Korea, said the Korean EPZ (KEPZ) will attract foreign investment of $1.2 billion and create jobs for 3,03,000 locals by the year 2020. But any move by the government to take back 2,000 acres of land acquired by the KEPZ will send negative message to foreign investors and discourage foreign investment largely, he added. “Lots of development at KEPZ has been made so far and 67 percent of land earmarked for industries has already been prepared for setting up factories. We have invested $250 million there. So the allegations that the authority has failed to develop the zone is baseless,” said Kihak Sung, chairman of the Korea-based multinational company that owns the KEPZ. “We are not sitting idle. Lots of development has been made so far. We did not violate the rules, nor any terms and condition,” said the Korean entrepreneur who has made his presence in Bangladesh for over 35 years. There is no scope for misunderstanding that the KEPZ lands have been lying unused, he said while his attention was drawn to a media report that the government has decided to take back 2,000 acres of land for not being able to draw FDI. “KEPZ is protected by law. We developed the entire land complying with the law of the land. Legally, the KEPZ land cannot be taken back. Any such move, if taken, will certainly affect the country. It will be self-damaging,” Kihak Sung told daily sun in an interview at Youngone’s Dhaka office on Tuesday. Youngone is a global listed company and 30 percent of its investment is from the US and European countries, he said, adding that the market capital of the company is $3 billion. If Youngone’s investment faces setback here, then definitely it will bear a worrisome message to foreign investors, he added. “The largest investment I have made in Bangladesh and I want to see more and more FDI comes here because I like this country and its people,” Kihak Sung said, adding, “I make profit to reinvest here, which is gradually increasing employment scope.” “Around US$ 250 million has already been invested at the KEPZ in Chittagong. Youngone has set up industries in Vietnam investing $150 million. This fund could be invested in Bangladesh, but it was not possible for various bureaucratic obstacles,” he said. Asked about the FDI prospect and problems in Bangladesh, Kihak Sung said, “If Bangladesh truly wants FDI, it can explore it as the country has huge prospects. The overall environment should be made industry-friendly and everyone should realise that more foreign investment is essential for the country to employ more people.” Elaborating overall development of the zone, he said, the KEPZ will have a total 1 crore square feet (sft) of floor area for setting up factories under a modern and well-equipped greenery environment being developed as a comprehensive industrial site. Over 67 percent of the land earmarked for industries has already been developed and a total of 30 lakh sft of floor area has been completed so far, while 30 lakh sft of floor area and related infrastructure will be completed by the 2016-17 and another 40 lakh floor area by 2018-19. The development of the site, over 2,492 acres of land was made as per the terms and conditions of the Environment Clearance Certificate issued by the Ministry of environment, he mentioned. As per the certificate, 33 percent (822 acres) land should be kept green with plantation, while 19 percent (470 acres) as open area and water bodies. Forty-eight percent (1200 acres) of land should be used for factories, utilities, roads, accommodations, hospitals, schools and other supporting facilities, Kihak mentioned. After keeping aside the area to be used for roads, utilities and supporting facilities, which is 30 percent of usable land, only 840 acres of land remain for industrial use, Kihak Sung said, adding, “We will need two dry seasons to complete development of the remaining area of 400 acres.” “We did not violate the terms and condition. About 26 kilometres roads have been constructed and installation of 16km 33KV and 11KV electric line has been completed. Two units of workers’ welfare centre are near completion and another two units are under plan,” said the Korean entrepreneur. “Thirty global giant investors sat with us. They wanted to invest here and sought land, but it was not possible as the district administration is yet to give ownership of the land through completing mutation process,” he said. The KEPZ authority acquired land, a barren land, from the government in 1999 by paying Tk 68 crore and its possession was handed over by the deputy commissioner of Chittagong on August 3, 1999, but it took ten years to get environment clearance in 2009. Karnaphuli Shoes Industries Limited is the first company that set up factory in KEPZ on October 2, 2011, said Kihak Sung, who is also Chairman of the Korea Federation of textile Industries (KOFOTI). A number of industries are now in operation there. Comparing the investment environment of Bangladesh to Vietnam, he said, “Doing business in Vietnam is quite easier. In Hanoi, we can make 90 percent concentration on business while in Dhaka it is 20 percent as most of the time we need to use for government procedures.” “We got land free of cost in Vietnam and needed no money to construct roads and other utility facilities as everything was arranged by the authority. We invested $150 million to set up three industries there,” Kihak Sung mentioned. He also said, “Bangladesh has a very dedicated workforce, more communicative, especially in terms of efficiency in English. People are hard working and very suitable for mid-level management. Considering all these, I can say Bangladesh has good future if foreign investors are treated appropriately.” “But still there are some challenges. Connectivity is a major challenge for which workers face problems in reaching workplaces in time. Some other factors, I should say local factors are there which also decrease productivity. The government should take initiative in improving connectivity.” “South Korean company Samgsung came at KEPZ in 2011 to invest here. LG was also interested. Thirty major Korean companies also wanted to invest here. Samsung has now moved away to Vietnam,” he added. At present, Youngone is employs over 70,000 workforces at CEPZ, DEPZ and KEPZ in Bangladesh. About his business career, he recalled that after completing his studies in 1970, he started the company in 1974. “I borrowed $700 from my aunt to start the company. Now Youngone has industries in five countries in the world – Korea, Bangladesh, China, Vietnam and El Salvador. But the biggest investment is made in Bangladesh.” The company exports goods worth $2 billion annually and its major markets are USA, Europe and Asia, Kihak Sung said, adding: “Korea is a prospective market for Bangladesh. I persuade the Korean government to allow Bangladesh duty-free access of Bangladeshi products to that country and Bangladesh now enjoys the facility,” said the Korean entrepreneur. While his attention was drawn about the government’s initiative to allow a number of economic zones, he said, whether it is EZ or EPZ, what is needed to attract FDI is proper support from the government. “We are the first investor in readymade garment sector in Bangladesh. We started here in 1980 and Youngone is the first company that employed female workers. The first industry at the Dhaka EPZ is ours. We purchased many of failed factories and upgraded them to modern units.” “The land at KEPZ has been developed in a greenery manner. The entire area was a barren land and we planted 20 lakh trees, developed lakes and other supporting facilities for making the zone comfortable for foreign investors,” Kihak Sung said.

Youngone Corporation of Korea, the largest foreign investor in Bangladesh, has been facing hurdles at every step for the last 16 years while the country is desperately seeking foreign direct investment (FDI). According to sources, a crisis has developed in the Korean EPZ (KPEZ) as the government has reportedly decided to take back a large chunk of the land allotted to the company for their functioning here. The Awami League government in 1999 allotted 2492.35 acres of land on the bank of Karnaphuli river in Chittagong  to the South Korean government-nominated enterprise Youngone Corporation for setting up the KEPZ. A gazette notification in this regard was published on October 7 of the same year. Reports have appeared in the media recently that the government would take back 500 acres of land from the company. The possession of the land was handed over in 1999, but the mutation has not been completed yet. The environment clearance for infrastructure was issued 10 years later. Gas and power connections were snapped on more than one occasions. Chairman of Youngone Corporation Kihak Sung has sought cooperation of the government as regards the KPEZ. He said the government cannot take back the land as the company is protected by the law and the agreement.  But any move to take back a large portion of the land of the KEPZ by the government will affect the country as this will send a negative message to foreign investors and discourage them seriously, he added. On this issue, Deputy Commissioner of Chittagong Mezbah Uddin said, “The question of taking back the land does not arise, as the KEPZ authorities are not the owner of the land at all.” It was seen during an on-the-spot survey that the construction work of four factories of the Youngone Corporation in that EPZ is progressing fast. Preparations are going on for the construction of 10 more factories. The construction of internal road is also almost complete and residential houses have been constructed for the foreign buyers. Kihak Sung said, “A lot of development at KEPZ has been made so far and 67 percent of land area earmarked for industries has already been developed for setting up the factories. We have invested $250 million there. So the allegation that the authorities have failed to develop the zone is baseless.” “We are not sitting idle. A lot of development has been made so far. We did not violate the rules, any terms and condition,” said the Korean entrepreneur who has made his presence in Bangladesh for over 35 years. Youngone is a global listed company and 30 percent of its investment is from US and European countries, he said adding that the market capital of the company is $3 billion. If Youngone’s investment faces setback here, then definitely it will bear an alarming message to foreign investors, he added. “The largest investment I have made in Bangladesh and I want to see more and more FDI comes here because I like this country and its people,” Kihak Sung said, adding, “I make profit to reinvest here, which is gradually increasing employment scope.”

The government’s efforts to inspect readymade garment (RMG) factories for structural, fire and electrical safety have reached a 1,000-factory mark, reports UNB. Following the Rana Plaza collapse, the immediate priority was to carry out safety inspections of all the 3,508 export-oriented RMG factories throughout Bangladesh. Till date, some 2,904 RMG factories have been inspected of which 1,000 fall under the government’s National Initiative under the Tripartite Plan of Action, supported by the International Labour Organisation (ILO) with backing from Canada, the Netherlands and the United Kingdom, according to ILO. A further 1,904 factories have been inspected by the Bangladesh Accord on Fire and Building Safety and the Alliance for Bangladesh Worker Safety. In all, 604 factories from the original list remain to be inspected. Syed Ahmed, Inspector General of the Department of Inspection of Factories and Establishments said, “This is a significant milestone as we seek to create a safer RMG sector for Bangladesh. We’re now making concerted efforts to complete as many inspections as possible by the July-31 deadline. We shall not compromise on the safety of workers. After this date, factories will no longer receive inspections for free and will need to meet the costs themselves if they wish to continue exporting.” He said the National Initiative is now moving into the factory remediation phase with a pilot programme which sees DIFE inspectors explaining the process of developing Corrective Action Plans to a select number of factories. “This will provide useful experience and lessons on the time, skills and resources needed to manage this process before it is fully rolled out to all factories under the National Initiative,” he added. Inspection of all 1,827 factories under the national initiative has been hampered due to the number of factories having closed, moved or changed contact details. Significant efforts involving Department of Inspection for Factories and Establishments (DIFE), the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and ILO are underway to create a comprehensive and accurate list of actively exporting RMG factories. This will be a valuable tool and form the basis for future follow-up activities and knowledge management systems. Srinivas Reddy, ILO Country Director for Bangladesh highlighted that the scope of the National Initiative goes far beyond carrying out factory inspections. “The national initiative has seen an intensive process of cooperation and collaboration on areas such as the harmonization of inspection standards and reporting. Considerable efforts have also been made to establish management processes within regulators to effectively follow up on inspection reports in a systematic and transparent manner,” he said.

The government is likely to reduce tax at source on export of all products by 0.20 percentage points to 0.80 per cent in the budget for the next fiscal year from the proposed 1 per cent, officials of the finance ministry said. Bowing down to pressure from the exporters, particularly from the readymade garment sector, the government has decided to reduce the export tax, they said. In the budget proposal before the parliament on June 4, finance minister AMA Muhith proposed an increase of export tax to 1 per cent for apparel and other products from the current 0.30 per cent and 0.60 per cent on export proceeds respectively. According to the proposal, the tax will be considered as final settlement for all export sectors and the exporters will not need to pay any other tax on their export earnings. Currently, export tax on some items including knitwear, woven garments, terry towel, carton and accessories of garment industry, jute goods, frozen food, vegetables, leather goods and packed foods are considered as final settlement. And the tax at source on export of other products is considered as advance tax which can be adjusted with the income tax returns. The National Board of Revenue estimated that additional Tk 2,000 crore would come in the next year from the sector if the export tax was raised to 1 per cent. The revenue board may get around Tk 600 crore less from the sector if the tax is reduced at 0.80 per cent, officials said. Exporters, however, have been demanding for not increasing the tax and keep the current rate unchanged. RMG products exporters demanded that any increase in the tax would severely hamper the growth of the sector as they managed to make profit only of 2 per cent to 3 per cent on their total export proceeds while the cost of doing business has increased significantly over the last few years because of compliance cost, implementation of new wages and devaluation of the Euro in Eurozone. The revenue board on Tuesday sent a summery proposing reduction of tax at source on export to the finance minister for his approval, officials said. Muhith has already approved the proposal which will be placed before the parliament for its approval. The budget for the next fiscal year will be passed in parliament by the end of this month.

Bangladesh in the recent past earned the highest US dollar 30,186.62 million, a record-breaking income from exports, during the 2013-14 fiscal year, reports BSS. The annual export income was US dollar 16,204.65 million in 2009-2010 fiscal year, which increased to US dollar 22,928.22 million in 2010-2011, US dollar 24,301.90 million in 2011-12 and US dollar 27,027.36 million in 2012-13. Commerce Minister Tofail Ahmed made the disclosure in parliament Wednesday while replying to a question from treasury bench member Habibur Rahman Mollah. “The country usually exports 729 items form various sectors,” he said.During the current fiscal year till May 2015, he said the country earned US dollar 28,144.38 million by exporting various items side by side with diversifying the export market in the greater interest of the economy, he said on another query from Jatiya Party bench member Mohammad Ilyas of Cox’s Bazar. “The Ministry of Commerce has already undertaken many steps for increasing the exports of non-traditional items to further raise the annual export income,” Mr Ahmed said.

Exportable products are no longer required international certification as the local accreditation is recognised globally, a minister said. “Local businesses now can take globally-accepted standardised calibration certificates for their products from the local accreditation authority. They don’t need to seek international certification,” Industries Minister Amir Hossain Amu said. In the past, local exporters used to rely on foreign countries for such costly certification to export their products as the local calibration certificates weren’t recognised internationally. The minister said Bangladesh Accreditation Board (BAB) will now issue the calibration certificate after securing accreditation recently from the Asia Pacific Laboratory Accreditation Co-operation (APLAC) to do so. The minister was speaking at a function organised to celebrate the global recognition of the BAB at the ministry on Wednesday. APLAC is a cooperation of accreditation bodies in the Asia Pacific region that accredits laboratories, inspection bodies and reference material producers.  It is recognised by the Asia Pacific Economic Cooperation (APEC) as one of five Specialist Regional Bodies (SRBs). Mr Amu termed the APLAC’s recognition a ‘big’ achievement of the incumbent government. He said it will help strengthen Bangladesh’s position further in global trade. “… hence, Bangladesh’s position in the international business has become stronger. It will also help our local entrepreneurs save money and valuable time, as they won’t need such certification from abroad,” the minister said. Industries secretary Md. Mosharraf Hossain Bhuiyan, BAB’s director general Md. Abu Abdullah, among others, spoke at the function.  The minister said such global recognition will not only eliminate the existing technical barriers to trade (TBT) for Bangladeshi products, but also help local consumers get products with accurate weight. “Now, existing unequal and asymmetrical measurement of products will be no longer in the market, from the industry to the consumer level, as the BAB’s calibration laboratory has got the authority,” Mr Amu said. He called upon the BAB officials to work hard for keeping up its reputation globally so that international traders will come to Bangladesh to get certification of their products. “If you can maintain a globally-recognised standard certification, then foreign traders will come to the country to get approval for their exportable goods,” he said. He urged the BAB authorities to issue such certificate carefully, so that the country’s image is not damaged in the international arena. “Bangladesh has many competitors in international trade. These competing countries are not sitting idle. They’re trying to establish their own national standards infrastructure alongside improving quality of their own products,” he said. Citing the example of ready-made garment, Mr Amu said the competing countries continue to hatch conspiracy against Bangladesh’s apparel products.

International trade is cross-border deal and both buyer and seller usually conclude the deal with communication without face to face contact. The buyer wants to be sure that he receives the goods of the quantity and quality agreed. On the other hand, the seller is eager to receive payments on time and in the currency required. In order to meet these demands, various methods of payment have been developed. There is another more important issue which is frictional money cost, which is often hard to appreciate. The cost of finance is not simply the rate that is charged – it is also the restricted availability. Finance is also limited for buyers, and it is also limited for Western banks. Importers very often request for deferred payments of their import LC or contracts. The trade finance remains stubbornly an issue for everyone – creating an unwelcome frictional cost in the bargains that rational companies want to make. Two other factors are at play. First, after many years of discussion, new regulations (Basel 3) are now finally coming into force across international markets. One requirement is that banks maintain a leverage ratio. This is the ratio between their core equity and their total balance sheet. LC (or trade finance) occupies a lot of balance sheet, but delivers only a low return for the provider. Consequently, LC is falling out of favour – as banks would rather use their balance sheet capacity (restricted by the leverage ratio) for higher margin activities. Second, banks are retreating to their home territories under pressure from regulators and shareholders. This pressure stems from the need to make sure that banks are only playing with the risks that they (and the market) understand. There are basically four methods of making payment for international transactions. These are i) cash in advance, ii) open account, iii) documentary collection and iv) documentary credit. There is a solution to the payment terms, crisis of fund and reduction of cost of transactions through different types of trade financing for both exporter in developing country and importer in developed country. The buyers not taking advantage on price of exported products on the basis of payment terms. The additional cost of transaction with LC that the exporters and the importers are shared between them. But alternately buyers prefer open account basis without LC and also factoring of transactions to reduce cost and time of transactions. For Bangladesh, this is important to understand. Historically, exporters could rely upon buyers offering them a LC as financial support, which could be used for back-to-back finance in the local market. Buyers were happy to do this – LC’s were not that expensive to organize – banks were willing to provide. Exporters can obtain working capital loan against exporter LC and further collateral security. But Bangladesh exporters offering lower prices were attractive. In the new world, this is changing. As credit (and LC) becomes scarcer, buyers become reluctant to provide LC. This is driving them into the hands of Indian and Chinese factories who are better capitalised than typical Bangladeshi manufacturers – and who can work without LC and offer open account and delay of payment. Using this new financing product allows the Bangladeshi seller to work with good quality buyers around the world on equal terms with the Chinese and the Indians. Equal terms means that the buyer is simply not troubled by the financing required in order to bridge the time from “order to cash”. The buyer gets what he wants – which is to pay for the goods only when he has sold them himself (90 days after receiving them)! This is good news for the buyer – because his scarce credit resources are used for his own purposes. This is good news for the buyer’s bank, who can refocus his credit supply onto higher margin lending and services, and away from low margin trade finance. A new breed of finance companies is emerging that can level the playing field for Bangladeshi factories allowing them to trade with buyers on open account with delay of payment and without LC. In South Asia factoring services has begun in 1990 after its successful launching in India and Sri Lanka. There are already two such overseas players in the Bangladesh market – PrimaDollar and DS-Concept. The new product is a hybrid between factoring (which is quite new in Bangladesh) and trade finance (which is as old as the hills, and which everyone understands). It is an agreement between an exporter and factor whereby the factor purchases the trade debt from the exporter and provides the services such as finance, maintenance of sales ledger, collection of debts, and protection against credit risks. There are various forms of international factoring. It may be simply defined as a purchase of receivables by factor from its client and collect it during the maturity from the debtor. Usually the factor pays the client about 80 per cent of the value of the receivable and remaining is paid by collecting from the debtor after the deduction of charges. There are few categories such as (1) Bulk Factoring, (b) Maturity factoring, (c) Agency Factoring, (d) Invoice discounting etc.  Factoring is flexible form of finance and with the help of factoring it is very easy to predict the cash flows. The factors immediately finance up to a certain percentage of the eligible export receivables. Bangladesh exporter can bargain better payment terms like deferred payment, export against contact or factoring etc. Western buyers are ready to pay more for better and less expensive payment terms. Exporter can now offer the same deal to the buyer that his stronger international competitors can. Bangladesh can compete with other competitors with better finance and better business terms with the acceptance of factoring and innovative financing of trade for value added products.

In a new move, the government has decided to give no fresh permission for setting up any export processing zone (EPZ) in the private sector. Rather, it will allow more economic zones (EZs) to be set up in the country. So far, the government has been looking for opportunities to encourage both local and foreign investments in both such zones. The Private EPZ Cell and the Bangladesh Economic Zone Authority (BEZA) were constituted under the Prime Minister’s Office with a view to providing policy- and other-related support for the purpose. The government has so far announced about the allotment of three EZs to the investors from China, Japan and India. Earlier, the Korean EPZ was set up in Chittagong as a private sector venture. Of late, the government has, however, decided to downsize this Korean Export Processing Zone (KEPZ). Bangladesh needs, at least, an aggregate amount of investments worth $35 billion a year, to help attain its cherished 8.0 per cent annual economic growth rate and graduate itself to a middle-income country by 2021. The BEZA has, meanwhile, acquired 510 acres of land at Sreepur Upazila in Gazipur for the Japanese investors and 774 acres at Anwara Upazila in Chittagong for the Chinese entrepreneurs. The government has also been in talks with Indian investors for selecting sites for their economic zones. Some developments to this effect took place during the recent visit of Indian Prime Minister Mr. N. Modi to Bangladesh. The new stance of the government on not allowing any new EPZ in the private sector reflects its preference, at this stage for economic zones in order to attract or facilitate new private investments. A meeting of the board of governors of Bangladesh Private EPZs, according to a report published in the FE this week, decided that since the executive cell has no authority to give permission for setting up private EPZs, the investors from private sector will have to make investment in EZs under the BEZA. A number of questions arises here: how did other private EPZs get permission earlier and from which authority? Secondly, if the executive cell of the private EPZs is turned into an authority, will it be able to allow more private EPZs to be established? Very recently, a total of 22 EZs got permission to operate in the country. Three of them — AK Khan Private Economic Zone (PEZ), Abdul Monem PEZ, and Garment Shilpa Park in Munshiganj — went to the private sector. Two private EPZs — Korean Export Processing Zone (KEPZ) and Rangunia Export Processing Zone (REPZ) – were given permission to operate, long ago. Reports say KEPZ and REPZ are having some problems to be fully functional. Prime Minister Sheikh Hasina directed the authorities concerned for taking steps to resolve the existing problems of two EPZs to make them operational. Of the two, the Rangunia EPZ authority failed to make any mentionable progress, save and except taking licence from the government. But the KEPZ, the much-talked-about one, is having some real problems. The government has recently decided to take back 2,000 acres of land, out of nearly 2,500 acres, from the KEPZ. The government claims that the KEPZ has not been able to utilise more than 500 acres of the land. But such a claim is not otherwise supported by facts. Thus, a spokesman of the Embassy of the Republic of Korea in Dhaka was reported to have told a contemporary this week that the work for making the whole of the KEPZ, as planned earlier, was in full progress. And he also gave a positive picture about the medium-term prospects of it to attract foreign investment in export-oriented areas, by detailing out which companies were planning to come there and in which areas or sectors. Youngone, the Korean conglomerate that has the lead role in the KEPZ, says it has legal obligations that it cannot use more than 1,200 acres, as it has to set aside 52 per cent of the land for plantation, open areas and water bodies. Besides, the KEPZ is yet to get the natural gas supply that was pledged to it before. It furthermore cited the government’s delay in handing over the mutation-related documents of the KEPZ’s land, as a lingering constraint to its operationalisation. On its part, the government has, however, been blaming the Youngone for its failure to fully use the industrial land in the KEPZ. Meanwhile, the latest government decision – that seems to have in a haste — about ‘reclaiming’ land from Youngon is likely to make the future of $1.2 billion fund flow, in the form of foreign investment by the Korean companies to the KEPZ, quite uncertain. This, as analysts have noted, will send a wrong signal — about policy flip-flops — to the foreign investors who do otherwise still look at Bangladesh as having the potential of becoming an attractive destination for relocating their sunset industries. The KEPZ, to mention here, was inaugurated twice by two separate Prime Ministers, during the last two and a half decades. But it has taken too long a period to issue the land mutation-related papers to the company concerned, even after their purchase of land and execution of related deed, upon full payment of money to the parties concerned. A litigation still awaits the completion of the judicial process at the higher level, according to reports published in the media. Against this backdrop, the government has now unfurled its latest decision about promoting growth of exports through setting up of more EZs in the country. In order to fully implement such strategic plans, it is, as the analysts have noted, very important that the existing private EPZs get sufficient opportunities to operate and sustain on fulfilment of the required procedural formalities and necessities. The EPZs are usually run by the government, while the EZs are slated to be operated under the public-private partnership (PPP). Presumably, there will not be any scarcity of land for the purpose, as the country plans to construct some of the EZs near the Bay of Bengal or on the land reclaimed from the sea. Besides, the government has stated that it would give its attention to retrieving the vacant land of the ‘unproductive’ state-owned enterprises (SoEs) and offer them to the EZs to be used as industrial plots. It is a different question whether the government can really execute such a decision. All said and done, the authorities need to appoint public operators at the EZs for their effective management. The BEZA should be at the helm of fast-track construction works. This is critically important because it is well-nigh impossible to get back a foreign investor if he leaves the country for not getting the required services to implement his project. The country’s overall investment scenario, in real terms, over the past couple of years has, in no way, been encouraging. There were flurries of registrations for fresh foreign investments with the Board of Investment (BOI). But the number of investors who really ventured further is negligible. Gross inadequacies relating to infrastructure facilities, access to gas and electricity, bureaucratic tangles etc., are some of the reasons responsible for keeping the foreign investors at bay. Reversal of such a trend needs active attention of both the government and the private sector.