Life has never been easy for the sponsor-the Seoul-based Youngone Corporation- of the Korean Export Processing Zone (KEPZ), since the signing of a memorandum of understanding (MoU) in 1995 to establish the first private EPZ in Bangladesh. The government allotted land and promised all the facilities and incentives to the EPZ, now situated on the bank of the river Karaphuli in Anwara of Chittagong. Sheikh Hasina as the Prime Minister of the then Awami League government in 1999 attended the ground-breaking inauguration of the KPEZ and pledged all support for the private EPZ. But the government agencies concerned did the opposite later. The company, allegedly, faced hurdles at every step, from getting the clearance from the department of environment (DoE) to power and water supply. It may sound bizarre that the KPEZ authorities got operational licence during the rule of the military-backed caretaker government – eight years after that inaugural function. The DoE in March 2012 had cancelled environmental clearance alleging that the KEPZ was cutting the hills and causing damage to environment. However, the clearance was restored later when the allegation was found to be false. It did not also get the supply of the promised volume of gas and power.  Rather once in 2012, the authorities concerned had cut off power supply to the EPZ. The supply was restored after more than a year following an order passed by the Supreme Court. It is widely believed that the land allotted to the KPEZ has been the main source of troubles for the Korean company. Some influential quarters, having political links, have been trying hard to make things difficult for the private EPZ with a view to grabbing a part of its land. The KPEZ was originally allotted nearly 2,500 acres of land. But it could not develop the land in time for not getting the ownership title to the same. All sorts of delay were being caused under different pretexts. Due to the non-completion of the land transfer deal, the KEPZ could not lease out industrial plots to foreign investors willing to set up factories there. Being instructed by the Prime Minister’s Office, the KPEZ in 2012 submitted details plans covering an area of 500 acres of the allotted land. But the zone authorities have developed more than 1,000 acres of land. It is widely believed that after the development, the land in question has become very lucrative which has lured the local crooks to grab a part of the same. Only very recently, some influential people, allegedly, have grabbed a portion of the KEPZ land, storming into its premises and uprooting the boundary pillars. They have, in fact, taken possession of six acres of land. The grabbers have done the mischief in the name of saving the land of a graveyard. The KPEZ authorities have drawn the attention of the PMO and lodged complaints with the local police. The police, it is alleged, have been non-reactive to the issue. The Anwara Police has reportedly not even recorded the incident as a regular case. All the developments have raised strong suspicion among the KPEZ honchos that some very powerful quarters are active behind-the-scene to grab a part of their land. If one follows the incidents involving the KPEZ, which now employs more than 10,000 workers and staff and has the potential to create employment opportunities for nearly 200,000 people, right from the beginning, one would smell something wrong with the government’s intention. The government’s enthusiasm about getting a private EPZ was found somewhat diluted, apparently, out of the realization that it had not been proper to allot such a large area of precious land for the establishment of one private EPZ. The reason for delay in signing the land transfer deal could be due to such realization or opposition from influential people coming from the same locality. The mistake, if there was any, was committed by the government, none else. But the negative developments centring the KPEZ are unlikely to go well with prospective sponsors from some other countries wanting to set up private export processing zones in Bangladesh. The message they are getting through the troubles being encountered by the KPEZ remains a demoralising one. Against this backdrop the government has recently invited investors from a couple of countries to set up their own export processing zones. But the investors concerned are expected to think twice before coming to a country where official incentives are aplenty and the cost of labour one of the cheapest but business environment on the ground remains somewhat hostile. The authorities concerned should try to change the situation, make moves that are necessary and bring an end to sufferings, if there is any, of the KPEZ and send positive signals to prospective foreign investors.

The Korean EPZ authority has suspended the drainage management work in and around the export processing zone due to obstruction from what it called miscreants, land grabbers and influential quarters. The authority said that it was constructing drainage system in a bid to save the KEPZ and local people from the onrush of hills and flood water during the upcoming monsoon. “We have already completed the drainage system in the jetty area adjacent to Chittagong Marine Academy and KEPZ Bandar area so that additional water from the hills is drained out and cannot do harm during the rainy season,” a statement of the KEPZ said. The authority has also constructed an artificial lake on the east of the historic Chand Sawdagar Dighi to preserve at least 25,000 gallons of water. When the drainage work was going on in full swing the land grabbers, who were active in the area since February 28, have forced the authority to stop drainage construction work, it said. “In the face of their aggressive attitude the workers of the KEPZ were forced to discontinue work of canal, culvert and lake digging beside the port link road of the KEPZ,” the statement said. It did not get any help from the local administration despite repeated requests, it added.

The Alliance for Bangladesh Worker Safety, a platform of North-American retailers, has set a plan to create a credit facility of $20-35m to extend low-cost loans to its sourcing factories, especially the small and medium enterprises for remediation works. The Alliance mentioned the plan in its 18-month report highlighting progress and improvement in factory safety since it was formed in 2013.  “Our goal is to create a credit facility of $20-35m via five local banks. The facility would be in US dollar denominated currency, enabling lower interest rates,” said Alliance in a statement on Monday. “The aim of the plan is to encourage these banks to extend loans to Alliance factories, especially small and medium enterprises.” The Alliance will provide technical assistance to the financing organisations on remediation progress and also cover administrative and startup costs and up to $2m in a first-loss guarantee, it added. Four Alliance members have launched innovative supplier financing arrangements while the low-cost remediation loans have been issued to an initial group of suppliers. According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA), a factory needs about half a million US dollar to complete remediation works. The Alliance said 10% of factories’ final inspection would be completed by July 9, 2015, while 100% would be done by July 2017. “I am extremely proud of the efforts undertaken by the Alliance and member companies to improve the safety of RMG factories, ensuring every garment factory is inspected, every employee is trained and empowered, and remediation is undertaken by every factory owner,” said Ellen O Tauscher, Independent Chair, Board of Directors of the Alliance in the statement. The retailers initiative also conducted follow-up remediation verification visits to 124 factories and finalised Corrective Action Plan (CAP) of 300 factories. “We hold meeting with the factory owners and technical expertise to make clear about the CAP and set ways how to remediate it,” M Rabin, Managing Director of Alliance told the Dhaka Tribune. The Alliance had completed inspection of 587 factories and 19 factories had been closed partially or fully following the inspection on fire, electrical and building safety. The issue of finance for remediation works came after the inspection by the global retailers’ platform as it prescribed CAPs to make the RMG sector safe and compliant. Safety issues in the RMG sector came under spotlight following the Rana Plaza factory building collapse, which killed 1,135 workers and injured over 2,500 people in April 2013.

We are concerned that the Korean Export Processing Zone (KEPZ) in Chittagong is being undermined by land-grabbers and that this is hampering investment at the site. The government must act firmly to support the KEPZ in evicting the local influential people who have grabbed parts of its site. There is no excuse for the long delays by the district administration and police in helping KEPZ retrieve land which has been encroached and occupied by land-grabbers. The delays are deterring investors and holding back the zone from developing further. Since 1999, the KEPZ has fully developed around a third of the 2,500 acre site. There are now 22 different factory buildings and industries supported by 24km of roads, employing many thousands of local workers. Under the master-plan, the zone expects to be able to provide jobs to at least 100,000 local people when fully implemented. The next crucial stage of development, which plans to take employment levels over 50,000 within two years, is being put in jeopardy by the failure to sort out the land-grabbing problem. Major manufacturers with factories at the site, such as Youngone, are unable to expand or invest further without legal settlement of land issues. The government has not helped matters by raising speculation last year that it might transfer some of the yet-to-be developed land. EPZs are a vital plank of national policies to attract investment and create industrial jobs. They must be supported in their efforts to expand free from bureaucratic interference and the activities of land-grabbers.

Terming the Korean EPZ the Neo-East India Company a local public interest forum headed by the Anwara Upazila chairman demanded removal of the KEPZ managing director within next five days. They said that the erstwhile management of the KEPZ had committed that as per government land acquisition rules graveyards, crematoriums, mosques, Mazars, Mandirs, Eidgah, public walkways etc within the KEPZ-acquired area would be kept outside the land use plan of the export processing zone keeping those for use by the local people. There is also a circular from the deputy commissioner of Chittagong in this regard as well. But Brigadier General (retired) Hasan Nasir, who joined the KEPZ as MD in July 2011, has refused to set aside the religious sites for local villagers and has been working against interest of the commoners. Anwara Upazila chairman and convenor of Anwara-Karnaphuli Public Interest Protection Action Council Tauhidul Haque Chowdhury said this at a press conference at the Chittagong Press Club on Tuesday. Boirag Union chairman Nowab Ali, Baro Uthan Union chairman Didarul Alam and over a dozen sacked workers of the KEPZ and local villagers were present on the occasion. Chowdhury in his written statement said villagers of Anwara, Karnaphuli and West Patiya areas have been passing their days in discontent since arrival of Brigadier Hasan Nasir as MD of the company in mid-2011. He alleged that Hasan Nasir had broken up the Shahid Minar of Deyang School and foundation stone laid by Prime Minister Sheikh Hasina and State Minister for Land Saifuzzaman Chowdhury Javed in the area.

The government has decided to issue certificates to small garment makers, allowing them to export to south Asian countries at lower duty, a senior official said. According to the existing export policy, Export Promotion Bureau (EPB) under the ministry of commerce issues SAFTA certificates only to the member factories of BGMEA and BKMEA. SAFTA certificates allow exporters to get duty benefits while shipping products in eight south Asian countries. The EPB, at a recent meeting, has decided to issue such certificates in favour of smaller apparel makers, helping them to foray into the neighbouring countries, where demand of low-cost Bangladeshi garment items is growing. “Our study shows that there is a huge demand for low-cost Bangladeshi garments in our neighbouring countries, especially in India.  Currently, smaller factories can’t export because they don’t have the SAFTA certificate. This is a big hurdle,” a director of EPB told the FE preferring anonymity. “We hope our exports to the neighbouring countries will increase manifold if we can begin issuing the certificate,” he added. According to the official, the smaller garment factories mainly produce their garment by using wastage and cut pieces of big garment factories, which make those items less-expensive. The smaller factories mainly make vest, T-shirt, shorts, shirt, bottom and other low cost basic garment products. Small garment factory owners have hailed the government’s decision, saying that the decision has emerged as “lifeline” for them. “There are huge demands of our low cost items mainly to Nepal, Bhutan and more than ten to twelve estates of India but for lack of certification we could not do well so far. Present decision of the government would boost our export significantly,” Lokman Hakim, who owns Bizli Fashion at Narayanganj, told the FE Monday. “As our raw materials are mostly wastage and cut-piece, we can sell at the lowest price,” he added. While production cost in smaller factories is cheaper, they cannot take the advantage due to lack of strong financial footing and logistic support, said Abu Abdulla, an owner of Bangla Fashion. “We’re not eligible for becoming members of BGMEA or BKMEA. We’re not financially well off. So, we can’t utilise our potential,” he said. “Our raw materials are mostly wastage and excess fabrics of big garment factories and workers also contractual. Our establishment is also not so strong which bars our factories to be a compliant one,” he added. However, BGMEA and BKMEA leaders expressed their concern over the compliance situation in such small garment units. “It’s good that the government has come forward to providing policy support to the small entrepreneurs but the government cannot ignore the issue of minimum compliance in these factories,” president of Exporters’ Association of Bangladesh Abdus Salam Murshedy told the FE. “If an accident occurs in these factories, none will take the responsibility. If these factories are members of the BGMEA or BKMEA then the associations would follow-up their activities and safety issues would taken care of,” he added. President of BKMEA A.K.M. Salim Osman also voiced same concern and said the government could provide policy support to these factories in making them members of the associations rather than only providing clearance to export by passing the existing practice. He also urged the government to make strict follow-up to these factories so that the units can maintain minimum compliance in their factories.

Bangladesh has come a long way in terms of its exports. With an export of only $0.36 billion in fiscal 1973, the country has managed to increase it to $30.2 billion by the end of fiscal 2014. Comprising a share of 20 percent in the GDP, the importance of exports remains critical to the overall economic growth of the country.Firstly, let us take a quick look at some of the facts regarding exports of Bangladesh. The exports are largely dominated by readymade garments, whose share was 81.2 percent in FY2014. Around 96 percent of all exported goods are manufactured commodities. If we look at the table of top five manufactured goods, what we can perceive is that Bangladesh’s export basket is heavily concentrated on one product that is the readymade garments.With about four million workers and 81.2 percent of total export earnings, a lot of the country’s fate depends on a single sector. High export concentration on the garment sector can make the economy vulnerable to shocks.Shocks stemming from international financial crises, however, are likely to have minimal effects on Bangladeshi exports. This is because the share of Bangladeshi exports in world trade is extremely small. To put this in perspective, let us take a look at our largest export partner — the USA. Total import of goods and services into the USA was $2,766 billion in 2013 and the share of Bangladesh is only a meager 0.2 percent of total US imports. This depicts that Bangladesh has a vast world market for selling its products.However, possible threats that Bangladesh’s garment exports may face mostly stem from domestic inadequacies and rival countries.Currently, our garment industry has a comparative advantage in two areas namely high capacity and low wages. With 5,600 factories, Bangladesh’s apparel industry is ahead of countries like Indonesia (2,450 factories), Vietnam (2,000 factories) and Cambodia (260 factories) in terms of capacity.However, the other prime factor, low wage, may not be a sustainable comparative advantage for Bangladesh. The minimum wage in the industry has already increased by 77 percent to $66.25 since December 2013. Though it is lower than in countries like India, Pakistan, Indonesia and Vietnam, an increase in Bangladeshi wages will lead to a change in its comparative advantage. Not only can a wage hike in the domestic industry create a problem but countries emerging with lower wages may pose threats to our industry as well. For instance in the case of African nations such as Ethiopia, minimum wages can be as low as $23 a month. In addition, African countries receive a zero duty benefit for their exports to the US under the African Growth and Opportunity Act, whereas Bangladesh has to pay duty of 15.6 percent. African garment exports to the US were $0.9 billion in contrast to Bangladesh’s $5 billion in 2013. It should not come as a big surprise if African garment exports to the US gallop in the next few years.Nevertheless, the effects of rising wages can be negated with the help of higher productivity. But in terms of Standard Allowed Minutes (SAM), Bangladesh has a productivity score of 40 percent in contrast to its competitors Vietnam, India and Pakistan with a score of 80 percent in garment production.The question remains as to what can be done to increase Bangladesh’s exports, especially since a vast world market lingers out there.One way to do this is by diversification of products. Along with introducing new products to the export basket, the country can also focus on increasing exports from the existing industries that can prove to be lucrative.For instance, if we look at the exports of leather and footwear industry, we will see that they have been growing at an average annual rate of 31 percent and 25 percent respectively during the last five years. Scope exists for these industries to increase their exports further with the help of correct policies.One thing to realise is that the protection system that currently prevails in Bangladesh favours production for the domestic market rather than exporting. This creates an anti-export bias which makes domestically produced import competing goods more profitable to sell in the country rather than exporting. Garments on the other hand have been able to overcome this bias with the help of several measures such as back-to-back LC for import finance and bonded warehouse system for duty-free imported inputs.Another way to increase exports is through diversification of markets. In fiscal 2009, 93 percent of Bangladeshi garment exports went to the traditional markets, namely the USA, the EU and Canada. This has declined to 85 percent in fiscal 2014. The government gave cash incentives to the garment industry (5 percent, 4 percent and 2 percent for 2009-10, 2010-11 and 2011-12, respectively) for exporting to new destinations. This has increased exports and helped trigger the process of market diversification.We have seen that Bangladesh has a vast market for its exports and fluctuations in world demand due to international financial crises are likely to have minimal effect. However, such crises may affect export earnings in the short run. This is because Bangladesh is considered to be a price-taker in the international market and a fall in output price may result in some decline in export earnings, despite total quantity of garment exports being unaffected. Geographical diversification of exports can also help in this regard.

Korean Export Processing Zone (KEPZ) authorities alleged that some local influential people had grabbed 11 acres of its land, hindering foreign investment and employment generation in the zone. Police and district administrations were not doing enough to recapture the lands from the grabbers, officials told a press conference yesterday.  “The land-grabbers are eating into our lands, which prevents development works and foreign investment in the KEPZ. But we are getting no sufficient help from police and district administrations,” KEPZ managing director Brigadier General (Retd) Hasan Nasir said. He said the local land-grabbers had grabbed 11 acres of land in the name of graveyard. MD said the district administration, however, retrieved four acres which were yet to be demarcated. “We sent 13 letters since 1999. But no response yet and the land-grabbers have been using the chance (of not demarcation).” The district administration was yet to give them the Deed of Transfer and Mutation of Land, Nasir Hasan said, adding that they were unable to accommodate foreign investors at the zone for this reason. “We cannot lease out industrial plots to foreign investors as the Deed of Transfer and Mutation of Land have not been provided,” he said. Youngone have just set up four industrial units at the zone, where 10,000 people have been employed, he added. MD also said if they got the Deed of Transfer and Mutation of Land, they would be able to increase employment to 50,000 at the KEPZ in two years. He alleged some local workers drew salaries from KEPZ without doing any work. When the salaries were stopped, they started waging movement against the decision, Nasir said. Mohammed Saiful Islam, another official, said then Prime Minister approved a proposal of KEPZ on August 3 in 1995. He said they had applied for land on December 13 in 1996 and received land on August 3 in 1999. The KEPZ sources said they had built 22 factory buildings, 24 kilometres of roads, a female dormitory for 5,400 workers and a golf course and planted 1.7m trees. Various other development works are also underway on about 2,500 acres of land in the zone. A high official of the KEPZ said they were just provided with the licence. He said they could provide jobs to at least 100,000 people of Bangladesh if everything remained in their favour.

Authority of Korean Export Processing Zone (KEPZ) – the first private EPZ in the country, demands immediate demarcation of land preserved as graveyards outside its acquired land. The authority made the demand at a press conference on Sunday as vested quarters erected pillars and barbed wire fencing around seven acres of KEPZ acquired land at four spots since the 21st February in a bid to grab those claiming to be falling inside graveyards and madrasa land. Through instigating locals the vested quarters also kept the Gate No 2 besieged barring movement of staffs and officials and hindering operation of factories inside KEPZ since February 28, alleged the KEPZ officials at the press conference held at KEPZ dormitory and office block. With the help of a few former KEPZ staffs, who were sacked on disciplinary ground, and miscreants from outside, they are staging showdown even inside KEPZ hampering development of industrial plots and other activities seriously for the last few days, they alleged. The KEPZ officials blamed neighbouring Boirag Union Parishad (UP) Chairman Nawab Ali and Baro Uthan UP Chairman Didarul Alam for leading the evil move, which is feared to discourage potential foreign investment in the country’s first private EPZ as well. The vested quarters filed a case claiming 6.67 acres of land with Patiya Joint-District Judge Court. As the case was dismissed by the court in March 2010, they made a writ petition to the High Court. Having the petition rejected by the High Court on January 18 this year, the land grabbers encircled 5.95 acres of land at Guapanchak and at South Block of KEPZ in the early hours of 21st February. They also raised pillars and barbed wire fencing around more than one acres of land at two more spots on March 5 night, said KEPZ officials. Concerned Karnaphuli police station recorded the complaint of KEPZ neither as general diary nor FIR, they alleged. KEPZ authority filed a case with a metropolitan magistrate on March 4 when the court proceedings started amid hartal and lodged another case with ADM court in this regard, they added. We have informed both police and district administration of the matter and have been waiting for decision and affective steps by them,” said KEPZ Managing Director Mohammad Hasan Nasir at the press conference. We want directions from the authority concerned and demand immediate demarcation of the land preserved as graveyards or religious establishments outside KEPZ acquired land,” he said. Claiming that KEPZ authority had sent 13 letters and memos over the last two years in this matter, the KEPZ MD said, We want cooperation from all concerned for the sake of industrial development and for not discouraging foreign investment.” KEPZ would be able to create employment of some 50,000 people in the next two years if everything goes well, they claimed.

A tense situation has gripped Korean EPZ in Anwara of the district as outsiders, assisted by a group of sacked workers of the Karnaphuli Shoe Industry (KSI), illegally grabbed its land in the name of a Madrasa and graveyard (Kabarsthan). They also threatened its managing director and other senior officials of dire consequences, sources said. The local administration, some local businessmen and public representatives have apparently launched a campaign against the Korean EPZ to create grounds for taking its land. They allege that the KEPZ officials did not allow the villagers to bury the dead people in the graveyard inside the area, use its walkways and the authority has failed to develop the land as expected. Sources said some identified miscreants have attempted to grab 11 acres of Korean EPZ’s acquired land at five spots by breaking open the gate number 2 of the KSI, a land earmarked for KEPZ IT Park, in the south block under Anwara Boirag mouza on February 28. The local villagers at Anwara and West Patiya and the security personnel of the KEPZ are engaged in repeated chase and counter-chase over the land boundary of the EPZ while development work has faced obstruction due to different bureaucratic tangles. “The miscreants have been attempting to grab the KEPZ lands since February 21, the government holiday on account of International Mother Language Day, and keep on obstructing normal activities in the country’s largest export processing zone until today (Sunday),” said managing director of the Korean EPZ Mohammad Hasan Nasir. He said that a small group of local people under the leadership of Boirag Union Parishad chairman Nawab Ali and Baro Uthan Union Parishad chairman Didarul Alam had forcefully constructed a brick wall on 1.5 acres of the KEPZ’s acquired land in the Guapanchak mouza and illegally grabbed the land on last Friday. The local influential people supported by sand smugglers have felled down many trees on the KEPZ land and raised barbed wire fence around the area, KEPZ authority said. “We had as many as 13 meetings with deputy commissioner of Chittagong and requested him to demarcate the land for graveyard to avoid such conflicts with the locals but officials in the local administration are yet to do so although the demarcation of the graveyard was supposed to be done within a month of registration of land,” he said. Hasan Nasir was briefing reporters on the latest situation of the KEPZ at its conference room on Sunday. DGM (admin and HR) Major (retired) Sadin Tayyeb, presented details of physical condition of the land after illegal occupation at South Block of the KEPZ. Legal advisor Advocate ATM Aftab Uddin was also present. Some 50 people were seen demonstrating outside main entrance of the KEPZ during presence of reporters inside the area and were chanting slogans against MD of the company. “The problem is not that serious. We want cooperation of all concerned including the local people and want that our investment is not discouraged. They must allow us to do everything needed to build an industrial zone in the KEPZ following all the administrative rules permissible under industrial policy 2010,” he said. He said officials of the global leading electronic company Samsung visited the KEPZ site and wanted to make a huge investment in this export processing zone in 2013 but they did not proceed further as the Deed of Transfer of the KEPZ land has not yet been made. “Foreign investors will first see in what state the land is. They will come only when they see there are no legal complexity about the land,” he said.