Business

Construction of Chinese economic zone gains momentum

The construction of the Chinese Economic and Industrial Zone in Chattogram has gained momentum nearly a decade after its initiation, as Dhaka and Beijing look to strengthen bilateral ties and punishing Trump tariffs prompt Chinese manufacturers to consider relocating factories.

Of the 784 acres designated for the economic zone in Anwara upazila of the port city, around 60 acres have been prepared for investors.

Utility services are also being put in place. The Chattogram Water Supply and Sewerage Authority has installed a pipeline for limited water supply, and Karnaphuli Gas Distribution Company Limited has set up a gas station nearby.

The Bangladesh Economic Zones Authority (Beza) has also constructed the zone's administrative building and two approach roads.

Some Chinese manufacturers have already visited the site, and officials expect around 200 potential Chinese investors to tour the zone soon.

"A major foreign investment worth over $1 billion is expected from China," said Ashik Chowdhury, executive chairman of the Bangladesh Investment Development Authority (Bida) and Beza, referring to the recent visit by Chinese investors.

Initiated in 2016 following former prime minister Sheikh Hasina's 2014 visit to China, the project's progress remained sluggish during the previous Awami League government.

However, after the political changeover in August last year, the new interim government showed renewed interest in strengthening trade ties with China — Bangladesh's largest import market.

"We are seeing growing interest from Chinese investors," said a Beza official. The official said that the expected investor visits could open up significant opportunities in apparel and auto manufacturing, electronics, and logistics.

During Sheikh Hasina's visit to China, Beza signed a memorandum of understanding (MoU) with China's Ministry of Commerce. The Bangladesh government later allocated Tk 420 crore for the first phase, partly funded by Chinese loans.

As per the deal, China Harbour Engineering Company Limited was appointed as the developer, but progress stalled due to unresolved lease and development agreements, prompting Beza to terminate the partnership in April 2022.

In July 2022, China Road and Bridge Corporation was picked as the new developer, and Beza signed a cooperation agreement to restart the project.

Located about 270 kilometres south of Dhaka, the zone could attract $1.5 billion in investment and create more than 200,000 jobs, according to Beza.

A "special purpose company" will be formed to manage and oversee operations in the economic zone.

To improve connectivity, the Roads and Highways Department is preparing to float a tender for a connecting road linking the zone with the Korean Export Processing Zone via the Karnaphuli tunnel.

A detailed project proposal has been submitted to the Chief Adviser's Office for preliminary review and is expected to be placed before the Executive Committee of the National Economic Council (Ecnec) later this month.

Bida Executive Chairman Ashik Chowdhury said some Chinese investors are planning to start with a factory in Phase 1 of the economic zone.

"We're working on finalising the developer agreement. Once signed, construction will commence," he said, adding that the process may take up to two years.

He added that some investors could begin industrial construction early in the development phase. Regular dialogue with investors will continue to ensure smooth progress.

Meanwhile, another China-backed project, Chandpur Economic Zone-1, is also making headway under a government-to-government framework.

Proposed by the Power Construction Corporation of China Ltd (PowerChina), the zone will span 3,038 acres on an island in Matlab upazila.

Currently, a feasibility study is underway.

Due to the zone's isolated location on the Meghna river and limited mainland access, the focus will be on renewable energy and agro-based industries rather than conventional manufacturing, according to officials.

Once the feasibility study is complete, the proposal will be submitted to the Ecnec.

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