Study finds proposed Sylhet SEZ site not suitable
Monday, 6 October 2008
Naim-Ul-Karim
The site selected for the country's first ever Special Economic Zone (SEZ) was found to be not viable due to potential delay in land acquisition and higher capital costs, the World Bank's private sector arm said.
The International Finance Corporation (IFC) said the proposed site in Sylhet is not feasible for a profitable public-private partnership structure as the government will have to acquire 90 per cent of the land.
"Land and resettlement may be more costly than previously estimated," IFC's Bangladesh Investment Climate Fund (BICF) said after conducting a pre-feasibility study of the project.
"If the 1982 Acquisition and Requisition of Immovable Property Ordinance is utilised, land expropriation costs will increase to over Tk7.48 billion, which is Tk 2.49 billion more than anticipated," it said.
The BIFC conducted the pre-feasibility study after it was commissioned by the Board of Investment, which is entrusted with finding site for the SEZ in greater Sylhet district.
The proposed economic zone site is situated five kilometers south of Sylhet, bounded by the Sylhet-Fenchuganj Road to the south, the Sylhet-Tamabil Bypass to the north, and the rural community of Dakhin Suma to the south and east.
The total area of the site is 389 hectares (961 acres) and the area is comprised of lowlands, wetlands and small rolling hills, as well as a lake and four rivers.
"The mix of lowlands and wetlands on the site will mean that the land will have to be filled (15-20 feet) possibly-- using sand dredged from the adjacent river--and may take up to two years to settle," the BICF study report said.
The BICF said because of high land and building price in Sylhet, the proposed site is not 'suitable' for a public-private partnership in which the private sector is expected to contribute equity.
The BICF said the government should select several more new sites across the country for potential SEZ.
"We think that at least 8-10 sites can be selected for preliminary assessment. If preliminary assessment found those sites viable only then pre-feasibility study can be carried out," said senior programme manager of BICF Syed Akhtar Mahmood.
Presenting four possible public-private partnership scenarios in this feasibility study, the BICF said none of these scenarios is likely to generate the kind of internal rate of return necessary to attract a private investor if the current site is developed.
It, however, said the demand for an economic zone in Sylhet does exist, so a new site should be considered.
If an alternative site is investigated in Sylhet, access to water for the industrial facility will need to be examined further as there is a water supply problem in the area, which needs to be addressed at regional level.
The site selected for the country's first ever Special Economic Zone (SEZ) was found to be not viable due to potential delay in land acquisition and higher capital costs, the World Bank's private sector arm said.
The International Finance Corporation (IFC) said the proposed site in Sylhet is not feasible for a profitable public-private partnership structure as the government will have to acquire 90 per cent of the land.
"Land and resettlement may be more costly than previously estimated," IFC's Bangladesh Investment Climate Fund (BICF) said after conducting a pre-feasibility study of the project.
"If the 1982 Acquisition and Requisition of Immovable Property Ordinance is utilised, land expropriation costs will increase to over Tk7.48 billion, which is Tk 2.49 billion more than anticipated," it said.
The BIFC conducted the pre-feasibility study after it was commissioned by the Board of Investment, which is entrusted with finding site for the SEZ in greater Sylhet district.
The proposed economic zone site is situated five kilometers south of Sylhet, bounded by the Sylhet-Fenchuganj Road to the south, the Sylhet-Tamabil Bypass to the north, and the rural community of Dakhin Suma to the south and east.
The total area of the site is 389 hectares (961 acres) and the area is comprised of lowlands, wetlands and small rolling hills, as well as a lake and four rivers.
"The mix of lowlands and wetlands on the site will mean that the land will have to be filled (15-20 feet) possibly-- using sand dredged from the adjacent river--and may take up to two years to settle," the BICF study report said.
The BICF said because of high land and building price in Sylhet, the proposed site is not 'suitable' for a public-private partnership in which the private sector is expected to contribute equity.
The BICF said the government should select several more new sites across the country for potential SEZ.
"We think that at least 8-10 sites can be selected for preliminary assessment. If preliminary assessment found those sites viable only then pre-feasibility study can be carried out," said senior programme manager of BICF Syed Akhtar Mahmood.
Presenting four possible public-private partnership scenarios in this feasibility study, the BICF said none of these scenarios is likely to generate the kind of internal rate of return necessary to attract a private investor if the current site is developed.
It, however, said the demand for an economic zone in Sylhet does exist, so a new site should be considered.
If an alternative site is investigated in Sylhet, access to water for the industrial facility will need to be examined further as there is a water supply problem in the area, which needs to be addressed at regional level.