Govt keen to finalise free trade zone decision by Dec
The government is showing interest in setting up the country's first free trade zone (FTZ) in the southern coastal region, aiming to attract more foreign investment and create jobs.
A national committee is now working on the feasibility of the project, and Bangladesh Investment Development Authority (Bida) Executive Chairman Ashik Chowdhury said they want to finalise the decision by December this year.
For all latest news, follow The Daily Star's Google News channel. Meanwhile, some economists have questioned the rationale for a new FTZ, pointing out that export processing zones (EPZs) and a special economic zone (SEZ) already offer many of the same benefits, including duty-free imports of raw materials.
"…we are going to build another without completing the existing ones," said Zahid Hussain, former lead economist at the World Bank's Dhaka office.
He added that it would be fair to comment fully on the FTZ once complete details are available. The national committee is expected to submit its proposal by the end of this month.
Normally, imported goods attract government taxes. Within an FTZ, however, companies can import, store, and manufacture products without paying duties immediately. This reduces costs, speeds up production, and allows goods to be exported with less bureaucracy.
Businesses save money by running in FTZs, which encourages them to establish factories and offices, creating jobs in the process. American multinational Apple uses similar zones in China to manufacture iPhones before shipping them worldwide.
Setting up an FTZ in the country was first raised at the Bangladesh Investment Summit in April, where policymakers and business leaders highlighted the need to modernise trade infrastructure and establish investor-friendly zones near ports and economic corridors.
Following the summit, the government formed a national committee to look into the issues of establishing a free trade zone.
Ashik Chowdhury said the committee is expected to submit its proposal by the end of this month, with decisions finalised before the year ends.
"The national committee preparing the proposal will ultimately decide the site of the zone. But we are committed to completing the decisions by this year," he told The Daily Star.
The panel includes representatives from the Bangladesh Economic Zones Authority (Beza), the commerce and industries ministries, the Economic Relations Division, the National Board of Revenue, Chattogram Port Authority, and Bida.
It is tasked with reviewing existing laws, including the Bangladesh Economic Zones Act and the Customs Act, and recommending amendments or new regulations to establish an FTZ.
Chowdhury said the committee is focusing on aligning policies and choosing a suitable location. "The FTZ will require regulatory alignment and a strategic location. We are confident in making significant progress soon."
WHAT MAKES THE FTZ DIFFERENT
Former World Bank economist Zahid Hussain said, "We already have export processing zones and these are sort of free trade areas."
Besides, Bangladesh provides special bonded warehouse facilities for exporters to import raw materials and intermediate goods duty-free.
"We are also establishing special economic zones where there are facilities for investors," he said. "The problem is that we are now building a new one without completing the existing ones."
However, Ashik Chowdhury said the FTZ is about more than infrastructure. "The FTZ and associated projects are not just about construction. They are about enabling long-term competitiveness and export diversification. For investors, predictability and inter-agency coordination are critical."
Fahmida Khatun, executive director at local think tank Centre for Policy Dialogue (CPD), welcomed the FTZ initiative, calling it timely for accelerating industrial growth, attracting investment, and improving trade logistics.
She said Chattogram, with its established port and industrial base, stands out as the most viable location.
"An FTZ can help boost exports, create employment opportunities, and eventually position Chattogram as a regional trade gateway," she said.
Khatun added that global experience shows FTZs succeed when backed by strong policies and infrastructure. Chattogram's proximity to Southeast Asian trade routes and its transport facilities give it a clear advantage, especially given the country's limited airport space and storage capacity.
She said implementation must take environmental and social safeguards into account, especially regarding land acquisition.
"If designed and executed properly, the FTZ can serve as a powerful catalyst for export diversification, employment generation, and deeper integration into the global economy. It represents a key opportunity for Bangladesh, particularly as it approaches graduation from LDC status in a rapidly evolving global trade environment," added the economist.
GLOBAL FTZ EXPERIENCE VARIES
Local businesses have broadly welcomed the FTZ move, though outcomes vary internationally.
Asif Ibrahim, former chairperson of Business Initiative Leading Development (BUILD), said China's zones, such as Shenzhen, were highly successful, while many in Africa and Latin America struggled.
He noted that FTZs can boost growth by attracting foreign investment, streamlining trade, and improving infrastructure. They often drive exports, create jobs, support technology transfer, and enhance skills, while also strengthening port and road networks.
However, Ibrahim warned of potential setbacks, including weak links with local industries, lost tax revenue, and poor labour and environmental standards.
Zaved Akhter, president of the Foreign Investors' Chamber of Commerce and Industry (FICCI), called the FTZ decision positive for foreign investment.
"Establishing a free trade zone creates a more favourable investment climate by offering facilities such as duty exemptions and tax incentives," he said. "However, for this to be truly effective, a clear and specific policy framework must be put in place to guide its implementation."
He added that location is crucial. Sites near seaports are more attractive to investors, reducing logistics costs and enhancing export competitiveness.
Mohammad Abdur Razzaque, chairman of Research and Policy Integration for Development (RAPID), said that Bangladesh faces challenges as the global trade order shifts.
"As major economies roll out subsidies and restructure supply chains, Bangladesh finds itself constrained," said Razzaque. "Our trade regime remains highly protectionist, and unlike advanced economies, we lack the fiscal space to support industries through large-scale incentive packages."
He stressed the urgency as Bangladesh nears graduation from least developed country status. "If we keep delaying reforms, Bangladesh could fall behind as global trade becomes more divided."
Razzaque said, "We should not just copy others. Instead, we need to update our trade and industrial policies to fit the changing world."
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