Beza, accessory-makers at loggerheads over plot price at Bangabandhu Shilpa Nagar

The Bangladesh Garments Accessories & Packaging Manufacturers & Exporters Association and the Bangladesh Economic Zone Authority (Beza) are at loggerheads over 20 plots in the Bangabandhu Sheikh Mujib Shilpa Nagar, the lease of which was suddenly increased.

In 2019, members of the Bangladesh Garments Accessories & Packaging Manufacturers & Exporters Association (BGAPMEA) applied for 20 plots in the Bangabandhu Sheikh Mujib Shilpa Nagar. 

According to Beza's prospectus, $0.60 per square metre was to be paid for a 50-year lease of the developed land.

This amount could be met for the applicants, primarily small and medium entrepreneurs.

The companies deposited 1% earnest money – a deposit made to a seller representing a buyer's good faith to make a purchase – of the total required for the lease. 

After three years of depositing earnest money for 20 acres of land at the predetermined price, the Beza, in a letter on 10 August, informed the applicants that the price had now been increased to $1. 

The BEZA increased the lease amount after receiving applications in 2022.

The rise came out of the blue, prompting the BGAPMEA to write another letter in October, saying  14 companies had separately applied for the land allocation on 7 July 2019 by depositing 1% of the lease money as per the prospectus of the BEZA. 

Saying it wanted to pay the amount as per the prospectus, the BGAPMEA added that most of the member companies in the garment accessories and packaging sector were small and medium. 

All had applied as the land price was $0.60 per square metre, but the sudden increase would make it difficult for the businesses to put together the money.

Taking the impacts of Covid-19 and other economic strains, they requested arranging the deposits at the previously agreed price.

Contacted, Md Moazzem Hossain Moti, president of the BGAPMEA, said they had informed the BEZA by letter.

"Small and medium entrepreneurs like us cannot do business by leasing the land at the new price fixed.

Many foreign and domestic companies will build factories at the Bangabandhu Sheikh Mujib Shilpa Nagar [BSMSN]. We planned to provide them with fast packaging and accessory products, and meet export and domestic demand."

Beza Deputy Secretary (Investment Promotion-2) Binita Rani said the new rate came into effect on 1 April 2021. Those who apply will have to pay the new rate, she added.

"They [BGAPMEA] have applied for the land. Their application has been accepted. If they still pay money, there will be an agreement with them."

According to the Beza, a lot of money is being spent on land acquisition, development, and infrastructure. 

As a result, they had no choice but to increase the land lease at the BSMSN.

According to Beza rules, applicants can express interest by depositing 1% of the lease price. After that, an agreement is only made if 25% of the lease value is paid. 

Sources said this had always been the rule. 

Industry insiders, however, pointed out that such sudden shifts in policy decisions do little but dissuade prospective investors.

According to the BGAPMEA, there are around 1,900 packagers and accessory-manufacturing units, mainly in Gazipur, Chattogram, and Narayanganj. 

The factories supply 40 products, such as buttons, plastic hangers, polybags, labels, zippers, tags, tapes, thread, ribbons, rivets, laces, hooks, transfer film, paper, and ink, to export-oriented readymade garment industries.

This backward linkage sector can meet the overall packaging demand of the local RMG and leather sectors.

Besides, local packagers provide backward linkage support to leather, pharmaceuticals, home textile, rice and crockeries.