The SEZ at Kurigram would benefit both countries
On May 6, 2023, the seeds of a milestone in Bhutan – Bangladesh ties were sowed. Prime Minister of Bangladesh H.E. Sheikh Hasina met His Majesty the King Jigme Khesar Namgyel Wangchuck in London where diverse bilateral issues including trade promotion, investment in special economic zone, connectivity etc. were discussed. Both the leaders agreed that a special economic zone will be established by Bhutan in Kurigram district of Bangladesh. A memorandum of understanding (MoU) towards this was signed during His Majesty’s latest visit to Bangladesh. Bhutan will now have a special economic zone (SEZ) at Kurigram.
This development is seen as another stride in Bhutan-Bangladesh ties, which will not only strengthen the existing ties, but also benefit both the countries immensely. “We are elated that a Memorandum of Understanding (MOU) has been signed in this context by Bhutanese and Bangladeshi authorities. This Economic Zone is expected to open new avenues in bilateral trade and investment, contributing to the prosperity of the South Asia region,” stated a joint communiqué from the Ministry of Foreign Affairs and External Trade (MoFAET).
“The proximity of Kurigam to Bhutan and especially Gelephu is a benefit Bhutan will reap,” an economist based in Thimphu said. According to him, today Bhutan has no alternative but to use the port city of Kolkatta, West Bengal, for trade, which is very far by road from Phuentsholing (called Bhutan’s commercial capital) and Gelephu. Kolkatta is more than 850 kms from Gelephu, while Kurigram is just 190 kms from Gelephu. Similarly, Kolkatta is more than 700 kms from Phuentsholing. “The shorter the route, the lower the costs for transportation; the benefits that can be reaped is for all to see,” he said.
Referring to media reports that Kurigram is an import port district of Bangladesh, with prominent rivers running through this district, including the mighty Brahmaputra, Teesta and Sunkosh rivers, amongst others, with easy travel access through Sonahali and Roumari land ports, along with Chilmari river port, he said that “accessibility” will benefit both Bangladesh and Bhutan.
The Sonahat land port, which is connected to India’s northeastern state of Assam, is 44 Kms from the designated site of the Bhutanese SEZ, while the Chilmari river port, which is also close to Assam, is 34 kilometres away. The Dharla river is just 500 metres away, while the Kurigram town is a Km away. Rangpur City is 52 Kms from the SEZ and the Lalmonirhat airport is 31 Kms away. The economic zone is well connected by road, rail, river and air.
Further, he added that the SEZ provides Bhutan the opportunity to reduce and replace imports. “Industries can be established in the SEZs producing some of the main imports of the country. Our trade deficit will be narrowed. Further, we can produce finished products that can be used for ventures at Gelephu Mindfulness City (GMC) in the near future. We could think about producing electric vehicle parts at Kurigram and assembling it at Gelephu, as an example.”
A former corporate employee said that though there needs to be more clarity about the SEZ, it offers an opportunity for Bhutanese to invest in the SEZ. “During the National Day celebrations last year, His Majesty called out to Bhutanese living abroad that GMC offers them the potentials to invest. The same opportunity waits at Kurigram now,” he said, adding that the SEZ would open avenues for Bhutanese to learn different trades.
He added that Bhutanese businesses operating within the SEZ would gain access to larger markets in Bangladesh and the wider region, leading to increased trade opportunities and export potential, boosting economic growth.
“Establishing an SEZ in Bangladesh would allow Bhutan to diversify its economy by tapping into different sectors such as manufacturing, services, and technology. This diversification can help reduce reliance on traditional sectors and enhance resilience to economic shocks,” another local economist said. Bangladesh’s well-developed infrastructure and logistics network could benefit Bhutanese businesses in terms of transportation, warehousing, and distribution. This would streamline supply chains and reduce costs, making Bhutanese products more competitive in regional and international markets.
He also said that collaboration within the SEZ could facilitate the transfer of technology, skills, and expertise from Bangladesh to Bhutan. This knowledge exchange could spur innovation and productivity growth in Bhutan, enhancing its competitiveness in various sectors.
Another area would be the potential to attract foreign direct investment (FDI). “Further, the setting up of an SEZ would necessitate more power, which would eventually be exported by Bhutan, contributing to Bangladesh’s energy security while generating revenue for Bhutan,” he added.
Bangladesh media reports have quoted Abdul Aziz Mia, president of the Kurigram Chamber of Commerce, saying Kurigram will be known as an international trade zone with the opening of the SEZ. “Besides the Kurigram-Bhutan trade relations, there will also be opportunities for commercial communication with the northeastern region of India,” he said..
The creation of a special economic zone for Bhutan in Kurigram will open new avenues for business and trade between Bangladesh and Bhutan, according to Bangladesh Economic Zones Authority (Beza) officials. The Bhutanese Embassy in Bangladesh has officially reached out to the Beza, indicating its interest in securing land for the economic zone in the northern territory. Beza officials have pinpointed Madhabaram village in Kurigram Sadar Upazila as the prospective site for the SEZ.
Ambassador of Bhutan to the People’s Republic of Bangladesh, Rinchen Kuentsyl, has shared his optimism regarding the prompt initiation of construction work. This initiative is expected to usher in industrial growth in the region, offering employment opportunities to many.
Media reports say that during a visit to the site, Ambassador Kuentsyl and Sheikh Yusuf Harun, Executive Chairman of Beza, assessed the potential of the proposed location. A feasibility study is currently in progress to further evaluate the project’s viability. The Ambassador conveyed his enthusiasm to the local Bangladeshi media, emphasizing the site’s suitability for an economic zone and the mutual benefits it would yield for both countries.
The Assistant Commissioner of Kurigram Sadar, Mizanur Rahman, noted that 133.92 acres of government land had been allocated to Beza, with plans to acquire an additional 80 acres of privately owned land.
While specific investment details remain to be confirmed, Bhutan has proposed establishing the zone under a government-to-government agreement, added a Beza official.
Trade between Bhutan and Bangladesh encompasses a diverse array of commodities, ranging from electricity and agricultural products to minerals and handicrafts. The SEZ’s establishment is poised to further bolster trade ties, attract foreign investment, and facilitate the transfer of technology and expertise between the two countries.
This groundbreaking project signifies a major stride in economic cooperation between Bhutan and Bangladesh, setting a foundation for future collaborations and contributing to the socio-economic advancement of both nations. Other than Bhutan, Bangladesh has already provided economic zones to India, Japan and South Korea.
In a nutshell, establishing a SEZ in Bangladesh could offer Bhutan a platform to accelerate economic growth, enhance competitiveness, and deepen regional integration, while also contributing to the socio-economic development of both the countries.
Bangladesh struck its maiden preferential trade agreement with Bhutan in 2020. The deal allowed duty-free export of 100 goods and import of 34 goods.
According to official data from the fiscal year 2021-22, the total volume of trade between Bangladesh and Bhutan stood at USD 45.06 million, with Bangladesh exporting pharmaceuticals, ceramics, garments and food items while Bhutan exports mainly calcium carbide, cement, ferrosilicon and food items.
By Tashi Namgyal, Thimphu
