Pre-feasibility Report Mirsarai 2 Economic Zone Submitted to Bangladesh Economic Zones Authority 30 November 2016 Contents Executive Summary ........................................................................................................... 5 Abbreviations .................................................................................................................. 10 1 Introduction .............................................................................................................. 11 1.1 Background ............................................................................................................................................................ 12 1.2 Description of the Project ...................................................................................................................................... 14 1.3 Chittagong District .................................................................................................................................................. 15 1.4 Mirsarai upazilla ..................................................................................................................................................... 18 1.5 Project Site and Off-site Infrastructure .................................................................................................................. 22 1.6 Outline of Future Mirsarai Industrial City ............................................................................................................... 27 1.7 Transport Connectivity Assessment ....................................................................................................................... 29 2 Approach and Methodology ....................................................................................... 35 2.1 Basic Philosophy Adopted for the Assignment ....................................................................................................... 36 2.2 Inception ................................................................................................................................................................ 36 2.3 Component 1: Competitive Advantage and Industry Assessment ......................................................................... 37 2.1 Component 2: Master Planning, Infrastructure, and E&S Footprint ...................................................................... 46 2.2 Component 3: Institutional Framework ................................................................................................................. 47 2.3 Component 4: Economic and Financial Modeling .................................................................................................. 48 2.4 Structure of the Financial Model ............................................................................................................................ 49 2.5 Financial Statements .............................................................................................................................................. 52 3 Economic Scenario of Bangladesh .............................................................................. 54 3.1 Growth ................................................................................................................................................................... 55 3.2 Vision 2021 ............................................................................................................................................................. 56 3.3 Bangladesh’s Industrial Performance and Trends .................................................................................................. 57 3.4 Foreign Trade ......................................................................................................................................................... 63 4 Bangladesh Competitiveness Analysis -Prospects of Investment in Bangladesh Economic Zones 66 4.1 Private Sector Investment ...................................................................................................................................... 67 4.2 Foreign Direct Investment ...................................................................................................................................... 67 4.3 Domestic Investment ............................................................................................................................................. 68 4.4 Emerging Prospects ................................................................................................................................................ 69 4.5 Factors inspiring confidence for the success of economic zone development in Bangladesh ............................... 73 5 Competitive Analysis and Industry Assessment .......................................................... 74 5.1 Industry Assessment .............................................................................................................................................. 75 5.2 Competitiveness Analysis of Mirsarai Site ............................................................................................................ 107 5.3 Demand Forecast ................................................................................................................................................. 119 5.4 Demand Survey .................................................................................................................................................... 124 5.5 Demand Survey Findings ...................................................................................................................................... 125 5.6 Estimation of Industry wise demand .................................................................................................................... 126 5.7 Demand Forecast Scenarios ................................................................................................................................. 131 2 6 Investment Promotion Strategy ............................................................................... 137 6.1 Tools of Investment Promotion ............................................................................................................................ 138 6.2 Methodology of Investment Promotion ............................................................................................................... 144 6.3 Pre-Notice Promotional Activities ........................................................................................................................ 146 6.4 Promotion during Bidding Period ......................................................................................................................... 146 6.5 Coordination with Other Promotional Agencies .................................................................................................. 152 6.6 Investment Promotion Action Program ............................................................................................................... 154 6.7 Success Factors ..................................................................................................................................................... 155 7 Master Plan and Onsite Infrastructure ..................................................................... 157 7.1 Master Planning Considerations for Mirsarai 2 .................................................................................................... 158 7.2 Land Use Pattern within the Economic Zone ....................................................................................................... 163 7.3 Onsite Infrastructure ............................................................................................................................................ 167 8 Environmental Footprint .......................................................................................... 184 8.1 Baseline Environment........................................................................................................................................... 185 8.2 Environmental Impacts ........................................................................................................................................ 215 8.3 Sustainability Initiatives ........................................................................................................................................ 217 9 Social Footprint........................................................................................................ 218 9.1 Baseline Socio-Economic Condition ..................................................................................................................... 219 9.2 Possible Social Impacts ......................................................................................................................................... 222 10 Institutional Framework........................................................................................... 224 10.1 Institutional Framework of the Authority ............................................................................................................ 225 10.2 Institutional Options for Mirsarai economic zone ................................................................................................ 226 10.3 Comparison of Options......................................................................................................................................... 229 10.4 Institutional Framework for Mirsarai