Pre-feasibility Study for Sylhet Economic Zone

United House, 10 Gulshan Ave, Gulshan-1 Dhaka-1212 Bangladesh

Phone: +880 2 88337-52 up to 66 Fax: +880 2 8833495
BICF is managed and executed by the IFC and funded by
the U.K. Department for International Development and the European Commission

About IFC BICF

The IFC Bangladesh Investment Climate Fund was established in January 2007 with the key
objective of addressing some of the main investment constraints in Bangladesh including an unduly
high administrative burden, poor infrastructure and corruption.
IFC BICF is funded by the UK Governments Department for International Development (DFID)
and the European Commission for a total of US54.8 million over eight years. It will consist of two
four-year phases, with the implementation of Phase II dependent on the success of Phase I.
IFC BICFs primary objective is to provide advisory services to the Government of Bangladesh in
its efforts to improve the countrys investment climate, whilst also working with other stakeholders
within the private sector, civil society and the media. IFC BICFs main counterpart in Government
is the Board of Investment.
IFC BICF targets three reform areas: improving overall business regulations through a dedicated
body within the Government; improving the regulatory framework for private participation and
environmental/social compliance practices in economic zones; and, strengthening institutional and
civil service capacity to promote private sector development reforms, while improving advocacy
capacity among all stakeholders.

Disclaimer
IFC, through IFC BICF, endeavors, using its best efforts in the time available, to provide high
quality services hereunder and have relied on information provided to them by a wide range of other
sources. However, IFC makes no express or implied representation or warranty as to the accuracy,
completeness or sufficiency of this report and its analyses.
Consequently, IFC shall not be liable for any loss, damage or liability that the Client or any other
third party may suffer or incur as a result of (i) this report prepared by IFC or (ii) any advice or
recommendation given or made by IFC in this report, unless a court of competent jurisdiction
determines by final judgment that such loss, damage or liability was the result of gross negligence or
willful misconduct on the part of IFC.

Foreword Acknowledgements
In the past three decades, Bangladesh has made wide use of Export Processing Zones (EPZs) as a
tool for economic growth and job creation. Industrial estates have also been established in most of
the 64 districts of Bangladesh, and the Government of Bangladesh (GoB) is also contemplating
paving the way for a variety of other kinds of economic zones in the country. The zones have
proven to be effective tools in setting aside and allocating land for industrial use and in creating jobs.
With a view to reaping the benefits of an economic zone in the northeast division of Sylhet, in 2005
the Sylhet Chamber of Commerce & Industry (SCCI) commissioned a pre-feasibility study for a
proposed economic zone in Sylhet to a local consulting company, Young Consultants. A major aim
of the proposed project was to attract investment from non-resident Bangladeshis, primarily those
of Sylheti origin, now residing in the U.K. and enjoying a great deal of economic success. The first
version of the study completed in August 2007 contained much useful information, however, the
Board of Investment (BOI), which was assigned responsibility for the project by the GoB felt that
the study could be enriched by bringing in international expertise to complete the financial and
economic models and to benchmark the site against other international zone projects.
The following pre-feasibility study was the result of a joint effort by Young Consultants and several
international experts brought in to Bangladesh between November 2007 and May 2008. There were
numerous trips to Sylhet by the consultants and the IFC BICF staff, as well as vast amounts of
information gathered both about Sylhet and Bangladesh and information about industries worldwide
for the benchmarking exercise.
Various people assisted us with information and logistics in the course of performing this study. We
would like to thank the Sylhet Chamber of Commerce for the original impetus for the project and
for providing extensive information on the project during our visits.
We would also like to thank the Board of Investment for making the request for the study of the
IFC BICF and especially Mr. M. Emdad-ul Haque, Deputy Director, Board of Investment in Sylhet,
for personally accompanying us on each of the trips to Sylhet. We also appreciate and thank the
Sylhet and Dhaka branches of the Board of Investment for providing the international and local
experts with data and background material for the study.
We extend thanks both to Mr. Haque and to the Sylhet Chamber of Commerce for assisting with
the organization of a mid-project presentation of the studys findings in Sylhet on February 25, 2008,
reserving the venue, and inviting the approx. one hundred stakeholders who were at the event.
The Bangladesh Export Processing Zones Authority (BEPZA) also provided important information
about the EPZs of the country that gave a picture of the role of economic zones in Bangladesh and
enabled the consultants to benchmark the proposed site in Sylhet against the other zone projects in
Bangladesh.
And lastly, we would like to extend our appreciation to the private sector in Dhaka, Sylhet,
Chittagong and elsewhere across Bangladesh who have worked with us and have provided
invaluable insight to the needs of companies.
2

Table of Contents
I. Executive Summary ......................................................................................................................................6
Introduction ...................................................................................................................................................6
The Site ...........................................................................................................................................................6
Market Analysis..............................................................................................................................................8
Demand Forecast ..........................................................................................................................................8
Financial Analysis ..........................................................................................................................................9
Economic Analysis......................................................................................................................................10
Recommendations.......................................................................................................................................11
II. Introduction ...............................................................................................................................................12
Purpose of the Study...................................................................................................................................12
SCCI-Commissioned Feasibility Study ....................................................................................................12
The IFC BICF Study ..................................................................................................................................14
III. The Site.......................................................................................................................................................15
Site Location ................................................................................................................................................15
Site Description ...........................................................................................................................................15
Land Use Designation ................................................................................................................................15
Ownership ....................................................................................................................................................15
Access............................................................................................................................................................16
Utilities ..........................................................................................................................................................16
Environmental and Social Assessment ....................................................................................................16
Site Summary ...............................................................................................................................................18
IV. Market Analysis ........................................................................................................................................19
Methodology ................................................................................................................................................19
Competitiveness Benchmarking................................................................................................................19
Benchmarking Results............................................................................................................................24
Trade Trends................................................................................................................................................25
Exports.....................................................................................................................................................25
Imports.....................................................................................................................................................26
Investment Trends ......................................................................................................................................27
Export-Oriented Investments...............................................................................................................28
Local Investments...................................................................................................................................29
Anticipated Investment Trends ............................................................................................................30
Market Analysis Summary..........................................................................................................................31
V. Demand Forecast........................................................................................................................................33
Methodology ................................................................................................................................................33
Likely Industry Sectors...........................................................................................................................34
Number of Tenants ................................................................................................................................34
Operating Parameters.............................................................................................................................34
General Assumptions .................................................................................................................................35
Forecast Scenarios.......................................................................................................................................36
Base Case Scenario .................................................................................................................................36
Aggressive Scenario ................................................................................................................................36
Demand Forecast ........................................................................................................................................37
Number of Tenants ................................................................................................................................37
Land Forecast..........................................................................................................................................38
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Employment Forecast............................................................................................................................41
Utility Forecast ........................................................................................................................................41
Demand Forecast Summary ......................................................................................................................42
VI. Financial Analysis......................................................................................................................................44
Methodology ................................................................................................................................................44
Assumptions.................................................................................................................................................45
Capital Costs............................................................................................................................................46
Phased Development .............................................................................................................................47
Operating Costs ......................................................................................................................................48
Product Configuration ...........................................................................................................................49
Prices.........................................................................................................................................................49
Capital Structure......................................................................................................................................50
Public Private Partnership Structure....................................................................................................50
Net Present Value...................................................................................................................................52
Results ...........................................................................................................................................................53
Sensitivity to Capital Costs and Prices.................................................................................................54
Financial Conclusions .................................................................................................................................55
VII. Economic Analysis..................................................................................................................................56
Scenario 1: 100% Private Sector Project .............................................................................................57
Scenario 2: Government Develops Phase 1 Infrastructure..............................................................57
Scenario 3: Government Acquires Land .............................................................................................57
Scenario 4: Government Acquires Land and Develops Phase 1 .....................................................57
Economic Analysis Summary....................................................................................................................57
VIII. Recommendations .................................................................................................................................59
Annex 1: Demand Forecast............................................................................................................................60
Aggressive Case Demand...........................................................................................................................60
Base Case Demand......................................................................................................................................64
Annex 2: Financial Analysis............................................................................................................................68

Acronyms, Abbreviations, and Initials

BEPZA
BICF
BOI
BPO
BSCIC
EPZ
EZ
HEPZA
ICT
ID
IFC
IRR
IZ
Ltd.
Kg.
KVA
KW/h
M2
M3
Mo.
NA
NRS
PPP
RMG
SCCI
SFB
Sq.
Tk.
U.N.
VAT
Yr.

Bangladesh Export Processing Zone Authority

Bangladesh Investment Climate Fund
Board of Investment
Business process outsourcing
Bangladesh Small and Cottage Industries Corporation
Export processing zone
Economic Zone
Ho Chi Minh City Export Processing Zone Authority
Inland container terminal
Industrial district
International Finance Corporation
Internal rate of return
Industrial zone
Limited
Kilogram
Kilovolt ampere
Kilowatt hour
Square meters
Cubic meters
Month
Not available
Non-resident Sylhetis
Public-private partnership
Ready-made garment
Sylhet Chamber of Commerce and Industry
Standard factory building
Square
Taka
United Nations
Value-added tax
Year

I. Executive Summary
Introduction
In 2007, the Board of Investment (BOI) of Bangladesh commissioned a pre-feasibility study to
develop a site for an economic zone in Sylhet. The study was funded by the International Finance
Corporation (IFC)-Bangladesh Investment Climate Fund (BICF) and was undertaken by an
international specialist and the local firm, Young Consultants, which had carried out the original prefeasibility study from 2006 to 2007. The following pre-feasibility study includes: i) a brief site review
and an environmental and social assessment, ii) a market analysis, iii) a demand forecast, iv) an
environmental and social assessment, v) a financial analysis, and vi) an economic analysis.

The Site
The Economic Zone site is situated 5 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 these lands are
comprised of lowlands, wetlands, and gently rolling hills, as well as a lake and four rivers.
The advantage of the sites location is:
It is located near an existing urban area, on the outskirts of Sylhet;
It has direct highway access to roads leading to India and Chittagong;
It is in close proximity to a railroad corridor that leads to Chittagong, which could be
connected to the economic zone through a spur;
The land is occupied by approximately 30 families, which means that there are few
resettlement issues;
It is adjacent a new residential/commercial community, which will provide an international
level of living to potential investors and their senior staff.
The disadvantage of the location is:
The government will have to acquire 90 percent of the land, which may mean delays in
beginning the project;
The land contains 4 rivers and a lake, which may present major master planning,
infrastructure and environmental challenges as well as increase the cost of development
significantly;
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 riverand may take up to two
years to settle;
The land is currently used for sustenance farming, so livelihoods will be lost;
The proximity to the urban area of Sylhet may be a liability as the city grows and encroaches
on the site;
Most of the farm workers are women, which may mean an unbalanced impact of the project
on women.

In addition, there are some critical environmental and social issues related to Sylhet in general, which
will significantly impact the financial and economic analysis of the site. Key concerns are:

Availability of water in the region is uncertain (Sylhet regional issue). Sylhets existing
groundwater table is unlikely to be able to support the EZ. A detailed hydrology study is
necessary to determine the medium and long-term water availability for the EZ and the
Sylhet region as a whole.

The EZ is in an area of high seismic risk (Sylhet regional issue). Bangladesh is located
in a seismic zone, and the north-eastern part of Bangladesh is an area of high seismic risk.
The main concern for the EZ is that the fill, which is needed to raise the lands above the
flood level, will have enough time to properly settle before construction is started. This is
necessary so the lands can support construction.

The above is true for the entire Sylhet Region therefore this applies to any site selected in Sylhet.
The rest of the concerns listed below only apply to the proposed site.

Flood retention capacity of the site must not be reduced (Issue related to the
proposed site). According to the Department of Public Health Engineering (DPHE), it is
critical that development of the site for an EZ not affect or reduce the sites current flood
retention capacity. A study and drainage management plan will need to be developed. This
will affect the master planning of the site and reduce the area which can be developed.

Location of the EZ may be too close to the city of Sylhet (Issue related to the
proposed site). If Sylhet continues to grow at a rapid pace, the EZ site will be surrounded
by residential communities. Although the land is currently zoned for industrial purposes, if
development is postponed, there will be pressure to rezone the lands to residential use in the
future. An EZ commitment should be obtained from the Government to ensure the
development of a zone in whichever site is chosen. An EIA should also be done quickly, if
development of this site is selected, in order to obtain an Environmental Clearance
Certificate.

Effluent Management is required for the EZ (Issue related to the proposed site). An
effluent management plan is required for the EZ, which includes: i) the installation of a
central sewage and effluent treatment plant (ETP), ii) pretreatment of effluents by tenant
industries if they do not meet ETP influent requirements, and iii) an emergency response in
the event of an ETP breakdown.

Land and resettlement may be more costly than previously estimated (Issue related
to the proposed site) If the Acquisition and Requisition of Immovable Property Ordinance
of 1982 is utilitzed, land expropriation costs will increase to 7,478,484,000 Tk, which is
2,492,828,000 Tk more than anticipated. In addition, if resettlement is carried out in
conformity with the IFCs Performance Standards then costs will be increased to pay for the
re-establishment of lost livelihoods.

Market Analysis
An analysis of the business climate and economic market in Sylhet was undertaken to help forecast
the market demand in the new EZ. They types of industry sectors proposed for the site are: i) Food
and beverage processing, ii) Garments and textiles, iii) Ceramic and mineral products, iv) Chemicals,
soaps, pharmaceuticals, v) Metalworking, vi) Electronics and electrical appliances, vii) Software and
BPO, viii) Rubber and plastic products, ix) Warehousing, and x) Manufacturing.
The following conclusions were determined from the market assessment:

Sylhet is a competitive location. When benchmarked against Dhaka (Bangladesh),

Kathmandu (Nepal), Visakhapatnam and New Delhi (India), Ho Chi Minh City (Vietnam),
Colombo (Sri Lanka), Karachi (Pakistan), and Guangzhou (China), Sylhet fares well, as it
delivers a low cost framework for doing business. Worker wages and salaries in Sylhet are
among the lowest in South Asian region. This is positive for companies with labor-intensive
production processes. However, the Sylhet labor force also lacks skills necessary for
industrial production or service-oriented exports.

Sylhet is not in the favored location for investment along the Dhaka-Chittagong
corridor. Bangladesh has experienced an increase in exports in a variety of sectors such as
apparel, leather, textiles, metal products, fish, footwear, mineral products (ceramics), and
others. Although Sylhet can attract a small fraction of these investments, business owners
still favor locations along the Dhaka-Chittagong corridor.

The location may only attract local investors selling to a local market. Most of the
companies that will locate in the proposed Sylhet economic zone will be local firms
producing goods and products for the local market. Some firms may also distribute goods
nationally, or export some items to northeast India.

NRS capital is high but they lack local industry knowledge. The non-resident Sylheti
(NRS) community has shown great interest in locating ventures in the Sylhet economic zone.
However, they generally lack industrial expertise, and require local investment partners with
such knowledge.

Demand Forecast
The Demand Forecast serves the dual purposes of determining the most likely mix of industries in
the zone, and estimating the numbers of new tenants that will locate in the economic zone each
year. Demand for land in the zone was estimated in two scenariosa Base Case and Aggressive
Case. Figure 1 illustrates the potential number of tenants the Sylhet Economic Zone will have under
each scenario over the course of 15 years. In the Base Case, 160 firms will likely locate in the zone
by Year 15. This expands to 290 firms in the Aggressive Scenario (see Annex 1 for demand forecast
numbers).


Figure 1. Number of Tenants
Number of Tenants
350
Cumulative Number of Tenants

Aggressive

300

Base Case

250
200
150
100
50
0
Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Financial Analysis
The IFC BICF developed a Financial Model which was developed using the base-case scenario to
assess the viability of the zone project from the perspective of a private sector
owner/developer/operator under four PPP scenarios.

Scenario 1: Full Private Sector Acquisition, Development, and Operation of the Sylhet EZ
Scenario 2: Public Sector Develops Phase 1 Infrastructure; and Private Sectors Acquires
Land and Develops Subsequent Phases of the Sylhet EZ
Scenario 3: Public Sector Acquires Land; and Private Sector Develops and Operates the
Sylhet EZ
Scenario 4: Public Sector Acquires Land and Develops Phase 1 Infrastructure; and Private
Sector Develops Subsequent Phases of the Sylhet EZ.

A summary of the financial model results is shown below.

Figure 2. Summary of Financial Results (US$ millions)

Scenario 1
Scenario 2
Scenario 3
Project IRR
2.57%
8.54%
5.25%
Project NPV (0%)
89
196
150
Project NPV (10%)
-110
-13
-55
Project NPV (15%)
-132
-39
-79
Project NPV (20%)
-138
-49
-88
Project Payback in Year
NA
NA
NA
Equity IRR 1
NA
NA
NA
Equity NPV (0%)
-241
-95
-158
Equity NPV (10%)
-167
-63
-108
Equity NPV (15%)
-143
-53
-92
Equity NPV (20%)
-125
-46
-80
Equity Payback in Year
None
None
None
Total External Equity Required
264
118
182
For Capital Expenditures
90.2
58.0
72.0
For Clearance of Deficits
173.8
60.3
109.7
Maximum Debt Balance
149
89
103
Average Debt Balance
80
56
66
Balance Sheet Value at Year 15
215
172
190
Undistributed Distributable Reserves
None
6.6
None
at Year 15

Scenario 4
11.40%
57
3
-4
-7
11
12.93%
14
1
0
-1
9
37
27.4
9.5
86
40
147
67

The model indicates that the Sylhet EZ is a not a financially feasible project for a developer/
operator unless capital costs can be reduced substantially. In PPP scenarios 1, 2, and 3, the project
generates an internal rate of return (IRR) lower than the cost of capitalmaking it a poor
investment choice. In PPP scenario 4, the private sector partner could see returns slightly above the
cost of capital, but the benefit provided by such a developer is almost nil, as the project comes close
to generating enough cash to fund future development without the need for external equity.
In short, given the high capital costs at the selected site, and the market prices for land and buildings
in Sylhet, the project is not suitable for a PPP in which the private sector is expected to contribute
equity. It could be suitable for a management contract PPP (in which an operator is paid a flat fee
or percentage of net earnings) and the zone is developed by a public sector developer depending on
the economic benefits generated. However, given the stated objective of the government of
Bangladesh to involve the private sector in the development of industrial land, a different site (with a
lower acquisition and development cost per square meter) would be required.

Economic Analysis
Government contributions to the Sylhet economic zone would entail both costs and benefits to the
government, andby extensionsociety. There are many valid reasons why the government would
choose to expend resources on an economic zone project. These include enterprise formation, job
creation, export generation, urban and rural development, environmental clean-up, and others. It is
crucial that the government understand the costs and benefits of its involvement in infrastructure
1

At a 70% debt-equity ratio

10


projects, and decisions on similar projects have not always been based on a thorough cost-benefit
analysis.
Recent trends in Bangladesh are to move away from wholly government funded economic zone
projects to projects that include some degree of private sector participation. There are a number of
reasons for this including: i) the need for master planning for new zones, ii) the lack of government
funding for such projects and iii) the recognition that the private sector does a better job of
managing zones while the public sector does a better job of regulating them.
Therefore, the goal of public sector stakeholders in the Sylhet Economic Zone should be to make
the zone profitable to a private sector owner/developer/operator under a PPP situation while
ensuring a positive economic impact as well. The IFC BICF team has demonstrated four possible
PPP scenarios in this pre-feasibility study. None of these scenarios is likely to generate the kind of
IRR necessary to attract a private investor if the current site is developed. A suitable IRR could be
generated if the public sector were to provide almost all of the capital required to develop the zone
(Scenario 4), but the economic returns to the public sector would fall proportionately. In this
scenario, the financial structure would more closely resemble a no-risk gift to the private sector
developer rather than a true PPP in which both risk and reward are shared.
For the Sylhet EZ, the high capital costs of the project make it unfeasible for any kind of private
developer. Given that the Government of Bangladesh has stated its preference for involving the
private sector in future EZs, the current site is not suitable and thus does not require a full-scale
economic analysis to justify public sector involvement. If a suitable site is found in the future, a fullscale economic model should be used to justify any public contribution to the PPP.
If a new site is identified for development, the government should only participate in the initial
capital development stages of the zone, rather than subsidize zone operations or hold equity in the
zone itself. The government can specifically discuss the fine details of its involvement once a new
site has been selected and a private owner/developer/operator has been identified.

Recommendations
1. After a detailed environmental and social review of the site was completed and the new
information was added to the financial model, it was determined that the development costs for
the Sylhet site would not allow for a profitable PPP structure. This is due to the significant
planning and environmental mitigation costs associated with the site.
2. Demand for an EZ in Sylhet does exist, so a new site should be considered.
3.

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 a regional level.

11

II. Introduction
This study was commissioned by the International Finance Corporations Bangladesh Investment
Climate Fund (IFC BICF) to determine the market demand and financial viability of establishing an
economic zone in Sylhet, Bangladesh. The IFC- BICF is a technical assistance program designed to
create a better environment for businesses in Bangladesh.

Purpose of the Study

Export processing zones (EPZs) and industrial estates in Bangladesh have historically been
developed by the government with little bearing on the actual demand for serviced industrial land.
This has yielded successful EPZs in population and transportation centers such as Dhaka and
Chittagong, but less successful ones in places such as Ishwardi. Traditional EPZsand their
associated fiscal benefitshave also been off limits to firms that do not have an export-oriented
business model.
The government of Bangladesh is no longer willing to expend public funds for new EPZ projects.
Current EPZs are heavily subsidized, and do not reflect the market value of serviced industrial land.
There thus exists a need for private commercial funding for new economic zones, including ways to
determine market demand and financial viability of such projects.
The IFC BICF is providing guidance to the Bangladesh Export Processing Zone Authority
(BEPZA) on evaluating new economic zones projects using internationally accepted methods of
market analysis, financial and economic modeling, and private sector participation in economic zone
ownership, development, and operation. In parallel, BICF is also training Bangladeshi companies
and non-profit organizations to conduct market demand-based feasibility studies.
This study is in response to government and private sector interest in establishing an economic zone
in Sylhet. In a demonstration of international best practices, IFC BICF commissioned this prefeasibility study to examine the market demand for serviced industrial infrastructure in Sylhet. This
will suggest, in part, the recommended mix of public and private sector participation in the project
sufficient to yield a positive internal rate of return (IRR) for private sector stakeholders. This type
of feasibility analysis is what has traditionally been lacking in past BEPZA and BSCIC industrial
zone and estate developments.

SCCI-Commissioned Feasibility Study

The analysis contained in this report builds upon the October 2007 Feasibility Report on Special
Economic Zone & Industrial Park in and around Sylhet prepared by Young Consultants. That study was
commissioned in 2005 by the Sylhet Chamber of Commerce and Industry (SCCI) with the belief
that an economic zone was necessary for spurring manufacturing and economic development in
Sylhetincluding investment by non-resident Sylhetis (NRSs), local entrepreneurs, and foreign
firms alike.

12


The study undertaken for SCCI did not include a market demand forecast, a land assessment, an
environmental evaluation, or a financial and economic analysis. It did, however provide an overview
of the socioeconomic climate in Sylhet, including local community and business support for an
economic zone, availability of productive resources for viable industries, location advantages of
Sylhet, location alternatives for an economic zone, and options for ownership and financing of such
a project.
Sylhet is a prosperous district in northeast Bangladesh, owing in significant part to the large
remittances sent by Sylhetis who have emigrated abroad. In 2006/2007, Sylhetis received BDT 5.7
billion (approximately US$ 80 million) in remittance earnings. The feasibility study commissioned
by SCCI showed, however, that these remittances have not translated into significant investments or
loansparticularly for industrial ventures of the type that would locate in an economic zone.
Rather, NRS remittances have been plowed primarily into savings, consumption, and real estate.
The result is a demand for consumer goods and construction materials that is higher in Sylhet than
many other districts outside Dhaka.
A survey of remittance receivers did find a willingness among them to invest in an economic zone in
Sylhet, primarily through the purchase of equity bonds for the zone construction. Surveys by Young
Consultants also unveiled some interest by existing business ownersas well as some NRSs to
expand, relocate, or open new ventures in the proposed zone. These ventures would likely include
production of consumer products such as processed foods, plastic and rubber products, handicrafts,
mineral-based items, and products to sell in expatriate niche markets.
Investments outside of real estate have been slow to materialize for several reasons, according to the
SCCI-commissioned study. Business formation has been limited by the following:

Scarcity of serviced industrial infrastructure

Bureaucratic hassles of obtaining land, permits, registrations, and venture capital

Lack of technically skilled labor

Little experience among local and NRS entrepreneurs and investors in operating industrial
ventures
The SCCI anticipates that an economic zone in Sylhet will ease constraints caused by the scarcity of
land, as well as improve the business climate through reduction of bureaucratic hurdles and
corruption. Provided that is the case, Sylhet does have some positive location attributes, which
include the following:

Inexpensive labor

Relatively wealthy local consumer market

Potential to tap consumer markets in northeast India

Good road, rail, and water transportation connectivity to Dhaka and Chittagong Port

International airport

Abundance of agricultural and mineral-based resources

A site audit was also conducted for the SCCI-sponsored report. It compared potential locations for
an economic zone within Sylhet. A location just outside Sylhet Sadar (city) ranked the highest, based
on criteria such as access to utilities, labor, transportation infrastructure, traffic congestion, and
natural resources. The IFC BICF Sylhet Prefeasibility Study will base its analysis and financial and
economic calculations on that site.

13

The IFC BICF Study

The IFC BICF Pre-feasibility Study for Sylhet is comprised of 5 components: i) a site assessment
including an environmental and social evaluation, ii) a market analysis, iii) a demand forecast, iv) a
financial model, and vi) an economic benefit review. The critical element of this study is a market
and land demand forecast for local, NRS, and foreign firms in Sylhet. This analysis was fed directly
into a financial and economic model to determine the IRR of the project.

14

III. The Site

This chapter provides an overview of the proposed site, its location, ownership, and the
environmental and social issues key to the development of the lands. This data will be used in the
financial model to help determine the feasibility of the site.

Site Location
The proposed zone site is situated 5 kilometers south of Sylhet, bounded by the the SylhetFenchuganj road to the south, the Sylhet-Tamabil Bypass to the north, and the rural community of
Dakhin Suma to the south and east. The Bypass leads to the Sylhet Airport, as well as the TamabilDowki border of India, which is considered the gateway to Meghalaya and Assam. The SylhetFenchuganj road runs south through the country ending in Chittagong. Adjacent the property is the
Akhaura-Chittagong railway line running from Akhaura to Chittagong. Although the railway runs
parallel to the site, there is an opportunity to develop a rail spur with direct connection into the site
to improve rail access.

Site Description
The site is 389 hectares or 961 acres in size. The lands are comprised of a mix of lowlands, wetlands,
and gently rolling hills. There is a lake and four rivers running through the property. In the centre of
the site is a small bridge. A few areas within the site contain trees and low lying vegetation, though
the majority of the property is flat and unencumbered as it is currently being utilized for crops,
fishing, and grazing. During the monsoon season these lands flood, hence to make these lands viable
for development, the lands must be raised approximately 15-18 feet in height.

Land Use Designation

The site and its surrounding area is deemed agricultural land by the planning department. In close
proximity to the economic zone are three (3) large-scale housing projects, (recently approved by the
municipality), which will change the existing land use designation in this area from agriculture to
mixed use. The Royal, which is the nearest to the economic zone lands, (directly across the
highway), contains 3,000 residential units with schools, community centers, commercial complexes,
mosques, and a range of support amenities. East of the site is an amusement park, which has a site
specific land use designation, and south of the site is a new government office building, which is
designated as institutional.

Ownership
Only 10 percent of the land is currently owned by the Government of Bangladesh. Hence the
remainder of the land will need to be assembled through expropriation, which may take 1 to 2 years.
There are a large number of land parcels that need to be acquired. Currently, the land is divided into
very small plots, which are used for sustenance farming.

15

Access
The site has good road and rail access, which makes its location desirable. It is situated at the
intersection of roads leading to Dhaka, Sylhet, India, and Fenchuganj. The existing roads are dual
carriageways and paved but not always lit. They do however currently handle heavy truck transport.
Because the proposed site is adjacent these key transportation corridors, it does reduce potential
transportation problems. Access points onto the existing roads and byways should be investigated
further in the feasibility study. In addition, it is anticipated that the highways will need to be widened
in the future to accommodate traffic flows from both the industrial and residential intensification
proposed for the area. There is however, land on both sides of the road to accommodate this
increase.

Utilities
The economic zone will need its own water and power supply as there is not enough water or power
in the region to support the industrial facility to the standards needed to attract both local and
international investors. There is an opportunity here to develop environmentally-friendly options.
Presently there is a high-pressure gas line, which runs through the economic zone site. When the site
is being designed, this must be taken into consideration. It will be important to provide an easement
and mandatory setbacks over this high-pressure pipeline to provide access in case of an emergency
or breakage. The connection point to this gas line is located in close proximity but off site. This does
not create any problem for hook up however.
To conform to best practices, there is a 100-meter setback from the railway line. This setback
encroaches on the perimeter of the site by approximately 25 feet. This land however, is targeted for
highway widening. Within this encroachment is also a low watt power line following the side of the
highway. At this point, there is a 15-20-foot dip from the highway level to the level of the site.

Environmental and Social Assessment

The site has environmental and social concerns, which need to be further investigated in order to
determine if they are fatal flaws for the project. Key issues are as follows:
Availability of water in the region is uncertain. (Sylhet Regional Issue- Potential Fatal Flaw).

The groundwater table in Sylhet is dropping rapidly and available groundwater resources are
unlikely to be able to support the EZ (Water demand for the EZ is estimated at a minimum of
280,235 cubic meters-m3-in year five of the base case scenario to a maximum of 1,056,580 m3 in
year fifteen of the aggressive scenario).

Surface water resources from the Surma River are not sufficient in the dry season, and although
water could be piped from the Kushiyara River in the dry season, there is no certainty as to the
availability of surface water from this river in the medium to long term, which will be affected by
a planned irrigation project upstream of Fenchuganj. If the Tipaimukh Dam on the Barak River
in India is constructed it could severely constrain downstream water supply in Bangladesh in
both the Surma and Kushiyara Rivers, which are distributaries of the Barak River.
16

A detailed hydrological study is necessary to determine water availability in the medium and long
term water for municipal users, the proposed EZ, other industrial users and for environmental
instream flow requirements for both the Kushiyara and Surma Rivers.

The EZ is in an area of high seismic risk (Sylhet Regional Issue)

Bangladesh is located in a seismic zone, and the north-eastern part of Bangladesh is an area of
high seismic risk. The main concern here is the liquefaction of soils during a seismic event.
Hence, it will be important that the site, once filled, rests for an appropriate amount of time to
let the land settle properly in order for it to be able to support construction.

International earthquake building standards should be utilized when constructing infrastructure

and buildings on this site.

The above is true for the entire Sylhet Region therefore this applies to any site selected in Sylhet.
The rest of the concerns listed below only apply to the proposed site.
Flood retention capacity of the site must not be reduced (Issue related to the proposed site)

The Department of Public Health Engineering (DPHE) has indicated that the sites current
flood retention capacity can not be reduced by the development of the EZ. A study needs to be
carried out to see if it is viable to build an EZ in this location if current drainage and flood
retention levels must be maintained.

A Drainage Management Plan with baseline flood levels and drainage requirements is needed to
determine the amount of land, which is left available for development. This will affect the design
of the Master Plan and phasing of the project.

Location of the EZ may be too close to the city of Sylhet (Issue related to the proposed site)

If the rapid expansion of residential areas on the outskirts of Sylhet continues, the EZ site will,
in the coming years, be surrounded by urban sprawl.

While the Department of Environment currently has no objection to an EZ on the proposed

site, delayed development could lead to a rezoning the area to a residential designation, which
would prohibit the development of the EZ in this location.

To show good will, if a feasibility study recommends the development of the EZ in this location,
a full environmental impact assessment (EIA) should be undertaken immediately so the site
obtains an Environmental Clearance Certificate. An EIA is a lengthy process and must be
completed before construction is permitted. A commitment from the Department of
Environment will also be needed so they do not revoke the certificate at a later date.

Effluent Management is required for the EZ (Issue related to the proposed site)

An effluent management plan is required for the EZ, which includes: i) the installation of a
central sewage and effluent treatment plant (ETP), ii) pretreatment of effluents by tenant
industries if they do not meet ETP influent requirements, and iii) an emergency response in the
event of an ETP breakdown.

17


Land and resettlement may be more costly than previously estimated (Issue related to the
proposed site)

Land acquisition costs are estimated at 4,985,656,000 Tk. based on an average market value of
1,300 Tk/m2. Under the Acquisition and Requisition of Immovable Property Ordinance (1982),
the Deputy Commissioner must award a sum of 50 percent of the lands market value in
addition to the market value itself for any expropriation. This would increase the land acquisition
costs to 7,478,484,000 Tk.

If resettlement of the site is carried out in conformity with the IFC's Performance Standards,
then resettlement costs may be more expensive than initially anticipated because displaced
persons would also be paid in order to re-establish their livelihoods.

Site Summary
Like most development sites, this location for the Economic Zone has a number of advantages and
disadvantages. In summary, the advantages are:
i)
ii)
iii)
iv)
v)

It is located near an existing urban area on the outskirts of Sylhet;

It has excellent highway access to roads leading to India and Chittagong, the major port
of Bangladesh;
It has close proximity to a railroad link that leads to Chittagong and which could be
connected directly to the economic zone through a spur;
The land is occupied by approximately 30 families which, for a site of 961 acres, is
relatively few and will present fewer resettlement issues than might otherwise be the
case;
Three residential developments are located directly outside the zone and have been built
according to UK-standards with full recreational facilities. This will provide attractive
living accommodations to potential investors and their relocating staff.

The disadvantages are:

i)
ii)

iii)
iv)
v)
vi)
vii)
viii)

The government will have to acquire 90 percent of the land which may mean initial
delays in beginning the project;
The land includes 4 rivers and a lake, which may present major challenges for
construction. This will reduce the amount of land for development and construction
may be significantly more expensive because development must preserve the rivers and
lake;
The land must remain as a floodwater catchment area for the surrounding region;
The mix of lowlands and wetlands on the site will mean that the land must be raised, and
the materials used will most likely take a significant amount of time to settle;
The land is livelihood property, which includes sustenance agriculture and raising of
cattle. Resettlement costs may be more than expected;
The proximity to Sylhet may be a liability as the city grows and encroaches on the site;
There are water constraints in the region and water may be a fatal flaw to the project;
Most of the farm workers observed were women, which may mean a potential impact on
gender issues.

18

IV. Market Analysis

This chapter examines the past and present market conditions in Sylhet and in Bangladesh. This
includes an analysis of trade and investment data, industry trends, and comparative cost of doing
business in Sylhet and other locations in the region. This Market Analysis is meant as a supplement
to the findings of the Feasibility Report prepared for the SCCI in November 2007. 2

Methodology
An analysis of the business climate and economic market provided the keystone to forecasting the
demand for serviced industrial land in Sylhet. The IFC BICF team examined the business trends and
the competitiveness of the Sylhet market from several different angles. This allowed the team to
make realistic assumptions about the types of industries and numbers of companies that would
locate in the zone each year, and the land, utility, and employment requirements of such firms. The
market was analyzed in the following manner:

Competitiveness benchmarking. The cost and quality of doing business in Sylhet was
compared to those of other locations in Bangladesh and Asia where investors might locate a
factory. This helped gauge the attractiveness of Sylhet as a place to do business.
Trade trends. The team examined recent import and export data to gauge the strength of
various industries in Bangladesh. This helped narrow the types of companies most likely to
locate in Sylhet in the near term.
Investment trends. Data on new company registrations and investor inquiries was sourced
from BOI, BSCIC, and BEPZA to determine the numbers of new companies in various sectors
that have invested throughout Bangladesh in the last five to seven years. Additionally, the team
surveyed existing investors to gauge their perceptions of future business trends. This data was
used to narrow the types of investors likely to locate in Sylhet, as well as predict the future
numbers of new companies in the Sylhet Economic Zone.

Competitiveness Benchmarking
The team examined the operating costs and quality conditions associated with doing business in
Sylhet, and compared them to those of seven other locationsDhaka (Bangladesh), Kathmandu
(Nepal), Visakhapatnam and New Delhi (India), Ho Chi Minh City (Vietnam), Colombo (Sri Lanka),
Karachi (Pakistan), and Guangzhou (China). These locations were selected for the following
reasons.

They compete for foreign investment in South Asia

They are home to some foreign investors in Bangladesh
They were cited by existing companies in Bangladesh as being competitive locations to produce
products and/or services

See Feasibility Report on Special Economic Zone & Industrial Park in and around Sylhet, Young Consultants, October 2007,
namely Chapter 3 Findings of the Field Surveys on Industrial Park/Economic Zone and Chapter 4 Availability of
Raw Materials in and around Sylhet.

19

Figure 3. Investment Priorities

Investment Priorities
Software
Recreation and Lodging Opportunities
Policy Support
Availability of Land
Duty Rebate
Political Stability
Cost of Transportation
Availability of Buildings
Cost of Land
Security
Availability of Transportation
Access to Seaport
Few Unions
Cost of Utilities
Availability of Supporting Industries
Availability of Utilities
Availability of Raw Materials and Supplies
Availability of Specialty Skills
Close to Residence
Cost of Operations
Access to Markets
Availability of Labor
Tax Benefits
Cost of Labor

6
8
Number of Responses

10

12

14

Figure 4 compares important operating costs such as labor, land, utilities, taxation, and freight
transportation, along with some common quality benchmarks such as the rigidity of the labor regime
and administrative burden in paying taxes. The IFC BICF team surveyed over 30 companies in
Sylhet, Dhaka, and other locations to learn more about what their actual priorities are when choosing
an investment location. In an interview setting, firms were asked to describe their top five
investment priorities when choosing a location for a new facility. The results of this survey, shown
above in Figure 3, provide a sense of the relative importance that companies place on each
benchmarked factor.

20

$0.082

Natural Gas

104.3

104.3

$0.31

40

40

Cost of Piped Water

($/m3)

20

20

N/A

44

44

Cost of Electricity
Capacity Demand
($/KVA/month)

35

35

$0.059Kwh

$41/month3

$27/month3

$0.07/m3 10

$0.253 (Dhaka
EPZ)10

N/A

$0.0597 (Dhaka
EPZ)10

$77-226/month3

$305/month

Dhaka

$72-140/month3

$201/month

Sylhet

Cost of Electricity
Usage ($/kwh)

Figure 4
Monthly Salary
Mid-Level Manager
Monthly Salary
Skilled / Technical
Worker
Monthly Salary
Unskilled Worker
Rigidity of
Employment
(Composite Index)
Difficulty Hiring
Index
Rigidity of Working
Hours Index
Difficulty Firing
Index
Firing Costs (Weeks
Wages)
Non-Wage Labor
Cost (% Salary)

$0.20/m3
(Hetauda ID)
$0.076/m3
(Kathmandu
Valley for
customers using
>10 m3/mo.)8

$2.892/KVA/
mo8

$0.0898/kwh

10

90

70

20

67

52

$71/month1

$225/month1

$333/month

Nepal
2

$0.102/m3 9

39

$0.52/m

$4.24 $6.52KVA/mo.

$0.076/kwh

17

55.9

70

20

30

$102/month2

$354/month2

$1,639/month

India

18

18

Sewerage:
Approximately
$0.19/m3

$0.24/m3

None

$0.075/kwh

17

87

40

40

27

$63/month19

$68-280/month19

Vietnam
$500700/month19
5

$0.072/MMBTU4
$0.154/m3

Sewerage:
$0.065/m3 4

$0.261/m3
$0.471/m3 5

21

$0.126/m3 11

$0.168/m3 11

Volume of
transformer:
$2.43/KVA/month
Basic Fee:
$3.64/KVA/mo11
$3.440/KVA/month
for bulk customers
demanding >42
KVA5
None

Off-Peak:
$0.039/kwh
Peak: $0.118/kwh11

Off-Peak:
$ 0.059/kwh
Peak: $0.133/kwh5

Industrial Off-Peak:
$0.058/kwh
Industrial Peak:
$0.083/kwh4

44

91

40

20

11

24

135/month6

250/month6

520/month6

China (Guangzhou)

15

169

60

20

27

$45/month5

$64 300/month5

$160 300/month

Sri Lanka

15

169

60

20

78

43

$77-105/month4

$115 287/month4

Pakistan
$575
1,725/month4

Air freight rates

for 1,000 kg
garments ($/kg)
to Los Angeles

Air freight rates

for 1,000 kg
garments ($/kg)
to New York

Cost of ocean
freight (40 to
Yokohama)

$3.35

$3.50

$1100

$3,600

$3,300

Cost of ocean
freight (40 to
New York)

Cost of ocean
freight (40 to
Rotterdam)

$3,400

Cost of ocean
freight (40 to
Long Beach)

$3.80 from
Dhaka

$3.35 from
Dhaka

$1,050 from
Dhaka

$3,500 from
Dhaka

$3,100 from
Dhaka

$3,800 from
Dhaka

$18
33m2/year12

Cost of
Prefabricated
Factory Shell
($/m2/year)

$ 2.25 / m2 /
year

$1.25 2.2/m2/year12

$2.00 / m2 /
year

Cost of Serviced
Land inside Free
Zone or Industrial
Estate ($/m2/year)

$4.55 from
Biratnager

$4.30 from
Biratnager
$4.20 from
Kathmandu

$3,850 from
Biratnager
$3.95 from
Kathmandu

$5,750 from
Biratnager
$4,200 from
Kathmandu

$5,850 from
Biratnager
$6,100 from
Kathmandu

$5,500 from
Biratnager
$6,200 from
Kathmandu

$5,800 from
Kathmandu

$5.76/m2/year
(Balaju ID)8

$0.13/m /yr
(Balaju, Patan,
Bhaktapur IDs)8

$3.60 from
New Delhi

$3.55 from
New Delhi

$3,000 from
New Delhi

$5,000 from
New Delhi

$4,400 from
New Delhi

$5,500 from
New Delhi

$15.4316.30/m2/yr9

$0.98/m2/year9

NA

$42/m2 for 47 years

(Tan Phu Trung IZ)

$108/m for 34
years
(Tan Thuan EPZ,
Ho Chi Minh City)

$5.28 from Karachi

$3.30 from Karachi

$1,050 from
Karachi

$3,370 from
Karachi

$2,925 from
Karachi

$3,100 from
Karachi

Industrial Plots:
Down payment of
$5/m2, plus annual
ground rent of
$2.50/m2 13
Trading Sector
Plots: Down
payment of $20/m2,
plus $2.50/m2
annual ground rent13
SFBs not available.
Short-term
warehouses
available for
$2.43/m2/mo13

$3.80 from
Colombo

$3.75 from
Colombo

$1,150 from
Colombo

$2,850 from
Colombo

$4,100 from
Colombo

$3,500 from
Colombo

30-yr lease:$123138/m2. Rental:

$115 1295

30-year lease:
$3.71 - $12.36/m2,
depending on zone,
plus annual ground
rent of $0.91
0.95/m2, depending
on zone5

22

NA

NA

$1,248 from
Guangzhou

$3,918 from
Guangzhou

NA

$3,939 from
Guangzhou
(Maersk)

Ranges from
$6.46 $243/m2/year14

10-year lease:
$27 50/m2
30-year lease:
$31 55/m2
50-year lease:$34
- 61/m2 11

400

400

15%

408

13%

18.6%

20%

$4.35 from
Biratnager

$3.12 from
Biratnager
$3.95 from
Kathmandu

$2.77 from
Kathmandu

1,050

10%

4% (Central
Sales Tax)
12.5% (State
VAT)
271

20.1%

28%

17.2%

33.7%

$2.40 from
New Delhi

$2.90 from
New Delhi

560

15%

25.8%

35%

$2.75 from Karachi

$2.70 from Karachi

256

15%

26.3%

35%

$2.60 from Sri

Lanka

$2.90 from
Colombo

872

17%

19.4%

33%

NA

NA

23

(1) Source: IFC survey; (2) Source: IFC Survey; (3) Source: IFC BICF Survey; (4) Source: Pakistan BOI; (5) Source: Sri Lanka BOI; (6) Source: IFC Survey; (7) Source: Doing Business
2008, IFC, World Bank Group;(8) Source: Industrial Districts Management Limited; (9) Source: Visakhapatnam Special Economic Zone and Madras Export Processing Zone; (10)
Source: Bangladesh Export Processing Zone Authority (BEPZA); (11) Source: Guangzhou Economic and Technological Development District; (12) Source: IFC Survey; (13) Source:
Pakistan Export Processing Zone Authority; (14) Shenzhen Government Onlinehttp://english.sz.gov.cn;(15) Source: Ganesh Air Cargo, Nepal, except China. China Source: Maersk. Sea
freight rates are from port to port, and do not include any fob charges and pick-up. Does not include insurance. Air freight rates are inclusive of security surcharge and fuel surcharge.
Rates are from airport to airport, and do not include fob charges. (16) Tax on profits for a typical medium-sized enterprise. Source: Doing Business 2008, IFC, World Bank Group; (17)
Tax calculated after allowing for typical deductions and exemptions of a medium-sized company. Source: Doing Business 2008, IFC, World Bank Group; (18) Source: Ho Chi Minh City
Export Processing Zone Authority (HEPZA); (19) Source: VietnamOpen for Business in www.business-in-asia.com, and Offshore Salaries: Vietnam is Cheapest, But India Is Still a
Bargain in www.informationweek.com. (20) Source: Biman Bangladesh Airlines, Fedreal Cargo Services Ltd. And FTI Cargo Services, Ltd.; (21) Source: Federal Cargo Service Ltd. And FTI
Cargo Services Ltd.

Administrative
burden spent
paying taxes
(Hours per year)7

15%

Total Corporate
Income Tax
Rate17

VAT

27.3%

Statutory
Corporate Income
Tax Rate16

40%
(30% for publicly
traded
companies,
accord. Natl
Board of
Revenue)

40%
(30% for
publicly traded
companies,
accord. Natl
Board of
Revenue)
27.3%

$3.20 from
Dhaka

$2.20

Air freight rates

for 1,000 kg
garments ($/kg)
to Tokyo

$3.10 from
Dhaka

$2.35

Air freight rates

for 1,000 kg
garments ($/kg)
to Amsterdam

Benchmarking Results
The benchmarking exercise illustrated that Sylhet compares favorably to most locations in terms of
the basic costs associated with doing business. Labor coststhe most frequently mentioned
investment prioritywere generally lower than all other surveyed locations. The Sylhet district also
has important natural resources such as agricultural products and minerals. However, the availability
of some important factors of productionsuch as skilled work force, reliable utilities, and presence
of suppliers and supporting industriesare currently lacking.
Most factory, software, and BPO business owners in Sylhet chose their locations because they are
from the Sylhet district, and understand the tastes and purchasing power of residents in the district.
There are numerous Sylhetis and NRSs, however, who chose to locate their enterprises in Dhaka,
Comilla, or Chittagong. Like other Bangladeshis and foreign business owners, they want to take
advantage of the synergies associated with existing industry clusters, and better air and sea
transportation optionscurrently not available in Sylhet.
Company owners and managers interviewed for this analysis stated that the main deterrents to
locating a business in Sylhet were the following:

Lack of serviced industrial land. Most BSCIC industrial estates in the vicinity of Sylhet city
have reached full occupancy.
Bureaucratic conditions associated with opening and operating a business. One investor
noted that he had to write over 1,000 letters just to open his single factory in the Sylhet division.
Inadequate power, water, and other necessary utilities. Use of expensive generators is
required, and most firms must dig their own wells or have water delivered to their facilities
Lack of skilled workforce in Sylhet area. In general, the workforce in Sylhet is well-educated,
but not experienced with industrial manufacturing; though the service sectorsoftware,
hospitalityis more developed.
Lack of industrial base and industry clusters in Sylhet area. Network of suppliers and
industry-specific support services do not exist in Sylhet, as they do in Dhaka, Chittagong,
Guangzhou, and other surveyed areas.
Unfamiliarity of Sylhet with foreign investors. The City of Sylhet is currently not on the
radar screen of foreign investors, and although Sylhet is a large city, it is not accustomed to
dealing with foreigners and international corporations.
Not a preferred location by NRSs. Sylhet is far from the community of risk-taking industrial
Bangladeshi entrepreneurs who are centered along the Dhaka-Chittagong corridor.

Most interviewed firms located in the Dhaka-Chittagong corridor were generally pleased with the
infrastructure provided by BEPZA or other industrial areas, rating it from good to excellent.
They noted recent improvements in the types of modern building facilities available, but also desired
necessary upgrades in utilities. Their primary reasons for locating there were the availability of
skilled labor, access to markets in Dhaka, and good transportation connections.
The IFC BICF team is optimistic about the low operating costs associated with doing business in
Sylhet. An economic zone in Sylhet will address and alleviate the top three concerns of
entrepreneursnamely, i) lack of land, ii) troublesome bureaucracy, and iii) poor quality of utilities.

24


However, the most attractive investment locations in Bangladesh, according to business owners, are
along the Dhaka-Chittagong corridor, where freight and air transportation options are more
established and worker skills, suppliers, and specialty services already exist for a variety of industries.
As long as industrial land and skilled labor continues to exist along this corridor, demand for land in
Sylhet will remain somewhat depressed in the near to medium term.

Trade Trends
The IFC BICF team analyzed Bangladeshi trade data as one way to understand the changing market
conditions in Bangladesh. Trade patterns provide an interesting proxy for investment patterns in a
country for several reasons: i) trade data is generally more available and more reliable than statistics
on investment, ii) increased exports tend to mirror increased investment, particularly for exportoriented products, and iii) decreased imports are sometimes associated with increased investment in
the local production of import-substituting products.

Exports

Figure 5. Apparel Exports

Data on Bangladeshs imports

and exports were obtained for
the years 2001 to 2004 from
the COMTRADE database
available from the U.N.
Statistics Division. The IFC
BICF team examined the data
at the 2-digit Standard
Industry Trade Classification
(SITC) code level.

Apparel Exports
4,500,000

US$ (thousands)

4,400,000
4,300,000
4,200,000
4,100,000
4,000,000
3,900,000
3,800,000
3,700,000
3,600,000

The
export
trends
of
Bangladeshs top ten exported
productsin terms of export revenuesare graphically shown in Figures 5 and 6. Investment in
production facilities for each of these displayed products continues to grow, particularly in the
Dhaka-Comilla-Chittagong corridor. Exports in all product categories shown, increased during the
analyzed time period, except for textiles, footwear, and leather products. Reduction in textile
exports is partially due to the closing of some textile operations, but also reflects a greater use of
Bangladeshi textiles in the ready-made garment (RMG) sector.
2001

2002

2003

2004

25


Figure 6: Top Exported Products (Excluding Apparel)
Top Exported Products (Excluding Apparel)
500,000
450,000

US$ (thousands)

400,000
350,000

Fish Products

300,000

Leather Products

250,000

Footwear

Textiles
Textile Fibers
Mineral and glass products

200,000

Petroleum products
Tobacco and products

150,000

Metal products

100,000
50,000
0
2001

2002

2003

2004

Imports
Examination of import flows can provide clues as to consumer goods demanded by Bangladeshis, as
well as the capital equipment, raw materials, and intermediate goods required by the countrys
industrial sector. There are often clues as to what import substituting industrial are currently
arisingor could arisethroughout Bangladesh.
Figure 7. Top Increasing Import Items
Top Increasing Imports
700,000

US$ (thousands)

600,000
500,000

32 Coal
07 Coffee, chocolate, spices

400,000

23 Rubber materials
05 Fruit and vegetable products
08 Animal feed

300,000

28 Ores
25 Paper pulp
33 Petroleum products

200,000

24 Rough wood
72 Specialty machinery

100,000
0
2001

2002

2003

2004

Bangladesh imports a wide variety of productssome in very small quantities; others in large
volumes. The Team analyzed products with import volumes in excess of US$ 10 million per year.

26


The team then examined the sectors in which import volumes were most rapidly increasing (Figure
7), and most rapidly decreasing (Figure 8).
Products with rapidly rising imports tend to be in raw material and natural resource sectors such as
coal, rubber, ore, paper pulp, petroleum, and wood, or capital inputs such as factory machinery.
Due to the complexion of these imports, these sectors are not good proxies for increased importsubstituting investment. One exception, however, could be in the manufacturing of fruit and
vegetable products, imports of which increased 92 percent between 2001 and 2002.
Examination of sectors where imports are decreasing can provide clues as to import-substituting
investment trends in Bangladesh. Figure 8 illustrates products with greater than US$ 10 million in
annual imports, in which levels of imports have most rapidly decreased between 2001 and 2003.
Figure 8. Top Decreasing Import Items
Top Decreasing Imports
450,000
400,000

US$ (thousands)

350,000
300,000

Metal products

250,000

Other manufactured items, n.e.s.

200,000

Metalworking tools and machinery

150,000

Pharmaceuticals

Boilers and non-electric engines

Apparel
Dairy
Basic plastic products
Instruments and meters, n.e.s.

100,000

Steel base metal products

50,000
0
2001

2002

2003

2004

Some of the products depicted in Figure 8namely, apparel and metal productshave become
export leaders in Bangladesh. Local entrepreneurs and non-resident Bangladeshis (NRBs) have also
increasingly invested in factories to produce the above products specifically for the domestic market.
This mirrors the existing types of industrial ventures currently seen in and around Sylhetfood
processing, agricultural machinery, pharmaceuticals, plastic products, metalworking, and other
factories.

Investment Trends
When estimating the demand for serviced industrial land, it is helpful to understand recent
investment trends. This helps determine the following:

Types of companies that locate in serviced industrial estates, free zones, and/or export
processing zones

Levels of investment over the past five years

Infrastructure requirements of companies in economic zones

27

Degree of satisfaction that current tenants of such zones have with the infrastructure and
services provided

To assess the above factors, the IFC BICF team accessed investment data from BEPZA, BSCIC,
and BOI and interviewed approximately 30 companies located in Sylhet, Dhaka, and Comilla. The
team also referred to surveys undertaken by Young Consultants for its report to the SCCI in
November 2007.

Export-Oriented Investments
Figure 9, below illustrates the trend of new tenants locating in BEPZAs EPZs each year between
2003 and 2007.
Figure 9. New EPZ Tenants 3

New EPZ Tenants

Number of New Tenants

25

20

Garments/Knitting
Agro products
Metal/Steel industry
Electronics & Electrical Goods
Footwerar & Leather
Paper industry
Chemical & Fertilizer
Misc.

Garments Accessories
Textile
Plastic industry
Power Industry
Furniture industry
Service Industry
Tent

15

10

0
2003

2004

2005

2006

2007
(up to Sep.)

Figure 9 shows that roughly 10 to 20 new RMG companies have located in Bangladeshi EPZs each
year over the past five years. There are also about five to ten garment accessory firms, and
approximately five each of agro products, plastics, and metalworking firms locating in EPZs each
year. This examination is useful for gauging the possibilities of export-oriented investments on a
national scale. For instance, if the trend is for an average of 15 export-oriented RMG factories to
locate in economic zones each year, it is possible for an economic zone in Sylhet to attract a fraction
of this. In the near and medium terms, this may be a small fraction, however, based on the tendency
of RMG operations to locate in clusters where forward and backward linkages are strong.

Source: IFC BICF aggregation of BEPZA data.

28

Local Investments
The demand for serviced industrial land extends beyond the types of companies that qualify for
tenancy in Bangladeshs EPZs. It was important, therefore, to also understand the investment
patterns of local and largely non-exporting firms.
Figure 10 illustrates the numbers of local firms registered in Bangladesh over the past two fiscal
years and highlights investmentin terms of takain BSCIC industrial estates in the Sylhet district
from 2003 to 2007. Investments in all sectors are very low, generally under Tk. 10 million per year.
Each rise in the graph in Figure 10 probably represents about one new investmentor continued
investment by the same companypointing to the fact that the trend to locate industrial ventures in
Sylhet is historically very low.
Figure 10. Investment in Sylhet BSCIC Industrial Estates

Investment in Sylhet BSCIC Industrial Estates

60

Million Taka

50

40

Agrobased
Engineering
Livestock
Textile
Pharmaceuticals
Food & Allied Products
Others (packing, stone crushing, etc)

30

20

10

0
2003

2004

2005

2006

2007

Inquiries for industrial plots in Sylhet BSCIC industrial estates are mostly for food processing
frozen vegetables, spices, biscuits, fast foodand cooking burners. Inquiries are primarily from
Sylhetis and potential investors from Dhaka. Industrial establishments in Sylhet tend to be low-risk
ventures by Sylheti entrepreneurs, often started up without loans or other external means of
financing. Land requirements are typically quite smallless than 3,000 square metersand
production usually caters to the Sylhet district market. The IFC BICF team expects this type of
investment to continue, with enterprises located within the proposed Sylhet Economic Zone.

29

Figure 11. BOI Registered Local Industries

Miscellaneous

Services

Engineering

Glass &
Ceramics

Chemicals

Tannery &
Leather

Printing &
Publishing

Textiles

Food & Allied

Agro-Based

Numbers of New Companies

In the near term, additional

BOI-Registered Local Industries
investments may be seen by NRS
1,400
investors, if they judge the risk of
2005-06
2006-07
investing to be lowered by the
1,200
existence of the zone. NRSs have
1,000
traditionally been opposed to risky
800
ventures or ventures with long
payback periods. One-stop provision
600
of bureaucratic services would assist
400
immensely in this regard by lowering
investment risk.
Investments in
200
export-oriented
ventures,
or
0
companies established by non-Sylhetis
might be possible once the
transportation
corridor
between
Chittagong and Dhaka has been
upgraded, and the ease of doing
business in the Sylhet Economic Zone has become firmly established. This will only occur if the
zone is expertly developed, operated, and maintained.

Anticipated Investment Trends

The IFC BICF team surveyed companies and businesspersons in Sylhet, Dhaka, and elsewhere in
Bangladesh to get their input on trends they see emerging in future industrial and service-oriented
investments. Interviewees were asked to name the sectors they felt were growing in strength in
Bangladesh, as well as the sectors that were doing poorly, or likely to experience future
disinvestment. The results of this survey are shown in Figures 12 and 13.
Figure 12. Industries Experiencing Positive Trends
Industries Experiencing Positive Trends
Electronics
Logistics Services
Metalworking
Software
Toiletries
Agriculture Equipment
Plastics
Glass and Ceramics
Pharmaceuticals
Packaging
Shoes
Textiles
Leather
Garments
Food Processing
0

Number of Responses

The processed food sector was cited as

having great future potential in
Bangladesh. Recent investments have
included facilities that produce or
process condiments, poultry, animal
feed,
tea,
and
shrimp.
Shoe
manufacturers in China are no longer
able to keep pace with world demand,
which has resulted in investments in
Bangladesh. The leather sector is also
quite healthy. Support industries are
also growing, including foil printing and
packaging
materials
for
pharmaceuticals, processed foods, and
fast-moving consumer goods such as
cosmetics.

30


Figure 13. Industries Experiencing Negative Trends

Bangladeshs garment sector shows signs

of maturing.
This is evidenced by
Leather
relatively large numbers of new EPZ
Steel
tenants in the apparel and garment
Electronics
accessory
sectors.
Interviewed
companies also noted that mid-level
Chemicals
management in the RMG sector has
Food Processing
become more knowledgeable and skilled.
Jute
However, respondents noted that, as the
Automotive
sector matures only larger operations will
Machinery and Engineering
likely be successful. This point has
Garments
injected a degree of caution about the
Textiles
future growth of Bangladeshs garment
0
1
2
3
4
5
6
sector. Some interviewees were skeptical
Numbers of Responses
about the prospects of RMG and textiles,
particularly with the rise of competitors like Vietnam and Cambodia, and lack of innovation with
older textile plants. Dyeing of denim and other fabrics has also caused severe environmental
damage in some areas, pointing to the need of strict regulatory controls and common effluent
treatment systems like the type proposed in the Sylhet Economic Zone.
Industries Experiencing Negative Trends

Market Analysis Summary

The IFC BICF team conducted this market analysis to understand the conditions that will contribute
to the demand for serviced industrial land in a Sylhet Economic Zone. In summary, the teams
investigations noted the following:

Sylhet is a competitive location based on low labor rates. When benchmarked against
Dhaka (Bangladesh), Kathmandu (Nepal), Visakhapatnam and New Delhi (India), Ho Chi
Minh City (Vietnam), Colombo (Sri Lanka), Karachi (Pakistan), and Guangzhou (China),
Sylhet fairs well, as it delivers a low cost framework for doing business. Worker wages and
salaries in Sylhet are among the lowest in South Asian region. This is positive for companies
with labor-intensive production processes. However, the Sylhet labor force also lacks skills
necessary for industrial production or service-oriented exports.

The favored location for investment is along the Dhaka-Chittagong corridor.

Bangladesh has experienced an increase in exports in a variety of sectors such as apparel,
leather, textiles, metal products, fish, footwear, mineral products (ceramics), and others.
Although Sylhet can attract a small fraction of these investments, business owners still favor
locations along the Dhaka-Chittagong corridor.

The location may only attract local investors selling to a local market. Most of the
companies that will locate in the proposed Sylhet economic zone will be local firms
producing goods and products for the local market. Some firms may also distribute goods
nationally, or export some items to northeast India.

31

NRS capital is high but they lack local industry knowledge. The non-resident Sylheti
(NRS) community has shown great interest in locating ventures in the Sylhet economic zone.
However, they generally lack industrial expertise, and require local investment partners with
such knowledge.

32

V. Demand Forecast
The demand forecast stands as a key element of an economic zone pre-feasibility study and serves to
help determine the development potential of the site. In this demand forecast, the IFC BICF team
identified: i) the type of industries most likely to locate in the zone, ii) the number of tenants
proposed, and iii) the land and infrastructure requirements of companies proposed for the Sylhet
Economic Zone over the course of a 15-year period. With this information, assumptions were
developed and two demand scenarios (a base case and aggressive case scenario) were produced.
These scenarios were then used to obtain a more realistic view of the demand, development
requirements and timeframes of the project.

Methodology
The Demand Forecast is a necessary element of an economic zone pre-feasibility study. The
forecast allows planners, developers, venture capitalists, zone operators, and the government to
make the following estimates:

Determine the ideal size of land to purchase. The Demand Forecast informs potential zone
owners, developers, and operators of the size of land necessary to accommodate the projected
demand for serviced industrial land in a given location.
Identify phased zone development. IFC BICF recommends phasing the development of the
Sylhet Economic Zone, based on projected and actual user demand over time.
Estimate the cost of zone development and operation. The larger the demand, the more
land that must be developed and the more services required to operate the zone.
Propose zone revenues. The revenues of the Sylhet Economic Zone will be directly
proportional to the demand for land in the zone.
Determine economic benefits. The Demand Forecast provides information such as the
numbers of tenants, average tenant revenues, and employment.

The Demand Forecast made extensive use of the outcomes of the Market Analysis and of the
following data and information:

Historical investment trends of domestic and export-oriented firms in Sylhet and Dhaka,
utilizing interviews with existing firms, and data from BOI, BEPZA, and BSCIC
Proclivity of NRSs to invest in the Sylhet Economic Zone, based on interviews with
potential NRS investors
Expansion of trade, based on data from UNCTAD
Move toward import substituting industries serving local markets, based on company
interviews and trade data from UNCTAD
Realistic economic zone growth potential, based on data of growth trends of economic
zones around the world

33

Likely Industry Sectors

The market analysis in Chapter IV suggests that some industries will be more likely to locate in the
Sylhet Economic Zone than others. As such, the Demand Forecast was built around the following
sectors.
Food and beverage processing
Garments and textiles
Ceramic and mineral products
Chemicals, soaps, pharmaceuticals
Metalworking
Electronics and electrical
appliances

Software and BPO

Rubber and plastic products
Warehousing
Other manufactured items
Privately operated zone services
Private operated power plant

When a Master Plan for the zone is eventually developed, the planner will efficiently design the zone
with the above industries in mind. This includes designing proper plot sizes and infrastructure such
as waste treatment, power, water, sewers, and telecoms, etc., suitable for these types of tenants.

Number of Tenants
From the industry sectors listed above, the team developed forecast scenarios to determine the
proposed number of tenants for the zone. The number of tenants is one factor, which determines
the following design and operating parameters of the zone:

Size of zone. Proposed occupancy aids in determining the ideal size and phasing of a zone.

Infrastructure and utilities. Infrastructure and utility requirements (type, quality and quantity)
are determined by this analysis.

Revenues and Operating Costs. Revenue streams to the zone operator, based on the land and
space leased by tenants is identified through this analysis.

Operating Parameters
The IFC BICF team collected details regarding the operating parameters of the types of firms most
likely to locate in the Sylhet Economic Zone. This included the following, based on information
collected in company interviews in Bangladesh and in other South Asian countries:

Land demand. Determine the average amount of land required by firms in each industry sector
proposed for the site.

Utilities requirements. Determine the average demand for water and power by firms in
different industries.

Employment. Number of workers hired in four labor categories-Management, Technical,

Skilled and Unskilled.

Land and facility preferences. The percentage of firms in each industry that would prefer: i)
short term land leases, ii) long term land leases, iii) SFB rentals, or iv) office rental.
The specific operating parameters utilized in the demand forecast and financial and economic
models represent average values, with the understanding that individual tenants may have
requirements in excess or less than those specified.

34

General Assumptions
The Sylhet Economic Zone does not yet have an owner, source of financing, developer, or operator.
Additionally, there are currently no laws or regulations for a new economic zone regime in
Bangladesh, though a policy is in draft form and being reviewed. Therefore, IFC BICF made
assumptions about some aspects of the economic zones legal framework and development
parameters, and crafted the demand forecast with these suppositions in mind.
The assumptions are:

The Sylhet Economic Zone will be located on a designated site along the Sylhet-Tamabil
Highway just outside the expanded Sylhet City boundary.

Companies will be allowed to locate in the Sylhet Economic Zone regardless of their exporting
status. Firms that produce in the zone will be allowed to have unlimited sales to the Bangladeshi
domestic market.

The entire zone will be considered a bonded and duty-free area. All tenants will be able to take
advantage of duty-free imported inputs. Tenants who do not export will pay duties on imported
inputs at the time of sale into the domestic market. Exporters and non-exporters will not be
segregated in different areas within the zone, allowing for maximum flexibility in the business
models of zone tenants.

The zone will offer streamlined bureaucratic services at a one-stop office within the zone. This
will include services such as business registration, licensing, permitting, environmental controls,
work permits, and others.

Laws and regulations will be upheld and enforced to the highest standards within the zone to
protect the environment, business owners, and the labor force.

A power plant will be constructed in the zone by a private developer/operator. This will
provide a dedicated power supply for tenants in the zone.

The government will construct and operate an inland container terminal (ICT) within the zone.

The zone developer/operator will construct a common liquid and solid waste treatment facility
within the zone, with mandatory usage tariffs for all tenants.

Additional utilities such as natural gas, water, and telecommunications will be available to zone
tenants at market-rate tariffs.

Tenants will have the option of short or long-term land leases, or rental of a prefabricated
standard factory building (SFB) or office space in a building constructed by the zone
developer/operator.

35


The Demand Forecast assumes that all of the above elements will characterize the Sylhet Economic
Zone. In the eventuality that some of these factors do not come into play, the levels of demand
presented in this report should be adjusted downward.

Forecast Scenarios
The Demand Forecast was developed under two scenarios to accommodate a variety of future
conditions and investment outcomes.

Base Case Scenario

The Base Case Scenario reflects the most likely business climate conditions and outcomes. It
presumes the same general assumptions outlined on the previous page. In the Base Case, the
political and economic climate in Bangladesh remains stable, but with a continuation of the same
general bureaucratic underpinnings that have made it difficult to do business. The new economic
zone regime will provide streamlined processes, but the business climate outside the zone will only
gradually improve, making it difficult to spur growth of suppliers, traders, and logistics handlers
located outside zones. The Base Case also assumes that additional economic zones will be built or
expanded over time, particularly along the Dhaka-Chittagong corridor, thus providing competition
for an economic zone in Sylhet.
The Financial and Economic Models presented in Chapter VI and VII of this report, utilize data
outputs from the Base Case Demand Forecast Scenario.

Aggressive Scenario
The Aggressive Scenario proposes more positive assumptions about Bangladeshs economic and
political climate. It differs from the Base Case Scenario in that the following assumptions are made:

A streamlined regulatory process more efficient one-window service. All bureaucratic

services will be provided and regulated within the zone itself. This differs from the Base Case,
whereby agencies post representatives within the zone for expedited service, but the paperwork
continues to go through normal bureaucratic channels.

An improved political climate. The political climate in Bangladesh will improve over the next
five years, with a dramatic restructuring and reforming of bureaucratic services for businesses.

Improved national infrastructure and logistics. Significant improvements are made to the
road corridor between Chittagong and Sylhet, and active efforts are made to secure international
cargo flights to Sylhet. Additionally, the proposed Asian Highway is constructed within the
next five years, which plays an important role in developing the importance of Sylhet as a
logistics and manufacturing hub for the region.

Minimal economic zone competition. Few new economic zones are built throughout
Bangladesh, making the Sylhet Economic Zone more attractive for companies seeking well-run
serviced industrial infrastructure.

36

Pro-active Marketing and Promotion. Sylhet is actively promoted by the Board of

Investment both domestically and internationally as an investment destination. The Sylhet
Economic Zone also conducts its own intensive marketing campaign. BOI and other promoters
will develop programs to match NRB capital with local and international technical and industrial
expertise.

Improved Capital markets. Micro-financing and capital markets will be developed and
expanded in Sylhet, including adequate formal financing facilities for industrial investments.

Demand Forecast
The IFC BICF team undertook an extensive Market Analysis to understand past and future potential
growth trends of industries suited for location in an economic zone. The Demand Forecast made
extensive use of the outcomes of the Market Analysis and of the following data and information:

Historical investment trends of domestic and export-oriented firms in Sylhet and Dhaka,
utilizing interviews with existing firms, and data from BOI, BEPZA, and BSCIC

Proclivity of NRSs to invest in the Sylhet Economic Zone, based on interviews with potential
NRS investors

Expansion of trade, based on data from UNCTAD

Move toward import substituting industries serving local markets, based on company interviews
and trade data from UNCTAD

Realistic economic zone growth potential, based on data of growth trends of economic zones
around the world

Number of Tenants
Figure 14 illustrates the number of tenants likely to locate in the Sylhet Economic Zone in both the
Base Case and Aggressive Scenario forecasts. In the Base Case, 160 firms will likely locate in the
zone by Year 15. This expands to 290 firms in the Aggressive Scenario. A more detailed overview
of the tenants is in Annex 1: Demand Forecast.

37


Figure 14. Number of Tenants
Number of Tenants
350
Cumulative Number of Tenants

Aggressive
Base Case

300
250
200
150
100
50
0
Year
1

Year
2

Year
3

Year
4

Year
5

Year
6

Year
7

Year
8

Year
9

Year
10

Year
11

Year
12

Year
13

Year
14

Year
15

Land Forecast
The SCCI has proposed that the Sylhet Economic Zone be located on approximately 389 hectares
of land outside Sylhet City along the Sylhet-Tamabil Highway. This designated site is sufficient to
accommodate the estimated growth of the zone in both the Base Case and Aggressive Scenarios.
The IFC BICF team forecasted the amount of land and facilities that would be leased to companies
in the zone over 15 years. This Land Forecast was developed by applying the Required Land
figures in Figure 15 to the forecasted number of tenants in Figure 14. Figures 16 and 17, illustrates
the Land Forecast over the course of 15 years. Each industry is denoted in the figures by a different
color.

38

Food and Beverage

Processing
Garments and Textiles
Ceramic and Mineral
Products
Chemicals
Metalworking
Electronics
Software/BPO
Rubber and Plastics
Warehousing
Other Industries
Privately Operated Support
Services
Power Plant
1,000
4,500
2,000
500
500
100
450
70
400
80
NA

20,000
40,000
15,000
5,000
5,000
500
5,000
10,000
5,000
350
30,000

Required Land
M2

400

Power Capacity
Demand (KVA)

5,000

Power
Consumption
(kw/h/mo.)
NA

2,000

350,000
25,000
55,000
10,000
120,000
5,000
50,000

100,000

200,000

75,000

Water
(m3/mo.)
30,000

15

7,500
160
200
100
500
20
750

7,000

20,000

800

Total
Employment
(Persons)
140

10

400
175
250
75
130
17
200

800

1,000

200

Unskilled
Employment
10

25
65
20
5
20
10
50

230

100

30

Skilled
Employment
60

300
100
145
50
85
5
110

500

850

140

60

60
5
75
17
20
1
35

50

40

25

Technical/
Professional
Employment

Figure 15. Sylhet Economic Zone Tenant Operating Parameter Assumptions

10

15
5
10
3
5
1
5

20

15

Management
Employment

Percent
Preferring
SFB Rental
0%

0%

0%
50%
65%
0%
25%
0%
50%

0%

50%

44%

Percent
Preferring ShortTerm
Lease
0%

0%

30%
20%
15%
0%
25%
50%
20%

0%

20%

44%

Percent Preferring
Long-Term Land
Lease
100%

0%

70%
30%
20%
0%
50%
50%
30%

100%

30%

12%

39

0%

100%

0%
0%
0%
100%
0%
0%
0%

0%

0%

0%

Percent Preferring
Office Rental


In the Base Case Scenario, the Sylhet Economic Zone will lease approximately 144 hectares of land
and facilities to tenants. This corresponds to a gross land uptake of approximately 206 hectares over
15 yearswell within the 389-hectare size of the site. In the absence of a Master Plan, IFC BICF
applied a standard 70 percent net-to-gross planning ratio assumption. In other words, the amount
of net leased land and facilities was divided by 0.7 to arrive at the amount of additional land required
for roads, administration building, green space, and other common area facilities such as waste
treatment and utilities.
Figure 16. Cumulative Leased Land Base Case Scenario
Cumulative Leased Land--Base Case Scenario
1,600,000
1,400,000

Square Meters

1,200,000

Food and Beverage Processing

Ceramic and Mineral Products
Metalworking
Rubber and Plastics
Other Industries
Power Plant

Garments and Textiles

Chemicals
Electronics
Warehousing
Privately Operated Support Services

1,000,000
800,000
600,000
400,000
200,000
0
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year
10

Year
11

Year
12

Year
13

Year
14

Year
15

Figure 17. Cumulative Leased Land Aggressive Scenario

Cumulative Leased Land--Aggressive Scenario
3,000,000

Square Meters

2,500,000

Food and Beverage Processing

Ceramic and Mineral Products
Metalworking
Software/BPO
Warehousing
Privately Operated Support Services

Garments and Textiles

Chemicals
Electronics
Rubber and Plastics
Other Industries
Power Plant

2,000,000

1,500,000

1,000,000

500,000

0
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9

Year
10

Year
11

Year
12

Year
13

Year
14

Year
15

40


The Aggressive Scenario shown in Figure 17 estimates that the Sylhet Economic Zone will lease
approximately 266 hectares of land and facilities within 15 years. This will correspond to a total of
380 gross hectares of developed zone landnearly all of the 389 hectares dedicated for the site.

Employment Forecast
The Sylhet Economic Zone will generate significant employment for Sylhet and the surrounding
area. Some employment would have been generated in the absence of the zone. However, most
new employment will arise from investments that would not have otherwise been made without the
existence of the zone.
Figure 18. Employment Forecast
Employment Forecast
100,000
90,000

Aggressive Scenario
Base Case Scenario

80,000

Persons

70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Year
1

Year
2

Year
3

Year
4

Year
5

Year
6

Year
7

Year
8

Year
9

Year
10

Year
11

Year
12

Year
13

Year
14

Year
15

Figure 18 shows the projected employment in the Sylhet Economic Zone in both the Base Case and
Aggressive Demand Forecast Scenarios. The Employment Forecast was developed by applying the
employment parameters to the number of companies projected to locate in the zone. Based on
these estimates, tenants in the zone would employ 45,000 persons in the Base Case, and 90,000
persons in the Aggressive Scenario by Year 15.

Utility Forecast
The Demand Forecast was created on the assumption that the Sylhet Economic Zone would
provide necessary utilities for tenants without regular interruptions in services. This means that
every tenant will have access to power, water, gas, and effluent treatment. The presence of quality
utilities will be a large draw for the zone in terms of attracting tenants. In the absence of
functioning utilities, the Demand Forecast presented in this report must be lowered.
The IFC BICF team projected the amount of water and power the Sylhet Economic Zone must
provide its tenants over time. This forecast was developed by applying the utility operating
parameters to the forecasted number of tenants in the Base Case and Aggressive Scenarios.

41


Sylhet Economic Zone planners and developers must design and construct the zone to
accommodate the following projected utility needs. At a minimum, the zone should be constructed
to the Base Case Scenario demands presented in Figure 19 below.

Monthly Water Usage

(cubic meters)
Monthly Power Usage
(megawatt hours)

Figure 19. Monthly Usage of Utilities

Base Case
Year 5
Year 10
Year 15

Year 5

280,235

380.020

471,850

494,925

904,120

1,056,580

6,429

10,875

14,294

12,058

22,103

28,017

Aggressive Case
Year 10
Year 15

Demand Forecast Summary

The Demand Forecast is a necessary element of any economic zone feasibility study. The forecast
allows planners, developers, venture capitalists, zone operators, and the government to make the
following estimates:

Determine the ideal size of land to purchase. The Demand Forecast informs potential zone
owners, developers, and operators of the size of land necessary to accommodate the projected
demand for serviced industrial land in a given location. The amount of gross land required in
the Sylhet Economic Zone will fall somewhere between 206 and 380 hectares, all of which can
be accommodated in the 389-hectare parcel recommended by SCCI. In the Base Case Scenario,
only 53 percent of this total parcel will likely be utilized. This may prompt a developer to
purchase less than the allocated 389-hectare site.

Identify phased zone development. The IFC BICF recommends phasing the development of
the Sylhet Economic Zone based on projected and actual user demand over time. The trend in
EPZ construction in Bangladesh to date has been to develop 100 percent of zone infrastructure
at the beginning of the project. Not only does this increase the initial capital costs of the project,
it also allows unused infrastructure to lie fallow and deteriorate. It is thus recommended that the
Sylhet Economic Zone be initially developed to accommodate the first seven years of projected
tenant Base Case Scenario demand.
While the entire site will be acquired at the beginning of the project, only an initial 180 hectares
should be initially developedsite raised, roads constructed, utilities installed, and administrative
facilities and other common areas developed. Once this first phase is approximately 70 percent
full, it is normal for a developer to construct a second phase of infrastructure development. In
the Base Case Scenario, this Phase 2 development is assumed to occur in Year 7, though the
actual year of development would be determined by the zone owner based on actual demand
over time.

Estimate the cost of zone development and operation. The Financial Analysis calls upon
the Demand Forecast to determine, in part, the cost of building and operating the zone. The
larger the demand, the more land must be developed, and the more services required to operate
the zone.

42

Project zone revenues. The revenues of the Sylhet Economic Zone will be directly
proportional to the amount of leased land and facilities. The Financial Analysis applies projected
lease ratesdetermined in part by the benchmarking analysisto the Demand Forecast to
arrive at projected zone revenues.

Identify economic benefits. The Demand Forecast provides information such as the numbers
of tenants, average tenant revenues, and employment. These figures are used in the Economic
Analysis to determine returns to the government in terms of personal and corporate taxation,
and other measurable costs and benefits of zone development.

43

VI. Financial Analysis

The government of Bangladesh has expressed its willingness and desire to allow the private sector to
shoulder greater portions of the burdens and rewards of developing infrastructurepower
generation, bridges, economic zonesthroughout the country. The IFC BICF assumes, therefore,
that the Sylhet Economic Zone will have a large degree of private sector involvement, particularly
given that the local private sector, foreign investors, and the NRSs have shown recent interest in
developing zones. This chapter accordingly analyzes the financial viability of the Sylhet EZ based
on the cash flow seen by equity investors.
The analysis is based on the
demand for serviced industrial land
set out in the demand projections
chapter and development costs
detailed in Annex 2. Assumptions
on operational costs, phasing,
product configuration and pricing,
and capital structure are also
presented. The model developed
proceeds to analyze the resulting
revenues and profits generated by
the zone, and the internal rate of
return (both for the project and for
equity investors) and the net
present value of the project. The
chapter
concludes
with
an
examination of the projects
sensitivity to various factorsboth
those under the direct control of
the Sylhet EZ and external
influences. Key assumptions are
presented in Figure 20.

Figure 20. Overview of Key Assumptions

Category
Land
Lease Revenues
Lease Rate
Escalation
Sale Revenues
Inflation
Service Revenues
Max Occupancy
Level
Lease and Service
Fee Collection
Rate
Depreciation
Grants
Debt/ Equity
Ratio
Long-term Loan

Assumption
3,885,120 million gross square meters of land
1,942,560 million square meters of plot space (net
land)
Serviced Land (250 Tk/m2/year) (US$3.58)
SFB (3,000 Tk/m2/year) (US$43.01)
10.8% nominal increase per year (Taka terms)
Serviced Land (3,500 Tk/m2) ($50.18)
8.8% per year (Taka terms)
Equivalent to 15% of applicable annual rent
95% (to allow for transitional periods)
95% (5% non-payment rate)
25 years (infrastructure)
25 years (buildings)
5 years (equipment)
None
70% (70% Commercial Debt, 30% Equity or
Reinvested Cash)
Loan arrangement fee equal to 2% of the maximum
credit line.

Methodology
This financial assessment has three goals: i) to assess the financial viability of the project, ii) to guide
any pricing and timing issues that may be able to influence the profitability of the project, and (iii)
identify any requirements for public support. A model was constructed by the IFC BICF to
calculate projected revenue streams, and capital and operational costs, to enable the testing of a
number of variables for their effects on the finances of the Sylhet EZ. The primary outputs of the
model are estimates of the Internal Rate of Return and Net Present Value of the cash flow generated
by the Sylhet EZ for the project and its equity investors. The analysis is based on the Base Case
Demand Forecast presented in Chapter V of this report, as this represents the most likely growth
scenario for the Sylhet Economic Zone.

44


The IFC BICF assessed the financial viability of the Sylhet Economic Zone through the following
estimations:
1.
2.
3.
4.

Capital costs of acquiring and constructing the zone

Costs of operating the zone
Revenues accruing to the zone owner/operator
Government support necessary to make the project viable for private sector ownership,
development, and/or operation

It is proposed that the Sylhet EZ funds all capital expenditures through debt financing. This debt is
secured through all the assets of the project. The equity share of initial capital expenditures is
funded by investors. Subsequent requirements are funded through the use of retained cash
whenever possible, and additional injections of external equity from investors when necessary.
The model additionally generates notional schedules of capital and recurrent expenditures, income
statements, and balance sheets for the project. After examining the financial structure of Sylhet EZ,
proposals for financing requirements are made.

Assumptions
The Sylhet Economic Zone does not yet have an owner, developer, or operator. In this prefeasibility phase, the IFC BICF team had to make certain non-financial assumptions in the absence
of a master plan and development cost estimate. These assumptions are listed in Figure 21.
The SCCI specified that the IFC BICF team should conduct this pre-feasibility study for the 389hectare parcel of land they have selected along the Sylhet-Tamabil highway, just outside the city of
Sylhet. The Financial Analysis in this report pertains only to costs and revenues associated with that
site. Should a developer eventually choose a different site for the economic zone, then separate
feasibility studyincluding Demand Forecast, Financial Analysis, and Economic Analysiswill
need to be completed for the alternate location.
The Financial Analysis covers only the on-site development and operational costs and revenues of
the economic zone. It is assumed that the government of Bangladesh will develop all off-site
infrastructure. This includes all road, rail, and utility connections to the border of the economic
zone. It is also assumed that the government will be responsible for acquisition of land and
development of the proposed inland container terminal (ICT) as part of the zone site.

45

Variable
Size of gross land

Gross/net land ratio

Inland container
terminal
Earth filling
requirement (average
depth)
Average market price of
land (per sq. meter)
Relocation and
compensation costs

Figure 21. Sylhet Economic Zone Financial Model Assumptions

Assumed Value
Notes
Parcel of land along the Sylhet-Tamabil Highway, specified
3,885,129 square meters
by SCCI, acquired and purchased by owner at beginning of
project.
50% of the gross land will be leasable. 30% will be devoted
to roads, utilities, green space, and common zone facilities.
50%
20% is deemed unusable due to the presence of rivers and
surface water.
50,000 square meters
18 feet
Tk. 1,300/m2

Tk. 7,478,484,000

Corporate tax / VAT

0%

Development Phasing

Phase 1: 180 gross hectares

Phase 2: 150 gross hectares
Phase 3: 58.5 gross hectares

Purchased, developed, owned, and operated by the

government.
Actual depths vary across the site. Average depth shown.
Information provided by the Sylhet Deputy Commissioners
office; may be provided by government under some PPP
arrangements.
Information provided by the Sylhet Deputy Commissioners
office; cost may be borne by government under some PPP
arrangements. Includes a 50% premium over current market
prices as required by law.
Assumed government will waive corporate tax and VAT for
the developer as an incentive
Infrastructure development in the zone is phased. Initially
only 180 hectares will be developed. When this phase is
70% full, Phase 2 is built. In the Base Case, this occurs in
Year 4. Phase 3 is built in Year 11.

Capital Costs
Capital costs are based on the market value of the land selected by SCCI, estimated relocation and
compensation payments made to landowners and residents, and the costs of on-site infrastructure
for the zone, including bulk earthworks, roads, institutional buildings, utilities, a waste treatment
plant, and standard factory buildings. Some costs required for the Sylhet EZ are best accounted for
outside of the phased construction of the zone, such as buildings for lease (SFBs). Accordingly, the
IFC BICF disaggregated these items from the estimated cost of developing each phase. So, the
phased development costs include costs related to the construction of all necessary infrastructure
and common buildings, site preparation costs (filling, leveling, and compaction), initial landscaping,
as well as the escalation, engineering and site inspection, preliminary and general requirements, and
contingency costs for these items.
Buildings to be leased to tenants are constructed and paid for upon request by an investor (provided
that enough serviced land is available given the development of the phases). Accordingly, the costs
associated with these buildings (including internal roads, parking, loading areas, ramps, hardscape
paving, landscaping, sidewalks, and the building itself) are timed in the financial model on an annual
basis according to investor demand. The costs for engineering and site inspection, preliminary and
general requirements, and contingencies for these buildings are included in these construction costs.
Land is assumed to become available for lease or sale in the same year as it is developed. Buildings
designated for lease are also assumed to become available in the same year that construction occurs.

46


The full annual breakdown of site development, equipment, and building costs is provided in Annex
2.
In the base case, all three phases are developed by Year 11. The total fixed capital cost for the
development of the Sylhet EZ over the 15-year period in the Base Case is projected to be
approximately US$ 364.8 million, which includes the impact of inflation. This cost is divided as
follows:

Land Acquisition US$ 107 million

Site development, infrastructure, and common buildings US$ 226.3 million
Equipment costs US$ 3.4 million

The remainder of the cost is from the construction of buildings to be leased to tenants. For the
Base Case, the assumed product configuration yields the following capital costs (which contribute to
the US$ 364.8 million figure mentioned above):

Standard Factory Buildings US$ 27.9 million

Phased Development
Best practice in economic zone development suggests that zones should be constructed in a phased
manner. While the entirety of the land is acquired at the beginning of the project, the infrastructure
is constructed to accommodate results of the Demand Forecast. Thus, normally Phase 1 of an
economic zone project includes enough land and infrastructure to satisfy the first seven years of
expected demand. The IFC BICF team incorporated the phased development concept into its
Financial Model.
Figure 22. Sylhet EZ Phase Sizing

The analysis looks at a 16-year period of the

Gross Area
Net Area (Plot Area)
Sylhet EZ project, with 15 years of actual
1,800,000 m2
900,000 m2
Phase 1
operation. Once a phase is 70 percent occupied,
(180 hectares)
(90 hectares)
construction for the next phase is begun. The
1,500,000 m2
750,000 m2
Phase 2
(150 hectares)
(75 hectares)
sizing of each phase is detailed in Figure 22. It is
2
585,120
m
292,560 m2
assumed that developed sites in a new phase
Phase 3
(~58.5 hectares)
(~29 hectares)
become available in the same year that the
construction takes place. The take-up of Sylhet EZ land under the Base Case scenario is illustrated
in Figure 23. The estimated timing of development for each phase is matched to the demand
projections given in Chapter V.

47


Figure 23. Serviced Land Supply and Demand

In addition, the IFC BICF team

assumed that the Sylhet Economic
Zone would rent standard factory
buildings (SFBs) to interested tenants.
Figure 24 illustrates the supply and
demand for floor space in SFBs. The
IFC BICF team recommended that
SFBs be constructed in blocks of 10 at
a time, based on tenant demand. The
first block (constructed during Phase 1
development of the zone) would be
smaller, at 4 units, so as to avoid
creating an oversupply of space in
early years.
Figure 24. Standard Factory Building Supply and Demand

Operating Costs
Operational costs with respect to the
Sylhet EZ are assumed for four areas

promotion
costs,
staffing/
management costs, provision of
services, and miscellaneous expenses.
Promotional costs for Year 0, Year 1,
and Year 2 are set to 7 million Tk.
After year 2, annual promotional
costs are set to 4 million Tk.
Staffing/ management costs are based
on 5 upper level managers, 4 mid/low
level managers, 10 technical workers, 16 skilled workers, and 15 unskilled laborers. Based on this
level of human resources, the initial annual wage bill for the Sylhet EZ administration would be just
above 23 million Tk. After Year 1, salaries are assumed to increase with inflation.
Service costs incorporate the cost of maintaining common spaces in the Sylhet EZ and insurance
costs. This cost is proportional to the number of sites and facilities that are occupied in any given
year, though there is a minimum cost that would be incurred even if there were no tenants.
Generally, service costs are equivalent to 85 percent of service fees assessed to tenants in any given
year. The average service cost in the US is approximately 0.4 US$/m2/year for leased plot space or
1.2 US$/m2/year for tenant-occupied leased buildings 4. It is assumed that the minimum service cost
for the Sylhet EZ is equivalent to the cost that would be incurred with a 25 percent occupancy rate.
4

Source: National Association of Industrial and Office Properties

48


Costs for other services provided to tenants (such as trash pickup, etc.) would be recovered through
usage fees on a cost-neutral basis.
Miscellaneous costs are those that cannot be easily recovered through tenant usage fees, including
any outside technical expertise used by the Sylhet EZ, unforeseen administrative costs, etc. It is
assumed that annual miscellaneous costs are equivalent to 3 percent of revenue, with a minimum of
2.9 million Tk.
All other operational costs are assumed to be contracted on a full cost recovery basis. If project
revenues are insufficient to fund operational costs, it is assumed that the project takes on short-term
debt. Interest on this debt must be paid off each year; payments to reduce the principal begin once
the project becomes profitable.

Product Configuration
The financial model assumes that there are three methods for disposing of property (product
configurations) within the Sylhet EZ: lease of land, sale of land, and lease of pre-built facilities.
Under the two methods, the Sylhet EZ would lease or sell serviced land to investors. Each investor
would then construct his own facility. Construction would have to follow Sylhet EZ planning
guidelines. In similar zones around the world, a slate of building designs from which the investor
can choose is pre-approved by the zone operator.
The second method for disposing of property would be for the Sylhet EZ to construct various prebuilt standard factory buildings to lease to investors. The lease of SFB floor space would also entitle
the tenant to the use of a designated piece of serviced land attached to the facility.

Prices
In the model, lease and sale prices for land and buildings are assumed to increase at 10.8 percent per
annum (2 percent above inflation). The price levels for leases were generated by analyzing prevailing
rates in Sylhet, Bangladesh, and the region in the context of competing free zones, industrial estates,
and commercial space, and by taking into account the likely increase in market rates due to inflation
while the Sylhet EZ is being planned and constructed. The Sylhet EZ is also assumed to provide
better infrastructure and service to its tenants than competing locations, which would justify
somewhat higher than market rate prices. The price of land for sale was generated by analyzing the
cost of improvements made to the land and by taking a multiple of the lease rate (generally sales are
12 times higher than lease prices, but in this case, a higher multiple is utilized to reflect the high
value of land inside an EZ).

Figure 25. Recommended Initial Prices and Current Market Rates (Tk)
Sylhet EZ
Current
Rate
Market Rates
A service charge is assessed on all occupants of
2
140/m2/yr
the FZ under this model. This service charge Leased Serviced Land 250/m /yr2
3,500/ m
Unknown
depends on the usage of the land, and is Sale of Serviced Land
1,0002
equivalent to 15 percent of the applicable lease Lease of SFB
3,500/m /yr
2,500/m2/yr

rate. This charge covers the provision of

common services to the occupants of the Sylhet EZ, and ensures that the owners/operators of the
Sylhet EZ have a continuing solid basis for management of the zone when all of the developed land
49


has been passed on to investors. The collection rate for all fees is assumed to be 95 percent to
account for delinquent payments and unpaid debts. For leased buildings, there is an additional
discount of 5 percent to account for transitional vacancies.

Capital Structure
The development of Sylhet EZ is assumed to require at least a 30 percent share of equity to secure
any needed loans. All capital expenditures are assumed to be leveraged at a 70 percent debt-equity
ratio to maximize returns to investors. If possible, equity requirements are funded through retained
cash from the operations of the Sylhet EZ. When retained cash is not available (such as for the
initial investment), the model assumes that equity is provided from an external source (the investor).
The sole investor in the development of the Sylhet EZ is assumed to be the developer/operator
hereafter referred to as Sylhet, Inc.
The model assumes that all new borrowing must be fully repaid within 6 years of the issuance of
debt. The interest rate on long-term commercial loans is assumed to be 10 percent. For the first
two years after new borrowing, there is a moratorium on principal and interest repayments. For
years 3-6 after borrowing, it is assumed that the Sylhet, Inc., pays its annual interest obligations and
annually repays 25 percent of the principal borrowed. It is also assumed that Sylhet, Inc., must pay
upfront a one-time loan arrangement fee equivalent to 2 percent of the size of the credit facility.
Sylhet, Inc., carries a debt burden throughout the 15-year projection. This is because Sylhet, Inc.,
funds capital expenditures throughout the project to construct pre-built units and renew equipment,
and because Phase 3 construction occurs in Year 11.
Sylhet, Inc., may not be able to meet its debt service obligations during early years of operations. If
Sylhet Inc., is unable to meet its debt obligations, it is assumed that additional external equity is
provided to clear the deficit. Debt considerations may require Sylhet EZ to lower its debt-equity
ratio from 70 percent to provide for better debt service coverage ratios. These issues are explored
for each PPP scenario in the Results section.

Public Private Partnership Structure

As part of the financial analysis, the IFC BICF assessed several PPP structures to determine their
impact on the viability of the Sylhet EZ. These four scenarios are detailed below. It is assumed that
Scenario 1 is the preferred PPP structure; in the Results section of this chapter, the impact of
changing the PPP structure to Scenario 2, 3, or 4 is presented.
1. In the first scenario, the IFC BICF team assumed that all on-site project costs would be
borne by a private sector owner/developer/operator. The private entity would:
Acquire all land 5
Pay for on-site infrastructure
Pay all operating costs throughout the life of the project
5

The land is paid for by the private sector, but acquired through the governments right of eminent domain, following
all necessary stipulations required under Bangladeshi law.

50


Retain all profits
Bear responsibility and risk for any and all losses
The government, for its part in Scenario 1, provides the following:
Resettlement and rehabilitation expenses associated with acquiring the land
Off-site infrastructure such as road, rail, and utility connectivity to the border of the
zone.
Construction and operation of the ICT located on the zone site
Waiver of corporate and VAT taxes for the zone developer/operator
2. Scenario 2 is defined by increased government involvement in the development of Phase 1
infrastructure. This includes earthworks and construction of roads, utilities, waste treatment
plant, and common buildings for the first 180 hectares of the zone. The private entity would
be responsible for:
Paying for the acquisition of land
Constructing all SFBs
Developing subsequent phases of the zone 6
Paying all zone operating costs
Retain all profits
All risks and losses associated with zone operation
For its part, the government will:
Pay for development of Phase 1 infrastructure
Pay all resettlement and rehabilitation expenses associated with acquiring the land
Pay for and construct off-site infrastructure such as road, rail, and utility connectivity to
the border of the zone.
Construct and operate the ICT located on the zone site
Waiver of corporate and VAT taxes for the zone developer/operator
3. Scenario 3 differs in that the government pays for the acquisition of the land while the
private owner/developer/operator pays all infrastructure development expenses. Under this
scenario, the private sector entity:
Pays for all on-site infrastructure
Construct all SFBs
Pays all operating costs throughout the life of the project
Retain all profits
Bears responsibility and risk for any and all losses
The government provides the following:

The private sector developer/operator would be contractually obligated to develop Phase 2 within a certain number of
years (10) if Phase 1 reaches a certain capacity (70%). Similar obligations could be added to require development of
Phase 3 under similar circumstances if necessary.

51


Land at no cost to the private developer 7
Resettlement and rehabilitation expenses associated with acquiring the land
Off-site infrastructure such as road, rail, and utility connectivity to the border of the
zone.
Construction and operation of the ICT located on the zone site
Waiver of corporate and VAT taxes for the zone developer/operator
4. In the fourth scenario, the government pays for land, as well as Phase 1 infrastructure. This
leaves the private sector to operate the zone, and bear any costs associated with future zone
development. Specifically, the private sector operator will:
Construct all SFBs
Pay for and develop subsequent phases of the zone 8
Pay all zone operating expenses
Retain all profits
Bear all risks and losses associated with zone operation
In partnership, the government will:
Provide land at no cost to the private developer
Develop Phase 1 on-site infrastructure at no cost to the private operator
Pay for resettlement and rehabilitation expenses associated with acquiring the land
Pay for and develop off-site infrastructure such as road, rail, and utility connectivity to
the border of the zone.
Construct and operate the ICT located on the zone site
Waiver of corporate and VAT taxes for the zone developer/operator

Net Present Value

The results of the financial analysis and the recommended financial structuring of the Sylhet EZ
using the base-case scenario are presented below. The internal rate of return is calculated from
projected cash flows to equity holders and the residual value of the Sylhet EZ after year 15. Residual
value is determined by subtracting the outstanding debt from the present value (in Year 15) of future
cash flows. The salvage value of buildings is not included in calculations for the sake of simplicity.
NPV is the present value of future returns, discounted at an appropriate rate, minus the initial cost
of the investment. The appropriate interest rate is the rate on a loan if the money had been
borrowed to fund the purchase/ development of the zone. Typically, real interest rates range from
8 to 12 percent for U.S. dollar purchases. For the purpose of this model, discount rates of 10, 15,
and 20 percent were used. Additionally, the NPV streams take into account the yearly escalation
rates for leases. NPV is calculated according to the following formula:
7

The government would retain ownership of undeveloped land until such time that the private sector operator chooses
to develop it. The private sector operator would have the legal right to acquire this land for the purposes of developing
the Sylhet EZ at no cost for a specified number of years.
8
The private sector developer/operator would be contractually obligated to develop Phase 2 within a certain number of
years (10) if Phase 1 reaches a certain capacity (70%). Similar obligations could be added to require development of
Phase 3 under similar circumstances if necessary.

52

NPV = Net Cash Flowt / (1 + ratet)

t=1
where the time period, n, is 15 years. Detailed income statements and revenue calculations to
support the project cash flow analysis are provided in Annex 2, along with notional balances.

Results
Key financial indicators for the Sylhet EZ are presented in Figure 26 below in terms of US dollars
including the NPV of the project under each discount rate, the projects IRR, cumulative project
returns to the equity investor, the average debt load, the maximum debt load in any single year, and
the equity required to fund development. After this, the impact of changing various assumptions in
the model is explored.
Figure 26. NPV, IRR, Debt, and Equity for the Sylhet EZ (US$ Millions)
Scenario 1
Scenario 2
Scenario 3
Project IRR
2.57%
8.54%
5.25%
Project NPV (0%)
89
196
150
Project NPV (10%)
-110
-13
-55
Project NPV (15%)
-132
-39
-79
Project NPV (20%)
-138
-49
-88
Project Payback in Year
NA
NA
NA
Equity IRR 9
NA
NA
NA
Equity NPV (0%)
-241
-95
-158
Equity NPV (10%)
-167
-63
-108
Equity NPV (15%)
-143
-53
-92
Equity NPV (20%)
-125
-46
-80
Equity Payback in Year
None
None
None
Total External Equity Required
264
118
182
For Capital Expenditures
90.2
58.0
72.0
For Clearance of Deficits
173.8
60.3
109.7
Maximum Debt Balance
149
89
103
Average Debt Balance
80
56
66
Balance Sheet Value at Year 15
215
172
190
Undistributed Distributable Reserves
None
6.6
None
at Year 15

Scenario 4
11.40%
57
3
-4
-7
11
12.93%
14
1
0
-1
9
37
27.4
9.5
86
40
147
67

As shown above, in scenarios 1, 2, and 3, the project IRR is below the interest rate on long-term
loans. This means that regardless of the debt/equity ratio utilized by Sylhet, Inc., equity investors
cannot obtain a rate of return higher than the project IRR (which would be achieved by funding all
capital expenditures through cash rather than debt). Sylhet, Inc.s ability to repay its debt servicing
obligations under each scenario is best shown by several ratios defined in Figure 27 that are
calculated on an annual basis (see Figure 28).

At a 70 percent debt-equity ratio

53


Figure 27. Definition and Purpose of Debt Coverage Ratios
Ratio
Formula
Debt Service Coverage Ratio
EBITDA / Annual Debt Service
(DSCR)
Requirement
NPV of Future EBITDA / Sum of All
Project Loan Life Coverage
Future Debt Service Requirement
Ratio (PLCR)
Loan Life Coverage Ratio
(LLCR)

NPV of Future EBITDA / Remaining

Debt Service Requirement on Loans
Drawn to Date

Purpose
Measures Sylhet, Inc.s ability to repay its
debt service obligation in the current year
Measures Sylhet, Inc.s ability to repay all
anticipated debt service obligations when
they become due
Measures Sylhet, Inc.s ability to repay
anticipated debt service obligations related
to existing loans

Figure 28. Debt Coverage Ratios

As Figure 28 shows, Sylhet, Inc., does not have a strong ability to repay its debt in any of the 4
scenarios. Typically, a bank would feel most comfortable lending to a developer whose coverage
ratios all remain above 1 throughout the project lifetime. At the very least, a lender would require
one of the ratios to remain above 1 throughout the project. For the Sylhet EZ, this is not possible
under any of the four PPP scenarios.

Sensitivity to Capital Costs and Prices

The Sylhet EZ project generates very low returns even in Scenario 4. As such, it is important to
determine whether higher returns could be generated by reducing capital costs or increasing prices.
54

In scenario 1, price levels would need to be increased by 175 percent to surpass the minimum
threshold for investment (15 percent equity IRR). This would, however, likely cause demand for
land and buildings in the Sylhet EZ to disappear. Alternatively, capital cost reductions of 65 percent
could generate an equity IRR above 15 percent.
In scenario 2, price increases of 62 percent would be required to boost equity IRR above 15 percent
which would also likely reduce demand significantly. A capital cost reduction of 33 percent would
be required to achieve a similar effect.
For scenario 3, price increases of 110 percent or capital cost reductions of 54 percent would be
required to boost equity IRR above 15 percent.
Finally, in scenario 4, the private sector developer contributes almost nothing to the development of
the zone. The standard factory buildings, along with Phase 2 and 3 could be paid for entirely with
retained earnings given either a 4 percent increase in prices or a 6 percent decrease in capital costs
suggesting that this PPP structure is very fragile, as the developer/operator would have little stake in
the success of the Sylhet EZ.

Financial Conclusions
The results of the financial modeling show that the Sylhet EZ is a not a financially feasible project
for a developer/ operator unless capital costs can be reduced substantially. In PPP scenarios 1, 2,
and 3, the project generates an IRR lower than the cost of capitalmaking it a poor investment
choice. In PPP scenario 4, the private sector partner could see returns above the cost of capital, but
the benefit provided by such a developer is almost nil, as the project comes close to generating
enough cash to fund future development without the need for external equity.
In short, given the high capital costs at the selected site, and the market prices for land and buildings
in Sylhet, the project is not suitable for a PPP in which the private sector is expected to contribute
equity. It could be suitable for a management contract PPP (in which an operator is paid a flat fee
or percentage of net earnings) and the zone is developed by a public sector developer depending on
the economic benefits generated. However, given the stated objective of the government of
Bangladesh to involve the private sector in the development of industrial land, a different site (with a
lower acquisition and development cost per square meter) would be required.
Financial statements generated by the IFC BICF Financial Model for Scenario 1 are included in the
in Annex 2. These include statements for Capital Expenditures, Operating Costs, Revenues,
Projected Cash Flows, and Projected Balance Sheets.

55

VII. Economic Analysis

The Financial Analysis presented in Chapter VI discussed the viability of the Sylhet Economic Zone
project from the perspective of the private sector. Each scenario involves contributions from the
government of Bangladesh in various formsforegone taxes, off-site infrastructure development,
land acquisition, and on-site zone development. Government contributions to the Sylhet Economic
Zone entail a cost to the government, but would also generate benefits for the government andby
extensionsociety. There are many valid reasons why the government would choose to expend
resources on an economic zone project. These include enterprise formation, job creation, export
generation, urban and rural development, environmental clean-up, and others. It is crucial however,
that the government understand and is able to estimate the costs and benefits of its involvement in
infrastructure projects. This has typically not been done in Bangladesh to date.
For the Sylhet EZ, the high capital costs of the project make it unfeasible for any kind of private
developer. Given that the Government of Bangladesh has stated its preference for involving the
private sector in future EZs, the current site is not suitable and thus does not require a full-scale
economic analysis to justify public sector involvementas no development is anticipated at this site.
If a suitable site is found in the future, a full-scale economic model should be used to justify any
public contribution to the PPP. For the purposes of this study, however, it is sufficient to list the
benefits and costs associated with developing the Sylhet EZ at the current site.
1. Direct Costs. Direct costs are the cash expenses borne by the government for things like land
acquisition, off-site infrastructure and on-site zone development (if necessary), operating
subsidies, and equity shares in projects. Depending on the PPP agreements between the
government and the private sector partner, the government may also have to bear costs of
environmental mitigation and resettlement of current occupants of the land.
2. Indirect Costs. Indirect costs include quantifiable expenses such as the construction of
additional public housing, utilities, schools, and recreation facilities to accommodate an influx of
workers and their families after an economic zone has been constructed. Indirect costs also
include non-quantifiable costs such as worker displacement and environmental degradation.
The indirect costs associated with the current site envisioned for the Sylhet EZ are relatively
high due to environmental factors.
3. Direct Benefits. Direct benefits consist of taxes, income from fees and licenses, zone profits
(if they partially belong to the public sector), income from the sale of government-owned land,
and other payments made to the government as a direct result of Sylhet EZ operations.
4. Indirect Benefits. Indirect benefits are those that accrue to the government by virtue of the
fact that an economic zone exists. These include quantifiable factors such as 1) the effects of
consumption by workers in the zone; 2) backward linkage multiplier effects between firms in the
zone and suppliers and designers outside the zone; and 3) forward linkage multiplier effects
between firms inside the zone and distributors, traders, manufacturers, and retailers outside the
zone. Indirect benefits can also include qualitative items such as employment of women.

56

Scenario 1: 100% Private Sector Project

In the first scenario, direct government costs consist of building an ICT, developing all off-site
infrastructure, and the resettlement of the current occupants of the Sylhet EZ. While giving a tax
holiday to the private zone developer/operator is categorized as foregone revenue, it is very unlikely
that a developer would invest in an EZ without this incentive, so it should not be included as a
direct cost. All other costs are borne by the private sector. Direct benefits in this scenario would
include the sale of government owned land, and all taxes and fees levied on zone tenants.

Scenario 2: Government Develops Phase 1 Infrastructure

In the second scenario, direct government costs consist of building an ICT, developing all off-site
infrastructure, the resettlement of the current occupants of the Sylhet EZ, and the cost of providing
all Phase 1 infrastructure. All other costs are borne by the private sector. Direct benefits in this
scenario would include the sale of government owned land, and all taxes and fees levied on zone
tenants.

Scenario 3: Government Acquires Land

In the third scenario, direct government costs consist of building an ICT, developing all off-site
infrastructure, the resettlement of the current occupants of the Sylhet EZ, and the cost of acquiring
the land for the Sylhet EZ. This cost is rather high as a 50 percent premium over market price is
required to purchase land through the right of eminent domain. All other costs are borne by the
private sector. Direct benefits in this scenario would include all taxes and fees levied on zone
tenants. As the land currently owned by the government would not be sold, it would constitute a
foregone benefit, and should be included in the direct cost category as it is likely someone else
would eventually purchase this land.

Scenario 4: Government Acquires Land and Develops Phase 1

This scenario provided the only equity IRR that is anywhere close to attractive for the private
investor. However, it would require substantial costs to the government. Direct costs would include
land acquisition, resettlement, off-site infrastructure, building an ICT, and building all Phase 1
infrastructure. When the government acquires the zone land and develops Phase 1 infrastructure,
the economic returns of the project will be lower, and it will take significantly longer to achieve a
positive impact on the government budget. In order to justify creating this kind of PPP (with low
risk to the private investor and little equity contribution), a very high economic rate of return would
be requiredwhich is unlikely given the costs attached to this option.

Economic Analysis Summary

Recent trends in Bangladesh are to move away from wholly government funded economic zone
projects to projects that include some kind of private sector participation. There are a number of
reasons for this including: i) the need for master planning for new zones, ii) the lack of government

57


funding for such projects and iii) the recognition that the private sector does a better job of
managing zones while the public sector does a better job of regulating them.
Therefore, the goal of public sector stakeholders in the Sylhet Economic Zone should be to make
the zone profitable to a private sector owner/developer/operator under a PPP situation. The IFC
BICF team has demonstrated four possible PPP scenarios in this pre-feasibility study. None of
these scenarios is likely to generate the kind of IRR necessary to attract a private investor if the
current site is developed. A suitable IRR could be generated if the public sector were to provide
almost all of the capital required to develop the zone (Scenario 4), but the economic returns to the
public sector would fall proportionately. In this scenario, the financial structure would more closely
resemble a no-risk gift to the private sector developer rather than a true PPP in which both risk and
reward are shared.
The IFC BICF recommends that a new site be identified for development. At such time, the
government should only participate in the initial capital development stages of the zone, rather than
subsidize zone operations or hold equity in the zone itself. The government can specifically discuss
the fine details of its involvement once a new site has been selected and a private
owner/developer/operator has been identified.

58

VIII. Recommendations
There is significant interest from the private sector to develop an economic zone in Sylhet. Such a
zone has the potential to attract approximately 160 firms over 15 years in a Base Case growth
scenario. This is possible given the current lack of serviced industrial land in Sylhet, interest by
entrepreneurs to start ventures in a zone, the low cost of doing business, and the positive effects a
zone could have on the business operating environment.
Private sector ownership, development, and operation of the zone are desirable for several reasons.
Firstly, the government of Bangladesh is hesitant to pour funds into additional EPZs or economic
zones. Secondly, privately developed zones are run more efficiently, and respond better to
tenant/client needs than government-operated zones. Finally, private developers will naturally
develop zones in locations chosen to maximize their profit, and economic effectiveness.
The Sylhet Economic Zone project is not feasible at the proposed site as a purely private sector
project however. Though demand existsas shown in Chapter V of this studythe high cost of
development in this location does not offset revenues to a degree that would be attractive to a
private sector developer. Further, the cost of development is so high that the level of public sector
involvement required to make the PPP interesting to the private sector almost eliminates the need
for a private sector investor at all.
Given that demand for an economic zone is Sylhet does exist and that involving the private sector in
developing a new zone is a government priority, a new site should be identified to reduce the cost of
development. Specifically, sites with lower requirements for earthworks and lower acquisition costs
should be identified.

59

Sl.

Cumulative Sub-total

Other Agro and Food Industries

16

Agar Industries

15

Y-1

Sub-total

Tea Blending and Packaging

Cereal Industries

14

Honey Processing and Packaging Indurtry

12

13

Bakery and Confectionary Industries

Sweetmeat Industries

11

Spices Industries

10

Ready Food Products Industries

Fruit Processing Industries

Edible Oil Industries

Meat Processing

Milk and Dairy Products Industries

Fish Processing

Animal and Fish Feed Industries

Poultry Industries (Bolier & Layer)

Agro-based & Food Processing Industries

Sector of Industries

A.

No.

First 5
Years
(Number
of Units)

Aggressive Case Number of Companies

Aggressive Case Demand

Y-2

18

Y-3

Annex 1: Demand Forecast

22

Y-4

26

Y-5

32

Y-6

Second 5
Years
(Number
of Units)

37

Y-7

41

Y-8

44

Y-9

46

Y-10

50

Y-11

Third 5
Years
(Number
of Units)

54

Y-12

58

Y-13

61

Y-14

64

Y-15

60

64

64

Total

Cumulative

0
1
1

Specialized Textiles Industries (Towel, etc.)

Composite Textile Mills (Knit & Woven)

Backward Linkage Industries

Jute Industries

Sub-total

Cumulative Sub-total

1
1

Toiletries Industries

Cumulative Sub-total

Herbal Cosmetics

Fertilizer Industries

Sub-total

Chemicals Industries

Cumulative Sub-total

Pharmaceuticals

Sub-total

Construction Materials (sanitary ware, tiles, etc.)

Chemicals & Fertilizer Industries

Glass Industries

D.

Cement Industries

Ceramic Industries (tableware)

Ceramic & Glass /Mineral based Industries

C.

Ready Made Garments (Woven)

Ready Made Garments (Knitwear)

Y-1

RMG, Textile & Jute Industries

Sector of Industries

First 5
Years
(Number of
Units)

B.

No.

Sl.

Y-2

Y3

12

Y-4

10

10

14

Y-5

12

12

19

Y-6

Second 5
Years
(Number
of Units)

13

13

22

Y-7

16

13

24

Y-8

17

14

25

Y-9

18

15

28

Y-10

20

17

29

Y-11

Third 5
Years
(Number
of Units)

22

18

30

Y-12

22

18

31

Y-13

24

18

31

Y-14

24

18

31

Y-15

61

18

18

31

31

24

24

Total

Cumulative

Aluminum Utensils

Other Metalworking, Including Aluminum Foil

Agricultural Machinery and Equipment

Sub-total

Cumulative Sub-total

Other Electrical Industries

Sub-total

Cumulative Sub-total

0
1
1

Melamine

Plastic Packaging Materials

Rubber Products

Sub-total

Cumulative Sub-total

PVC Pipes
0

Plastic Products

Cumulative Sub-total

Rubber and Plastics

Sub-total

BPO

H.

Software

Software and BPO

Appliance Assembly

G.

Electric Cable Industries

Electric Bulb Industries

Electronics & Electrical Goods Industries

Machinery

F.

Re-rolling Industries

Kitchen Cabinet and Oven Industries

Y-1

Steel and Engineering Industries

Sector of Industries

First 5
Years
(Number of
Units)

E.

No.

Sl.

Y-2

Y3

12

Y-4

11

15

Y-5

14

19

Y-6

Second 5
Years
(Number
of Units)

15

10

12

21

Y-7

18

11

14

23

Y-8

19

12

15

25

Y-9

19

13

16

27

Y-10

20

15

17

28

Y-11

Third 5
Years
(Number
of Units)

21

17

18

29

Y-12

23

18

19

31

Y-13

23

19

19

32

Y-14

24

21

21

33

Y-15

62

24

24

21

21

14

21

21

33

33

10

Total

Cumulative

Sl.

Corrugated Carton Industries

Computerized Automobile Service Center

12

14

L.

K.

Off-set Printing and Packaging Industries

11

Cumulative Sub-total

1
0
2
2

Transportation/Logistics Provider Offices

Other

Sub-total

Cumulative Sub-total

26
37

1
1
11
11

Sub-total

Cumulative Sub-total

TOTAL FORECASTED NEW TENANTS

CUMULATIVE TOTAL FORECASTED
TENANTS

Y-2

Power Plant

Private Power Plant

Bank

Privartely Operated Support Services

0
0

Other Industries

Sub-total

Furniture

Leather and Footwear Industries

Cumulative Sub-total

Other Industries

Sub-total

Y-1

Third Party Warehouse Facility

Warehousing

Sector of Industries

First 5
Years
(Number of
Units)

J.

I.

No.

72

35

Y-3

99

27

10

Y-4

117

18

12

Y-5

145

28

10

16

Y-6

Second 5
Years
(Number
of Units)

166

21

12

18

Y-7

183

17

12

19

Y-8

198

15

13

23

Y-9

211

13

14

25

Y-10

225

14

14

26

Y-11

Third 5
Years
(Number
of Units)

240

15

15

29

Y-12

254

14

16

32

Y-13

261

16

33

Y-14

63

269

16

34

Y-15

269

269

16

16

34

34

Total

Cumulative

4
5

1
1

Cumulative Sub-total

Agar Industries

Other Agro and Food Industries

Honey Processing and Packaging Indurtry

12

16

Sweetmeat Industries

11

15

Bakery and Confectionary Industries

10

Tea Blending and Packaging

Spices Industries

Cereal Industries

Fruit Processing Industries

14

Ready Food Products Industries

13

Meat Processing

Edible Oil Industries

Fish Processing

Animal and Fish Feed Industries

Milk and Dairy Products Industries

Sub-total

Y-2

0
0
1
0
0
1
1
0
1
0
0
0
0
0
0
0

Poultry Industries (Bolier & Layer)

Y-1

First 5
Years
(Number
of Units)

0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0

Agro-based & Food Processing Industries

Sector of Industries

A.

No.

Sl.

Base Case Number of Companies

Base Case Demand

0
0
0
1
1
0
0
0
0
1
0
0
1
0
0
0

Y-3

15

1
0
0
0
0
0
0
0
0
0
1
1
0
1
1
1

Y-4

20

0
1
0
0
0
0
1
1
1
0
1
0
0
0
0
0

Y-5

25

1
0
1
1
0
0
1
0
0
0
0
0
1
0
0
0

Y-6

Second 5
Years
(Number
of Units)

29

0
1
0
0
1
1
0
0
0
1
0
0
0
0
0
0

Y-7

31

0
0
1
0
0
0
0
0
1
0
0
0
0
0
0
0

Y-8

32

0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0

Y-9

34

0
0
0
0
0
1
0
1
0
0
0
0
0
0
0
0

Y-10

36

0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
1

Y-11

Third 5
Years
(Number
of Units)

40

1
0
1
0
0
0
0
1
0
1
0
0
0
0
0
0

Y-12

43

0
0
0
0
0
1
1
0
0
0
0
0
0
1
0
0

Y-13

45

0
0
1
0
1
0
0
0
0
0
0
0
0
0
0
0

Y-14

45

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

Y-15

64

45

45

3
2
5
2
3
4
5
4
3
3
2
1
2
2
2
2

Total

Cumulative

Ready Made Garments (Knitwear)

Ready Made Garments (Woven)

Specialized Textiles Industries (Towel, etc.)

Composite Textile Mills (Knit & Woven)

Backward Linkage Industries

Jute Industries

Cement Industries

Glass Industries

Construction Materials (sanitary ware, tiles, etc.)

Fertilizer Industries

Herbal Cosmetics

Toiletries Industries

Cumulative Sub-total

Chemicals Industries

Pharmaceuticals

Chemicals & Fertilizer Industries

Cumulative Sub-total

D.

Sub-total

Ceramic Industries (tableware)

Sub-total

Ceramic & Glass /Mineral based Industries

C.

Cumulative Sub-total

Sub-total

RMG, Textile & Jute Industries

Sector of Industries

B.

No.

Sl.

0
0
0
0
1
1
1

0
0
0
0
0
0

0
0
0
0
0
0
0
0

Y-1

First 5
Years
(Number of
Units)

0
0
0
0
0
0
1

1
0
1
0
2
2

1
1
0
0
0
0
2
2

Y-2

0
1
0
1
0
1
2

0
0
0
1
1
3

1
0
1
0
0
1
3
5

Y3

1
0
0
0
0
1
3

0
1
0
1
2
5

1
0
0
1
0
0
2
7

Y-4

0
0
1
0
0
1
4

0
0
0
0
0
5

0
0
0
0
1
0
1
8

Y-5

0
0
0
0
0
0
4

0
0
0
1
1
6

0
0
0
0
0
0
0
8

Y-6

Second 5
Years
(Number
of Units)

1
0
0
0
0
1
5

1
0
0
0
1
7

0
0
0
0
0
0
0
8

Y-7

0
1
0
1
1
3
8

0
0
0
0
0
7

0
0
1
0
0
0
1
9

Y-8

0
0
0
0
0
0
8

1
0
0
0
1
8

0
0
0
0
0
0
0
9

Y-9

0
0
0
0
0
0
8

0
0
1
0
1
9

0
0
0
0
0
0
0
9

Y-10

0
0
0
0
1
1
9

0
0
1
0
1
10

0
0
1
0
0
0
1
10

Y-11

Third 5
Years
(Number
of Units)

1
1
0
0
0
2
11

0
0
0
0
0
10

0
0
0
0
0
0
0
10

Y-12

0
0
0
0
0
0
11

0
0
0
0
0
10

0
0
0
0
0
0
0
10

Y-13

0
0
0
0
0
0
11

0
0
0
1
1
11

0
0
0
1
0
0
1
11

Y-14

0
0
0
0
0
0
11

0
0
0
0
0
11

0
0
0
0
0
0
0
11

Y-15

65

3
3
1
2
3
11
11

3
1
3
4
11
11

11

3
1
3
2
1
1
11

Total

Cumulative

Machinery

Aluminum Utensils

Other Metalworking, Including Aluminum Foil

Agricultural Machinery and Equipment

Electric Bulb Industries

Electric Cable Industries

Appliance Assembly

Plastic Products

PVC Pipes

Melamine

Plastic Packaging Materials

Rubber Products

Cumulative Sub-total

Sub-total

Rubber and Plastics

G.

Cumulative Sub-total

Sub-total

Electronics & Electrical Goods Industries

F.

Cumulative Sub-total

Sub-total

Kitchen Cabinet and Oven Industries

Steel and Engineering Industries

Sector of Industries

E.

No.

Sl.

1
0
0
0
0
1
1

0
0
0
0
0

1
0
0
1
0
2
2

Y-1

First 5
Years
(Number of
Units)

1
0
0
0
0
1
2

0
1
0
1
1

0
0
0
1
1
2
4

Y-2

0
0
0
1
0
1
3

1
0
0
1
2

1
1
1
1
0
4
8

Y3

1
1
0
0
0
2
5

0
0
1
1
3

0
0
0
2
0
2
10

Y-4

1
0
0
0
0
1
6

0
0
0
0
3

0
0
0
1
0
1
11

Y-5

0
0
1
0
0
1
7

0
1
0
1
4

1
0
0
1
1
3
14

Y-6

Second 5
Years
(Number
of Units)

1
0
0
0
0
1
8

0
0
0
0
4

0
1
0
0
0
1
15

Y-7

0
1
0
0
1
2
10

1
0
1
2
6

0
1
1
0
0
2
17

Y-8

0
0
0
1
0
1
11

0
0
0
0
6

0
0
0
1
0
1
18

Y-9

0
0
0
0
0
0
11

0
0
0
0
6

0
0
1
1
0
2
20

Y-10

0
1
0
0
0
1
12

0
1
0
1
7

0
1
0
0
0
1
21

Y-11

Third 5
Years
(Number
of Units)

1
0
0
1
0
2
14

0
0
0
0
7

0
0
0
1
0
1
22

Y-12

0
0
0
0
0
0
14

0
0
0
0
7

0
0
0
1
1
2
24

Y-13

0
0
0
0
0
0
14

0
0
0
0
7

0
0
0
1
0
1
25

Y-14

0
0
0
0
1
1
15

0
0
0
0
7

0
1
0
2
0
3
28

Y-15

66

6
3
1
3
2
15
15

2
3
2
7
7

3
5
3
14
3
28
28

Total

Cumulative

K.

J.

Other Industries

14

14
22

1
1

8
8

Cumulative Sub-total

TOTAL FORECASTED NEW TENANTS

CUMULATIVE TOTAL FORECASTED
TENANTS

0
1
0
1
3

0
0
1
0
0
0
1
1

0
0
0

Y-2

Sub-total

1
1
0
2
2

0
0
0
0
0
0
0
0

0
0
0

Y-1

First 5
Years
(Number of
Units)

Power Plant

Private Power Plant

Cumulative Sub-total

Sub-total

Other

Transportation/Logistics Provider Offices

Bank

Privartely Operated Support Services

Cumulative Sub-total

Sub-total

Corrugated Carton Industries

Computerised Automobile Service Center

Off-set Printing and Packaging Industries

11

Furniture

12

Other Industries

Leather and Footwear Industries

Cumulative Sub-total

Sub-total

Third Party Warehouse Facility

Warehousing

Sector of Industries

I.

H.

No.

Sl.

39

17

0
0
1
1
4

0
1
0
0
0
0
1
2

0
0
0

Y-3

59

20

1
0
1
2
6

0
0
0
0
0
1
1
3

1
1
1

Y-4

71

12

0
1
0
1
7

0
1
0
1
0
0
2
5

0
0
1

Y-5

85

14

0
1
0
1
8

0
0
0
1
1
0
2
7

0
0
1

Y-6

Second 5
Years
(Number
of Units)

95

10

0
0
1
1
9

1
0
0
0
0
0
1
8

0
0
1

Y-7

109

14

0
0
0
0
9

0
0
0
1
0
1
2
10

0
0
1

Y-8

116

0
0
0
0
9

1
1
1
0
0
0
3
13

0
0
1

Y-9

122

0
0
1
1
10

0
0
0
0
0
0
0
13

0
0
1

Y-10

131

0
0
0
0
10

1
0
0
0
0
0
1
14

0
0
1

Y-11

Third 5
Years
(Number
of Units)

142

11

0
0
0
0
10

0
1
0
0
0
0
1
15

1
1
2

Y-12

148

0
0
0
0
10

0
0
1
0
0
0
1
16

0
0
2

Y-13

154

0
0
1
1
11

0
0
0
0
0
0
0
16

0
0
2

Y-14

67

160

0
1
0
1
12

0
0
0
0
0
1
1
17

0
0
2

Y-15

160

160

2
5
5
12
12

3
4
3
3
1
3
17
17

2
2
2

Total

Cumulative

Phase 1
Year 0
Year 0

Phase 2
Year 4
Year 3

Phase 3
7,521.5
5,983.2

Phase 3
Year 11
Year 6

6
50,000

11,811,497

244,800

266,342

289,781

4,810,987

368,943

Total

12,171,497

532,685

5,001,424

630,562

25,918

5,171,136

812,110

11

11
25,000
-

39,513

39,513

11

7,314,721

568,984

6,745,737

10
-

10

39,513

39,513

Figure 7: Inflation Adjusted Capital Expenditures from All Sources (Taka thousands) (Aggressive Case)
0
1
2
3
4
5
6
7
8 9
Land Acquisition
7,478,484
Phase
4,226,013
4,421,863
4,424,711
- Construction
Standard Factory
450,000
532,685 579,561
630,562
746,425 812,110 - Building
Equipment
17,000
25,918
- -

Total

9
-

10

8
-

7
50,000

Total
25,353.4
24,345.3

Figure 6: Inflation Adjusted Capital Expenditures from All Sources (Taka thousands) (Base Case)
0
1
2
3
4
5
6 7 8
Land Acquisition
7,478,484
Phase Construction
4,226,013
4,810,987
- - Standard Factory
90,000
244,800 266,342 289,781
343,026 - - Building
Equipment
17,000
25,918
- - -

Figure 5: Standard Factory Building Construction Completion Schedule (m2)

0
1
2
3
4
5
Base Case
10,000
25,000
25,000
25,000
25,000
Aggressive Case
50,000
50,000
50,000 50,000
-

Figure 4: Inflated Phase Construction Costs (Taka millions)

Phase 1
Phase 2
Base Case
12,612.4
5,219.4
Aggressive Case
12,704.2
5,657.9

Base Case
Aggressive Case

Figure 3: Phase Timing

Annex 2: Financial Analysis Scenario 1

12

12

13

12
-

13

14

14
5,000
-

14

146,561

146,561

13
-

68

60,240

60,240

15

60,240

60,240

15

15
-

Total
140,000
300,000

Net Profit.
Deprec.
(from above)
EBDA
Interest
(from above)
EBITDA

Promotion
Mgmt/ Staff
Cost
Service
Provision
Misc. Ops
Expenses
Commercial
LT Debt
Interest
Commercial
ST Debt
Interest
Depreciation
Sub-Total
Expenses

Building rent
Land rent
Land Sales
Building
service
charges
Land Service
Charges
Total Revenue

475,180

5,236

5,383

471,580

524,100

2,900

41,411

475,180

-580,521

1,000,434

471,580

124,164

5,383

129,548

-41,411

-41,411

419,913

-1,055,700

1,539,831

1,000,434

14,358

14,259

-347,416

-41,411

9,180

27,313

8,438

8,286

484,130

25,104

176,684

5,526

23,074

2,138

11,250

7,616

1,015

74,998
23,947
368,410

7,000

6,769
9,263
157,500

540,008

771,060

-231,051

484,972

-716,023

1,340,474

484,972

771,060

18,458

31,116

29,717

5,152

624,451

9,184

27,422

182,815
39,799
365,230

926,567

538,327

388,240

495,626

-107,386

1,150,707

495,626

538,327

30,893

47,925

32,332

5,605

1,043,321

13,569

42,813

285,423
58,797
642,719

628,987

301,940

327,047

699,656

-372,609

1,123,738

699,656

301,940

21,970

58,897

35,177

6,098

751,129

18,792

50,498

336,652
81,434
263,753

442,362

28,784

69,151

38,273

6,635

1,362,635

41,630

83,260

555,069
180,397
502,278

1,233,629

715,161

354,779

32,214

82,615

41,641

7,219

1,147,425

715,161

838,646

442,362

396,284

701,440

-305,156

937,805

354,779

583,026

715,161

-132,135

233,319

39,630

106,157

45,305

7,854

1,163,689

233,319

930,370

715,161

215,209

Earnings and Profits

1,286,645

701,440

1,101,494

27,685

69,509

463,392
119,968
420,940

Expenses (Negative)

981,490

22,012

59,343

395,617
95,384
409,133

Figure 8: Sylhet Inc. Income Statement (Taka thousands) (Scenario 1) (Base Case)
0
1
2
3
4
5
6
7
8
Revenue (Positive)

1,170,098

117,497

1,052,601

715,161

337,440

1,053,032

715,161

117,497

40,306

122,230

49,292

8,545

1,390,472

46,935

96,865

645,767
203,387
397,517

1,258,805

7,812

1,250,993

715,161

535,832

965,548

715,161

7,812

43,454

136,193

53,630

9,297

1,501,380

52,901

107,326

715,510
229,238
396,404

10

1,790,627

1,790,627

717,880

1,072,747

1,007,600

717,880

(0)

60,473

160,782

58,349

10,115

2,080,347

64,575

124,580

830,537
279,826
780,828

11

1,796,464

3,347

1,793,117

987,709

805,408

1,324,224

987,709

3,347

61,445

197,234

63,484

11,005

2,129,633

81,456

150,584

1,003,892
352,977
540,724

12

1,636,268

622,067

1,014,201

1,010,469

3,732

1,996,318

1,010,469

622,067

57,257

225,481

69,070

11,974

2,000,051

91,473

173,799

1,158,659
396,383
179,737

13

69

2,314,190

466,341

1,847,849

1,010,469

837,380

1,909,496

1,010,469

466,341

79,285

265,225

75,148

13,028

2,746,876

104,055

207,975

1,386,498
450,905
597,444

14

2,094,575

310,615

1,783,960

1,010,469

773,492

1,787,899

1,010,469

310,615

73,383

297,497

81,761

14,174

2,561,391

115,293

234,703

1,564,688
499,602
147,104

15

Net Profit.
Deprec.
(from above)
EBDA
Interest
(from above)
EBITDA

Promotion
Mgmt/ Staff
Cost
Service
Provision
Misc. Ops
Expenses
Commercial
LT Debt
Interest
Commercial
ST Debt
Interest
Depreciation
Sub-Total
Expenses

Building rent
Land rent
Land Sales
Building
service
charges
Land Service
Charges
Total Revenue

489,580

10,997

5,383

471,580

529,861

2,900

41,411

489,580

-290,469

1,030,926

471,580

309,365

5,383

314,749

-41,411

-41,411

740,456

-780,049

1,599,336

1,030,926

24,442

18,788

-162,215

-41,411

9,180

27,313

8,438

8,286

819,286

25,104

367,646

4,543

23,074

1,065

17,561

7,616

4,254

117,071
19,688
660,423

7,000

28,361
4,616
329,350

1,030,713

773,194

257,519

489,580

-232,061

1,378,942

489,580

773,194

34,068

47,232

29,717

5,152

1,146,881

11,293

44,274

295,162
48,934
747,218

1,229,437

560,581

668,856

687,762

-18,906

1,401,712

687,762

560,581

40,962

74,470

32,332

5,605

1,382,806

17,411

70,200

468,002
75,449
751,743

1,281,539

715,191

566,349

710,944

-144,596

1,609,030

710,944

715,191

43,257

98,363

35,177

6,098

1,464,435

22,545

93,176

621,174
97,697
629,842

393,683

62,069

140,518

38,273

6,635

2,165,156

50,131

209,483

1,396,553
217,236
291,752

1,470,896

914,939

265,342

61,780

179,976

41,641

7,219

1,854,329

944,796

1,852,968

393,683

1,459,285

737,950

721,334

1,808,875

265,342

1,543,534

914,939

628,595

572,251

63,451

220,672

45,305

7,854

1,827,874

572,251

1,255,623

944,796

310,827

Earnings and Profits

1,379,128

737,950

2,099,491

40,163

171,574

1,143,827
174,039
569,888

Expenses (Negative)

2,100,462

31,489

133,826

892,174
136,451
906,523

Figure 9: Sylhet Inc. Income Statement (Taka thousands) (Scenario 1) (Aggressive Case)
0
1
2
3
4
5
6
7
8
Revenue (Positive)

1,822,462

411,732

1,410,730

977,280

433,450

1,769,943

977,280

411,732

64,435

258,659

49,292

8,545

2,203,393

55,546

248,759

1,658,391
240,698
-

2,180,849

271,136

1,909,714

977,280

932,434

1,695,632

977,280

271,136

76,996

307,294

53,630

9,297

2,628,065

61,545

299,977

1,999,850
266,693
-

10

2,466,314

143,892

2,322,423

979,999

1,342,424

1,626,129

979,999

143,892

87,011

346,763

58,349

10,115

2,968,552

68,191

339,765

2,265,100
295,496
-

11

2,734,045

20,543

2,713,502

979,999

1,733,503

1,555,653

979,999

20,543

96,408

384,213

63,484

11,005

3,289,156

75,556

376,460

2,509,730
327,410
-

12

3,030,812

2,510

3,028,302

979,999

2,048,303

1,596,082

979,999

2,510

106,820

425,708

69,070

11,974

3,644,385

83,716

417,117

2,780,781
362,770
-

13

70

3,359,761

1,673

3,358,087

979,999

2,378,088

1,659,890

979,999

1,673

118,357

471,685

75,148

13,028

4,037,978

92,757

462,166

3,081,106
401,949
-

14

3,724,378

837

3,723,542

979,999

2,743,543

1,730,537

979,999

837

131,139

522,627

81,761

14,174

4,474,080

102,775

512,080

3,413,865
445,360
-

15

Retained Cash Used

for Capex
Equity Drawn to
Clear Deficits
Retained Cash Used
to Clear Deficits
Cumulative Cash
Balance

Annual Cash
Surplus / Shortage

3,543.4

0.0
0.0
0.0

82.8

0.0

0.0

0.0

0.0

82.8

73.4

41.4
0.0
0.0

0.0

0.0
0.0
0.0
-46.8

-207.6

171.4

-115.3

176.7
-47.1
-244.8

8,475.6

-11,852.9

Net Project
Cashflow

LT Loans
LT Loan
Arrangement Fee
ST Loans
LT Debt Service
ST Debt Service
Equity Drawn for
Capex

0.0
-41.4
-11,811.5

Revenues
Operating Costs
Capital Expenditures

0.0

2.9

3,078.8

79.9

-3,161.5

0.0

0.0
-3,501.5
0.0

0.0

186.4

153.6

484.1
-64.2
-266.3

0.0

0.0

2,784.0

0.0

-2,784.0

86.9

0.0
-3,324.0
0.0

0.0

202.8

250.2

624.5
-84.4
-289.8

0.0

0.0

2,221.1

0.0

-2,221.1

1,443.3

0.0
-3,147.6
0.0

0.0

3,367.7

-3,884.4

1,043.3
-116.8
-4,811.0

0.0

0.0

2,343.6

0.0

-2,343.6

110.7

0.0
-2,972.6
0.0

0.0

258.3

260.0

751.1
-122.1
-368.9

0.0

0.0

792.0

0.0

-792.0

0.0

0.0
-1,630.7
0.0

0.0

0.0

838.6

981.5
-142.8
0.0

0.0

0.0

631.6

0.0

-631.6

0.0

0.0
-1,569.4
0.0

0.0

0.0

937.8

1,101.5
-163.7
0.0

Figure 10: Sylhet Inc. Cash Flow (Taka millions) (Scenario 1) (Base Case)
0
1
2
3
4
5
6
7
Annual Cash Flows

0.0

0.0

227.8

0.0

-227.8

0.0

0.0
-1,391.5
0.0

0.0

0.0

1,163.7

1,362.6
-198.9
0.0

0.0

0.0

44.2

0.0

-44.2

0.0

0.0
-1,214.3
0.0

0.0

0.0

1,170.1

1,390.5
-220.4
0.0

1,172.9

0.0

0.0

0.0

1,172.9

11.9

0.0
-85.9
0.0

0.0

27.7

1,219.3

1,501.4
-242.6
-39.5

10

1,790.6

0.0

0.0

1,172.9

617.8

1,021.5

0.0
0.0
0.0

0.0

5,120.3

-5,524.1

2,080.3
-289.7
-7,314.7

11

3,575.4

0.0

0.0

0.0

1,784.8

0.0

0.0
-11.7
0.0

0.0

0.0

1,796.5

2,129.6
-333.2
0.0

12

3,032.3

543.1

0.0

0.0

-543.1

0.0

0.0
-2,179.3
0.0

0.0

0.0

1,636.3

2,000.1
-363.8
0.0

13

3,278.9

0.0

0.0

44.0

246.6

0.0

0.0
-2,023.6
0.0

0.0

102.6

2,167.6

2,746.9
-432.7
-146.6

14

71

3,487.6

0.0

0.0

18.1

208.6

0.0

0.0
-1,867.9
0.0

0.0

42.2

2,034.3

2,561.4
-466.8
-60.2

15

Retained Cash Used

for Capex
Equity Drawn to
Clear Deficits
Retained Cash Used
to Clear Deficits
Cumulative Cash
Balance

Annual Cash
Surplus / Shortage

3,651.4

0.0
0.0
0.0

268.0

0.0

0.0

0.0

0.0

268.0

0.0

41.4
0.0
0.0

0.0

0.0
0.0
0.0
-46.8

-232.9

0.0

314.7

367.6
-52.9
0.0

8,752.9

-12,212.9

Net Project
Cashflow

LT Loans
LT Loan
Arrangement Fee
ST Loans
LT Debt Service
ST Debt Service
Equity Drawn for
Capex

0.0
-41.4
-12,171.5

Revenues
Operating Costs
Capital Expenditures

0.0

108.1

2,759.6

159.8

-3,027.6

0.0

0.0
-3,608.2
0.0

0.0

372.9

207.8

819.3
-78.8
-532.7

0.0

0.0

2,319.8

0.0

-2,319.8

1,500.4

0.0
-3,350.5
0.0

0.0

3,501.0

-3,970.7

1,146.9
-116.2
-5,001.4

0.0

0.0

2,021.3

0.0

-2,021.3

189.2

0.0
-3,250.7
0.0

0.0

441.4

598.9

1,382.8
-153.4
-630.6

0.0

0.0

3,182.8

0.0

-3,182.8

7.8

0.0
-4,464.4
0.0

0.0

18.1

1,255.6

1,464.4
-182.9
-25.9

153.9

0.0

0.0

0.0

153.9

1,551.3

0.0
-1,699.1
0.0

0.0

3,619.8

-3,318.2

2,100.5
-247.5
-5,171.1

232.7

0.0

0.0

153.9

78.8

89.7

0.0
-1,576.2
0.0

0.0

568.5

996.8

2,099.5
-290.6
-812.1

Figure 11: Sylhet Inc. Cash Flow (Taka millions) (Scenario 1) (Aggressive Case)
0
1
2
3
4
5
6
7
Annual Cash Flows

0.0

232.7

804.7

0.0

-1,037.4

0.0

0.0
-2,865.3
0.0

0.0

0.0

1,827.9

2,165.2
-337.3
0.0

4.8

0.0

0.0

0.0

4.8

0.0

0.0
-1,817.7
0.0

0.0

0.0

1,822.5

2,203.4
-380.9
0.0

637.3

0.0

0.0

4.8

632.5

7.1

0.0
-1,543.6
0.0

0.0

27.7

2,141.3

2,628.1
-447.2
-39.5

10

1,692.7

0.0

0.0

0.0

1,055.5

0.0

0.0
-1,410.8
0.0

0.0

0.0

2,466.3

2,968.6
-502.2
0.0

11

4,225.9

0.0

0.0

0.0

2,533.2

0.0

0.0
-200.9
0.0

0.0

0.0

2,734.0

3,289.2
-555.1
0.0

12

7,245.9

0.0

0.0

0.0

3,019.9

0.0

0.0
-10.9
0.0

0.0

0.0

3,030.8

3,644.4
-613.6
0.0

13

10,595.6

0.0

0.0

0.0

3,349.7

0.0

0.0
-10.0
0.0

0.0

0.0

3,359.8

4,038.0
-678.2
0.0

14

72

14,292.7

0.0

0.0

18.1

3,697.1

0.0

0.0
-9.2
0.0

0.0

42.2

3,664.1

4,474.1
-749.7
-60.2

15

82,753

9,313

-3,543,449

-3,161,508

-82,753

-3,078,755

-2,870,907

-2,870,907

-3,664,375

-3,664,375

-2,454,316

-2,454,316

-792,038

-792,038

-631,583

-631,583

-227,841

-227,841

-44,249

-44,249

267,954

267,954

-3,651,449

-3,651,449

-3,027,589

-267,954

-2,759,635

-3,820,223

-3,820,223

-2,210,423

-2,210,423

-3,190,589

-3,190,589

-1,397,425

153,916

-1,551,341

-10,956

78,761

-89,717

1,037,426

-232,677

-804,750

4,769

4,769

10

625,420

632,505

-7,085

10

1,161,015

1,172,869

-11,854

-1,870,308
24,596,819

None
6.69%

11

1,055,470

1,055,470

11

-403,789

617,758

-1,021,547

2,533,171

2,533,171

12

1,784,751

1,784,751

12

3,019,935

3,019,935

13

-543,058

-543,058

13

3,349,721

3,349,721

14

246,622

246,622

14

15

3,697,103

3,697,103

15

208,629

208,629

73

Calculated as the net cash flow in Year 15 divided by a discount rate of 0.15. Negative residual values indicate that the project owes more money than it is worth at
the end of Year 15
11
Calculated as the net cash flow in Year 15 divided by a discount rate of 0.15. Negative residual values indicate that the project owes more money than it is worth at
the end of Year 15

10

Base Case
Aggressive Case

Figure 15: IRR to Equity Holders 11 (Scenario 1)

Scenario

Base Case
Aggressive Case

Figure 14: Residual Value of Future Cash Flows to Equity Holders after Year 15 (Taka thousands)10 (Scenario 1)
Scenario

Equity
Drawn
Change in
Retained
Cash
Net Cash
Flow

-73,440

-3,543,449

Figure 13: Sylhet Inc. Equity Holder Cash Flow (Taka thousands) (Scenario 1) (Aggressive Case)
0
1
2
3
4
5
6
7
8
9

Equity Drawn
Change in
Retained Cash
Net Cash
Flow

Figure 12: Sylhet Inc. Equity Holder Cash Flow (Taka thousands) (Scenario 1) (Base Case)
0
1
2
3
4
5
6
7
8

-1,210.2
11,672.9

-249.0

11,770.1

9,294.7

-7,780.2

10,379.3
6,695.6

11,375.9
419.9
-2,501.1
9,294.7

9,167.8

-8,517.3

8,118.5
9,566.6

11,180.7
540.0
-2,552.9
9,167.8

13,813.3

-8,391.7

8,974.1
13,230.9

15,496.0
926.6
-2,609.3
13,813.3

14,463.9
838.6
-1,188.3
14,114.2

9,372.1
3,651.4
-1,050.2
11,973.3

8,752.9
3,651.4

-274.3

12,130.1

Debt Outstanding
Equity Subscribed
Undistributed Distributable
Reserves
Total Equity and Liabilities

11,699.9
314.7
-41.4
11,973.3

12,171.5
-41.4
0.0
12,130.1

Net Fixed Assets

Current Assets
Current Liabilities
Total Assets

9,906.2

-7,187.1

10,682.1
6,411.1

11,743.0
740.5
-2,577.3
9,906.2

14,708.3

-7,166.1

11,643.1
10,231.3

16,254.9
1,030.7
-2,577.3
14,708.3

14,737.0

-7,603.0

9,898.3
12,441.7

16,197.7
1,229.4
-2,690.1
14,737.0

13,748.7
937.8
-1,214.6
13,471.9

13,123.6

-9,543.7

6,982.1
15,685.2

14,114.2

-7,070.8

4,707.7
16,477.3

19,945.8
1,853.0
-1,305.4
20,493.4

19,843.0
1,808.9
-1,310.9
20,341.0

13,045.0

-10,242.9

7,655.6
15,632.3

20,493.4

-4,266.8

7,576.6
17,183.7

20,341.0

-4,136.0

7,203.7
17,273.4

Equity and Liabilities

15,512.6
1,281.5
-3,749.2
13,045.0

13,471.9

-7,184.7

3,547.8
17,108.9

Equity and Liabilities

15,165.3
629.0
-2,670.7
13,123.6

Figure 17: Sylhet Inc. Balance Sheet (Taka millions) (Scenario 1) (Aggressive Case)
0
1
2
3
4
5
6
Assets

9,266.2
3,616.9

8,475.6
3,543.4

Debt Outstanding
Equity Subscribed
Undistributed Distributable
Reserves
Total Equity and Liabilities

11,584.7
129.5
-41.4
11,672.9

11,811.5
-41.4
0.0
11,770.1

Net Fixed Assets

Current Assets
Current Liabilities
Total Assets

Figure 16: Sylhet Inc. Balance Sheet (Taka millions) (Scenario 1) (Base Case)
0
1
2
3
4
5
6
Assets

18,433.0

-5,992.9

6,347.8
18,078.1

18,898.2
1,827.9
-2,293.0
18,433.0

13,039.1

-6,630.8

2,333.2
17,336.7

13,033.6
1,163.7
-1,158.2
13,039.1

18,337.4

-3,858.0

4,117.3
18,078.1

17,920.9
1,822.5
-1,406.0
18,337.4

12,391.7

-6,164.3

1,175.0
17,381.0

12,318.4
1,170.1
-1,096.9
12,391.7

17,891.6

-2,932.7

2,739.0
18,085.2

16,983.2
2,180.8
-1,272.4
17,891.6

10

12,823.4

-4,675.1

105.8
17,392.8

11,642.8
1,258.8
-78.1
12,823.4

10

17,202.5

-2,352.0

1,469.3
18,085.2

16,003.2
2,466.3
-1,267.0
17,202.5

11

20,030.2

-3,534.8

5,150.7
18,414.4

18,239.6
1,790.6
0.0
20,030.2

11

17,576.9

-713.8

205.4
18,085.2

15,023.2
2,734.0
-180.3
17,576.9

12

19,040.0

-5,040.2

5,665.8
18,414.4

17,251.9
1,796.5
-8.4
19,040.0

12

17,065.6

-1,044.7

25.1
18,085.2

14,043.2
3,030.8
-8.4
17,065.6

13

16,320.4

-8,314.6

6,220.7
18,414.4

16,241.4
1,636.3
-1,557.3
16,320.4

13

74

16,414.6

-1,687.4

16.7
18,085.2

13,063.2
3,359.8
-8.4
16,414.6

14

16,134.5

-7,045.9

4,766.0
18,414.4

15,377.5
2,314.2
-1,557.3
16,134.5

14

15,859.4

-2,276.3

50.5
18,085.2

12,143.4
3,724.4
-8.4
15,859.4

15

14,964.6

-6,710.9

3,261.2
18,414.4

14,427.3
2,094.6
-1,557.3
14,964.6

15

75