Bangladesh to Establish Military Economic Zone in Mirsarai Amid Strategic Shift in Investment Policy
Bangladesh has taken a significant step in reshaping its economic landscape with the decision to establish a Military Economic Zone (MEZ) within the National Special Economic Zone (NSEZ) in Mirsarai, Chattogram. Approved at a high-level governing board meeting chaired by Chief Adviser Professor Muhammad Yunus, the new zone will repurpose around 850 acres of land originally set aside for an India-Bangladesh government-to-government (G2G) economic zone that was cancelled last year.
This initiative marks a strategic shift toward diversifying industrial activities, boosting defence-related production capacity, and attracting domestic and foreign investment into sectors of emerging global importance.
Repurposing Land for New Strategic Objectives
At the heart of the plan is the decision by the Bangladesh Investment Development Authority (Bida) and the Bangladesh Economic Zones Authority (Beza) to convert the previously vacant land into a specialised defence-oriented economic zone. The area was originally earmarked for an Indian Economic Zone under a G2G framework, but that project had been discontinued, leaving the land available for alternative development.
Chowdhury Ashik Mahmud Bin Harun, the executive chairman of Bida and Beza, explained that the governing board made a policy decision to include the site in the authority’s long-term master plan as a defence industrial park, noting that “the Indian Economic Zone has been excluded from the government-to-government framework, leaving the land vacant. The proposed Military Economic Zone will be developed on around 850 acres of land at the site.”
The move comes as Bangladesh seeks to build deeper industrial capacity and strengthen its role in producing defence-related goods, particularly as global demand for such products continues to evolve.
A Defence Industrial Park With Broader Economic Ambitions
The proposed Military Economic Zone is intended to focus on the manufacturing of defence and military-related equipment. Officials have highlighted that discussions on building capacity for domestic arms and military production have been ongoing and that the current global context, with heightened demand for defence supplies, offers potential economic and strategic opportunities.
“This is an area where Bangladesh can begin participating and start work,” Ashik said at a press briefing, adding that the country has recognised the importance of domestic production capabilities for basic military items. “In many recent wars, it has been seen that the shortage is not in high-technology items; the shortage is often in bullets, tank axles, and similar essential components.”
The idea is not to pivot Bangladesh into high-end defence manufacturing overnight, but rather to cultivate foundational industries that can support national requirements and potentially develop into export-oriented sectors in the longer term.
Strategic and Economic Rationale
The establishment of an MEZ represents both economic and strategic considerations:
1. Strengthening Domestic Capability
By domesticating certain aspects of defence production, Bangladesh can reduce reliance on imports for essential military goods and build resilience in national supply chains. This objective aligns with broader global trends, where countries seek to enhance self-sufficiency in defence manufacturing.
2. Attracting Foreign Investment
Officials have indicated that several countries have shown interest in the project, although specific investor identities are being kept confidential due to security considerations. Attracting strategic foreign partners could accelerate technology transfer, skills development, and infrastructure growth within the zone.
3. Economic Diversification
The MEZ is part of a broader set of decisions aimed at diversifying Bangladesh’s economic structure and expanding industrial capacity beyond traditional sectors. Defining a zone focused on defence manufacturing complements other investment initiatives and signals a willingness to explore non-traditional pathways to economic growth.
Broader Policy Decisions at the Beza Governing Board Meeting
The decision to establish the Military Economic Zone was one of several major policy directions endorsed at the meeting. Officials also approved:
A cashback incentive of 1.25% on foreign direct investment (FDI) brought in through expatriate Bangladeshi networks, aimed at leveraging global diaspora connections to attract investment.
Allowing economic zones within municipal boundaries, reversing previous restrictions and opening new avenues for industrial development in urban areas.
Exploring a Free Trade Zone (FTZ), potentially the first of its kind in Bangladesh in Anwara, Chattogram, to facilitate duty-free trade and re-export operations. External analysis suggests an FTZ could help integrate Bangladesh more deeply into global supply chains and enhance competitiveness.
Revival plans for Kushtia Sugar Mill land, which would leverage existing infrastructure to bring abandoned industrial areas back into productive use.
Proposals to merge six investment promotion agencies, including Bida, Beza, Bepza, and others to improve coordination and efficiency in Bangladesh’s investment landscape.
Together, these decisions reflect a comprehensive effort to catalyse economic activity, foster investment, and streamline institutional frameworks.
Why Mirsarai is a Strategic Choice
The selection of Mirsarai within the National Special Economic Zone (NSEZ) underscores the area’s strategic importance. The NSEZ itself is one of Bangladesh’s largest and most ambitious industrial developments, spanning tens of thousands of acres along the Dhaka–Chattogram corridor, and intended to function as a globally competitive industrial hub with multimodal infrastructure and significant job creation potential.
By situating a defence-oriented economic zone within this environment, policymakers aim to leverage existing infrastructure, connectivity, and investor interest to accelerate growth. Such clustering of complementary industrial zones can also create ecosystem effects that benefit suppliers, service providers, and export markets.
Challenges and Next Steps
While the concept of a Military Economic Zone offers economic promise, analysts and prospective investors have pointed out several challenges ahead:
Technical and Regulatory Framework
Developing defence production capabilities requires not only land and capital but also technical expertise, regulatory clarity, and long-term planning. Bangladesh will need to establish clear policies governing intellectual property, export controls, safety standards, and quality assurance to attract serious investors and partners.
Integration With National Security Objectives
A defence industrial zone must balance commercial ambitions with national security priorities. Close coordination between Beza, the Armed Forces Division, the Ministry of Defence, and other stakeholders will be essential to ensure that the zone’s development aligns with broader governmental strategies.
Regional and Global Market Dynamics
Export markets for defence equipment are competitive and often influenced by geopolitical considerations. Bangladesh may initially focus on niche areas where it can establish strength such as basic components and materials, while gradually building capacity in more advanced assembly and manufacturing processes.
Defence Industrial Zones and Economic Strategy
Across regions, defense industrial bases often begin with modest capabilities before scaling up into larger manufacturing sectors. Countries like South Korea and Turkey have demonstrated how targeted policy support can grow local defence industries into export-oriented hubs. Bangladesh’s MEZ is still at an early stage, but it reflects broader global recognition of defence as both a security necessity and economic opportunity.
In contrast, Bangladesh’s NSEZ was mainly conceived as a traditional industrial and manufacturing hub, with infrastructure attracting a wide variety of sectors such as textiles, agro-processing, and engineering. The addition of a distinct military industrial component signals a nuanced approach to future economic planning that considers both domestic and global demand dynamics.
Economic and Social Impact Potential
If implemented effectively, the Military Economic Zone could have transformative impacts:
- Job creation across manufacturing, engineering, logistics, and services
- Technology and skill development, especially in high-precision manufacturing
- Increased export potential in defence-related products
- Stronger supply chain resilience through domestic production capabilities
These outcomes align with Bangladesh’s ambition to move up the value chain in manufacturing and diversify beyond commodities and textile-centric exports.
Looking Ahead
The decision to establish a Military Economic Zone in Mirsarai’s National Special Economic Zone marks a new phase in Bangladesh’s economic strategy one that bridges traditional industrial policy with defence-oriented manufacturing and long-term investment planning. By repurposing land from a cancelled G2G economic zone and integrating strategic, commercial, and institutional objectives, policymakers aim to create a platform that supports national security, invites foreign and domestic investment, and fosters industrial diversification.
While challenges remain, particularly in regulatory frameworks, investment attraction, and defence-industry integration, the MEZ has the potential to become a cornerstone of Bangladesh’s future economic landscape. As implementation begins, stakeholders across government, industry, and global markets will be watching closely to see how this initiative unfolds and contributes to the country’s economic transformation.
