The decision was taken at the 12th meeting of the Private EPZ Board of Governors chaired by Prime Minister Khaleda Zia at her office (PMO). The board last met in April 2003.

The KEPZ authorities will be formally informed of the decision soon. And they will have to deposit $100,000 as licence fee, instead of the previously fixed $20,000, the sources said.

Between 1999 and 2003, the KEPZ spearheaded by Korean company Youngone had invested about Tk 100 crore to procure 2,500 acres of land for the export zone and develop it. But the BNP-led alliance government declined to give it operating licence without any explicit reasons.

Sources said the PMO decided to review the KEPZ case last month, considering that the investors have already suffered a lot and that there is no clear reason for not awarding it operating licence.

The KEPZ with its size and investment profile stands out from all the EPZs in the country. It plans to install 500 industrial units with an investment of $1billion. KEPZ sources said they plan to set up a whole range of garments and textiles units plus electronics, software, scientific and optical tools, machine tools, automotive parts and other units there. To build its infrastructure, Youngone will separately invest $200 million.

"When we will be formally informed of the decision, we expect to bring in investors immediately and start export from the zone within two years," said a KEPZ source requesting anonymity.

The KEPZ would directly employ about 100,000 people and indirectly another 200,000 people.

After coming to power in 2001, the BNP-led four-party coalition government started viewing the KEPZ as a 'political beneficiary' of the previous Awami League (AL) government although the process of setting up the KEPZ started back in 1995 under the previous BNP government.

From early 2002, the PMO formed several committees to look into 'irregularities' in the KEPZ and the private EPZ Act that was framed during the AL rule. The first committee verbally asked the KEPZ authorities why they needed an area as huge as 2,500 acres and hinted that they could do away with 500 acres.

Then in November 2003, a high-powered committee headed by the principal secretary recommended that there is no need to change the Private EPZ Act and said, 'in the interest of national image and foreign investment', the KEPZ should be allowed to function without any delay.

Despite this, the issue remained nearly shelved while the KEPZ authorities kept on requesting the government to issue operating licence. At one stage, a powerful minister's son approached the KEPZ authorities indicating that he can resolve all the troubles for a 'fee' of $ 3 million.

Between 2002 and 2006, many foreign investors visited the KEPZ site expressing their interest to invest there. Youngone group on the other hand diverted more than $40 million, earmarked for investment in the KEPZ, to Vietnam, China and India.

Youngone started its operation back in 1978 in Bangladesh and grew into a massive company through its operations here. It made 25 percent investment in five EPZs of the country with its 17 units employing more than 36,000 people. Youngone's annual exports from Bangladesh are worth about $400 million.

KEPZ overview
The KEPZ was conceived during Khaleda Zia's visit to South Korea as prime minister of the previous BNP government in 1995.

After the change of government in 1996, Youngone applied for 2,700 acres of land by the Karnaphuli river opposite to Chittagong airport at a hilly location, and the land ministry in November 1996 approved 2,526 acres. Of this, about 1,700 acres belong to the government and the rest to individuals.

Side by side, the government approved the Private EPZ Act. And the KEPZ was registered as a company in 1996.

More than 60 percent of the site land consists of hills and ditches and 40 percent are usable for industrial establishments. The other EPZs like Chittagong and Dhaka EPZs are neither a model for the KEPZ nor have the same strategic location.

Both the CEPZ and DEPZ are set up on plain land and are well connected to the cities. The KEPZ is situated in an environmentally sensitive area beside the Karnaphuli river. The CEPZ and DEPZ accommodates only industrial units whereas the KEPZ layout consists of dorms, recreational facilities like golf course, school, training centres, convention centres and guest house. Unlike other EPZs, it will accommodate 100,000 people.