Economic Zone Lease in Bangladesh 2026: Utilities, Lender Step-In, Assignment and Exit

Economic zone lease in Bangladesh: the 2026 position

An economic zone lease in Bangladesh is the document that decides whether a factory can be built, financed, sold and, if things go wrong, rescued. Since 20 August 2026 the lessor in a public economic zone is no longer the Bangladesh Economic Zones Authority but Invest Bangladesh, the single agency created by the Invest Bangladesh Act 2026, and the statute that governs allotment, lease and cancellation has changed with it. The headline rent is rarely the point of failure. Possession dates, utility capacity, construction milestones, consent to mortgage, lender cure rights, assignment controls and the price of exit are where projects and loans are won or lost.

This guide covers the three settings investors meet in practice: government zones leased by Invest Bangladesh, private and PPP zones where a licensed developer grants the interest, and BEPZA export processing zones. It explains what to negotiate on title, rent, utilities, milestones, mortgage, step-in, assignment, termination and disputes.

Summary: A zone lease in Bangladesh is granted under section 19 of the Invest Bangladesh Act 2026 and can be suspended or cancelled under section 20 for breach of the Act, the allotment letter or the lease. The Act says nothing about mortgaging the leasehold or lender step-in, so every protection a lender needs, and every exit right an investor needs, has to be written into the lease and a direct agreement before signing.

Key point: The Invest Bangladesh Act 2026 overrides other laws, covers every pre-existing economic zone, lets the Authority recover unpaid dues as public demands and remove and reallocate machinery, and contains no statutory compensation or lender protection for an ordinary zone lessee. Contract is the only safeguard.

At a glance

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Table of Contents

The economic zone lease in Bangladesh after the Invest Bangladesh Act 2026

The Invest Bangladesh Act 2026 is Act No. 104 of 2026, dated 16 July 2026, and it took effect on 20 August 2026 under S.R.O. No. 307-Law/2026.[1] Section 66 repealed the Bangladesh Economic Zones Act 2010, the PPP Act 2015, the BIDA Act 2016 and the One Stop Service Act 2018, and dissolved BEZA, BIDA and the PPP Authority. Invest Bangladesh began operating on 23 August 2026, the first working day after the gazette.[2] New documents should not cite BEZA or the 2010 Act.

The Act uses the Bangla term for "industrial area" rather than "economic zone". Its definition expressly includes every economic zone, free trade zone and private export processing zone that existed before the Act came into force.[1] Section 3 gives the Act primacy over any other law in force. For a zone lessee, that combination matters: where the Transfer of Property Act 1882 or the lease itself conflicts with the Act, the Act prevails. TRW's overview of the Invest Bangladesh Act industrial-area framework covers zone declaration and incentives; this guide concentrates on the lease.

The two sections that govern every zone lease

Section 19 provides that where a person or enterprise has permission to run an industrial project, commercial or service enterprise or approved economic activity in an industrial area, the Authority will allot land, a building, space or floor space on terms it sets, or may grant a lease on a rental or other basis.[1] The allotment is therefore tied to an approval. Lose the approval, and the foundation of the lease is exposed.

Section 20 is the cancellation power. The Authority may suspend or cancel an approval, permit, allotment, lease or tenancy if the holder breaches the Act, rules made under it, or any order or condition of the approval, allotment letter or lease. It may also cancel where land, a building or space is used for anything other than the approved industry, its forward and backward linkage industries or approved economic activity. Section 20(4) leaves the procedure for suspension, cancellation and recovery of arrears of lease money or rent to regulations.[1]

Existing BEZA leases and the rules that still apply

Section 66(2) deems anything done under the repealed Acts to have been done under the new Act, and section 66(3) vests the dissolved authorities' property, rights, debts, liabilities and contracts in Invest Bangladesh. A lease signed with BEZA is now a lease with Invest Bangladesh, without novation. Sections 64 and 65 keep rules and regulations made under the 2010 Act in force until replaced, so far as they do not conflict with the new Act.[1] Any economic zone lease in Bangladesh signed before August 2026 should be re-read against sections 19, 20 and 52 rather than the 2010 Act it cites.

Public zones, private zones and BEPZA export processing zones

Before any commercial term, identify who grants the interest and under what instrument. Section 12 lists the classes of industrial area the government may establish: PPP zones, private zones set up by local, non-resident Bangladeshi or foreign investors, government zones, specialised zones, government-to-government zones, inter-agency zones and free trade zones declared under the Customs Act 2023.[1] Each produces a different chain of title and a different counterparty.

Government zones leased by Invest Bangladesh

In a government zone the Authority is landowner, developer and lessor at once. Section 17 deems land needed for a zone to be needed in the public interest and allows it to be acquired under the Acquisition and Requisition of Immovable Property Act 2017 on the Authority's application.[1] Leases continue to be signed in 2026: in July 2026 a packaging manufacturer signed for a 6.34-acre plot in the National Special Economic Zone for a facility of about US$13.7 million.[9] The advantage of a single counterparty is that consents come from one place. The disadvantage is that the lessor also holds every statutory power under the Act.

Private and PPP zones

In a private zone the developer owns or controls the land and grants the lease or sub-lease. Section 18 lets the Authority appoint developers and operators on terms fixed by rules, and section 20(2) lets it suspend or cancel a developer's permit if the developer cannot perform, ignores government directions, breaches its permit or fails financially.[1]

A unit lessee in a private zone therefore carries developer risk on top of its own: if the developer's permit falls, the lessee needs a contractual route to attorn to the Authority or a replacement developer. In a PPP zone, the PPP contract under section 39 may address rights over the project area, security interests and termination, and those terms flow down to unit leases.[1]

BEPZA export processing zones

BEPZA was not merged. Section 66 does not repeal its statute, and BEPZA continues to allot plots and factory buildings in its own EPZs. Its October 2025 investor brochure describes fully serviced plots leased for 30 years and standard factory buildings leased for two years on a renewable basis, with rents quoted in US dollars per square metre.[7]

On signing an EPZ lease, BEPZA requires a US$500 registration fee and a security deposit of one year's rent for land or four months' rent for a standard factory building, with stamp duty applicable to land leases.[8] BEPZA precedents do not transfer automatically to an Invest Bangladesh zone. Our note on investment approvals across Invest Bangladesh and BEPZA explains the registration routes.

Title, possession and registration

A lease is a transfer of a right to enjoy immovable property for a term in exchange for a premium, rent or both, under section 105 of the Transfer of Property Act 1882. Section 107 requires a lease from year to year, for more than one year or reserving a yearly rent to be made by registered instrument executed by both parties.[3] An unregistered 30- or 50-year zone lease is a weak foundation for a bank's security.

The Act lets the government, by gazette notification, exempt zone developers, operators and enterprises from the Stamp Act 1899 and the Land Development Tax Act 2023, among other laws.[1] That is a power, not an exemption: confirm whether a notification covers the specific zone before assuming no duty is payable.

What the schedule must identify

The schedule should identify the plot by survey and record particulars, with a demarcated site plan showing access, drainage and utility corridors. The investor should see the zone gazette, evidence of acquisition or developer title, the developer's permit in a private zone, and confirmation that no litigation, competing allotment or occupation affects the plot. TRW's guide to lease agreements in Bangladesh covers general drafting points; zone leases add the statutory layer above.

Default rules and their limits

Section 108 of the Transfer of Property Act supplies default terms that apply only in the absence of a contract or local usage to the contrary: the lessor must disclose material defects, put the lessee in possession and allow quiet enjoyment while rent is paid.[3] Authority forms routinely displace these defaults. Section 17(2) of the Invest Bangladesh Act adds a statutory restriction: allotted land may not be used for any purpose other than the one for which it was allotted without the Authority's prior written approval.[1] A change of product line can therefore be a change of use.

Possession should start the clock

Rent, construction deadlines and investment covenants should run from documented handover of vacant, demarcated and accessible land, not signature. The lessee should be able to qualify acceptance if a material item is missing, with a long-stop date and refund if the site is never delivered.

Rent, premium and escalation in an economic zone lease in Bangladesh

Zone rents are usually set in US dollars per square metre, with the level varying by zone and by the degree of development. The tariff structure the BEZA governing body considered in January 2017 ranged from US$0.35 to US$0.80 per square metre for leasing, varied for developed, undeveloped and specialised land, and added a service charge of 10 per cent of utility bills.[12] An earlier 2016 proposal contemplated 50-year land contracts with the rent rate renewable every five years.[14] Those figures are history, but the architecture persists: long term, dollar rent, periodic resets, separate service charges.

The price can move before signing

The risk is not only escalation during the term. In January 2023 garment-accessory makers reported that BEZA had raised the rate for 50-year leases of developed land in the zone now called the National Special Economic Zone from US$0.60 to US$1 per square metre, after applicants had already paid earnest money. BEZA's rules required a deposit of 1 per cent of the lease price to express interest, and the agreement was signed only after 25 per cent of the lease value had been paid.[10] An applicant who pays a deposit without a locked price is exposed to a revised tariff.

Drafting the escalation clause

Rent escalation in an economic zone lease in Bangladesh should be a formula, not a discretion. Workable options are a fixed step schedule, an index-linked increase with a cap, or a periodic review limited to a published tariff that applies to all lessees in the zone. The clause should also fix the currency, the exchange rate for taka settlement, refund of premium on early termination, service charges and the late-payment rate. Section 20(4) leaves the recovery of arrears to regulations, and section 52 makes unpaid dues recoverable as public demands, so payment discipline is not optional.[1]

Utilities and infrastructure: from promises to obligations

The Act makes the Authority responsible for developing and monitoring zone infrastructure, and Invest Bangladesh promotes zones for more efficient delivery of utilities.[1] [2] Neither gives a lessee a right to a specific load; the lease must.

Power and gas

The utility schedule should state the committed load, voltage, metering point, energisation date, tariff basis and whether the allocation is firm or subject to system capacity. BEPZA's brochure shows the level of detail that is achievable, specifying an 11 kV, three-phase supply with per-unit tariffs by zone.[7] The Act allows the government to exempt zone enterprises or developers from the Electricity Act 2018 by notification, which can matter for captive generation inside a zone.[1] Gas should be documented by volume, pressure, connection point and interruption rules.

Water, effluent and environmental clearance

Water clauses should distinguish process, potable and firefighting supply; effluent clauses should say who runs the treatment plant, the discharge standard and who bears plant failure. Environmental law is not on the list of laws from which zone enterprises can be exempted. The Environment Conservation Rules 2023 classify industrial units as green, yellow, orange or red and set the route for environmental and location clearance.[13] A lease should never promise that the zone "covers" environmental clearance unless a document from the Department of Environment says so.

Access and common areas

Round-the-clock access for workers, trucks and emergency services is an operating utility, and lenders and valuers need access rights too. Where a delay in power, gas, water or access is attributable to the lessor or developer, rent abatement and an extension of construction milestones should follow automatically.

Construction milestones and the idle-land risk

The Authority has made clear that it expects allotted land to be used. In September 2022 BEZA's executive chairman warned that investors who had not begun work within the time stipulated in their agreements could face action, and that land could not be held idle in the hope of a rise in value.[11] Under the 2026 Act, failure to meet a lease condition is a ground for suspension or cancellation under section 20(1).[1]

Separate mobilisation, foundation, completion, trial production and commercial production, each with objective evidence and a cure period. Extensions should be automatic for delay caused by the lessor, developer, Authority, utility provider, change in law or force majeure. A missed milestone should trigger notice and a recovery plan, not forfeiture, and the lender should receive every such notice. For factories moving into a zone from elsewhere, TRW's note on relocating a factory into a Bangladesh economic zone covers the approvals that run alongside these milestones.

Mortgage of the leasehold and lender security

The general law permits a lessee to transfer or mortgage its interest. Section 108(j) of the Transfer of Property Act says the lessee may transfer absolutely, by mortgage or by sub-lease the whole or part of its interest, but only in the absence of a contract to the contrary.[3] Zone leases almost always contain that contrary contract. Section 59 requires a mortgage securing Tk 100 or more to be made by registered instrument, and a mortgage by deposit of title deeds in favour of a scheduled bank or financial institution must also be registered.[3]

Consent must be express and irrevocable

The Invest Bangladesh Act contains no provision on mortgaging a zone leasehold, no lender notice requirement and no step-in right.[1] The lender's position therefore depends entirely on the lease and the Authority's written consent. The consent should cover a mortgage of the leasehold, hypothecation of plant and machinery, assignment of receivables and insurance, and a pledge of shares; it should extend to security trustees and refinancing lenders; and it should not be revocable after first drawdown. Where an Authority form or a mortgage deed needs countersignature, the lessor should commit to sign within a fixed period. Our guide to mortgage deeds in Bangladesh covers execution and registration.

Enforcement meets the eligibility problem

Under section 12(3) of the Artha Rin Adalat Ain 2003, a bank that took a mortgage with a power of sale must sell, or try and fail to sell, the mortgaged property before suing in the money loan court. Sections 12(5) and 12(5A) let it demand possession and, if refused, ask the District Magistrate to deliver possession.[4] In a zone, that sale runs into section 19: the Authority allots only to a person with permission to operate in the zone.[1] A purchaser who is not approved acquires nothing usable. The lease must therefore pre-agree a route for an enforcement transfer to a qualified purchaser, with a timetable for the Authority's decision.

The Authority's statutory claims

Section 52 gives the Authority special rights that cut across private security. Unpaid dues, fees, service charges and compensation are recoverable from the enterprise as public demands under the Public Demands Recovery Act 1913, and the Authority may proceed against owners and directors under the contract. If dues remain unpaid, it may remove the enterprise's machinery, equipment, raw materials or other goods and, after valuation, allot them to another enterprise.[1] A bank holding hypothecation over that machinery needs a contractual commitment that the Authority will notify it first and give it a chance to pay arrears and protect its collateral.

Lender step-in and the direct agreement

There is no statutory step-in right in any economic zone lease in Bangladesh. Step-in is contractual, usually through a tripartite direct agreement among the Authority or developer, the lessee and the lender. A direct agreement cannot remove the section 20 power, but it can bind the Authority, as a contracting party, to a process before it acts.

What the direct agreement should contain

At a minimum: consent to creation and enforcement of security; copies to the lender of every default, suspension, cancellation and rent notice; a cure period for monetary defaults and a longer one for non-monetary defaults while the lender is diligently enforcing; a standstill on cancellation during that period; access for inspection, valuation and protection of assets; the right to appoint a receiver, nominee or substitute operator; transfer of the lease to a qualified substitute lessee on objective eligibility criteria; and a clean-start rule so the substitute takes the lease subject to rent and obligations but not to the original lessee's unrelated liabilities.

PPP and developer zones

In a PPP-developed zone, section 39(3) lets the PPP contract address security interests, rights over the project area and termination, so the lender's protection should start in that contract and flow down.[1] Section 41(3) requires the contracting authority's prior approval for material changes to the project company's constitutional documents, which affects share enforcement. In a private zone, the Authority should agree to recognise unit leases if the developer's permit is cancelled.

Assignment, change of control and subletting

Zone leases typically prohibit assignment, subletting and change of control without consent, which bites on a reorganisation, a sale and a lender enforcement. Negotiate pre-approved transfers to affiliates, an objective test for consent to third-party transfers, a deemed-consent mechanism if the Authority does not respond within a fixed period, and confirmation that a share pledge and its enforcement do not count as a prohibited change of control.

Two statutory points sit above the contract. First, section 17(2) and section 20(3) mean an assignee must use the land for an approved purpose, so a transfer to a buyer in a different industry also needs a change-of-use approval.[1] Second, section 59 allows the government to transfer an industrial area, or an enterprise in it, from the Authority to another authority or agency for development and management.[1] The lease should state that it binds any successor lessor and that consents already given survive a transfer of the zone.

Termination, cancellation and compensation

Termination of an economic zone lease in Bangladesh should be analysed as a waterfall rather than a single clause. Give each lessor ground (non-payment, unauthorised transfer, insolvency, failure to build, prohibited use, loss of approval) its own notice, cure and consequence. For the lessee, provide exits for non-delivery of the site, failure of utilities by a long-stop date, withdrawal of an approval and a change in law that makes the project unlawful.

What the general law adds

Section 111(g) of the Transfer of Property Act ends a lease by forfeiture where the lessee breaks an express condition that allows re-entry. Section 114 lets a court relieve a lessee against forfeiture for non-payment of rent if it pays the arrears, interest and costs. Section 114A bars a suit for ejectment for breach of other express conditions until the lessor serves written notice identifying the breach and the lessee fails to remedy it within a reasonable time, though it does not apply to conditions against assignment or subletting or to non-payment of rent.[3]

How far these provisions survive against the Authority's section 20 power, given section 3, is untested; the safer course is to write equivalent notice and cure steps into the lease.

Compensation is not automatic

The Act provides no general compensation when a zone lease is cancelled. Its only compensation mechanism of this kind sits in section 49, for transfers of state-owned enterprises and their unused land, where on surrender the government adjusts for damage and pays the transferee the value of the assets under the contract.[1] An ordinary zone lessee has no equivalent. The lease must therefore define what is paid on each termination scenario: the basis of valuation (cost, depreciated replacement cost, independent fair value or formula), the valuation date, permitted deductions for arrears and restoration, the payment deadline, and payment into the lender's secured account.

Buildings, machinery and handback

Section 108(h) lets a lessee remove things it has attached to the earth while still in possession, provided it leaves the property as it received it.[3] A zone lease can and usually does modify that rule. Agree which improvements stay, which plant can be removed, the removal window, closure standards and any lessor purchase option; otherwise section 52 and a generic handback clause decide the fate of the plant.

Dispute resolution under an economic zone lease in Bangladesh

Contractual disputes will usually fall within the Commercial Courts Act 2026, Act No. 23 of 2026, which lists agreements relating to immovable property used for trade or business among the commercial disputes it sends to the specialist Commercial Courts.[5] Construction and infrastructure contracts, and disputes about arbitration agreements and awards under the Arbitration Act 2001, are also listed. Our analysis of the Commercial Courts Act explains procedure and timelines.

Arbitration and the statutory overlay

Arbitration is available only if the lease contains an arbitration agreement; the Arbitration Act 2001 then governs an arbitration seated in Bangladesh and the enforcement of foreign awards.[6] For PPP contracts, section 42 of the Invest Bangladesh Act prescribes a ladder of mutual settlement, then a neutral expert mediator, then arbitration seated in Dhaka unless the parties agree otherwise in special cases, and bars recourse to court before the ladder is used.[1] That ladder does not apply automatically to a unit lease, so an investor who wants arbitration must ask for it. See TRW's guide to arbitration clauses in Bangladesh for drafting.

A cancellation under section 20 is an exercise of statutory power by a public body. Its lawfulness, including whether the procedure in the regulations was followed, is ordinarily tested through the writ jurisdiction of the High Court Division rather than in arbitration. Section 58(2) adds that no allotment letter, lease or developer agreement may contain a condition inconsistent with labour, health, safety or child-labour law.[1]

A negotiation sequence that protects investor and lender

Run the lease, the approvals and the financing as one workstream. The sequence below ensures that nothing a lender needs is left for a post-signing side letter.

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Mistakes to avoid

Paying earnest money without a locked tariff. Accepting rent from signature rather than handover. Relying on section 108(j) when the lease prohibits mortgage. Assuming a BEPZA precedent works in an Invest Bangladesh zone. Treating a utility brochure as a capacity commitment. Leaving the lender's direct agreement until after first drawdown. Citing the repealed 2010 Act in a new document. Each can be fixed before an economic zone lease in Bangladesh is signed; almost none can be fixed after. TRW's industrial parks, economic zones and manufacturing facilities practice reviews zone leases, direct agreements and security packages for investors and banks.

Frequently asked questions

Who is the lessor in a Bangladesh economic zone in 2026?

In a government zone, Invest Bangladesh. The Invest Bangladesh Act 2026 dissolved BEZA from 20 August 2026 and vested its property, rights and contracts in the new Authority. In a private or PPP zone the developer usually grants the lease under a permit from the Authority, and in an EPZ the lessor is BEPZA.[1] [2]

Are leases signed with BEZA still valid?

Yes. Section 66 deems acts done under the repealed 2010 Act to have been done under the 2026 Act and treats BEZA's contracts as contracts of Invest Bangladesh. The lease is now read subject to the new Act, including its cancellation and recovery powers.[1]

Can an economic zone lease in Bangladesh be mortgaged to a bank?

Usually, but only with the lessor's consent. Section 108(j) of the Transfer of Property Act allows a lessee to mortgage its interest unless the contract says otherwise, and zone leases generally restrict it. The Invest Bangladesh Act is silent, so obtain express, irrevocable written consent and register the mortgage.[3]

Does a lender have a statutory right to step in?

No. The Act contains no lender notice, cure or step-in provision. Those rights exist only if a direct agreement with the Authority or developer creates them, covering notice of default, a standstill on cancellation, cure periods and transfer to a qualified substitute lessee.[1]

When can Invest Bangladesh cancel a zone lease?

Under section 20, for breach of the Act, its rules, or any order or condition of the approval, allotment letter or lease, and where the land is used for anything other than the approved industry or activity. The procedure is to be set by regulations.[1]

How is rent set and can it increase?

Rent is generally fixed in US dollars per square metre by zone tariff. Tariffs have been revised in the past, including an increase reported in 2023 for applicants who had already paid deposits. Negotiate a locked price at deposit stage and an escalation formula with a cap.[10] [12]

Is compensation payable if the lease is cancelled?

Not under the Act for an ordinary zone lessee. Compensation exists only if the lease provides it. Define the valuation basis, deductions, timing and payment to the lender's account for each termination scenario.[1]

How does a BEPZA lease differ from an Invest Bangladesh zone lease?

BEPZA was not merged and leases under its own statute. It typically leases serviced plots for 30 years and factory buildings for two renewable years, and requires a US$500 registration fee and a security deposit of one year's rent for land.[7] [8]

Which court hears a dispute under a zone lease?

Contract disputes over immovable property used for business fall within the Commercial Courts Act 2026, unless the lease has an arbitration clause. A challenge to a statutory cancellation is ordinarily brought in the High Court Division's writ jurisdiction.[5] [6]

Can the Authority take machinery for unpaid dues?

Yes. Section 52 lets it recover dues as public demands and, if dues remain unpaid, remove machinery, equipment and raw materials and allot them to another enterprise after valuation. Lenders with hypothecation should secure prior notice and a right to cure.[1]