Bangladesh Economic Zones Authority (BEZA) on Sunday signed a joint venture agreement with Sumitomo Corporation of Japan for the development of an exclusive economic zone for Japanese investors. According to the plan, the economic zone will be set up at Araihazar upazila in Narayanganj alongside Dhaka-Sylhet Highway.
The signing ceremony took place at Hotel Inter Continental Dhaka on Sunday. The location of the economic zone is 37 kilo metres from Gulshan in the capital and it will be named as Bangladesh Special Economic Zone (BSEZ). BEZA General Manager Md Shohelur Rahman Chowdhury and Sumitomo Corporation General Manager (Logistics Infrastructure Business Division) Yasushi Fukuda signed the agreement on behalf of their offices.
Prime Minister’s Principal Secretary Md Nojibur Rahman attended the signing ceremony as chief guest, while Md Abul Kalam Azad, principal coordinator (SDG affairs), Takheshi Ito, minister at Japanese embassy in Bangladesh, Yoshibumi Bito, senior representative of JICA Bangladesh Office and Yasushi Fukuda, general manager, Sumitomo Corporation were present as special guests. BEZA Executive Chairman Paban Chowdhury chaired the event.
According to the agreement, the Sumitomo Corporation will have 76 percent stake while the remaining 24 percent will be held by BEZA. According to sources, the government has already acquired 500 acres of land for the proposed 1000-acre economic zone, while the remaining 500 acres are under the land acquisition process.
Speaking on the occasion, Nojibur Rahman said, “The establishment of the special economic zone opens up new horizon of Japanese investment in the country.” The move will also bring in a new era of friendship between the two countries, he said, adding, this initiative would boost up confidence in investors and would augment the brand image of Bangladesh in improving investment climate.
Meanwhile, BEZA Chairman Paban said, “Establishment of an economic zone for Japan is a great move, which will prove that Bangladesh is a lucrative place for foreign investors.” The project will be implemented by June 2023, he added. The proposed economic zone is being developed exclusively for Japanese investors as the follow-up of a decision taken during Prime Minister Sheikh Hasina’s visit to Japan in May 2014 and Japanese Prime Minister’s subsequent visit to Bangladesh in September the same year.
The Executive Committee of the National Economic Council (ECNEC) has already approved a Tk 2,582.17-crore project to this end and Japanese multilateral donor Japan International Cooperation Agency (JICA) is financing the project. When BEZA moved to develop the project following the ECNEC approval, JICA advised it to invite expression of interest from experienced Japanese investors to develop the proposed economic zone. Especially, the officials said, those Japanese firms were invited for the project which have vast experiences to develop such projects.
Leading Japanese firm Sumitomo Corporation responded to the BEZA’s invitation and came up with its own proposal to develop the economic zone. At one stage of the negotiation between the BEZA and Sumitomo, both signed a memorandum of understanding (MoU) to move ahead with the project under a joint venture.
After long negotiations, now both the sides—BEZA and Sumitomo—have decided to form a joint venture company which is known as a special purpose company (SPC) to develop the economic zone in joint venture. BEZA officials said the SPC will mainly be appointed to develop the proposed economic zone after a tripartite agreement between BEZA, Sumitomo and SPC.
In the proposed SPC, the Sumitomo Corporation will have 76 percent stake while the remaining 24 percent will be held by BEZA. Government document in this regard shows that the BEZA and Sumitomo have already prepared a joint venture agreement (JVA) for the project. When it was sent for vetting to the law ministry, BEZ was advised to ensure rationalisation of risk-sharing factor.
“The sharing of risk between the two parties should be rational and be based on their risk-sharing capacity,” the Law Ministry said in its vetting. Following the advice, BEZA amended the draft JVA agreement which was placed at a meeting of the Cabinet Committee on Economic Affair (CCEA) on May 22. The committee has approved in principle the BEZA proposal which was placed by the Principal Secretary of the Prime Minister’s Office as BEZA is under the PMO.
BEZA officials said they will now move on to sign the JVA with Sumitomo Corporation once the CCEA is approved.
According to BEZA, Japan International Cooperation Agency will lend Bangladesh about Tk 1,000 crore at a concessional interest rate to establish the zone.
Sumitomo Corporation will invest about Tk 600 crore and would get it back from investors. It has built and continues to run economic zones in the Philippines, Indonesia, Myanmar, and Vietnam and the SEZ in Bangladesh would be its fifth project, according to media reports.
A survey of Japan External Trade Organization (JETRO) shows that 70 percent of Japanese companies expressed interest to expand their presence in Bangladesh in the next one year and around 60 percent in the next two to three years. The number of Japanese companies operating in the country was 183 in 2014 and it went up to 223 in 2015, 245 in 2016, 260 in 2017, and 269 in 2018, according to the survey.
