Bangladesh Economic Zone Authority (BEZA) will sign a joint venture agreement with Sumitomo Corporation of Japan for development of the proposed economic zone, official sources at BEZA said.
According to them, the new economic zone will be developed on 1,000 acres of land of which the government has already acquired 500 acres in phase-1 while the remaining 500 acres are under the land acquisition process as part of phase-2.
The location of the economic zone is 37 km away off Gulshan in the capital and it will be named as Bangladesh Special Economic Zone (BSEZ).
The sources said 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 counter visit to Bangladesh in September the same year.
The Executive Committee of the National Economic Council (Ecnec) has already approved a Tk 2582.17 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 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.