Prime Minister Sheikh Hasina has approved a joint venture investment proposal with Japanese automobile giant Honda, a high official at the Prime Minister's Office (PMO) said. The new automobile venture will be registered as 'Bangladesh Honda (Pvt) Ltd'.
It is aiming to assemble 10,000 motorcycles with an engine capacity of 100cc in the first year, 35000 pieces in the second and 70,000 pieces in the third year of operation, said a high official in the Ministry of Industries (MoI).
The initial investment for Bangladesh Honda (Pvt) Ltd has been estimated at Tk 610 million.
Bangladesh Steel and Engineering Corporation (BSEC) under the MoI is the local partner of the joint venture entity. Of the total investment, BSEC will own 30 per cent stake, while Honda will own 70 per cent in the project.
"With the approval from Prime Minister Sheikh Hasina, formalities like registering the new venture with the Board of Investment (BoI) and other agencies will be completed soon," the senior official in the MoI told the FE.
The Japanese company was looking for a local partner over the last few years, but they were not convinced about the possibility in the private sector. In 2009, they had proposed to the government for setting up a joint venture, he said.
He said the interest of Honda for Bangladesh was triggered by the huge demand for motorcycles in the country, which is now about two lakh a year.
Generally, Honda sets up a plant in a country, where 50,000 motorcycles are sold annually. But, in Bangladesh the annual sale of motorcycles is about two lakh, he added.
The local light engineering sector would be immensely benefited with the beginning of the production from the joint venture plant, business people said.
According to the approved proposal, a five-member board of directors will be formed with three members from the home side and two from Honda. The chairman of the joint venture company will be appointed from the three directors on the Bangladesh side, while Honda will nominate the managing director for the joint venture from their two directors.