Major trading house Sumitomo Corp. will manage a special economic zone financed by Tokyo and expected to open near the Bangladesh capital, Dhaka, in early 2022, according to the Japan International Cooperation Agency (JICA), the government’s development aid arm.
Land reclamation for the economic zone is scheduled to begin in Araihazar, about 30 kilometers from Dhaka, in September, according to Hitoshi Hirata, head of the Bangladesh office of JICA, who spoke at an investment seminar in Tokyo on Wednesday.
Sumitomo will establish a special-purpose company with the Bangladesh Economic Zones Authority to draw tenants from Japan and run the 300-hectare industrial park, set to be developed in two phases, he said.
The initial phase, scheduled to be completed in the first half of 2022, will involve the development of land lots totaling 100 hectares for sale to Japanese companies, Hirata said.
A Sumitomo spokesman declined to comment, but the trading giant is expected to confirm the move after the establishment of the joint venture in May, a source familiar with the situation said.
The economic zone development will include a 46,000-kilowatt gas-fired power plant, a substation, gas pipelines and a cable telecommunication network. Dhaka will cooperate with Japanese representatives to facilitate swift approval of various applications for local operations, Hirata said.
Japan’s government will provide a low-interest loan for the project, but it is unclear how much this will cover of the total cost, expected to be fixed around June, according to Yumiko Horiwaki, a JICA spokeswoman, who responded to an email inquiry on Friday.
In 2015 the two countries signed a soft loan of up to ¥133.3 billion ($1.2 billion) for six economic development plans for the developing South Asian nation, including one aimed at facilitating foreign direct investment by setting up the economic zone with a loan of ¥15.8 billion, according to JICA.
JICA expects the zone to attract firms from the motorcycle, automobile, home appliance, food processing and electrical equipment sectors, Horiwaki said.
Bangladesh depends heavily on clothing for its exports, with the sector accounting for more than 80 percent of the total in the fiscal year to June 2018, according to Dhaka’s Export Promotion Bureau.