Japan's Nippon Steel has formed a joint venture company with Bangladesh's McDonald Steel Building Products Ltd to set up an import substitute plant in the Mirsarai Economic Zone in Chattogram.
Initially, the two companies have agreed to invest $59.19 million, or nearly Tk 500 crore, to establish the plant.
“We will manufacture basic steel products like galvanised steel, steel sheets and pre-fabricated steel,” said Mohammad Sarwar Kamal, managing director of McDonald Steel.
Bangladesh Economic Zones Authority (Beza) yesterday signed an agreement with the joint venture to lease out 100 acres of land in the economic zone for the plant.
Md Harunur Rashid, executive member for investment promotion of the Beza, and Kamal signed the agreement at the Beza conference hall in Dhaka.
McDonald Steel produces pre-fabricated structural steel. It imports quality products from Japan, Luxembourg, China and India.
According to the Beza, the joint venture will start the development work of the project in December 2018 and it will be completed within 730 days.
Kamal said the manufacturing units would source 50 percent of the raw materials from local sources. The plant will create about 2,500 jobs directly.
The venture plans to sell $13.67 million-worth steel products in the local market every year. Some 20 percent of the total output will be exported to South Asian countries.
The Beza has received investment proposals involving more than $12 billion for Mirsarai Economic Zone, he said, adding that the government was ready to provide security to Japanese investors.
Kago Taiki, acting country representative of Japan External Trade Organisation, said there were 269 Japanese companies present in Bangladesh manufacturing export-oriented products.
He hoped that the number would increase in the future.
Ishtiak Ahmed, a former environment and forest secretary, said the joint venture indicates that a climate for foreign investment prevails in the country. “So, Japanese investors are keen to invest in Bangladesh.”