Honda may invest $60m in motorcycle plant

Bangladesh Honda Private Ltd, a concern of Honda Ltd of Japan, has expressed its interest in investing $60 million in motorcycle manufacturing at a special economic zone in Bangladesh.

The company is currently manufacturing motorcycles under a joint venture with Bangladesh Steel and Engineering Corporation (BSEC), a state-run company, at a rented factory in Sreepur, Gazipur. The factory was set up at an investment of Tk 58 crore in 2013.

“During a visit to our office, Yuichiro Ishi, managing director of Bangladesh Honda Private Ltd, demanded 25 acres of land at any special economic zone near Dhaka,” said Paban Chowdhury, executive chairman of Bangladesh Economic Zones Authority (Beza), which has been working to develop 100 SEZs across the country.

Ishi said they would initially invest $15 million and the rest of the amount would come in phases, according to Chowdhury.

Ishi has already visited two private special economic zones -- Abdul Monem Economic Zone and Meghna Economic Zone -- both of which are close to the capital, Chowdhury said.

Ishi is scheduled to visit Keraniganj SEZ in Dhaka on Thursday to select a site to set up the motorcycle manufacturing plant, Chowdhury said. “If they can decide on a site, we will sign a deal as soon as possible.”

Japanese motorcycle companies are interested in investing in Bangladesh for two reasons -- first, Bangladesh is a good market for them as sales are higher due to a growing middle class. And second, there is a zero-duty benefit on exports, said Chowdhury.

Beza has been working to develop a separate SEZ for Japanese investors, as per a commitment of the Bangladesh government.

During his visit to Bangladesh in September 2014, Japanese Prime Minister Shinzo Abe was assured of a separate SEZ for the Japanese investors in Bangladesh.

“We have already selected 500 acres of land at Araihazar in Narayanganj for a SEZ for Japanese investors. We will gradually expand the area as the number of Japanese investors in Bangladesh is higher compared to other nations,” Chowdhury said.

Imtiaz Hossain Chowdhury, chairman of BSEC, said it would be better for the country if Bangladesh Honda can set up a separate manufacturing plant in the SEZ as the market for the company is increasing with a rise in the number of customers here.

“We do not have a problem if Bangladesh Honda leaves us, as we have been working under a joint venture since December 2013,” Imtiaz told The Daily Star by phone.

In the joint venture, BSEC has a 30 percent stake and Honda has the rest; the company produced 15,000 motorcycles in fiscal 2015-16 and 10,000 in fiscal 2014-15, Imtiaz added.

He, however, said motorcycle sales in Bangladesh have been decreasing every year because of higher prices resulted from rising taxes and supplementary duties on import of motor parts. Higher registration fees also lead to a rise in prices.

Sales declined to below 150,000 pieces a year from 275,000 pieces a few years ago, he said.