In a rare move the government on Wednesday approved a proposal that would enable Akij Group to invest $20 million in Malaysia.
The cabinet committee on economic affairs on the day at a meeting, presided over by finance minister AMA Muhith, approved the proposal put forward by the Financial Institutions Division to open the overseas investment opportunity against the backdrop of poor private investment in the country.
The approval has created scopes for Akij Group which produces from matches to cigarettes, beverage to cement and particle board to ceramic to become the first local company to make investment abroad.
Under the current Foreign Exchange Regulation Act, overseas investment is not permitted for resident Bangladeshis.
As the government policymakers have been suggesting that they would relax the rule and allow investment abroad by local companies on case to case basis, the approval to Akij would encourage many other local companies to lobby the government to get permission for their overseas investment pleas.
Additional secretary Mustafizur Rahman told reporters after the meeting that Akij Group’s subsidiary Akij Resources SDN BHDR was given approval to invest $20 million in Malaysia from the export retention quota of another subsidiary of the Group, Akij Jute Mills.
The investment would enable Akij to acquire Malaysian fibreboard manufacturing firm Robin Resources and its subsidiary Robina Flooring.
Akij Group managing director Bashir Uddin told New Age that his group would utilise the opportunity to become the first local company to go global.
Though the issue is very challenging, Akij has already gained experiences to run overseas venture, he said.
In May, the same cabinet committee sent back Akij’s proposal along with two other investment proposals by Ha-Meem Group ($10.44 million in Haiti) and Nitol-Niloy Group ($7 million in Gambia).
The companies’ managements were asked to submit their proposals again with further details like job employment opportunity and repatriation of profit.
In its re-submission, Akij said the company could make $83.06 million in 10 years from the purchase of the Malaysian firm.
The company also said it could repatriate $29.90 million from the overseas equity investment within the time frame.
Earlier, the proposal was examined by a Bangladesh Bank committee called the Performance Evaluation Committee. The committee gave opinion in favour of the proposal although BB officials had initially opposed the move.
The PEC report calculated that Akij Group could return its investment of $20 million within three years after the acquisition of Robin Resources.
Robina Flooring made a profit of $7.84 million in 2016 by sending its products to major countries in Asia and Europe, said Akij Group officials.
Akij’s investment will be highest overseas investment from Bangladesh as six companies, three of which hail from the health sector, earlier invested $9.1 million in total in six countries between 2013 and March 2016.
Source: New Age