9 foreign cos willing to invest Tk6,250cr in farm mechanisation

Nine foreign companies have expressed interest in investing around Tk6,250 crore in manufacturing farm machinery in Bangladesh, a move experts say will contribute to agricultural modernisation and economic growth.

These companies have already submitted proposals to the Bangladesh Investment Development Authority (Bida) and applied to the Office of the Registrar of Joint Stock Companies and Firms (RJSC) for permission to start operations in the country.

According to RJSC sources, four Chinese companies are willing to invest Tk700 crore, Tk1,200 crore, Tk1,000 crore, and Tk600 crore, respectively.

Two Japanese companies intend to invest Tk800 crore and Tk350 crore, while two Korean companies Tk550 crore and Tk650 crore each. Additionally, a Taiwanese company is looking to invest Tk400 crore.

Sheikh Shoebul Alam, the registrar of the RJSC office, told The Business Standard (TBS) that the applications of these foreign companies have been submitted this year and are currently under review. Their proposals will be approved following due process, but it requires time.

"The growing agricultural economy is attracting foreign companies willing to invest in the manufacture of farm machinery and equipment," he added.

According to RJSC office documents obtained by this newspaper, one of the nine companies, a Chinese firm called Juhachun Ltd, initially intends to invest around Tk1,200 crore.

Foysal Shaheed Sumon, the Bangladesh coordinator of the company, stated that Juhachun manufactures about eight types of agricultural machinery and machine parts.

They have sought a three-acre site in an economic zone near Dhaka. If all the procedures are completed, it will be possible to start the construction of the factory early next year and commence production by the end of that year or early 2025, employing about 500 people.

According to Foysal, the Chinese company will not only supply its items locally, but countries like India, Pakistan, Vietnam, Nepal, Sri Lanka, and seven others are planning to import these machines and parts from Bangladesh.

The company will manufacture machinery and equipment such as farming vehicles, tractors, combine harvesters, tractor attachments, ploughs, harrows, fertilizer spreaders, seeders, balers, and wagon trailers.

An RJSC office source stated that eight out of the nine companies have planned to supply machinery and components in Bangladesh and also export to various countries.

BIDA officials mentioned that five of these companies have already requested allotment of space in different economic zones to set up factories, while the remaining four want to establish factories in areas adjacent to the capital.

However, the sources declined to disclose the full list of the companies.

According to sources in the Ministry of Agriculture and the Department of Agricultural Extension, the Tk11,000 crore annual market of agricultural machinery and parts in Bangladesh is mostly in the hands of foreigners.

Most of the machinery used in agriculture in the country has to be imported, resulting in a significant expenditure of foreign currency each year and adding pressure on reserves.

However, some local companies manufacture a small amount of agricultural machinery.

Khandoker Moynur Rahman, the president of the Bangladesh Agricultural Machinery Merchants Association, told TBS that foreign companies investing in the country's agricultural equipment production is definitely good news. However, the amount of investment is not sufficient to meet local demands.

He also said the country has many small enterprises that can produce good-quality agricultural machinery. The government should provide various facilities for them with special allocation.

Mohsina Yasmin, BIDA executive member, said some foreign companies want to invest in the production of agricultural machinery and they are receiving full support from BIDA.

Another BIDA official told TBS that if these nine companies establish factories in the country and start production, it would create 8,000-10,000 new jobs, contributing to the growth of the local economy.

MA Sattar Mandal, emeritus professor at Bangladesh Agricultural University (BAU), said, "Data indicates that approximately 95% of the land in the country is currently cultivated using agricultural machinery."

Around 90% of pesticide spraying and 75% of crop threshing are done using farm machinery. However, the use of equipment for fertiliser application is only 3%, for planting 1%, and for harvesting 1%. A majority of these equipment needs to be imported from foreign countries, he said.

The professor highlighted that the country relies on imports for 95% of power tillers and tractors, 99% of reapers, all planters, all combine harvesters, and 70% of sowing machines. The country's own manufacturing covers 100% of thresher machines.

MA Sattar Mandal emphasised that producing these equipment in the country would significantly strengthen the agricultural economy. "If these machines are manufactured domestically, they can be purchased at lower prices, leading to a reduction in taxes and VAT. Additionally, the government's revenue will increase."