Industrial conglomerate Akij Group is likely to get permission to invest US$20 million in Malaysia from its exporter's retention quota, officials said.
The central bank recently forwarded a proposal in evaluation committee (PEC) report to the finance ministry for a decision regarding Akij Group's plea to make equity investment abroad, at the first go.
Now the financial institutions division, under the ministry of finance, is scrutinising the central bank's report before providing the go-ahead to Akij, sources said.
With $20 million worth of equity investment the Bangladeshi conglomerate wants to acquire Robin Resources (Malaysia) Sdn Bhd by taking $60 million more loans from abroad.
The company will produce fibreboard and wood-based products there and export to various countries. According to the central bank's PEC report the Malaysian Robin Resources Sdn Bhd is a profitable company and provided 10 per cent, 20 per cent, and 82 per cent dividend to shareholders during 2014, 2015, and 2016 respectively.
According to the last audited financial report the earning per share of the company is $0.13. The company may earn some $83.06 million as profit over next 10 years and the Akij Group has pledged to repatriate $29.90 million during the period.
The central bank suggested submitting the proposal before the cabinet committee on economic affairs for its consideration.
However, the PEC set some conditions against making equity investment which include 100 per cent repatriation of profit in the form of dividend, taking prior permission from the central bank in case of reinvestment of earnings/dividends/sale proceeds of shares/residual amount in case of liquidation, and prior permission from Bangladesh Bank in case of share transfer or the winding up of the company.
The central bank also made compulsory employment creation for Bangladeshi nationals in the proposed company, and asked for following zero-tolerance policy in case of money laundering and terror financing.
Earlier, a cabinet meeting, chaired by finance minister AMA Muhith, in mid-May decided in principle to allow Bangladeshi investments abroad amid a strong plea made by several companies.
Before that the Bangladesh Bank had forwarded application of Akij Group, Ha-Meem Group, and Nitol-Niloy Group which sought permission to make equity investment worth a total of $37 million in Malaysia, Haiti, and Gambia respectively.
After the cabinet decision, the central bank asked the three companies to submit detailed project proposal mentioning required statistics for the equity investment. However, only Akij Group submitted the project proposal so far.
Meanwhile, following a PMO (Prime Minister's Office) directive an inter-ministerial committee, led by executive member of the Bangladesh Investment Development Authority (BIDA) Ajit Kumar Paul, is preparing a report asserting the necessity of allowing overseas investment by resident Bangladeshis.
The committee will submit the report shortly to the PMO. Presently, making equity investment abroad for resident Bangladeshis is not open under the foreign-exchange regulation act.
But under sub-section 6 of section-4 of the act, the central bank in consultation with the government can identify areas of equity investment abroad.
Contacted over telephone Sunday, secretary of the Financial Institutions Division Md Eunusur Rahman told the FE the ministry has been scrutinising the central bank's report regarding Akij Group's application.
"If we find it appropriate, we will send it to the cabinet body for government decision," he said.
