Meghna Group teams up with Thai firm to form joint venture

Meghna Group of Bangladesh and PM Group of Thailand have joined hands to set up a polypropylene factory that will support packaging industries at home and abroad.

The factory will be the first of its kind in Bangladesh as polypropylene consumers, including garment exporters, now meet their demand by imports.

Polypropylene is smooth surface plastic that cracks easily when bent but is difficult to scratch, used in making bags, battery cases, jar lids and straws.

PM Group will invest around $150 million, equivalent to around Tk 1,170 crore, to set up the plant at Meghnaghat in Narayanganj. Both sides signed a deal in Bangkok last week. However, the shareholding issue has not been finalised yet.

“Half of the products will be exported,” Mostafa Kamal, chairman of Meghna Group, told The Daily Star.

Apparel exporters will be benefitted, as it will reduce costs of using biaxially-oriented polypropylene (BOPP).

BOPP is a polymer widely used in place of cellophane, waxed paper, and aluminium foil for packaging consumer products, including garment, food and stationery items.

Meghna Group has 32 companies. The local conglomerate has an annual turnover of $2 billion and asset worth $1 billion, while PM Group is a private firm valued at more than $2 billion.

Meghna wanted to sell all the products from the new factory in the local market, but PM Group wants to export half the products to enjoy the facility of generalised system of preferences (GSP) given to Bangladesh by the European Union.

PM Group's proposal has already been sent to the Board of Investment (BoI) for its approval.

“PM Group is ready to make the investment anytime, but they want to be sure about tax holiday and bond facility,” Kamal said. Besides, there are issues of gas and electricity connections, he added.

According to BoI, 100 percent tax exemption is given in the first two years to factories in Dhaka and Chittagong divisions, 50 percent in the third and fourth year and 25 percent in the fifth year.

“There is no reason, why the joint venture will not get tax break. They will get it as per rules,” a BoI official told The Daily Star yesterday, requesting not to be named.