New Dhaka project of India’s Sahara unlikely
Indian conglomerate Sahara’s much-hyped proposed schemes, including a satellite township within the capital’s periphery, are looking uncertain after a recent court order on the group and “slow” preparations by its local affiliate Matribhumi Unnayan Corporation.
Sahara India Pariwar signed a non-binding Memorandum of Understanding (MoU) with Bangladesh government on May 23 with the intention of developing a satellite township fashioned “New Dhaka”.
Three days after the signing, Subrata Roy Sahara, chairman of the group, launched the Matribhumi Unnayan Corporation Ltd in Bangladesh and announced an initial investment of $120 million.
He presented Sheikh Fazle Fahim, son of ruling Awami League lawmaker Sheikh Fazlul Karim Selim and nephew of Prime Minister Sheikh Hasina, as the company’s director.
“Fahim will be our guide and mentor here,” said Subrata at the launching ceremony.
Around a year ago, Sahara placed a conceptual proposal to the government and asked for either one-lakh acres or half-a-lakh acres of land to develop a “New City” with “affordable housing for low-income groups” near the capital.
Meanwhile, the Matribhumi Unnayan Corporation is yet to be registered with the joint stock of companies and incorporated in the Board of Investment.
Talking to The Daily Star in June, Fahim said they were set to finalise by July the procurement of a sizable land for a housing scheme on the capital’s eastern fringe.
“We will start the construction by the middle of next year,” he said, adding that a couple more sites were also awaiting finalisation. He, however, did not specify any site location.
Fahim said once the projects were finalised within July, Sahara’s initial investment would formally start flowing in through the Board of Investment within this year. But it was subject to the size of the project.
He said a delegation was expected to meet the government within a short time to discuss possible schemes.
Two Sahara teams visited Bangladesh in September and met private real estate developers to seek their cooperation in land procurement and scheme implementation.
On September 27, Fahim, however, said the expected land procurement and the schemes were yet to be finalised. As for the registration of the company, he said it had been deferred, as the proposed schemes could not be finalised.
The proposed housing schemes would be “self-sufficient” with utility services including electricity, water and gas supplies and civic amenities like business centres, educational institutions and hospitals.
Alongside expensive apartments, there will be one-bed and two-bed studio apartments for the low-income group, who will be able to purchase a one-bed apartment with Tk 15 lakh having a pay time duration of 15 years, said Fahim.
Competent sources said the project preparatory works by Matribhumi lost pace owing to an August 31 ruling of the Indian Supreme Court that ordered Sahara to repay its 30 million investors as much as $4.5 billion within three months.
The court declared the finance schemes run by two Sahara companies in India illegal.
Sources said Matribhumi was observing how Sahara dealt with the situation, as it entailed a credibility concern.
The move complies with the MoU between the Bangladesh government and Sahara Pariwar, a business empire that possesses assets worth $26 billion.
According to the MoU, the government and Sahara can work together for developing the satellite township around Dhaka with affordable housing for the low-income groups, as the government intends to decongest the capital.
Sahara, with business experience in infrastructure and housing development, financial services, media and entertainment, commodity sales and retail chain, consumer products and manufacturing, is capable of implementing government-envisaged projects in infrastructure and housing sector.
It reads that Sahara will submit project proposals for urban development like satellite housing-township to the government through its local representative. Once an agreement is signed, Sahara would reserve the right to refuse it first.
The understanding, however, is not legally binding. It will expire after three years unless a specific agreement is reached.
PROJECTED BUSINESS AREAS
Sahara is primarily interested to invest and do business in real estate development, tourism and hospitality services, healthcare and communications facility, said Fahim, adding that Sahara’s official sponsorship for the Bangladesh national cricket team is also underway.
While it intends to set off with a real estate scheme, it is also exploring other business opportunities, he said.
Sahara would affiliate itself with both the government and private sector schemes, he said.
It proposed to develop a tourism city in the Sundarbans of Bangladesh. It backtracked from a similar attempt in the Indian-side of Sundarbans in the face of protests by environmentalists.
LOCAL REAL ESTATE DEVELOPERS WORRIED
Local real estate leaders in a press conference early June expressed worries that giving Sahara the opportunity would create an uneven business competition for the local developers.
Nasrul Hamid Bipu, president of Real Estate and Housing Association of Bangladesh, later told The Daily Star that it was not clear why the government had opted for foreign investors without assessing the potential of local entrepreneurs.
“The sudden decision of the government to invite a foreign developer surprised us,” he said, “The local developers are capable of implementing such schemes.”
He apprehends that the government as a partner may procure the land required at acquisition rate and provide it to Sahara under Public Private Partnership basis.
Bipu said the government took the initiative when it had failed to provide a piece of land and adequate utility services to the local realtors for years. If this move succeeds, the foreign investor would take the profit home.
The real estate leaders demanded that the government hold a dialogue with them before going ahead with the Indian conglomerate.
LOCAL PARTNER’S ROLE
Fahim said their foremost job, in partnership with Sahara, was to find and develop business opportunities in real estate sector in Bangladesh.
“We are a strategic working partner of the company while Sahara is the investor and developer,” he said.
HOW CONNECTIONS EVOLVED
General trading company Obsidian, which is owned by Fahim and mainly imports electromechanical products, contacted Sahara a year ago and has been working with it on launching business partnership in Bangladesh, as Sahara is expanding its business globally.
The Time magazine rated Sahara as the India’s second largest employer after the Indian railway.
“A common friend initiated the linking up in June last year,” said Fahim, adding, “More than eight delegations from both the parties have visited each other since then.”
About the criticism that his father Sheikh Selim provided Sahara the political assurance for business in Bangladesh, Fahim said his father, who just had a “personal contact” with Sahara, had not used his political position in this regard.
A graduate in economics from St Edwards University in the United States, Fahim served in an investment bank in Austin Texas for a year and came back home in 2002, after a 12-year stay abroad. He has been running Obsidian since then.
He initiated a real estate company around seven years ago but it did not take off, neither did he revive it in the past years.
Local critics on Sahara proposals and political connections
Prof Sarwar Jahan, a teacher of urban planning at Bangladesh University of Engineering and Technology, termed the proposed satellite township risky and unplanned, as the Detailed Area Plan for Dhaka did not allow it.
Shamsul Huda, executive director of Association for Land Reform and Development, said if the amount of land Sahara asked for was procured by any means, it would inevitably displace people from their livelihood and ancestral homestead, and destroy croplands and wetlands.
“The move is conceptually flawed and politically suspicious,” said Hossain Zillur Rahman, an economist and former adviser to a caretaker government.
Md Nurul Huda, chairman of Rajdhani Unnayan Kartripakkha that represents the government in the MoU, said any scheme development by Sahara and the government would require a detailed agreement on the terms and conditions.
Sahara India has to purchase 80 percent of the land required for the satellite township while the government would provide the rest as per the private housing development rules.
The one lakh-acre land Sahara had asked for was not even available in the city’s periphery, said Nurul Huda.
Asked why then the government had signed the MoU, he said they could not rely on the “defiant local developers”, who did not comply with the real estate laws. Sahara could do business as a private entrepreneur and in compliance with relevant laws, he added.