Bangladesh Defense
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Japan-only bidders, fat quotes and no room to negotiate
A fresh dilemma has emerged in Dhaka's ambitious metro-rail expansion as the state-owned operator faces exorbitant bids from a narrow pool of Japanese firms. Despite interest from companies worldwide, restrictive Japan-specific tender conditions have effectively sidelined all but a few players, re
DMTCL in a fix over MRT 5 North execution
Japan-only bidders, fat quotes and no room to negotiate
Munima Sultana
Published :
Jul 09, 2025 00:35
Updated :
Jul 09, 2025 00:35
A fresh dilemma has emerged in Dhaka's ambitious metro-rail expansion as the state-owned operator faces exorbitant bids from a narrow pool of Japanese firms.
Despite interest from companies worldwide, restrictive Japan-specific tender conditions have effectively sidelined all but a few players, resulting in a staggering 162-percent cost overrun in one major contract package, sources said.
The lowest bid for contract package (CP) 6 of MRT Line 5 North came in at over Tk 155 billion, dwarfing earlier cost estimates and putting the Dhaka Mass Transit Company Limited (DMTCL) in a bind with no room for negotiation, due to the Japan International Cooperation Agency's (JICA) rigid financing rules.
Procurement insiders and engineers now warn that the country's metro rail procurement process has become increasingly monopolised by Japanese firms, with systemic limitations built into tender documents.
Despite initial global interest, only a handful of Japanese companies made it through to final bidding stages-raising questions about transparency, competitiveness, and long-term technological dependence in one of Bangladesh's most significant infrastructure undertakings.
The DMTCL is currently implementing two major metro projects-MRT Line 1 and MRT Line 5 North-funded primarily by JICA. In the case of CP 6 of MRT 5 North, the lowest bidder quoted Tk 155.27 billion while the second came in slightly higher at Tk 164.30 billion.
These bids overshot the revised project cost of Tk 59.51 billion, already up from the Tk 39.67 billion outlined in the original 2019 development project proposal (DPP), and even exceeded the engineering estimate of Tk 61.26 billion prepared in 2025 by the project's Japanese design consultant.
CP 6's prequalification process, initiated in August 2024, saw 15 firms express interest, yet only four (all Japanese) were prequalified. Ultimately, just two companies submitted final bids.
DMTCL insiders say such one-sided participation reflects deeper flaws in the procurement framework, where Japan-specific tender conditions and tax exemptions discourage wider competition.
While Japanese firms enjoy full VAT and income tax waivers, other countries' bidders do not, making it financially unviable for them to compete.
This trend has persisted across multiple contract packages of both MRT 1 and 5 North. For example, CP 1 of both projects, related to depot land development, was awarded to Japanese firms.
In MRT 1, which will be the country's first underground metro rail, 15-36 companies initially bought prequalification documents across various CPs, including CPs 2 through 10.
However, the final bids overwhelmingly came from just two or three Japanese firms with some packages receiving no final bids at all, despite strong initial interest.
According to officials involved in bid evaluations, this pattern reveals a systemic issue: foreign firms with technological expertise and interest are deterred by the tender structure, which is narrowly tailored to Japanese firms.
This is in part due to JICA's guidelines, which do not allow price negotiations once the lowest bidder is selected, further tying DMTCL's hands, even when costs far exceed both estimates and fiscal logic.
Critics argue that this quasi-monopoly stems not just from JICA's terms, but also from a lack of technical competence and awareness within DMTCL.
Engineers working on the project say that tender documents were developed with little understanding of global MRT technologies, leaving little room for alternatives.
"We cannot even negotiate with the final bidders against these unusual quotations," said a DMTCL insider, noting that previous management failed to negotiate key terms with JICA before signing the loan agreements.
Preferring not to be named, an insider in the overall procurement, evaluation process told the FE that as only Japanese companies enjoy total tax exemption in all development projects, making it non-competitive for other countries.
This has led to concerns about future technology lock-ins. As one engineer put it, "The three MRT lines, including MRT 6, already partially operational, have been blocked by Japanese systems. Even if DMTCL wants to bring in other technologies in the future, it may not be possible."
Sources at the Japanese consultant side have defended the current arrangement, pointing out that many government-funded projects worldwide, including those financed by China or through India's Line of Credit, often prioritise firms from the donor country.
However, procurement experts in Bangladesh counter that in this case, the issue lies in the extreme extent of that preference and its rigid enforcement, which has turned procurement into a non-competitive process.
The DMTCL is overseeing the development of a 128-kilometre MRT network comprising six metro lines across Dhaka's north-south and east-west corridors.
Japan-only bidders, fat quotes and no room to negotiate
Munima Sultana
Published :
Jul 09, 2025 00:35
Updated :
Jul 09, 2025 00:35
A fresh dilemma has emerged in Dhaka's ambitious metro-rail expansion as the state-owned operator faces exorbitant bids from a narrow pool of Japanese firms.
Despite interest from companies worldwide, restrictive Japan-specific tender conditions have effectively sidelined all but a few players, resulting in a staggering 162-percent cost overrun in one major contract package, sources said.
The lowest bid for contract package (CP) 6 of MRT Line 5 North came in at over Tk 155 billion, dwarfing earlier cost estimates and putting the Dhaka Mass Transit Company Limited (DMTCL) in a bind with no room for negotiation, due to the Japan International Cooperation Agency's (JICA) rigid financing rules.
Procurement insiders and engineers now warn that the country's metro rail procurement process has become increasingly monopolised by Japanese firms, with systemic limitations built into tender documents.
Despite initial global interest, only a handful of Japanese companies made it through to final bidding stages-raising questions about transparency, competitiveness, and long-term technological dependence in one of Bangladesh's most significant infrastructure undertakings.
The DMTCL is currently implementing two major metro projects-MRT Line 1 and MRT Line 5 North-funded primarily by JICA. In the case of CP 6 of MRT 5 North, the lowest bidder quoted Tk 155.27 billion while the second came in slightly higher at Tk 164.30 billion.
These bids overshot the revised project cost of Tk 59.51 billion, already up from the Tk 39.67 billion outlined in the original 2019 development project proposal (DPP), and even exceeded the engineering estimate of Tk 61.26 billion prepared in 2025 by the project's Japanese design consultant.
CP 6's prequalification process, initiated in August 2024, saw 15 firms express interest, yet only four (all Japanese) were prequalified. Ultimately, just two companies submitted final bids.
DMTCL insiders say such one-sided participation reflects deeper flaws in the procurement framework, where Japan-specific tender conditions and tax exemptions discourage wider competition.
While Japanese firms enjoy full VAT and income tax waivers, other countries' bidders do not, making it financially unviable for them to compete.
This trend has persisted across multiple contract packages of both MRT 1 and 5 North. For example, CP 1 of both projects, related to depot land development, was awarded to Japanese firms.
In MRT 1, which will be the country's first underground metro rail, 15-36 companies initially bought prequalification documents across various CPs, including CPs 2 through 10.
However, the final bids overwhelmingly came from just two or three Japanese firms with some packages receiving no final bids at all, despite strong initial interest.
According to officials involved in bid evaluations, this pattern reveals a systemic issue: foreign firms with technological expertise and interest are deterred by the tender structure, which is narrowly tailored to Japanese firms.
This is in part due to JICA's guidelines, which do not allow price negotiations once the lowest bidder is selected, further tying DMTCL's hands, even when costs far exceed both estimates and fiscal logic.
Critics argue that this quasi-monopoly stems not just from JICA's terms, but also from a lack of technical competence and awareness within DMTCL.
Engineers working on the project say that tender documents were developed with little understanding of global MRT technologies, leaving little room for alternatives.
"We cannot even negotiate with the final bidders against these unusual quotations," said a DMTCL insider, noting that previous management failed to negotiate key terms with JICA before signing the loan agreements.
Preferring not to be named, an insider in the overall procurement, evaluation process told the FE that as only Japanese companies enjoy total tax exemption in all development projects, making it non-competitive for other countries.
This has led to concerns about future technology lock-ins. As one engineer put it, "The three MRT lines, including MRT 6, already partially operational, have been blocked by Japanese systems. Even if DMTCL wants to bring in other technologies in the future, it may not be possible."
Sources at the Japanese consultant side have defended the current arrangement, pointing out that many government-funded projects worldwide, including those financed by China or through India's Line of Credit, often prioritise firms from the donor country.
However, procurement experts in Bangladesh counter that in this case, the issue lies in the extreme extent of that preference and its rigid enforcement, which has turned procurement into a non-competitive process.
The DMTCL is overseeing the development of a 128-kilometre MRT network comprising six metro lines across Dhaka's north-south and east-west corridors.
