Japanese investors want simplified tax, customs

“Japanese investors complain about different challenges, such as remittance problem, LC issue, customs, VAT, and income tax, while talking to us. If we can resolve the issues to ensure ease of doing business, Bangladesh would get more Japanese investment,” immediate past president of Japan-Bangladesh Chamber of Commerce and Industry (JBCCI) and also Chairman of Crown Navigation Co (Pvt) Ltd Asif A Chowdhury told The Business Post’s Rafikul Islam in an exclusive interview

Japan and Bangladesh have 50 years of diplomatic relations. What role does JBCCI play to bring Japanese investors to Bangladesh?

The JBCCI has been advocating for bringing more Japanese investments to Bangladesh and strengthening trade relations between the two countries for the last 18 years. 

Besides, in a bid to ensure ease of doing business and lure more Japanese investments in different sectors, we assist the investors to resolve various problems they face in Bangladesh.

Bangladesh has set up an economic zone at Araihazar of Narayanganj dedicated to Japanese investors. The economic zone is set to be operational from March 2023, hopefully with 300 small, medium and big enterprises investing over $1 billion.

At present, more than 150 Japanese companies are working in our country. Some of them are implementing different mega development projects like metro rail and Matarbari sear port. 

Japan is a technologically advanced country. How can Bangladesh get Japanese technological support to tackle the impact of the fourth industrial revolution? 

The JBCCI has been trying to attract the attention of the Japanese government for the last several years, through different discussions, so that a skill development institute is set up in Bangladesh where our people will be trained with Japanese technology by their skilled manpower.

Our manpower trained in the institute will then be able to work with the Japanese companies investing in our country. They will also get the chance to work in Japan in future as the country might face an employment problem due to the increasing number of elderly people.

However, Bangladesh’s total foreign direct investment (FDI) is now around $20 billion. Japanese investment in different sectors is 10 per cent of the total FDI. We hope that its investment volume would increase by several times in the next decade.

Which Bangladeshi products have the potential to be sold in the Japanese market?

Japan is a quality-conscious country. They prioritise quality goods. We can export any kind of product to Japan if its quality can be ensured.

We have exported readymade garments worth $1 billion to Japan this year. Our target is to export apparel worth $10 billion by 2030. Besides, our frozen fish and ceramic products are also exported to the country.

What kind of challenges do Japanese investors face while doing business here?

The Japanese who are investing in Bangladesh always complain to JBCCI about several issues including remittance problem, LC (letter of credit) issue, customs, income tax and VAT. If we can resolve the issues ensuring ease of doing business, it will pave the way to increased Japanese investment in Bangladesh. We will get more investments from other countries as well.

Japanese Ambassador to Bangladesh Ito Naoki has also urged to reform our tax system recently.

There is a culture of fixing the statutory regulatory order (SRO) whimsically in our country which hampers the plan of the investors. Sudden issuance of SRO disrupts the supply chain.

Besides, it takes an unnecessarily long time to unload many products from the port due to various administrative complications. Foreign investors want an easier and smooth system in ports.

Japanese investors want an equal facility for all local and foreign entrepreneurs so that unfair competition is not created in the market.

What type of government policy support is needed to increase bilateral trade between the two countries?

Bangladesh is scheduled to graduate from the least developed country (LDC) status in 2026. After LDC graduation, we will not get the facilities we are receiving now.  

We should sign a free-trade agreement (FTA) to ensure tax-free access of our products to the Japanese market after LDC graduation too.

At present, Vietnam, Thailand, and Indonesia are attracting Japanese investors. The Bangladesh government should carry out a study on how those countries are luring Japanese investments to adopt a comprehensive strategy to bring more FDI to the country.

Please, tell us about your own business and future plan.

I am engaged in the shipping business. I provide shipping, cargo and logistical services. I represent a Japanese company here. I am the local partner of Kawasaki Group which is one of the top five ocean networking services in the world. I provide all container carrying services like import and export products across the world. 

I have the plan to invest jointly in our economic zone. So, I am looking for Japanese investors now.

Freight charge impacts the price of products. Why the charge has increased so much recently?

Freight charges increased across the globe after the beginning of the Covid pandemic. But it has come down by 40 per cent during the second quarter of this year. It is reducing gradually. The charge will come down further in near future.

What do you expect from JBCCI’s new committee?

We could not do many things due to the two-year-long pandemic. We were forced to arrange webinars in place of our scheduled programmes. Now, the physical meeting is possible. I hope that the members of the new committee will speed up our unfinished activities. And, they will work to increase FDI here.

Prime minister Sheikh Hasina is likely to visit Japan at the end of November. I hope that new agreements will be signed up bringing new investors to Bangladesh.

As the Japanese investors are looking for new destinations, Bangladesh should bag the opportunity to provide more facilities for them ensuring ease of doing business.