Japan wants public-private cooperation with Bangladesh in diversification through manmade fibre in the apparel sector, utilising young human resources in the IT industry, and promoting a feasible energy transition to clean energy.
The county is also eager to invest in industry up-gradation and diversification, integrating Bangladesh’s strategic location into the global supply chain, and investing in ship-recycling and car–recycling.
The intentions came at the 12th networking programme Japan-Bangladesh Chamber of Commerce and Industry in Dhaka on Sunday.
While presenting a keynote paper titled, “Strengthening Ties: The Next Phase of Economic Partnership between Bangladesh and Japan” analyst Ifty Islam, also chairman of Asian Tiger Capital Partners, cited Japan’s areas of interest.
Japanese investors in Bangladesh see significant potential for increased trade and economic ties between the two countries. However, they cite several barriers, including complicated customs clearance procedures, foreign exchange rate volatility, challenges in local procurement of raw materials and parts, electricity shortages, and increased procurement costs.
Ifty said the Bangladesh-Japan economic partnership has reached a new height with Japan being the largest bilateral development partner of Bangladesh after recently Prime Minister Sheikh Hasina's visit to Japan.
As Bangladesh might face a range of trade and economic challenges after it graduated from Least Developed Country status by 2026, the country now needs to create a business-friendly environment to attract foreign direct investments, and establish an independent body for coordinating policies, said experts suggesting strengthened ties between Bangladesh and Japan.
They also think Bangladesh also needs to improve industrial promotion, negotiate with Japan to get preferential trade facility after LDC graduation, remove constraints such as tax and tariff regime, investment policy, business regulations, access to long-term finance as well as competitiveness to tackle the possible problems.
Direct flight will be a game-changer
Speaking at the networking programme, Japanese Ambassador Iwama Kiminori a direct flight between Bangladesh and Japan has started this month and it will be a game changer in trade and economic ties.
“Bangladesh’s prime minister recently visited Japan to strengthen bilateral relations. Our companies are also eager to increase investment here. There is an opportunity to increase trade and investment. However, there are some challenges including Letter of Credit (LC) statement and customs clearance,” he added.
Kiminori said it is important for Bangladesh to focus on ICT capacity development in industry. Bangladesh will graduate from LDC status. To overcome challenges, the two countries need to maintain a partnership for the next ground, he added.
“We are preparing an economic partnership agreement (EPA) as soon as possible to deepen and expand bilateral trade and investment between two nations,” he said.
The president of the Japan-Bangladesh Chamber of Commerce and Industry (JBCCI), Myung-Ho Lee, said they need three bilateral agreements -- investment protection treaty, double taxation treaties, and an Economic Partnership Agreement. The EPA negotiation will be held as soon as possible and a joint study on the agreement will end very soon, he added.
“JBCCI members work hard to support and enhance trade and economic ties between the two countries. We are trying to open up new opportunities here,” Myungho Lee, also Mitsubishi Corporation’s Country Representative for Bangladesh said.
Japan 2nd largest export destination in Asia after India
The total bilateral trade between Bangladesh and Japan stood at $3.79 billion in the fiscal year 2021-22.
Bangladesh received an investment of $100 million from Japan in 2022, and the cumulative investment was $675 million. Bangladesh exported products worth $1.35 billion to Japan in 2022, and imported products worth $2.43 billion from the country in the same period.
350 Japanese cos operating in Bangladesh
According to a recent survey of the Japan External Trade Organisation (JETRO), around 72 per cent of Japanese companies operating in Bangladesh are interested in expanding their business operation.
However, 70.8 per cent of the companies that attended in the survey said they are not satisfied with the business environment in the country.
Yuji Ando, country representative of JETRO, said Bangladesh is the first choice for Japanese companies in terms of business expansion within Southeast Asia, ASEAN and Northwest Asia regions.
Volatility in the exchange rate, difficulties in local procurement of raw materials and parts, and shortage of electricity are also challenges in the country, the survey also pointed out.
