Bangladesh a top choice for Japanese investors: survey

Most Japanese firms operating in China choose Bangladesh as the second best investment destination after India due to lower production costs here, according to a survey by Japan External Trade Organisation (Jetro).

Due to sluggish operations and struggle for expansion of business in China, firms are expanding their operations mainly in Bangladesh, India, Vietnam and Thailand.

Some 71.7 percent Japanese-affiliated firms in China want to expand their operations in Bangladesh, with 78.2 percent favouring India, 66 percent Vietnam and 60.9 percent Thailand, according to the official trade and investment promotion agency of Japan.

Jetro that has been conducting such surveys since 1987 took opinions of 10,078 firms from 20 countries. It also directly interviewed the chief executives of the firms between October and November last year to conduct the survey -- A survey of Japanese Affiliated Firms in Asia and Oceania for the Year 2014. 

Bangladesh is offering the lowest worker wage levels among its competing countries. Workers' wages in the manufacturing sector in Bangladesh is $100 a month, while Cambodia has the second lowest wages at $113, according to the survey.

Japanese investors also think that Bangladesh has the widest room for cost cutting, according to some 84 percent of the CEOs in the survey.

In comparison to Japan, the cost of production in Bangladesh is less than half (48.7 percent), while it is 77 percent in China and 71 percent in Vietnam.

Japanese corporate heads feel that there are better trade opportunities in Bangladesh in 2015, as some 71 percent of the CEOs surveyed are expecting profits to rise in the country.

Jetro's Dhaka office published the highlights of the survey on Sunday.

The survey, however, stressed improving worker efficiency in the country by providing basic education and vocational training.

Among the countries surveyed, Bangladesh ranked the lowest in quality of employees. The average rate of workers' productivity in Bangladesh is 31.6 percent, while it is 77.8 percent in Sri Lanka, 68.4 percent in Pakistan, 44.4 percent in China and 42.1 percent in India, the study shows.

The study suggested the Bangladesh government focus more on signing free trade agreements (FTA) with countries under the Asia and Oceania region, to boost regional trade.

The survey portrayed that the highest utilisation of FTA is made by firms engaged in the textiles trade.

“FTA is the means to trade facilitation among the countries under the Asia and Oceania region, not only a generalised system of preference. In this context, it is high time that Bangladesh considers FTAs seriously,” it said.            

Japanese entrepreneurs have been shifting their investments to other countries since its government announced the 'China plus one' policy in 2008 to reduce over-dependence on China.

Investment from Japan rose three times to $94.37 million in 2013, compared to the previous year, according to Bangladesh Bank.

The bilateral trade balance between the two countries is heavily tilted towards Japan, as Bangladesh imports vehicles, electronic goods and spare parts. On the other hand, Bangladesh mainly exports apparel items, leather and leather goods, and footwear to Japan.

In fiscal 2012-13, Bangladesh exported goods worth $750.27 million to Japan, against $600.52 million in the previous year, according to data from Export Promotion Bureau.

In 2012-13, Bangladesh imported goods worth $1.19 billion from Japan against $1.45 billion in the previous year, according to BB. At present, more than 180 Japanese companies have operations in Bangladesh.

suman.saha@thedailystar.net