Around 62 per cent of Japanese companies in Bangladesh expect to turn a profit in 2023 even though the country's macroeconomic situation is currently unstable, according to a survey of the Japan External Trade Organisation (Jetro).

This is mainly due to the fact that business is improving in line with the reduced impact of Covid-19. About 48 per cent of Japanese companies in the country registered profit last year.

However, the firms forecast lower margins this year compared to 2022 as the rising cost of raw materials, procurement, labour, logistics and fuel will remain a burden.

The survey was conducted from August 22 to September 21 last year with all 314 Japanese companies operating in Bangladesh taking part.

As was the case the year before, Bangladesh ranked fourth in terms of business confidence for 2023, as per the study, styled "Jetro Survey on Business Condition of Japanese Companies Operating Overseas (Asia and Oceania)".

Although Japanese investment in Bangladesh now stands at more than $380 million, this is just 0.1 per cent of their overall investment in Asia.

Japanese companies in the country mainly invested in the gas, petroleum, trading, chemical, pharmaceutical, leather and garment sectors.

Bangladesh is forecast to come third in terms of profit growth for Japanese firms among all countries and regions, the survey says.

As such, 72 per cent of the companies plan to expand their operations in the country within the next two years, up from 68 per cent in the previous survey.

Besides, the government has established the Japanese Economic Zone at Araihazar upazila of Narayanganj to facilitate Japanese investment in Bangladesh.

The zone, jointly owned by the Bangladesh Economic Zones Authority, Japan International Cooperation Agency and Sumitomo Corporation, opened last year.

Sources at the Bangladesh Economic Zones Authority said five companies, including Lion Corporation of Japan, Onoda and Nikka Chemical, have already signed agreements to set up factories in the dedicated industrial area.

Apart from this, 40 other companies have shown interest in investing as well with about 30 of them being Japanese.

During a recent visit to Japan, Prime Minister Sheikh Hasina called for taking the business and investment relationship between the two countries to a higher level.

The firms forecast lower margins this year compared to 2022 as the rising cost of raw materials, procurement, labour, logistics and fuel will remain a burden

"Our embassy in Tokyo is ready to cooperate and facilitate your ventures in Bangladesh. Please come to Bangladesh to explore the potential of business and investment opportunities waiting for you," she said.

Also, Dhaka and Tokyo signed eight agreements and memorandums of cooperation on agriculture, the metro rail, industrial upgradation, ship recycling, customs, intellectual properties, defence cooperation and ICT and cyber security.