Bangladesh to benefit from ‘China Plus One’ policy

Kazushige Nobutani, president of the Japan External Trade Organisation (Jetro), is scheduled to come to Bangladesh today along with Yasutoshi Nishimura, minister for economy, trade and industry of Japan. Their visit is aimed at discussing the Economic Partnership Agreement (EPA) the two countries plan to ink in order to promote trade and investments.

In an email interview with The Daily Star, Nobutani spoke about investment opportunities in Bangladesh for Japanese firms and challenges the face, among other issues.

DS: A lot of Japanese companies located in China also want to relocate to other countries, including Bangladesh. Do you think that Bangladesh has the opportunity to attract some of them?

Nobutani: Japanese companies are trying to diversify the supply chain not only from China but to other regions, especially the Association of South East Asian Nations. I believe Bangladesh is one of them.

DS: How do you see the business potential for Japanese investors in Bangladesh?

Nobutani: There are a lot of business opportunities for Japanese companies in Bangladesh.

First, we see a lot of export-oriented industries utilising abundant human resources in Bangladesh.

Since the 1980s, some Japanese companies, especially those based in the Chittagong Export Processing Zone, set up export-oriented industries and they are still doing very good business in Bangladesh.

Second, based on Jica's support, mega infrastructure development projects are going on in Bangladesh. Since Bangladesh is one of the fast-growing economies in the world, Japanese companies are showing great interest in developing infrastructures in the country.

Third, there is a huge domestic market in Bangladesh. Jetro Dhaka is getting a lot of queries from Japanese companies to market their products in Bangladesh. We see more opportunities in domestic market-oriented businesses. Lastly, the ICT and startup sectors are more focused areas in Bangladesh for Japanese companies.

DS: Do you think Bangladesh could create an investment-friendly environment?

Nobutani: I appreciate Bangladesh's government for working very hard to improve the business environment.

Our focused activity is to work with the government to create a more business-friendly environment in Bangladesh. We normally get a variety of opinions from Japanese investors regarding the business environment in Bangladesh and raise these issues with related ministries and agencies. Bangladesh is sincerely working to address the issues.

We believe that the success of existing Japanese companies will bring more FDI from Japan. That's why we are working very hard to support the existing Japanese companies.

DS: What initiatives should Bangladesh take to attract Japanese investments?

Nobutani: Japanese companies always compare business environment and incentives when they decide on investment. To attract Japanese investments, Bangladesh should have better business environment and incentives than other countries.

Japanese companies have long experience in Asian countries, and we are ready to support Bangladesh to have a better business environment based on our experiences.

DS: What types of opportunities are available in Bangladesh for investments?

Nobutani: Japan is facing an ageing society and the population is going down. It's high time for Japan to work together with Bangladesh to get the source of economic growth for both countries.

Bangladesh is a time-tested friend of Japan and we believe that we can work together for win-win relations in business.

DS: How can Jetro help Bangladesh attract Japanese investments?

Nobutani: Jetro works together with Bangladesh to provide investment opportunities for Japanese companies. We don't have any shortcuts to promote Japanese investment. I believe the shortest way is to address the issue one by one to facilitate more business from Japan.

DS: What will the potential sectors for Japanese investors in Bangladesh in the coming days?

Nobutani: Startup is a potential sector for investments for Japanese investors. Startups are growing industries in Bangladesh, and we believe Japanese companies can collaborate with them to deliver services.

Energy is a sector that is vital for realising a carbon-neutral Bangladesh. So, it is important for Bangladesh to introduce environmental-friendly energy.

DS: Do you think Japanese investors face any obstacles to investment in Bangladesh?

Nobutani: There are a number of obstacles to investment in Bangladesh. We see bureaucratic challenges in custom procedures and tax administrations.

We want more transparency and predictability in administrative procedures. I believe that digitalisation and one-stop service would be good methods for having a better environment.

Amid the Ukraine war, the world is facing difficulties owing to the price hike of energy and essentials. Bangladesh is not an exception.

As Bangladesh needs to import raw materials, foreign exchange regulations are crucial for Japanese companies to operate businesses. Once the difficulties are over, I'd like to expect Bangladesh's government to take initiatives for better regulations in the foreign exchange policy.

Japanese companies would like to contribute to industrial diversification in Bangladesh. However, industrial diversification takes long time for getting investment and technical transfer from outside.

In order to do that, long time and consistency in the policies are crucial. We would like to emphasise that Bangladesh learns from Japanese companies to develop industries.

DS: How can Bangladesh increase exports to Japan?

Nobutani: Bangladesh should increase the portfolio of export goods, especially value-added goods in the RMG sector. Japan and Bangladesh governments have set up the joint study group for bilateral EPA in December.

EPA is more comprehensive than free trade agreement (FTA). According to our survey, 85 per cent of Japanese companies in Bangladesh are wishing to have a bilateral FTA or EPA before Bangladesh graduates from the LDC group in 2026.

We also came to know that without FTA or EPA, 20 per cent of existing Japanese companies in Bangladesh would consider relocation or reduce procurement from Bangladesh in the future. I believe EPA would not only avoid relocation but also help Bangladesh to increase exports to Japan.

DS: Japanese Prime Minister Fumio Kishida, during his visit to India in April, touted the idea of a new industrial hub for the Bay of Bengal and northeast India. How will it be materialised?

Nobutani: The Japanese government would like to work with Bangladesh to realise "Free and Open Indo Pacific". In the prime minister's speech, Bangladesh was cited as the hub of the region.

Japan is supporting to develop Matarbari deep seaport. The seaport will be the gateway to approach the northeastern region of India. At the end of the day, Matarbari could be the hub for exporting to other regions. Literally, Matarbari would be a game-changer in this region.