Bangladesh top priority for Japanese business expansion: JETRO
Published: 20:55 31 March 2019
Bangladesh is the highest choice for the Japanese companies to expand their business in the next two years in the Asian and the Pacific region due to cheap labour and high profitability, according to a new survey by the Japan External Trade Organisation (JETRO).
Some 73.2 percent of 57 Japanese companies operating in Bangladesh said this country is the top priority of expansion of the businesses, reads the survey.
President of Japan-Bangladesh Chamber of Commerce and Industry (JBCCI) D Arai today released the findings of the survey at a press conference at JETRO office in the city.
According to the survey, some 26.8 percent participants said they are stable with their current status. India is the second top priority for business expansion by the Japanese companies. About 72.8 percent of the 405 surveyed companies said they want to expand the business in India.
The JETRO conducts the survey among 5,073 Japanese firms in 20 Asia and Oceania countries and regions mainly to know the real time information of the business.
Some 62.2 percent Japanese companies operating in Bangladesh expect an increase profit in 2019 compared with the last year. Bangladesh is the second highest destination for profit making by the Japanese companies among the surveyed 20 countries.
The survey also said about 56.6 percent Japanese companies are planning to increase the number of local employees in next one year in Bangladesh. The percentage is the fifth largest recruitment plan among the surveyed countries.
“Labour cost is the cheapest in Bangladesh in manufacturing sector. Still strong competitiveness remains in labour intensive sector, mainly RMG,” according to the survey.
The strong presence of Japanese companies in Bangladesh is also noticed if the inflow of private companies is analysed, the survey added.
For instance, last year, the total number of Japanese companies in Bangladesh was 278 and in 2017 the number of private companies operating in Bangladesh was 260, the JETRO also said. In 2016, the number of Japanese companies in the country was 245, the JETRO also said.
Bangladesh is one of the major destinations although Japanese entrepreneurs are investing in Cambodia, Vietnam and Myanmar in areas of textile, IT and infrastructure.
So far, the amount of Japanese investment in Bangladesh by private companies is $326 million as of November last year. However, the amount is much higher if the investments made by Japanese automobile giant Honda and Japan Tobacco are included.
In August last year, Japan Tobacco Inc agreed to purchase local Akij Group’s tobacco business for $1.5 billion, which is the single largest FDI in Bangladesh’s private sector so far.
Also in last November, Honda inaugurated its lone manufacturing plant at Munshiganj that it set up with state-owned Bangladesh Steel Engineering Corporation for Taka 230 crore.
If the amount of Japan state sponsored investment through Overseas Development Assistance (ODA) in different projects is included the amount is even bigger. So far, the Japanese government has committed $12 billion as ODA and has already released $7 billion of the sum.
Many Japanese companies, especially the consumer and food processing companies have been conducting feasibility studies in Bangladesh to grab the consumer market of 170million by fresh investment, said Arai who is also the country representative of JETRO in Bangladesh.
For example, Bangladesh is a very big market for baby diapers as the demand for this product is growing with the urbanization of the country. Although some local companies have been producing the baby diapers, still 60 percent is imported to meet the demand, he said.
The problems listed by the Japanese companies in Bangladesh include inadequate logistics and infrastructure, difficulty in quality control and shortage of skilled manpower, he added.
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