As Bangladesh prepares to graduate from a least developed country (LDC) status, it looks at losing many benefits from trade partners, including from Japan, with which it is celebrating 50 years of friendship in 2022.
The solution, as put forward by economists and businesses, is to sign free trade agreements (FTAs), and governments of both nations are also considering this as the most viable alternative in the near future.
Japan would be a strong contender in Bangladesh's list for signing an FTA, Planning Minister MA Mannan said on Wednesday.
"Based on the experiences of the bilateral relationship between Bangladesh and Japan over the last 50 years, we are looking forward to the next 50 years, which are going to be much better, stronger and warmer," he added while speaking as the chief guest at a dialogue titled Bangladesh-Japan Partnership for the Next Development Journey, organized by Centre for Policy Dialogue (CPD).
Mannan also said Bangladesh is attaching the highest importance to its relationship with Japan, adding that completion of the special economic zone (SEZ) at Araihazar in Narayanganj would change the landscape for Japanese investors.
Japanese Ambassador to Bangladesh Ito Naoki said that Tokyo is considering initiation of a joint study on framing the FTA with Bangladesh.
"If we can start the process and frame it, then this will help boost our economic partnership ... but this has to be reciprocal," he added.
“The friendship and cooperation between Japan and Bangladesh have become more robust than ever. The number of Japanese companies investing in Bangladesh has been increasing year by year. Indeed, the investment from Japan has more than tripled in the last 10 years,” Naoki also said.
According to the recent JETRO survey, 68% of Japanese companies in Bangladesh are ready to expand their business operations in the coming years, he added.
Naoki also noted that there is a need to focus on training the Bangladeshi workforce for catering to the needs of the Japanese market.
CPD Chairman Professor Rehman Sobhan said Japan has been providing support in many mega projects of Bangladesh, and hoped that Japan would stand beside Bangladesh in the energy sector and in addressing climate change issues.
Strong bilateral ties
Syed Yusuf Saadat, research fellow of the Centre for Policy Dialogue (CPD), said in his keynote presentation that Bangladesh’s export to Japan has increased over the years and apart from the US and EU, Japan is one of the major trading partners for Bangladesh.
“This is quite significant in the sense that Japan is a very quality sensitive country, which shows that our producers have also, over the years, become more quality compliant,” he added.
Saadat noted that Bangladesh has huge potential for export of T-shirts, vests, men’s trousers and jerseys to Japan.
Japan also has good potential for exporting automobiles, especially diesel-powered trucks, to Bangladesh.
“So, trade between Bangladesh and Japan can be complementary and there is a lot of scope for increasing this trade,” the researcher said.
Bangladesh and Japan adopted the Comprehensive Economic Partnership Agreement (CEPA) initiative in 2014, which is significant for increasing bilateral trade and economic cooperation and as an LDC, Bangladesh did get some specific benefits from Japan, he added.
Moreover, Japan is the largest development partner of Bangladesh and Japanese official development assistance (ODA) to Bangladesh has increased over the years.
“Lot of the loans from Japan are used for financing big industrial projects,” Saadat said.
Foreign direct investment (FDI) from Japan to Bangladesh has also increased over the years.
“However, we could bring in a lot more FDI from Japan if we can improve the ease of doing business in Bangladesh. Specifically, if we could reduce the time and cost for doing business in the major cities of Bangladesh,” the CPD fellow further said.
Future opportunities
During the fourth industrial revolution (4IR), a reform of the education system was going to be a primary concern for Bangladesh, he said, noting that is how Japan capitalized on its economic miracle.
“So, Bangladesh needs to go into that and support education in science, technology and mathematics, especially for women,” according to Saadat.
Kazi Nabil Ahmed, member of the Parliamentary Standing Committee on Ministry of Foreign Affairs, said that Bangladesh can take advantage of demographic change in Japan.
But that by itself is not going to be advantageous to Bangladesh, he said, adding that we need Bangladeshi youngsters — university students, students at polytechnic institutes and high schools to be ready for the training needed to work in Japan.
“We need to get a much bigger workforce ready to be able to be trained and work in Japan and be completely culturally attuned to the Japanese society and economy over there. Without that actually this demographic advantage cannot be taken,” he explained.
Japan International Cooperation Agency (JICA) Chief Representative Yuho Hayakawa said Bangladesh is a great and trusted friend of Japan, adding that the existing comprehensive relationship would turn into a more strategic one going forward.
He suggested that Bangladesh should focus on accelerating inclusive growth, overcoming social vulnerabilities and building comprehensive cooperation.
The JICA Chief Representative informed that Bangladesh became the largest recipient of JICA loan in the last fiscal year (FY21).
Japan-Bangladesh Chamber of Commerce and Industry (JBCCI) President Asif A Chowdhury said that Bangladesh should sign FTAs with as many countries as possible including Japan, considering the LDC graduation in mind.
He also suggested forming a special cell on FTA at the Ministry of Commerce like the cell on WTO.
Shahabuddin Ahmed, Ambassador Extraordinary and Plenipotentiary of the Embassy of Bangladesh in Japan, gave the closing speech.
Among others, Kathy Matsui, board member of the Asian University for Women and general partner at MPower Partners; Dr Khondaker Golam Moazzem, research director of CPD; Dr Kenta Goto, professor of the Faculty of Economics at Kansai University; and Dr Tatsufumi Yamagata, professor of the College of Asia Pacific Studies at Ritsumeikan Asia Pacific University, also spoke at the dialogue.
CPD Executive Director Fahmida Khatun moderated the event.