Some 80% of Japanese companies are planning to expand their business activities in Bangladesh in next two years, availing the opportunity of lower production costs.
A survey conducted by JETRO (Japan External Trade Organisation) came up with the disclosure. Currently, 34 Japanese companies are engaged in business in Bangladesh.
Myanmar is the top choice of Japanese entrepreneurs as more than 84% of the companies plan to invest in Myanmar, followed by Pakistan, Cambodia, Bangladesh and India, according to survey on Japanese Business, FDI Policy and MEIT ( Ministry of Economy, Trade and Industry) in South Asia.
The survey was presented by Ichiro Abe, director and industry researcher, JETRO of New Delhi and special advisor to MEIT, government of Japan, at a seminar on ‘Business Climate in Asia and Bangladesh Position’ which was jointly organised by Dhaka Chamber of Commerce and Industry (DCCI) and JETRO at DCCI in the city yesterday.
Abe in his paper said: Operating profits of Japanese firms is estimated to increase 67.6% in next year from almost 56% in 2013, according to sales forecasts of JETRO. After Pakistan and Cambodia, Japanese firms will have the highest profits from Bangladesh.
The survey identified some operational problems for Japanese firms in Bangladesh. “Various issues, including wage increase, growing market share of competitors, lack of employee performance, quality of employees, difficulty in quality control and inadequate logistics infrastructure, on employment are major concerns for Japanese in Bangladesh,” said the survey.
The report also said difficulty in local procurement of materials or parts in Bangladesh is almost 54%, much lower than Myanmar, Cambodia, Vietnam, Philippines and India but higher than Sri-Lanka, Pakistan, Thailand, China and Malaysia.
Difficulty in recruiting executive staff is more than 48%, higher than Vietnam, Malaysia and Pakistan and Sri-Lanka but lower than Laos, Cambodia, Myanmar, Indonesia and Thailand, it said.
It said cost of production is the lowest than any other countries in the world. Production cost includes the costs of all resources consumed in producing an item, such as materials, labor, and others.
A Memorandum of Understanding (MoU) was also signed at the seminar between DCCI and JETRO, Dhaka to facilitate business between these two friendly countries.
According to the MoU, both the parties will provide relevant market information and support government to formulate more business friendly policies. DCCI President Mohammad Shahjahan Khan and JETRO, Dhaka Representative Kei Kawano signed the MoU on behalf of their respective organisations.
Planning secretary Bhuiyan Shafiqul Islam, senior research fellow, JETRO Bangkok, Hiroshito Ito, other DCCI members and officials were present at the seminar.
Shafiqul Islam sought Japan’s cooperation in the economic development of Bangladesh. He also said JETRO could come forward to collaborate with our private sector to make Bangladesh an attractive investment destination.
He also sought cooperation from Japan in building international standard export processing or economic zones in Bangladesh.
Shahjahan Khan said recently, Bangladesh government has established a Task Force comprising of business leaders and government officials for the purpose of eliminating impediments for Japanese investors to Bangladesh.
The Task Force also aimed to explore the prospective areas of Japanese investment in Bangladesh, identify problems in attracting investment from the world’s third largest economy.
Bangladesh exports nearly 70 items to Japan but only seven or eight items constitute 90% shares of the total export in Japan.
DCCI President urged Japanese firms to invest in gas exploration, power generation, communication network, infrastructure and agro-based industries in Bangladesh.
Kei Kawano said JETRO is closely working with Bangladesh to strengthen bilateral relation between Bangladesh and Japan. He said Bangladesh is a nice investment destination and Japanese investors are keen to invest in this country.
