Lack of info, support barrier to more Japanese investment

Besides, a culture of procedural delays at government offices and frequent policy changes discourages Japanese investors from starting a business in Bangladesh.

Till December 2019, around 310 Japanese companies were conducting business in Bangladesh, with investments reaching $386 million.

Just a decade ago, there were merely 82 firms from Japan operating in the country.

The latest information on foreign direct investment (FDI) from Japan is yet to be available with the Bangladesh Bank and the Bangladesh Investment Development Authority (Bida).

The country office of the Japan External Trade Organisation (Jetro) recently conducted a survey among 75 Japanese companies on the challenges they were facing in running operations during the pandemic.

It showed around 67 per cent of Japanese companies were witnessing troubles due to the suspension or reduction of commercial flights, and 64 per cent for 14-day mandatory self-quarantine after arrival in Bangladesh.

Another 63 per cent faced difficulties involving coronavirus infection control, 61 per cent dealing cases of infections (medical system and bed availability), and 61 per cent in case of inviting business travellers and technical instructors to Bangladesh.

Sixty per cent of companies say they are going through difficulties over travelling outside of Bangladesh, and 57 per cent to vaccinate Japanese expatriates in Bangladesh.

Half of the respondents cited troubles while checking the latest information on travel guidelines and business operation from the government.

Thirty-one per cent faced troubles over delay in exports and imports, 24 per cent mentioned order cancellation and reduction, 9 per cent working capital shortage, and 8 per cent about the overdue letter of credit settlement.

"Japanese companies that do come to do business in Bangladesh face an absence of proper information on related fields initially," said Prodip Das, managing director of Rohto-Mentholatum (Bangladesh).

The investors do not get information either from the government offices or from private consultancy firms, he said, adding that there were no private firms that can help enable business-to-business connections and partnerships.

For any company seeking to start a business, all types of workers and employees are available except for a managerial-level workforce, he said.

They do not even get information on banking support, clearing and forwarding agents, and distributors, although these are important to run business, Das said.

Japanese companies have to provide various documents and go through bureaucratic complexities and complex rules in filing tax and calculating value-added tax.

"Japanese companies are highly compliant and expect transparency at every stage," Das said.

He believes there is a considerable scope to make improvement to attract more Japanese investors.

Shah Muhammad Ashequr Rahman, head of finance and commercial at Bangladesh Honda Private, said there was a need to improve the ease of doing business for smooth business operations.

"If we are able to maintain an operational minimum lead time and faster import clearance, the cost of doing business and raw materials and capital machinery costs will be competitive," he said.

Hiroki Watanabe, managing director of Aishin International, said Japanese companies face hassles in taking profits back home.

"It is very easy to bring investment to Bangladesh but tough to repatriate the profit to the home country, which is detrimental for investment," he noted.

Companies go through a lot of official formalities, which are time-consuming, to transfer profits, he said. "The government should address this issue."

Besides, the investors find it hard to manage visas and work permits, and sometimes, they have to endure long waiting periods, said Watanabe.

Md Sirazul Islam, executive chairman of the Bida, said investors and foreign experts face no hassles if they apply for visas through Bida's one-stop service platform.

He also refuted the findings that there was a lack of information available, saying the Bida provided all kinds of information on investment.

Paban Chowdhury, executive chairman of the Bangladesh Economic Zones Authority (Beza), said there was room for improving the business environment in Bangladesh and relaxing some rules and regulations to attract more FDI.

The Bangladesh Bank, the National Board of Revenue, and the commerce ministry have already issued several circulars regarding the relaxation of investment rules, he said.

"However, it would take some time to meet all expectations of the investors as they are always concerned about their investment in any country."

Chowdhury said Bangladesh was becoming a lucrative destination for FDI.

About $1.5 billion Japanese investment would be made at a dedicated economic zone in Araihazar, Narayanganj, which would be ready for setting up factories next year, he said.