Most Japanese firms eye profit this year
Around 65 per cent Japanese companies operating in Bangladesh think that they would be able to make a profit in 2022 as the coronavirus pandemic situation has improved, according to a survey of the Japan External Trade Organisation (Jetro).
This contrasts to 43.2 per cent of the companies that were profitable last year.
Bangladesh was ranked fourth in terms of business confidence for 2022, up five notches from 2021, said the "2021 Jetro Survey on Business Condition of Japanese companies operating in Asia and Oceania with focus on Bangladesh".
Yuji Ando, the country representative of the Japanese agency, released the survey report at a programme at the Pan Pacific Sonargaon hotel in Dhaka yesterday.
Bangladesh is forecast to come third in terms of profit growth among all countries and regions.
The Jetro said 68 per cent of companies are planning to expand their businesses in the next one to two years, up from 41.8 per in the year prior. The increase would take the number to almost to the pre-pandemic level.
Two per cent of the firms want to relocate to another country after withdrawing investments, down from 3 per cent in 2021.
A total of 320 Japanese companies are doing business in Bangladesh and the number has risen in recent years due to the continuous economic growth in the past decade and huge business potential.
Those expressing intent to widen their footprint cite growth potential and sales increases for the plans.
Some 54.6 per cent of companies are willing to expand the function of sales, 45.5 per cent plan to go for the production of high-value products, and 27.3 per cent for making general-purpose products.
More than 15 per cent of companies intended to expand research and development activities to drive their business growth.
The survey report describes Bangladesh as the top place for export-oriented industries, with the ratio of exports to total sales by Japanese companies standing at 65.4 per cent.
Bangladesh has the most competitive wage among the surveyed countries and regions.
"This is the time for Japanese companies to expand in Bangladesh and procure from local sources," said Yuji Ando.
The survey cited the quality of employees and increased wages as top challenges facing companies in Bangladesh.
Time-consuming customs procedures, complicated customs clearance procedures, and restrictions on foreign remittance are major challenges for business operations in Bangladesh.
In the manufacturing sector, 61.9 per cent of firms stated that procurement cost has increased and mentioned difficulties in the local purchase of raw materials and parts.
The Jetro called for further improvement of the business environment for more competitiveness and to attract future investment.
Addressing the programme, Md Saiful Islam, president of the Metropolitan Chamber of Commerce and Industry, urged the government to introduce renewal of trade licence every five years with a view to reducing hassles faced by investors.
Investors will pay the annual fee to the government at a time or annually, he said, urging the government to cut the corporate tax rate gradually.
Asif A Chowdhury, president of the Japan Bangladesh Chamber of Commerce and Industry, said the government should address the problems faced by the Japanese companies to attract investors from the country.
Md Khorshed Alam, executive director of the Bangladesh Export Processing Zones Authority, Taro Kawachi, managing director of the Bangladesh Special Economic Zone, Myung-Ho-Lee, vice-president of Shoo-Ho-kai, Shah Mohammad Mahboob, director-general of the Bangladesh Investment Development Authority, and Tareq Rafi Bhuiyan Jun, secretary-general of the Japan Bangladesh Chamber of Commerce and Industry, also spoke.