Japan wants cash incentive for its exporters in EPZs

The Japanese garment factories, which are housed inside Bangladesh’s export processing zones (EPZs), should enjoy cash incentives against exports to emerging destinations, said Naoki Ito, newly appointed Japanese ambassador to Bangladesh, yesterday. 

The apparel companies, which are outside of EPZs, enjoy 4 percent cash incentive on export to non-traditional markets but the Japanese companies are not getting this benefit, he said.

Ito was addressing a group of businesspeople from both Bangladesh and Japan at an extraordinary general meeting of the Japan-Bangladesh Chamber of Commerce and Industry (JBCCI) at the Lakeshore hotel in Dhaka.

The government has introduced 4 percent cash incentive against export of apparel items to new markets in 2009 to face the fallout of the global financial recession in 2007.

In this case, Bangladesh considers all destinations as emerging markets, except the European Union, the USA and Canada.

Moreover, the ambassador suggested Bangladesh sign free trade agreements with major trading partners including the Association of Southeast Asian Nations.

This will enable Bangladesh to continue to enjoy preferential trade privileges even after graduation from the status of least developed country in 2024, he said.

Ito also said a lot of Japanese companies were headed for Bangladesh for investment and business.

“The investment climate and business environment needs to improve, particularly, those issues and challenges of the existing companies needs to be addressed,” he said.

“The existing companies needs to be taken good care of by the government and the people of Bangladesh,” Naoki also said.

If the business climate in Bangladesh improves, the number of Japanese companies will increase here. Currently, some 305 Japanese companies are in operation in Bangladesh and more are in the pipeline, he said.

Some of the companies have been facing difficulties and delays in approval procedures for importing necessary cars, machinery, air conditioners and, in the EPZ, old machines, he said narrating a recent visit to Chittagong EPZ.

Sometimes the authorities seek very high taxes from the Japanese companies although the tax should be paid in accordance with the sales prices of goods, he said.

If these kinds of things continue, the pace of Japanese companies coming here will not be as fast as it was planned, Naoki also said.

Yuji Ando, president of the JBCCI, said every month the number of Japanese companies in Bangladesh has been increasing and it would continue to grow.

Some 70.3 percent of Japanese companies operating in Bangladesh have plans to expand their business here in the next two years, he said.

As of November last year, the amount of investment made by private Japanese companies in Bangladesh was $326 million, excluding Japan Tobacco’s $1.5 billion acquisition of Akij Group’s cigarette business.

In recent years, Japan has also turned into a big market for Bangladesh’s garment sector. Japan is the only country among the Asian nations where $1 billion-worth garment items are shipped from Bangladesh. The indication is that the potential of apparel export to Japan this year is about $1.3 billion from Bangladesh.

Akhtaruzzaman, an adviser to the JBCCI, and Tareq Rafi Bhuiyan, secretary general, also spoke.