Japan has sought competitive incentives and long-term policies to ensure the viability of businesses of its investors who are eyeing expansion in Bangladesh.
Japanese Ambassador to Bangladesh Naoki Ito made the request meeting Finance Minister AHM Mustafa Kamal on November 4.
Kamal called for bringing over relevant persons, including officials of the embassy and Japan International Cooperation Agency (Jica), at the Economic Relations Division on November 16 to discuss the issues. Talking to journalists that day, he also said to have assured giving due consideration to all proposals.
The requests are logical as Japanese investors want sustainability of their businesses, Paban Chowdhury, executive chairman of Bangladesh Economic Zones Authority (Beza), told The Daily Star last week.
Frequent policy changes are a hindrance on business plans while stability helps settle investment targets, he said, adding that the incentives sought include tax exemptions and relaxation of import duty on capital machinery.
Quality Japanese investment will set Bangladesh’s standard, giving others around the globe the confidence and assurance to come over, he said.
“If the planned Japanese special economic zone attains success, Bangladesh will not face any problem in attracting foreign direct investment (FDI) in the future,” said Chowdhury, referring to the creation of a “brand image” of the country.
He expects the zone to draw in $20 billion in Japanese FDI once it was established on 650 acres of land in Narayanganj with a capacity to accommodate around 200 companies.
Though the “Development of Infrastructure for Japanese Economic Zone at Araihazar in Narayanganj Project” is scheduled for completion by June 2023, he hopes for the factories to be set up by early 2022.
The Tk 2,582.17-crore project got approval from the Executive Committee of the National Economic Council in March.
Of the cost, the government will provide Tk 454.35 crore as investment while Jica will provide the remaining Tk 2,127.82 crore as a loan. Japanese trading giant Sumitomo Corporation and Beza teamed up on May 26 to develop the zone.
Sumitomo has built and continues to run economic zones in the Philippines, Indonesia, Myanmar and Vietnam and the Bangladesh one will be its fifth, Chowdhury said. According to the latest study of the Japan External Trade Organization, investment of Japanese companies in Bangladesh has been steadily increasing at a rate of 16-17 percent for the last couple of years with a majority showing growing interest in expansion.
The study shows that the number of Japanese companies grew from 183 in 2014 to 269 in 2018 with 70 percent expressing interest in expansion within a year and around 60 percent in the next two to three years.