Japanese investors have never been so interested in investing in Bangladesh, but administrative and regulatory reforms are needed to attract them, analysts and businesspeople said yesterday.
They said Japanese investors are trying to relocate their units from China and are looking for alternative destinations.
As of August, 300 Japanese companies were doing business in Bangladesh. There were only 82 of them a decade ago.
In 2011, the number of Japanese companies operating in the country was 100, said Yuji Ando, country representative of the Japan External Trade Organisation (JETRO).
Around 2,000 Japanese businesspeople visited Bangladesh in 2018 alone, according to the JETRO.
“I personally see a very good future for Japanese investment in Bangladesh,” said Yasunori Takeuchi, chief executive officer of Standard Chartered Japan.
Naser Ezaz Bijoy, CEO of Standard Chartered Bangladesh (SCB), said there were 32,000 Japanese companies in China. Of them, 5,000 to 8,000 companies were looking for an alternative.
“Bangladesh’s opportunities are quite significant, but there are challenges too,” he said.
Their comments came at a roundtable on deepening Bangladesh-Japan business ties, jointly organised by the SCB and The Daily Star at the latter’s office in the capital.
Mamun Rashid, managing partner of PwC Bangladesh, said after Japanese Honda invested in Bangladesh, Indian Hero, TVS and Bajaj also entered Bangladesh’s motorbike market.
Two Japanese car manufacturers are interested in investing in the economic zones here to manufacture cars that will be sold in other countries, said Rashid.
He added that two large Japanese companies were supposed to invest in insurance and cement industries in the country. But it did not happen because of the Holey Artisan Bakery attack in July 2016.
“Very soon, the number of Japanese companies in Bangladesh will be 500 as we are receiving good responses from Japanese investors,” said Tareq Rafi Bhuiyan, secretary-general of the Japan-Bangladesh Chamber of Commerce and Industries.
A 600-bed hospital is likely to be set up in the capital’s Uttara soon by a Japanese company, he added.
In November last year, Japan Tobacco Inc, one of the five largest tobacco companies in the world, completed its $1.47 billion acquisition of Akij Group’s tobacco business, the largest single foreign direct investment in Bangladesh.
The Japanese government has invested in some large infrastructure projects in Bangladesh. Some of them are Matarbari power plant, metro rail and the construction of a terminal at the airport in Dhaka, said Yasunori Takeuchi.
The banker has high hopes about Japanese private sector’s investment in Bangladesh.
Bijoy said Bangladesh’s ranking in the World Bank’s Ease of Doing Business is 176th, out of 190 countries.
“Despite these challenges, Bangladesh has managed to grow,” he said.
If the growth rate continues even at 7.5 percent, Bangladesh will have half a trillion-dollar economy in five years, he added.
Bangladesh would need to have a $3 trillion economy to be considered a developed country by 2041. It is possible to achieve the target with proper foreign investment, Bijoy added.
Takeuchi said some large Japanese corporations have raised safety concerns after the Holey Artisan attack.
Yuji Ando added that the bureaucracy along with a complicated taxation system are barriers to attracting Japanese investment.
Shariful Alam, country manager of Mitsui, said absence of a deep-sea port was a major challenge for them. The delay in the delivery of goods from the airport and sea port is another challenge.
Mahfuz Anam, editor and publisher of The Daily Star, said Japan has long been a trusted development partner of Bangladesh.
Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, presented the keynote paper, while Shahedul Anam Khan, associate editor of The Daily Star, moderated the discussion.
Ali Z Chowdhury, general manager of Tekken Corporation, and Shahwar Nizam, partner of DFDL Bangladesh, also spoke.