Mon Dec 5, 2022 09:00 AM Last update on: Mon Dec 5, 2022 09:00 AM
With Bangladesh rapidly improving its infrastructure and connectivity and making regulatory reforms, Japan expects massive foreign investments flowing into the country as it looks to become a regional industrial hub in a few years.
"As we get out of the current economic crisis, Japanese companies will look at Bangladesh as a frontier of investment," said Ito Naoki, outgoing Japanese ambassador to Bangladesh.
He said Japan will look at the supply chain being built in Bangladesh as part of the regional supply chain.
"Once an increasing volume of investment comes from Japan, there will be a positive trend of trade and investment, which will create a positive cycle."
The envoy, who assumed his responsibility as the Japanese ambassador to Bangladesh in October 2019, made the comments during an interview with The Daily Star recently.
"As we get out of the current economic crisis, Japanese companies will look at Bangladesh as a frontier of investment," said Ito Naoki, outgoing Japanese ambassador to Bangladesh
Naoki said he is expecting bilateral trade to reach $20 billion by 2030 from around $3 billion now.
The export of apparel, the mainstay of Bangladesh's foreign trade, was worth more than $1 billion last financial year and is expected to hover around $2 billion at the end of the current fiscal year.
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) wants to raise it to $10 billion by 2030.
Naoki sees the BGMEA's export plan as possible and it might be materialised in the foreseeable future.
The Japanese Economic Zone in Araihazar will be inaugurated soon and it will attract Japanese as well as other foreign companies, according to Naoki.
Some of the very crucial infrastructure projects being implemented in Bangladesh with Japanese support include Dhaka Metro Rail, Matarbari Deep Seaport, and the third terminal of the Hazrat Shahjalal International Airport.
By this month, the Dhaka Metro Rail line-6 will be open to the public. The work on Line-1 will start early next year, while the construction of Line-5 is likely to begin in the middle of next year.
Also, in October next year, the third terminal of the Hazrat Shahjalal International Airport is expected to see a soft opening.
Besides, the road and rail connectivity between Dhaka and Chattogram and Chattogram and Cox's Bazar are rapidly improving.
"Altogether, all of these will change the face of the country," said Naoki.
The construction of unit-1 and unit-2 of the coal-fired power plant in Matarbari deep seaport is progressing rapidly. A 300-metre jetty is already in place.
And the diplomat says Matarbari needs to be a full-fledged deep seaport in 10 years from now.
"A steady implementation of the project is a must and it will require a new masterplan. This flagship project can be a game-changer for the development of Bangladesh and the entire Indo-Pacific region because Matarbari will have regional connectivity. It will be the hub of industries and energy."
However, Naoki said, it needs adequate funding and planning, and further cooperation and collaboration between Bangladesh and Japan.
Bangladesh will need to prioritise projects and Japan is in a position to provide more resources to Matarbari Port to accelerate implementation, the envoy said.
Speaking about regulatory reforms, Naoki said the government of Bangladesh has already brought in important reforms.
They include relaxing the rules on parent companies providing loans to their subsidiaries, the registration fees of motorbikes, the disposal of unused machines inside export processing zones, and the dual use of containers of EPZs.
"Still, we have some miles to go," said Naoki.
Bangladesh would have to work in the areas such as outbound remittance, taxation, customs clearance and discrimination in cash incentives foreign companies face compared to domestic firms, he said.
"Bangladesh and Japan will work together to improve the ease of doing business."
The diplomat also shed light on the opportunities Bangladesh will have and the challenges it would experience after graduating from the grouping of the least-developed countries in 2026.
In order to tackle challenges, Bangladesh needs to diversify the economy and make structural reforms since the country may face competition from the countries in the region and beyond, he said.
"You should be more aggressive in attracting foreign direct investment and be more eager to provide incentives to prospective investors."
He thinks free trade agreements (FTAs) may be a very important instrument with major trading countries, including Japan, to ensure preferential market access after becoming a developing nation.
"If you have an FTA with Japan, it would be a great step towards your accession to the RCEP, which will provide Bangladesh regional market opportunities and supply chain integration opportunities."
The Regional Comprehensive Economic Partnership is an FTA among the Asia-Pacific nations of Australia, Brunei, Cambodia, China, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, and Vietnam.
"I am a bit hesitant to say this, but some cultural aspects like graft culture or time management are the things that you may need to improve as you take the rough ride on the ocean as you graduate," Naoki added.