As China's wages rise, Bangladesh is newest stop for Japanese companies

[EastBengalPro]

TOKYO (BLOOMBERG) - As wage hikes in China push away manufacturers, Japanese companies are on the hunt for cheaper production bases elsewhere in Asia.

One country where they're landing is Bangladesh, which offers them the lowest labour costs in the Asia-Pacific region.

The number of Japanese companies with operations in Bangladesh has more than tripled since 2008, reaching 253 as of May 2017, according to the Japan External Trade Organisation. That is still far fewer than the number in China or Thailand, but their presence in Bangladesh is increasing at a much faster pace.

"Bangladesh has been traditionally known as Asia's poorest country," said Ms Mari Tanaka, an official at Japan External Trade Organisation's Overseas Research Department. "Labour costs there are lower compared to Japan and other East Asian countries, while it's possible to hire a large number of young labourers."

Among workers in 19 countries in Asia Pacific, those in Bangladesh received the lowest average monthly wage from Japanese companies, below their counterparts in Sri Lanka, Laos and Myanmar, according to a Jetro survey.

Some firms are establishing a presence in Bangladesh with an eye on its promising domestic market, Jetro says. Major companies such as Honda Motor, Rohto Pharmaceutical, and Ajinomoto are betting on growth there.


With a population of 158 million and a median age of 26.3 years, Bangladesh's gross domestic product has more than doubled over the past five years.

"Larger companies are expanding with the expectation that the domestic market will grow," Ms Tanaka said.

Uniqlo operator Fast Retailing played a role in Japanese companies starting to move to Bangladesh a decade ago, Ms Tanaka said. Their decision to outsource production there in 2008 triggered a jump in Japanese arrivals, while rising labour costs in China and worsening relations between China and Japan in 2010 and 2012 drove another burst, she said.

Among the 253 companies operating in Bangladesh, about 30 are in the clothing or leather industries, 15 or so are in clothing parts and inspection, 10 in logistics and about 15 in the IT services industry.

http://www.straitstimes.com/asia/ea...gladesh-is-newest-stop-for-japanese-companies

 

[mb444]

Japanese or any investment from anywhere is very welcome.

 

[Bilal9]

JAPANESE CEOS VIEW BANGLADESH AS NEXT INVESTMENT DESTINATION
Japanese CEOs view Bangladesh as next investment destination


Refayet Ullah Mirdha

Shinzo Abe

Visiting Japanese business leaders yesterday demanded easing of investment rules as they look to divert funds to Bangladesh from China due to rising production costs and worker shortage there.

“We want to expand business in Bangladesh but we need policy support from the government,” said Kuniharu Nakamura, president and chief executive officer of Sumitomo Corporation, one of the top three sogo shosha companies in the world.

Japanese companies that trade in a wide range of products and materials are known as sogo shosha. In addition to acting as intermediaries, sogo shosha also engage in logistics, plant development and other services, as well as international resource exploration.

Sumitomo, which has been in Bangladesh since 1961, is interested in helping the country achieve its goal of becoming a middle-income country by 2021, he said.

“If the government wants, we can help with the construction of railways and industrial parks. We are fully committed to contribute to its growth,” he said, adding that the Japanese conglomerate has been providing scholarships since 1996 to 40 students in various faculties of Dhaka University.

Nakamura's comments came at the Japan-Bangladesh Business Forum at Sonargaon Hotel in Dhaka, attended by 22 CEOs and 65 other high officials of companies from Japan. They accompanied Japanese Prime Minister Shinzo Abe during his two-day visit.

The CEOs present were from: Marubeni, Ship Healthcare Holding, Maruhisa, Kanbe, JETRO, Mayekawa, Euglena, IHI, JFE Engineering Corporation, ITOCHU, Shimizu, Mitsubishi Heavy Industries, Toshiba, Toray Industries, Nippon Poly-Glu, Medical Corporation Otsubo-Kai, Obayashi, Mitsubishi UFJ Financial Group, Bonmax and Kume Sekkei.

During his presentation, Yukio Yamada, president and CEO of Kume Sekkei, one of the leading architectural design firms in Japan, said he is interested in providing technological and architectural support for railways, airport and industrial park.

Ichiji Ishuzu, executive director of Mayekawa, manufacturer of industrial refrigeration equipment and automated food processing robots, said his company is interested to set up food processing, beverage and ice-making machinery plants.

Kiminobu Hiraishi, president of Maruhisa that owns factories dealing with integrated knitting, dyeing, printing and sewing at Adamjee Export Processing Zone, demanded direct sea freight between Bangladesh and Japan for shortening lead-time.

Kunihisha Furukawa, CEO of Ship Healthcare Holding that is engaged in the medical product business, said he has plans to invest 2 billion yen in Bangladesh to expand his business in medical college and hospital.

Mitsuru Izumo, president of Euglena, a venture company that engages in selling health food and development of bio-fuel with its core technology for mass cultivation of “euglena”, said he wants to expand his operations in Bangladesh.

In April 2014, the company launched “Euglena GENKI Programme,” that distributes Euglena Nutrition Biscuits to children in Bangladesh.

Kazi Akram Uddin Ahmed, president of the Federation of Bangladesh Chambers of Commerce and Industry, said China, Vietnam, Cambodia, India and many Asian countries have benefited tremendously from Japanese investment.

“Similarly, we expect Japan will support us in reaching our vision 2021 target.”

The World Bank in its recent study on South Asia showed that Bangladesh needs to spend $7.4 billion to $10 billion a year until 2020 to bring its power grids, roads, and water supplies up to the standard needed to serve its growing population, said Mir Nasir Hossain, former FBCCI president.

The power sector, on the other hand, will require an investment between $11 billion and $16.5 billion to generate electricity needed for industrial growth and supporting the people at large, he said.

Sakhawat Hossain, managing director of Western Marine Shipyard Ltd, said his company has been building high-quality ships for different companies and countries worldwide.

Japan has turned into a major export destination for Bangladeshi products, thanks to an increased demand for apparel and leather items at competitive prices.

Exports from Bangladesh to Japan increased 14.90 percent year-on-year to $862.08 million in fiscal 2013-14, riding on the back of generalised system of preferences.

Bangladesh shipped garment products worth $572.27 million to Japan last fiscal year, up almost 20 percent from the previous year.

-----------------------------------------------------------------------------------------------------

Japanese investors now keen on investment in Bangladesh

FE Report


Japanese investors have expressed their willingness to come to Bangladesh to explore areas of their investment.

The interest was shown in a Bangladesh-Japan business-to-business conference held on August 03 and 04 in Singapore.

A high-level Bangladesh delegation, led by Bangladesh Investment Development Authority (BIDA) chairman Kazi Aminul Islam, attended the conference.

This was disclosed at a press briefing held Tuesday in a city hotel organised by BIDA to disseminate outcome of the delegation's visit to Singapore.

Abul Kalam Azad, SDG coordinator of the Prime Minister's Office and Shubhashish Bose, commerce secretary, among others, were present at the briefing.

During the conference, the delegation conveyed what Bangladesh can offer for Japanese investors, the BIDA chairman said.

The government agencies will try to adopt best practices of Singapore with a view to improving the ease-of-doing business index and to attract foreign investment in the country, Mr Azad said.

"The Japanese are very willing to come to Bangladesh," Mr Bose said adding that steps have been taken to regain their confidence describing the 'flexible investment regime' of the country.

As a least developed country, Bangladesh enjoys duty-free and quota-free facility in many countries and they can take the advantage of this, he said adding Japanese investors can enjoy the facility in their market by investing in Bangladesh.

To ease up doing business in the country, the company act and the chartered accountants act would be amended, he informed.

Terming the delegation's visit as 'the first and important attempt' to regain the Japanese investors' confidence, Syed Nasim Manzur, who represented the Metropolitan Chamber of Commerce and Industry (MCCI) during the conference, said that renewed interest from Japanese investors have been observed per a number of official inquiries received recently from business enterprises in that country.

Earlier Bangladesh was not in the top 20 investment destinations' list of Japan, he pointed out.

"But Japanese companies now in the Asian region informed that Bangladesh has come to the 13th position due to global economic shift," he said terming it as an indication that they are willing to invest in Bangladesh.

He, however, stressed the need for continuation of exchange of such delegations.

Abul Kasem Khan, president of the Dhaka Chamber of Commerce and Industry (DCCI), said 56 per cent of the Japanese companies operating in Asia are concerned over wage hikes and they want to relocate their industries.

Japan annually invests around $20.0 billion in six Asian countries, he said adding, "If we can take the China-plus advantage, $2.0 billion Japanese investment can be drawn to the country."

The objectives of the delegation were to promote bilateral business between Bangladesh and Japan, experience Singapore's reform initiatives and networking with key policymakers and network with Singaporean investors to attract their investment in the country, according to a BIDA presentation.

About 38 Japanese companies, 24 Singaporean companies including Singapore Business Federation and IE Singapore and 55 Bangladeshi businesses attended the conference while eight focused meetings took place, the presentation added.

Singapore is potentially a billion-dollar FDI (foreign direct investment) source and is a potential partner in expanding Bangladesh's global economic and investment outreach, the BIDA presentation said adding Singaporean investors' interest in Bangladesh is growing.

It recommended strengthening of economic partnership between Bangladesh and Japan, facilitating economic zone for them and ensuring further follow-up of investment missions to and from Japan to capitalise the experiences of the delegation.

The other recommendations included implementation of business reform actions, building partnership with key Singaporean government agencies and facilitating matchmaking with Singaporean businesses.

 

[idune]

Not today or yesterday or 1 year or 2 years ago, Japan asked ruling awami regime almost 5 years ago to allocate land and necessary infrastructure for setting up industrial zone. Ruling awami regime (knowing what we know) on behest of its master, did not follow through on it commitment.