News Bangladesh - Japan Relation

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Japan External Trade Organization (JETRO) has asked to lift the limitation of telegraphic transfer (TT) remittance for imports to attract more Japanese investment in Bangladesh.

The organization says the limitation is hindering the country from increasing trade and investment.

TT remittance for import trade is the international standard and the process can play a vital role to increase investment in the country, said JETRO Country Representative Yuji Ando.

The government is now annually allowing $200,000 for importing through TT remittance, he said, adding that import through letters of credit (LCs) takes a lot of time, but import through TT remittance saves time and is easier.

To this end, Deputy Secretary of the Commerce Ministry Mohammad Monir Hossain Hawlader said the government is considering the issue positively and necessary steps have already been taken in the draft import policy for 2021-24 to make the TT remittance process for importing easier.

Yuji Ando said Bangladesh is one of the major destinations for Japanese entrepreneurs and they are investing in different fields, including ready-made garments (RMG), textile, IT, and infrastructure, taking the advantage of competitive human resources and a huge domestic market.

“The number of Japanese companies operating in Bangladesh has increased around four times in 10 years. A total of 321 Japanese firms are currently running their businesses in the country which was 83 in 2010,” he said.

Many Japanese entrepreneurs are expanding their businesses in different fields, including electric and consumer products, he added.

Though the flow of Japanese investment is now slow due to the ongoing pandemic, he hopes that investment will increase in a bigger way as the Bangladesh government is implementing different projects, including the Japan Economic Zone at Araihazar upazila under Narayanganj district.

Many Japanese infrastructure development companies are coming to Bangladesh for working on the Japanese Official Development Assistance (ODA) projects, including the Matarbari Deep Sea Port.

Japanese entrepreneurs are also showing their keenness to invest in the country’s manufacturing, fast-moving consumer goods (FMCG), infrastructure development, and tech and digital startups, he added.

He said Japanese firms are also investing in different projects under the Public-Private Partnership (PPP) method.

However, Yuji Ando mentioned that many challenges still exist for Japanese and other foreign companies in Bangladesh, citing examples of infrastructure and taxation.

For attracting more Japanese investors, the Japanese trade diplomat said Bangladesh will have to remove the bottlenecks of investment and improve its position in the ease of doing business index.

He urged the authorities to change the foreign exchange regulations for ensuring smooth foreign remittance by a branch office and foreign loans for working capital from the parent company.

Lifting limitations for royalties or technical assistance remittance and TT remittance for import is also important, Ando said.

He urged the government to ensure smooth services in tax and VAT systems and an easy registration process.

Ando mentioned that Japan has been significantly contributing to Bangladesh’s socio-economic development since its independence with the trading relationship getting stronger and productive day by day.

To attract more Japanese investment, Bangladesh must prioritize issues such as corporate governance and a more investment-friendly environment, he further said.

Japan and Bangladesh have maintained friendly relations since February 10, 1972, through economic and technical cooperation, cultural exchanges, and mutual visits.

 

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The pandemic is showing no signs of abating but still 41.8 per cent of Japanese companies in Bangladesh during 2020 wanted to expand business in the next two years, according to a survey by Japan External Trade Organization (Jetro).

However, 70.3 per cent had sought to do so in 2019.

In 2020, another 49.3 per cent believed that their operations will remain the same while 6 per cent pondered over going for retrenching.

Besides, 3 per cent wanted to shift to another country withdrawing investments, failing to bear the difficulties of the ongoing Covid-19 fallouts.

The "2019 JETRO Survey on Business Condition of Japanese Companies in Asia and Oceania" was released on March 2021.

Over 300 companies are doing business in Bangladesh and the number has been rising in recent years due to continuous economic growth in the last decade.

Those expressing intent to expand business in Bangladesh cite growth potential and sales increases enabled through exports and the domestic market.

According to the Jetro report, 9 per cent of the companies in Bangladesh have already recovered from the pandemic's effects, 31.3 per cent expect to return to normalcy in the first half of 2021 and 34.3 per cent in the second half.

The report said a change in the trading environments in Vietnam, Bangladesh and India had a positive impact on business performance.

Many investors stated that the shift of production to Vietnam and Bangladesh, caused by the US-China trade friction, had a positive impact.

Jetro said further improvement of the business environment in Bangladesh was needed for more competitiveness and future investment.

Some 66.7 per cent of Japanese companies stated that their major challenges were in local procurement of raw materials and components while 56.1 per cent in customs procedures.

The report found that 48.9 per cent expected to generate an operating profit in 2020, down 16.7 percentage points from 65.6 per cent in 2019.

In contrast, 32.4 per cent expect to incur an operating loss, up 14.7 percentage points from 17.7 per cent in 2019.

With respect to operating profit forecast, Bangladesh stands in the lowest position while South Korea the highest with 71.8 per cent, exceeding 60 per cent in Taiwan, Australia, and China.

For 2020, 16 per cent expect an increase in operating profit over 2019, down 17.1 percentage points from 33.1 per cent in 2019.

The proportion of companies expecting a decrease in operating profit was 65.6 per cent, up 26.8 percentage points from 29.8 per cent in 2019.

A total of 52.8 per cent expect an increase in operating profit in 2021, up 10.7 percentage points from the 2020 forecast (42.1 per cent) in 2019. Bangladesh will expect an increase by 38.3 per cent in 2021.

Yuji Ando, country representative of Jetro, said Bangladesh has the potential to develop businesses but needs to improve environment bottlenecks.

He said investors face different hassles like time consuming customs procedures, difficulty in local procurement of raw materials and components, power shortages and wage hikes.

According to him, in recent years the wages of workers and employees have increased in Bangladesh.

Besides, Japanese companies have no opportunity to borrow from local banks in Bangladesh, for which they sometimes have to face a shortage of working capital.

The survey took comments of 13,399 Japanese firms engaged in manufacturing and non-manufacturing sectors in 20 Asia and Oceania countries between August and September last year.

The report said business confidence had fallen to its lowest level due to the Covid-19 pandemic whereas the deterioration was mild in China.

Even the intentions towards business expansions in the next one or two years hit a new record low.

The impact of changes in trading environments such as the US-China conflict and a decline in demand due to the Covid-19 pandemic have had a negative impact on the companies' motivation to expand their business.

Even under such a harsh environment, 50.9 per cent of the companies in India and 53.5 per cent in Pakistan are still motivated towards expanding business in the next one to two years.

 

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The relationship between Japan and Bangladesh is a trusted and time-tested one. Bangladesh became Japan's biggest recipient of official development assistance in 2020. Since the Covid-19 pandemic started more than a year ago, there has been a lot of talks and anticipation about Japanese businesses moving base to Bangladesh. In a series of high-profile interviews, The Daily Star tries to understand the increasing interest of Japanese investors in Bangladesh, its growth prospects, barriers to growth, ground realities, and how to attract more Japanese investment. As part of the series, today, we are running the interview of ITO Naoki, Japanese ambassador to Bangladesh.

DS: What lessons can Bangladesh learn from Japan's growth trajectory?

Naoki: Bangladesh at present and Japan in 1971 share almost the same level of GDP per capita (About $2,000). Japan achieved rapid economic growth after the Second World War, particularly in the 1960s and the 1970s. That was based on the improvement of infrastructures, namely, highway and railway networks, airports, and coastal industrial zones, and industrialisation policy focusing on prime sectors, including automobile, steel, electronics, textile, and SMEs.

Bangladesh has been implementing several mega infrastructure projects to accelerate the growth, targeting to graduate from the grouping of the least developed countries (LDC) by 2026 and realise an advanced economy by 2041.

In addition to industrialisation and infrastructure development, Japan focused on human resources development, education, health, and SMEs. I am pleased to note that Bangladesh is now putting its priority on these areas.

DS: As we celebrate the 50th anniversary of Bangladesh, how significant has the contribution of Japanese companies been in the country's journey towards a developing nation? How do you assess Japan's role in developing our economy?

Naoki: Since the independence, Bangladesh has become the largest recipient of Japan's official development assistance (ODA). The construction of the Kanchpur, Meghna, and Gumti second bridges and the existing bridges rehabilitation project are excellent examples of the Japanese ODA. Those bridges have significantly reduced the travel time between Dhaka and Chattogram.

Japanese companies transferred their know-how and skills to the Bangladeshi engineers and workers for future maintenance work and infrastructure construction by themselves.

As a potential hub of the regional economy, Matarbari Port would connect South Asia and South-East Asia. In other words, it could re-shape Bangladesh as a trading nation deeply incorporated in the inter-regional and global value chains.

In parallel to the support for building infrastructures, the investment from the Japanese private sector has also played a significant role. As of September 2020, cumulative direct investment from Japan reached $390.18 million.

Furthermore, as of April 2021, some 321 companies are operating in Bangladesh. The number quadrupled from 83 in 2010. The amount of investment in FY2019-20, even under the Covid-19 pandemic, was $60 million, about three times higher than in FY2009-2010, when it was $22 million.

Currently, Mitsubishi Motors Corporation is exploring the possibility of making a new investment to establish a completely knocked down (CKD) assembly plant for National Brand Cars. This project would be immensely impactful for Bangladesh's industrialisation and the diversification of its economy through technology transfer and the creation of significant employment opportunities.

DS: What are some of the main achievements of the bilateral value-chain of Japan and Bangladesh? What is the bilateral trade scenario? What steps should be taken to strengthen trade relations?

Naoki: Japan is the largest export market for Bangladesh in Asia. Over the last 10 years, the export figures have doubled and reached $1.2 billion. The main export items are textile, ready-made garments, and leather products. I expect these sectors will continue to secure a significant position, and the key is to establish the brand image by increasing productivity and assuring better quality. I firmly believe that is possible.

Pharmaceuticals, agricultural and fishery products, and the food industry have high potential. Your marvellous mangoes are yet to enter the Japanese market. Once exported, Bangladesh's mangoes and lychees will undoubtedly be popular among our consumers.

I reiterate the importance of concrete and early solutions to tax, customs, and foreign exchange (remittance) issues, which have already been raised by Japanese companies operating in Bangladesh. The existing companies will play a critical role in enhancing foreign direct investment, and those steps are necessary to make Bangladesh an attractive destination for future investment. Bangladesh needs to reduce cost and bring ease of doing business.

Following a series of dialogues with the Bangladesh government, areas such as parent companies' loans for working capital, royalty remittance, container round-use for companies at the export processing zones (EPZs), and registration fee of two-wheelers have made considerable advance.

Nevertheless, several remaining business risk factors impede newcomers into a market, such as delay of letters of credit payment, tight regulation on telegraphic transfer for import transaction, cash incentive for RMG exports, and difficulties in customs clearance.

Let me emphasise that a business environment needs to improve from the eyes of existing companies, and to attract further investment to Bangladesh, we must find solutions to their challenges.

I also would like to look at our economic partnership from a different angle. When Bangladesh graduates from LDC status by 2026, it needs to keep or even further expedite the flow of trade in goods and services with other countries. I believe it is vital for Bangladesh to proactively conduct studies and then advance negotiations on bilateral free trade agreements (FTAs) with countries, including Japan.

DS: Japan's contributions have been fundamental in various areas of infrastructure development. What are the other sectors where Japan has made notable contributions?

Naoki: In the Japanese FY2020, the government of Japan provided 373.2 billion Japanese yen ($3.423 billion) to Bangladesh as project loans and financial assistance for Covid-19 countermeasures. This amount means that Bangladesh has become the largest recipient, overtaking India, on a single Japanese fiscal year basis for the first time in the history of the yen loan.

The government of Japan and the Japan International Cooperation Agency (Jica) have contributed to the development of Bangladesh through loans, grant aid, and dispatch of the Japan Overseas Cooperation Volunteers (JOCV) in various fields, including education, health, water/sanitation, and agriculture.

In the past, support in the agricultural sector included the establishment of agricultural research institutes and universities. Notable examples are the establishment of the Citrus and Vegetable Seed Research Centre under Bangladesh Agricultural Research Institute in the late 1970s and the Institute of Postgraduate Studies in Agriculture, which became the first graduate school of agriculture in Bangladesh in 1998.

Japan extended technical cooperation and support for skills transfer through the JOCV. The radishes that were grown on a trial basis were later called Tasaki radish, after a JOCV who popularised them.

In the future, Japan will broaden its contributions to include the IT sector, food value-chains, and human resource and skills development. These are essential for the sustainable and inclusive growth of the economy and society.

DS: Will Japan continue the GSP facility for Bangladesh even after the graduation of the country from the LDC?

Naoki: Japan is now providing the government of Bangladesh with special preferential treatment (SPT), which is applied only to LDCs. Although subject items and applied tariff rates differ from the SPT, Japan will continue to provide the generalised system of preferences (GSP) after Bangladesh's graduation from the LDC group in 2026.

On the other hand, from a long-term perspective, just receiving GSP will neither increase export nor contribute to strengthening Bangladesh's competitiveness in the global market. By concluding FTA or economic partnership agreement, Japan and Bangladesh will be able to form a new partnership of trade and investment. Then, more new investments from Japanese companies could be expected. That would lead the country to expand trade and promote economic diversification.

As a first step, I would urge both Japanese and Bangladesh's companies to share that FTA or PTA (preferential trade agreement) is beneficial in expanding their business between the two countries.

DS: Why are Japanese companies interested in investing in Bangladesh? What are the barriers that Bangladesh need to remove to attract more Japanese investment?

Naoki: Bangladesh exhibits tremendous development potential due to its advantageous geographical location in Asia, linking India and the Asean. The Japanese companies will look at the advantages of Bangladesh, such as labour cost, skills availability, logistics, infrastructure, and benefits of EPZs and special economic zones.

Undoubtedly, Japanese investors have high hopes for the business potential in Bangladesh, in readymade garment, power and energy sectors, and other sectors such as ICT, light engineering, pharmaceutical, and agro-based industry.

DS: How do you look at the Japanese Special Economic Zone in Bangladesh?

Naoki: The development of the Japanese Economic Zone in Araihazar also makes Bangladesh a more attractive destination for Japanese investment. To that end, direct and indirect incentives are required, including corporate tax incentives.

Also crucial is coordinated improvement in investment climate among relevant ministries and authorities. Then, I believe the Araihazar Economic Zone will become the No.1 investment destination among many other economic zones in Asia.

Bangladesh has the advantage of attracting Japanese companies as they intend to diversify their production bases. Besides, the Beza Japan office is eager to assist Japanese companies in enhancing the bilateral business relationship.

The Bangladesh Economic Zones Authority (Beza) and Japanese trading giant Sumitomo Corporation have jointly established a new special purpose company (SPC) to run the economic zone. The Jica has provided 21.1 billion Japanese yen for the SEZ in 2015 and 2019 through a yen loan.

The SPC will commence its own development work and sales activity from the end of 2021 and start its operation before the end of 2022. Once the whole development project is complete, the economic zone will accommodate dozens to 100 companies. Araihazar will soon become a game-changer to accelerate FDI to Bangladesh, particularly Japanese direct investment. This zone by itself will be a $1 billion investment project.

 

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The Ambassador Extraordinary and Plenipotentiary of Japan to the People’s Republic of Bangladesh, ITO Naoki and the multifaceted artist Tahsan, sat down for an interview with Rafi Hossain. The guests talked about the Japan fest 2021 and how over the years the friendship between Bangladesh and Japan keeps on growing.

Rafi Hossain: Today, we have two guests with us, Honourable Ambassador of Japan, ITO Naoki sir and our beloved singer, songwriter, and actor Tahsan Khan.

Your Excellency, could you tell us more about how Japan Fest first started?


ITO Naoki:
Japan Fest first started about ten years ago to showcase Japanese culture. Previously, we would have an in-person event for people to come to the venue and enjoy a hands-on experience of Japanese culture, such as ikebana, bonsai, tea ceremony, or even trying on a kimono. I believe it's a great way to get to know a foreign culture. During in-person events, we would host this at the Shilpakala Academy. A few years ago, we even had around a thousand people taking part in it in one day, and it was a very successful event. Moreover, Bangladeshi and Japanese people also have certain similarities and a natural sense of affinity between themselves. For instance, Japan and Bangladesh love greenery, and both are rice-cultivating nations. Both countries also have strong family values. Additionally, we have industrial, hard-working people. Also, both countries are scarce in natural resources and are prone to natural disasters. So, we have a mutual basis of understanding between ourselves in terms of the cultural front. It is the first time we have held this event virtually, in which Tahsan kindly participated. Thank you very much, Tahsan.

Rafi Hossain: Tahsan, can you tell us how you got associated with the project?

Tahsan Khan:
My relationship with Japan first began around 2015 when I became the brand ambassador of a Japanese brand, Uniqlo. During my tenure, I had the opportunity to travel there for the first time. After that, I got involved with JETRO – Japanese External Trade Relations Organisation, and the Japanese Embassy gracefully invited me to Japan to take part in a fellowship. So, I've travelled to Japan quite a few times now, and I've had the opportunity to meet many amazing Japanese people who are illustrious in their fields. At the same time, I got to interact with regular people in Japan as well. So, I've developed a deep sense of respect for them and their culture, and when I got asked to take part in their festival, I gladly agreed to do so. Like the Honourable Ambassador mentioned, the Japan Fest has been going on for ten years now, and this is the first time it has been organised virtually because of the pandemic situation.

I am happy that I got to be a part of it and bring my experiences from Japan into it by creating new music for the show. It was quite eye-opening as this was the first time I had to sing in Japanese. The last time I visited Japan, I got to meet Kazufumi Miyazawa. He is an amazing entertainer, and he was part of the band, Boom. We were discussing our favourite and most celebrated songs, and he mentioned that it was Shima Uta. When he described the meaning of the song to me, I was very touched. I felt that the message was universal and wished that I could translate it to Bangla, which he gladly encouraged me to do. I did translate a bit of it to Bangla, and the highlight of Japan Fest for me was getting to sing it with him. But I also have to thank his Excellency for singing a Rabindra sangeet, Anondoloke, with me, with only five minutes of practice. It was an amazing experience for me.

Rafi Hossain: Tell us more about the song, Shima Uta, Tahsan.

Tahsan Khan:
Shima Uta is a song about war and peace. When a country is at war, it loses everything; both the brave men and women who risk their lives and those that they leave behind have to make a big sacrifice. We lose colour and the essence of life when we're at war. The message of the song is that we cannot call ourselves civilised beings if we continue carrying out atrocities in the name of war. The universal message is that we need to make the world leaders and common people realise that we should strive for a peaceful world, and set aside our differences, be it geographic, religious, or economic.

Rafi Hossain: Can you tell us more about the vision of Japan Fest, Mr Ambassador?

ITO Naoki:
Bangladesh is an important country for Japan, and we supported Bangladesh's independence. Japan has lent assistance to the development of Bangladesh as well. Nowadays, people are also engaging in economic relations between our countries. So, I believe it is time to uplift this amicable relationship. So, cultural exchange and understanding are really important. This event, therefore, tried to bring Japanese culture to a larger audience, without risking the health of people during a pandemic. We are also grateful for the involvement of Tahsan khan, who knows a lot about our culture and is loved by Japanese people as well for promoting economic relations by supporting Uniqlo and even Pilot.

We also asked him to make a new song this time, which has been titled Bondhutto Potaka, or friendship flag. Through the song, he tried to deliver two messages: one about the importance of friendship between Japan and Bangladesh, and the other is about preventative measures during this pandemic. You can also see this in his music video. Similar to Shima Uta, his song is beautiful and carries an important message. I might sing like a karaoke singer, but I wanted to pay tribute to Rabindranath Tagore during the event. He is very well-known in Japan as a Bengali poet, but not as a composer. So, I asked Tahsan to help me with it too. I am delighted to say that the event was a success, as the video of Japan Fest on the embassy's YouTube channel reached over 280,000 views.

Rafi Hossain: What do you find the most fascinating about Japan?

Tahsan Khan:
This question brings me back to Bondhutter Potaka, while writing it, I was pondering over the similarities our countries had when I realised the similarity between our flags. So, I included that aspect in the lyrics. Bangladesh has been an independent country for fifty years now, and many countries have assisted us along the way. Japan is one such country that has been at the forefront of this since the beginning. However, many people are unaware of this since Japan is not vocal about their help since they are very humble. So, I thought I could bring attention to their foreign and infrastructural support throughout the years that has cemented our relationship.

My hope with this song is that in the coming years, Bangladesh will become a developed country, and other nations can then look at the friendship between us and use it as an example of how long-term bonds can bring about positive changes not only within the countries involved but those outside of it as well. It was a lengthy event, but I'm grateful for everyone who was a part of it. I am thankful to the embassy for organising such a tasteful festival as well. I want to share a story about Japan here as well. I was at the Pilot pen factory, and I asked an employee why they strive so hard to make the best products, and his answer touched me to the core. He said that during the war, they were cut off from the entire world and international trade. Now that they get to produce products for their people and neighbouring countries, they give their best to it as you would never sell something below par to your family. This is true for everyone in Japan, and that's why they have succeeded in making cars, watches, and so on. I think we can achieve this in Bangladesh, as well, if we view each other as a family.

Rafi Hossain: Mr Ambassador, do you have any plans to make Japan Fest a better success?

ITO Naoki:
This time, the Japan Fest was supported by Rahat Hayat, better known as DJ Rahat. His company, Blues Communication, did a fantastic job, and I am very thankful to him for that. Deepto TV also helped us tremendously by lending us their studio. In addition, this was initially broadcasted by RTV, thanks to their CEO, Mr Syed Ashik Rahman. Kaushik Hossain Taposh also helped us by using Gaan Bangla.

Next year will mark the 50th anniversary of Japan Bangladesh diplomatic relations, and everybody is very positive, forthcoming, and supportive. So, the idea and willingness are available, but the planning is yet to start because of the COVID-19 pandemic. The ambassador can only play a small part; having such artists and influencers spread the message of cooperation is much more important as they reach many people across borders. In the past 50 years, Bangladesh has achieved great economic growth, and that will perhaps be reflected in next year's Japan Fest.

Rafi Hossain: How do you plan on incorporating people from different areas of the media into this event?

ITO Noaki:
I hope that next year influencers, journalists, artists, and even sportspeople from Japan and Bangladesh can visit each other's countries and learn about the new culture. They can also share their experience on social media and help spread their learning. I also want to add that the embassy will organise a singing contest to encourage people of Bangladesh to sing Bondhutter Potaka on social media, as it can be important during current times. Perhaps The Daily Star can be a partner in this as well.

Rafi Hossain: What are some things that you found to be unique about Bangladesh?

ITO Naoki:
Bengali hospitality is amazing. At dinner tables, the guest is always taken care of, and the food is always delicious. One thing that was interesting to see was the effort that is put into the Hilsha fish and how you take care of the bones. Sometimes it can be slightly spicy for us though. I also like Bangladeshi music and art. I find Bangladesh to be a very vibrant country. Dhaka especially is a busy city, which is reminiscent of Tokyo, where I am from. The traffic jam is not very enjoyable, but it is a sign of the rapid economic growth the country is experiencing. I also got to see the metro in Uttara, and I was very moved by the reactions of people there. I believe it was the first electricity run vehicle in the country, and it is a sign of development as well. I'm sure people will enjoy the convenience of public transport without traffic congestion, and I hope it will give them confidence in the economy. I'm glad Japan was able to introduce the Dhaka metro system. The Prime Minister and the leaders of Bangladesh have taken a step in the right direction to show world leaders that Bangladesh is changing.

Rafi Hossain: Thank you for being with us today.

 

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Japanese Ambassador to Bangladesh ITO Naoki said his country is keen to work together with Bangladesh to develop smart city here.

"We are contributing in many areas including infrastructure development in Bangladesh and Japan is now interested to develop smart city," he said during a bilateral meeting with State Minister for ICT Zunaid Ahmed Palak at the latter's office at ICT Division here today.

The ambassador said Japan and Bangladesh could work together on how to develop strategic partnership for widening the cooperation between the two friendly countries.

"Definitely ICT is now key driver of economy and JICA can provide support to development of human resource, enhance and enrich master plan for 2041 of Bangladesh," said Naoki.

He assured of looking into the number of proposals offered by ICT State Minister Zunaid Ahmed Palak through his presentation, including the design of a project, in association with Japan, to materialize the High-end Computing Centre in Bangladesh, e-waste management and discussions on those.

Appreciating the envoy's eagerness to work for developing smart city, Palak sought Japan's assistance and cooperation in Prime Minister's dream programme – `My Village, My Town' for ensuring all modern facilities enjoyed by the city people to the rural people.

"Not only developing smart city, but also we want Japan's cooperation in making entire Bangladesh into a smart country," Palak said, adding Japan can provide help in health, education, agriculture, automobile and other areas.

In his presentation the ICT state minister said that the government has taken initiatives to establish Bangladesh-Japan ICT University with state -of- the- art innovation center and research and development facilities to create resources and expertise befitting to Fourth Industrial Revolution (Industry 4.0) and Society 5.0.

"We have already sent a proposal to ERD to establish Bangladesh-Japan ICT University to fulfill the specifications to accomplish Industrial Revolution 4.0 and Society 5.0," he said and added resources and expertise will be developed as per the industrial requirements from Japan.

Palak also sought cooperation from Japan to invest already-built 7 Hi-Tech/IT Parks of the 39 as the government has created a business-friendly environment there.

ICT Senior Secretary N M Zeaul Alam, Executive Director of Bangladesh Computer Council, Managing Director of Bangladesh Hi-Tech Park Authority Dr. Bikarno Kumer Ghose and officials of Japan embassy were present, among others.

 

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A total of 100 companies from Japan will invest $1 billion on the Special Economic Zone (SEZ) at Araihazar Upazila in Narayanganj, said Ito Naoki, Ambassador of Japan to Bangladesh.

Answering a question, Ito Naoki said, "In the last 10 years, NIPRO Corporation and JMI Group have jointly invested US$100 million, which is wonderful. Japanese investment would increase proportionately as Bangladesh"s economy will increase in stature. A new Special Economic Zone is being developed at Araihazar, outskirt of Dhaka. Our goal is for 100 Japanese companies to US$1 billion at the Araihazar SEZ. The pharmaceuticals sector is very important in this regard. I strongly believe that JMI"s successful venture with NIPRO Corporation will play an important role in bringing more Japanese investment in Bangladesh"s healthcare sector."

 

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Japanese Ambassador to Bangladesh ITO Naoki said the companies of his country are looking at Bangladesh as a new frontier of investment in Asia.

He made the remarks at a digital seminar on "Banking Support for Bangladesh-Japan Trade and Business Growth" jointly organised by Eastern Bank Limited (EBL) and Japan External Trade Organization (JETRO) on Monday.

The Japanese ambassador said that one of the outstanding issues in bringing ease of doing business here in Bangladesh is the known restrictive use of telegraphic transfer in settling import transactions.

He said, "Nowadays telegraphic transfer is a standard method in international trade settlement. Bangladesh has yet to standardise it that has been a predicament of integrating Bangladesh into global supply chains."

Attended by representatives of top Japanese companies operating in Bangladesh, the seminar was arranged to discuss and understand banking services and products requirements for Japanese investment in the country.

Managing Director and CEO of EBL said that Japan is the biggest development partner of Bangladesh and as a leading private commercial bank of the country EBL should come up with products and services to meet the ever growing banking requirements of Japanese companies operating here in Bangladesh.

He announced at the seminar that EBL will soon open a Japan Desk to cater to the banking needs of the Japanese companies to provide one-stop service.
Country Representative of JETRO Yuji Ando said Japan-Bangladesh enjoy special relationship which has stood the test of time.

"During the challenging time of COVID-19 pandemic Japanese companies suffered supply chain disruption. Japanese companies are looking for diversification of supply chain to reduce the risk. Bangladesh is one of the potential countries for the Japanese companies to diversify their production," he added.

Ahmed Shaheen, DMD and Head of Corporate Banking of EBL gave a presentation on services and propositions of EBL, suitable for Japanese investors and responded to queries from participating companies.

The seminar was also attended by First Secretary, Head of Economic Department of Japanese embassy Haruta Hiroki, President of Japan Commerce and Industries Association in Dhaka Hikari Kawai, and Vice President of Japan-Bangladesh Chamber of Commerce and Industries SM Shariful Alam.

 

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The interest of Japanese companies and joint ventures in Bangladesh has grown steadily in the past decade with their increased footprint.

The Japan Bangladesh Chamber of Commerce and Industry (JBCCI) and the Japanese Commerce and Industry Association in Dhaka (JCIAD) have now members more than three times they had in 2010.

According to the Japan External Trade Organisation (JETRO), the JBCCI has shown an average increase trend of members every year since 2010.

But the chamber got the highest 40 firms in 2014.

The JCIAD, the association for only Japanese firms, also saw the arrival of 14 and 17 companies in 2011 and 2015 against the average yearly trend of five to six.

The JBCCI has now 318 companies as members while JCIAD has 111 as of 2019 against 83 and 30 members respectively in 2010.

"Bangladesh has experienced two waves of the arrival of Japanese-origin companies and joint ventures since 2008. The third wave also started experiencing before coronavirus situation," says JETRO country representative Yuji Ando.

These Japanese companies are engaged in ready-made garments, trading, development projects, service sector and private investment, he adds.

Mr Ando, however, tells the FE that the third wave is likely after the improvement of the Covid-19 situation.

Twenty-nine JCIAD-affiliated firms have invested in garments, 28 in uplift projects, 13 in manufacturing and 19 in the service sector and domestic market.

The JCIAD was born in 1972 and the JBCCI in 2004 with the rise of joint ventures or companies having business interests with Japan.

With the coming of Uniqlo in Bangladesh in 2008, the first wave of Japanese companies was witnessed until 2011 in line with trading and services like inspection.

The second wave began in 2014 after the Japanese premier's tour of Bangladesh and a commitment of $6.0-billion economic cooperation.

Before the pandemic, Mr Ando says, all types of Japanese companies visited Bangladesh to see the investment situation here and still they are querying those as part of their interest.

"I think after corona, the third wave will be visible," he told the FE over the phone, indicating the readiness of the Japanese economic zone at Araihazar by 2022.

Mr Ando, however, says despite travel restrictions, many interested companies continue queries and hold online meetings to know about the updated situation.

The JETRO's annual survey 2019 also shows 70-per cent of Japanese companies working in the country plan for expansion in the next two years.

Meanwhile, an effort has been made to have a free trade agreement (FTA) between Bangladesh and Japan reflecting a pro-business environment.

The JBCCI along with the government has started a survey on the FTA to understand the demand from companies and guide two governments in signing the deal in future.

 

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The automotive industry in Bangladesh could be an emerging investment destination for Japanese entrepreneurs, Dhaka Chamber of Commerce and Industry's (DCCI) President Rizwan Rahman said yesterday.

Rahman said this in a bilateral business meeting with Japanese Ambassador to Bangladesh Ito Naoki held at DCCI office.

In fiscal year 2019-20, Bangladesh's bilateral trade with Japan stood at $2.92 billion when Bangladesh exported goods worth $1.2 billion and imported $1.72 billion worth of products from the East Asian island nation, he said.

But Bangladesh's export to Japan fell to $1.18 billion in 2020-21 fiscal year because of the Covid-19 pandemic, he said and expressed his hope that the amount would increase in the days to come.

He said 321 Japanese companies are now operating in Bangladesh and Japanese foreign direct investment in Bangladesh was $397.15 million in March 2021.

Stating that Bangladesh mainly exports garment products to Japan, he urged the ambassador to facilitate other promising products for export to Japan.

Mentioning the strong bilateral business relation Japan shares with Bangladesh, he thanked the Japanese government for providing the Covid-19 vaccine for the Bangladeshi people.

Naoki said Bangladesh has been able to send a strong message to the world and maintain a positive growth in gross domestic product even during the pandemic.

He also said the Japanese economic zone in Araihazar will be able to go for operation by next year and it will expedite Japanese investments in Bangladesh.

The Japanese ambassador said the governments of both the countries can sign free trade agreements.

Naoki also said the automotive industry in Bangladesh can be a good destination for investment.

Japan's Mitsubishi has completed their feasibility study and next year they will take decision on investment in Bangladesh, he added.

 

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Some Japanese companies are thinking of entering the e-commerce business in Bangladesh, said ITO Naoki, Japanese ambassador to Bangladesh, yesterday.

"I learned of several Japanese companies which are thinking of entering e-commerce business or selling their products through e-commerce here in Bangladesh," he said.

In future, some Japanese companies will be visible through e-commerce platforms in Bangladesh, he added.

He was addressing a session on "Ecommerce & Digital Business - Flourishing Sector to Lead the Future" at a four-day World Congress on Information Technology (WCIT) Bangladesh 2021 at Bangabandhu International Conference Center.

"I talked to some Japanese business people in Bangladesh and asked what the potential challenges were.

They said logistics as timely delivery is very crucial for the success of e-commerce and facilitation of e-logistics is very important," said the ambassador.

Another challenge is shoddy or counterfeit goods and these goods should be excluded from the market as these do not give confidence to the system, he said.

Other challenges are a secure online payment system, regulatory framework and coordinated efforts, said Naoki.

"I really hope that Bangladesh will see a better future for the e-commerce sector in the near future," he said.

"One of the important developments of Softbank's decision to buy some shares of bKash, a mobile payment service company, is very successful," he said.

"The fact that Softbank decide to put money to bKash, its mean company like Softbank recognised overall running system by bKash," he added.

"I think that is a very important message for outside investors to Bangladesh. If bKash goes more successful as a result of Softbank investment, following it prospective investors will come to the e-commerce area in Bangladesh," said the ambassador.

"I think that will provide a tremendous opportunity for Bangladesh to make the e-commerce sector more mature," he said, adding that Softbank's decision has a symbolic meaning for the future development of the sector.

Formulating a special law and introducing a regulatory authority are crucial for warding off future e-commerce frauds, said Hafizur Rahman, an additional secretary to the commerce ministry.

"We should require an agency that would work promptly and immediately to address the irregularities in the e-commerce sector. I believe the government is working to take initiative to regulate the e-commerce in future," he said.

"One issue is framing a special law and another issue is introducing one authority. Though we know that many laws may disrupt, may create problems for e-commerce," said Rahman.

"Stringent laws will not help flourish the e-commerce smoothly. Our target is keep the system simple and easy, so that every entities and entrepreneurs can join e-commerce," he said.

But law and authority should be operational so that scams and fraudulent activity cannot go ahead, he added.

There are some laws -- the consumers' right protection act, digital security act and penal code -- which are highly applicable to e-commerce, he said.

"I believe those laws that apply to our brick-and-mortar are not inadequate for e-commerce. Those can be applicable to e-commerce entities," said Rahman.

But the e-commerce business has some specialty as it works on an online system, he said.

He went on to say that this was a good time, if not the best, for e-commerce in Bangladesh.

"Few days ago, we couldn't say this, but now time is going well with the e-commerce. For those who like to do business fairly and using the innovative ideas, this is a good situation," said the additional secretary.

"We had problems a few days ago, different kinds of online scams, fraudulent activities had taken place in the e-commerce. With regulatory changes and active intervention of some government agencies, we are in a situation that has controlled all kinds of fraudulent activities," he added.

Customers and merchants who engaged in business with fraudulent e-commerce entities are facing some problems getting their payments or products back, said Rahman.

The government is working with those issues and finding ways over how customers or merchants will be paid back their money, he said.

"Though there is some uncertainty in some areas, because some money has already gone out of the country or not traceable, that would be difficult to bring back to customers," he said.

"But money that is in government custody, in the payment gateway system—as we know a considerable amount of money is stuck in the payment gateway system— the government is working on how that money can be given back to the customers," he added.

"The government has been working on some issues to regulate the e-commerce sector. I personally have been working with one issue that is unique business identification number for e-commerce sites to track all the activity," said Rahman.

"In one or two months we will be able to introduce the system," he added.

Now the industry is running a manual escrow system for payment. The government is trying to make it digital so that as soon as the delivery message is sent to the payment gateway, the money can be immediately sent to the e-commerce entities, he said.


Japanese multinational conglomerate SoftBank Group Corporation is going to buy a 20 per cent stake in bKash, which could give a further push to the fast-expanding mobile financial service industry in Bangladesh.

BKash, the largest MFS operator in Bangladesh, said investment from SoftBank Vision Fund 2 is to promote financial inclusion by building a digital financial ecosystem.

The Fund will make both primary and secondary investments in the operator to buy the shares on a fully diluted basis.

The investment will provide support to bKash's existing platform, increase digital adoption and help users experience the best technology available in the world, said the MFS operator in a statement.

The investment by the renowned foreign firm was viewed positively by analysts and MFS operators as it shows the potential of the MFS industry, which recorded around Tk 2,100 crore transactions daily in July, up 115 per cent three years ago.

Brac Bank, which holds 51 per cent stake in bKash, said its board approved the execution of the share purchase and subscription agreement amongst bKash and its existing shareholders, including Money in Motion LLC, the International Finance Corporation, the Bill & Melinda Gates Foundation, Alipay Singapore E-Commerce Private Ltd, and the bKash Employee Share Option Plan Trust, and the proposed investor SoftBank.

Brac Bank shares rose 9.93 per cent to Tk 48.7 on the Dhaka Stock Exchange yesterday.

"This latest investment round validates our dedication and relentless efforts over the last 10 years and places its trust on the potential of a well-regulated fintech space," said Kamal Quadir, founder and CEO of bKash.

"It is a significant vote of confidence on the current and future growth trajectory of bKash. It also paves the way to attract global investment for other entrepreneurs and innovators of Bangladesh by showcasing the successful digital transformation of our country and its economy."

Launched in 2011 by Brac Bank and Money in Motion, bKash gained popularity within a short time. Fifteen MFS providers are operating in the country.

In the statement, Greg Moon, managing partner at SoftBank Investment Advisers, said broadening access to financial services could be critical to building a robust economy.

"We believe that bKash is strengthening Bangladesh's financial system by providing a safe and convenient way for people to adopt digital payments."

"We are excited to partner with Kamal Quadir and the bKash team to help support the company's vision to achieve greater financial inclusion in Bangladesh through affordable, reliable and accessible services."

SoftBank is engaged in a variety of businesses in the telecommunications and information technology industry. Its Vision Fund has an investment in Arm Holdings, Sprint Corporation, Alibaba, Yahoo Japan, Ola Cabs, HYKE, Paytm, and WeWork.

"SoftBank is one the prestigious investment banks in the world, so it's a good initiative for the country," said Arif Khan, vice-chairman of Shanta Asset Management.

"It has an investment in many renowned companies in the world. So it is a positive development."

SoftBank's total investment fund is bigger, Khan said. "So, it will portray a positive image of Bangladesh in terms of an investment destination."

Shahidul Islam, CEO of VIPB Asset Management Company, said as the Japanese investment bank was the world's top technology investor, the investment was very positive for Bangladesh.

"It shows that renowned companies are optimistic about us. It will create a positive impression among other foreign investors."

SoftBank logged profits of $4.94 billion for the financial year ended on March 31, 2021, according to its financial statement.

However, SoftBank Group Corp slumped to a quarterly loss on Monday, as its Vision Fund unit took a $10 billion hit from a decline in the share price of its portfolio companies and as China's regulatory crackdown on tech firms weighed, reported Reuters.

With 5.6 crore registered customers, bKash's net loss rose to Tk 81.4 crore in 2020 from Tk 62.5 crore in 2019.

 

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Japan has signed deals to provide $2.66 billion to Bangladesh, which will be used for two development projects and as a budget support loan.

Fatima Yasmin, secretary of the Economic Relations Division (ERD); ITO Naoki, Japan ambassador to Bangladesh, and Yuho Hayakawa, chief representative of JICA Bangladesh office, signed the "Exchange of Notes" and "Loan Agreement" today at a programme.

Finance Minister AHM Mustafa Kamal virtually joined the deal signing ceremony held at the ERD in Dhaka's Sher-E-Bangla Nagar, according to a press release of the finance ministry.

The projects are Matarbari Ultra Super Critical Coal-Fired Power Project (6th tranche) and Dhaka Mass Rapid Transit Development Project (Line 1) (2nd tranche).

Besides, the government will use the loan for smooth implementation of the policies to strengthen Covid-19 response capacity in the health sector, to enhance economic and physical access to health services towards the achievement of Universal Health Coverage.

 
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