News Bangladesh - Japan Relation

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JICA signed 11,400 Crore Taka Loan Agreements for MRT Line 5 (North) and Development of Southern Part of Chattogram Region

On June 28, 2022 JICA signed loan agreements with the Government of the People’s Republic of Bangladesh, to provide Japanese ODA Loans up to 165,861 million Japanese yen (approx. Bangladesh Taka 11,400 crore) in total for the following 2 Projects:

(1) Dhaka Mass Rapid Transit Development Project (Line 5 Northern Route) (II)
(2) Southern Chattogram Regional Development Project
20-Kilometer long, MRT Line-5 (north), will be the Dhaka city's first east-west metro line. MRT Line 5 (North) Project has made significant progress in detailed design and the tender has already been floated for land development of its depot area. MRT Line 5 will connect important urban centers in Dhaka such as Gabtoli Bus Terminal, Mirpur, Banani, Gulshan and Baridhara.

South Chattogram Regional Development Project will improve the living standard and the quality of life in the Southern Chattogram region by development of public infrastructure and will assist host communities for displaced people from Myanmar and also contribute to the realization of the Moheshkhali-Matarbari Integrated Infrastructure Development Initiative (MIDI).

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A Bangladeshi private company and a Japanese company will set up an aluminum ingot and copper ingot factory at Mirsarai Economic Zone (MEZ) in Chattogram.

Star Allied Venture Limited of Bangladesh and Metal Company Limited of Japan on Tuesday signed a Memorandum of Understanding (MoU) to establish the joint venture factory on 50 acres of land at the Mirsarai Economic MEZ.

The signing ceremony was held at the World Trade Centre (WTC) hall room of the Chittagong Chamber of Commerce and Industry (CCCI) in the port city.

Chairman of Star Allied Venture Ltd Abdul Matlub Ahamad, Vice Chairman Mahbubul Alam, directors Nader Khan, Almas Shimul and President of Japan Metal Company Ltd Jun Mizutani, Director Anwarjeb Chowdhury and Director Masaki Fukuhara were present at the agreement signing event.

Addressing the event, CCCI President and Vice-Chairman of Star Allied Mahbubul Alam said Japan is a trusted friend in Bangladesh's development.

He said, "We are happy to invest with a Japanese company here (at the MEZ) in Chattogram."

Addressing the MoU signing function, Japan Metal Company Ltd President Jun Mizutani said, "I heard that Chattogram is a very good place for investment. After visiting the 50 acres of land at the MEZ, I had taken the decision to invest here."

Later, they visited the Japan Desk, jointly set up by the CCCI, Japan External Trade Organisation (JETRO) and Japan Bangladesh Chamber of Commerce and Industry (JBCCI).

 

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JICA signs investment agreement with Bangladesh SEZ Ltd.!

The Japan International Cooperation Agency (JICA) signed an investment agreement with Bangladesh SEZ Ltd. (BSEZL) on 1st August 2022 in Tokyo, Japan. BSEZL is a development company whose major shareholders are Sumitomo Corporation and the Bangladesh Economic Zones Authority (BEZA), established for the purpose of developing, selling, and operating the "Bangladesh Special Economic Zone (BSEZ)". BSEZ is the first special economic zone developed by a Japanese company in the nation.

JICA has been supporting the development of the BSEZ in a variety of ways, including improvement of physical the infrastructure around the BSEZ (roads, electricity, gas, etc.) through the provision of Japanese ODA loans, and supporting the establishment of a one-stop service system through technical cooperation.

Established in 2019 as a joint venture between Sumitomo Corporation and BEZA, the BSEZL is developing industrial land plots in Araihazar, Narayanganj, with the expectation that many Japanese companies, mainly in the manufacturing industry, will expand their business into the economic zone. BSEZL commenced sales of such land at the end of March 2022 and is going to open in the end of 2022. The development and sale of the BSEZ will support Bangladesh's industrial modernization and diversification!

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To eliminate the disparity in domestic and foreign investments, the Japanese Ambassador to Bangladesh Ito Naoki has proposed extending the existing cash incentive benefits on ready-made garment (RMG) exports to 100% foreign and joint investment companies listed under the export processing zones (EPZs).

Currently, only the domestic RMG companies get cash incentives for exporting products to new markets.

In a letter to Finance Secretary Fatima Yasmin on 11 August, the Japanese envoy said extending the facility to all will increase Bangladeshi exports to Japan as well as Japanese investments in Bangladesh.

Also, the Japanese companies investing in Bangladesh will be able to hire more workers, increase the wages of workers and increase the expenditure on skills development, he said in the letter.

For this reason, the Japanese ambassador recommended reducing the existing 5% cash incentive against RMG exports to 2% and providing it to all types of domestic and foreign exporters so that the cost of the government does not increase.

At present, there are three types of companies in EPZs: 100% foreign-owned companies in the A category, domestic-foreign joint companies in the B category and 100% domestic-owned companies in the C category.

The 4% cash incentives given by the government against RMG exports to new markets are availed by local companies outside EPZ, as well as only the C category companies within the EPZ. The A and B category companies do not get it.

Besides, the government gives a 1% incentive on the export of manufactured apparel products to any country, which earlier A and B category companies did not get.

To tackle the pandemic-induced situation, the stimulus package announced by the government to provide working capital at low interest was initially not available to A and B category companies.

In a meeting with Principal Secretary of the Prime Minister's Office (PMO) Ahmad Kaikaus, Japanese investors proposed to solve these inequalities, and the government accepted it. All types of companies, including the ones listed in EPZs, are now benefiting from the Covid incentive and 1% cash incentive on RMG exports.

According to Bangladesh Export Processing Zone Authority (Bepza) data, there were 359 'A' category companies, 100 'B' category companies and 216 'C' category companies in the country's EPZs till the fiscal year 2020-21.

According to Bepza's Annual Report for FY2019-20, the total export volume from 8 EPZs in Bangladesh in that year was about $7.5 billion, and in FY2020-21 it was about $6.49 billion.

The total investment in EPZs in Bangladesh till 2020 was more than 5.2 billion, according to Bepza.

In the letter, Ito Naoki said, "I appreciate the government's recent decision that the 1% cash incentive of the export value for garment exports is given to all types of companies across the board."

"However, the discrimination between domestic and foreign companies still remains. Only 'C' category companies are eligible for the additional 4% cash incentive," he noted.

"If the 4% cash incentive will also be granted to 'A' and 'B' category companies, exports to new markets including Japan will definitely grow and Japanese companies will be further encouraged to expand their investment in Bangladesh. I believe that should be the intention of the policy," said Naoki.

The Japanese ambassador also discussed the matter with the former finance secretary and Bangladesh Bank governor Abdur Rouf Talukder.

At that time, Abdur Rouf Talukdar told Ito Naoki that Bangladesh will graduate from the least developed country (LDC) status in 2026 and it will not be possible to give such incentive then.

Based on that discussion, Naoki wrote to Fatima Yasmin, "I would like to take this opportunity to propose that, if the cash incentive is to be reduced in stages, the government would be able to set the cash incentive at 2% for all type companies to make it non-discriminatory between domestic and foreign companies."

"The measures mean to reduce the cash incentive for 'C' category companies from 5% to 2%, and temporarily increase it for 'A' and 'B' category companies to 2%, and Japanese companies can make use of the 2% incentive for their further recruitment, wage increase, and skills development," the ambassador said.

"Resolving this issue is crucial to improve the investment climate in Bangladesh and to encourage more foreign companies, particularly Japanese companies, to come into Bangladesh," Naoki pointed out.

"It is unexpected to have this kind of discrimination between domestic and foreign investors in giving cash incentives," Former president of the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) Shafiul Islam Mohiuddin told The Business Standard, emphasising uniform benefits for all types of investors.

 

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Grameen Euglena, a joint venture between Japan's Euglena Co Ltd and Bangladesh's Grameen Krishi Foundation, has been processing moong dal collected from Patuakhali and exporting it to Japan since 2018.

And although the company's exports had declined due to various difficulties amid the Covid-19 pandemic, the situation has now normalised to an extent.

Grameen Euglena exported some 300 tonnes of moong dal to Japan in 2021 but this year, the company aims to ship 1,000 tonnes of the lentil.

Sources at Grameen Euglena said they had signed an agreement with the Ministry of Agriculture in 2012 to allow moong dal exports on a limited scale. The company initially procured the lentil from Dashmina upazila of Patuakhali but later started sourcing it from Patuakhali sadar upazila and Baufal upazila as well.

The purchased moong dal is processed at the company's facility in Ishwardi upazila of Pabna before being exported to Japan.

Najmus Sadat, coordinator of Grameen Euglena's local operations, said Japanese businessman Yuko Satake decided to form the joint venture after seeing that moong dal, which has huge demand in his country, is widely produced in Bangladesh.

Although moong dal exports are generally prohibited, he was initially able to secure permission for shipping it abroad on a trial basis for one year.

In 2018, the company officially began exporting moong dal to the island nation after receiving approval in this regard for a five-year period.

Since then, cultivation of the Bari-6 (large grain) variety of moong dal has started in Patuakhali under the supervision of the agriculture ministry to meet the demand for exportable lentils.

Grameen Euglena currently has about 10,000 contract farmers, who sell their produce to the company for around Tk 5 to Tk 10 per kilogramme higher than the market price.

Considering that Japan has an annual demand of 50,000 tonnes for large-grain lentils, the Smallholder Agriculture Competitiveness Project (SACP) of the Department of Agriculture Extension (DAE), International Fund for Agricultural Development and Grameen Euglena are working together to increase cultivation.

Mohammad Emdadul Haque, project director of the SACP, said moong dal exports have not only improved Bangladesh's export earnings, but also the farmers' standard of living.

He went on to say that farmers sell their moong dal for between Tk 78,000 and Tk 80,000 per ton.

Nurunnabi Sikder, a farmer of Hosnabad village in Dashmina Upazila who has been contracted by Grameen Euglena, said he cultivates export quality large-grain moong dal.

"The lentil is selling for Tk 70 to Tk 80 per kilogramme in the market and so, local farmers are happy to be getting better prices from the company," he added.

AKM Mohiuddin, deputy director of the Patuakhali DAE, said moong dal has been cultivated on 86, 431 hectares of land in Patuakhali to produce 1.14 lakh tonnes of the pulse this season.

"Farmers are benefiting more from exports, which also makes it possible to earn more foreign currency," he added.

 

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Riding on strong demand for apparel items made in Bangladesh, the shipment of garments to Japan, a promising Asian export destination, rose 25.81 per cent year-on-year to $217.53 million in July-August.

The receipts in the first two months of the previous fiscal year were $172.91 million, according to data from the Export Promotion Bureau (EPB) compiled by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

Japan is the only country in Asia where Bangladesh's shipment of garment items crossed $1-billion mark a lot earlier whereas many other promising nations such as India, Russia and China have not lived up to the expectations of local suppliers.

Revenue in Japan's apparel market is estimated to be $75.91 billion in 2022, said German market and consumer data provider Statista.

China and India have an apparel market of $287 billion and $88 billion this year.

Garment manufacturers are banking on Asia as they look to grab more share of the global apparel market. Demand for the items made in Bangladesh is increasing among Asian consumers, whose buying capacity is on the rise.

The BGMEA is preparing a roadmap to export $100 billion worth of garment items by 2030 and capture 10 per cent of the global market by 2025.

Last fiscal year, garment shipment to Japan was $1.09 billion, up 15.46 per cent from $0.944 billion in 2020-21, EPB data showed.

Apparel exports to the European Union stood at $3.45 billion in the July-August period, an increase of 23.21 per cent from a year prior. The shipment to Germany, the largest apparel export destination for Bangladesh, rose 16.44 per cent to $1.06 billion.

Garment export to Spain and France surged 24.52 per cent and 37.73 per cent to $574.70 million and $370.80 million, respectively. The shipment to other EU countries also showed a positive trend during the two-month period.

Receipts from the US, the single largest export destination for Bangladesh, were up 20.52 per cent to $1.41 billion.

Manufacturers shipped $819.86 million worth of apparel items to the UK and $227.03 million to Canada, respectively clocking 35.64 per cent and 18.49 per cent growth in July-August.

Among the non-traditional markets, garment exports to India nearly doubled to $188.29 million, according to the EPB.

By contrast, the export to Russia and China declined by 58.29 per cent and 13.21 per cent to $29.04 million and $33.89 million, respectively.

Though exports grew in August from a year earlier, the growth might decelerate from September due to the global economic turmoil and record inflation affecting retail business, exporters warned.

"Many global brands are suffering from a decline in sales and unsold stocks, so they are putting current orders on hold," said one exporter.

Garment shipment clocked 35.47 per cent year-on-year growth in FY22, netting $42.61 billion. Of the sum, $23.21 billion came from knitwear shipment, up 36.88 per cent. Woven garment shipment grew 33.82 per cent to $19.39 billion.

 

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Sixty-seven percent of Japanese companies are experiencing a shortage of skilled workers even at a time when those are looking to increase investment.

Citing a survey of the Japan External Trade Organization (Jetro), its Dhaka Representative Yuji Ando said, "There are 338 Japanese companies in Bangladesh. 68% of these intend to expand their business in Bangladesh in the next one to two years. However, 67% said the quality of employees is a challenge for them in doing business in Bangladesh."

On Monday, the Bangladesh Investment Development Authority (Bida), Bangladesh Economic Zones Authority (Beza) and jointly organised the "Welcoming Investment from Japan, Lessons for Bangladesh, From the experience in India" knowledge sharing session event at the capital's BIDA building, where the findings were discussed.

On the challenges for business operations in Bangladesh, Yuji Ando said the number of those facing a shortage of skilled employees had increased from 48.5% in 2020.

The problems were also seen in administrative procedures and regulations, time-consuming customs procedures (46.7%) and complicated customs clearance procedures (46.7%).

Representative Yuji Ando said in response to a question, the automation of customs must be done, which would speed up the work.

Jetro New Delhi Chief Director General Takashi Suzuki said there are 1,439 Japanese companies in India.

In the light of Indian experience, he highlighted the opportunity of more Japanese investment in various sectors in Bangladesh.

Takashi Suzuki said the Japan Institute of Manufacturing (JIM) is building an upcoming skills development centre for Japanese companies, but this can also be done in Bangladesh to create skilled workers.

BIDA Executive Chairman Lokman Hossain Miah said Jetro has been investing in Bangladesh since 1973, and the amount of investment is increasing day by day.

Bangladesh's large domestic market and low production costs are the reasons behind the increase in investment.

He conceded that there are some obstacles in terms of investment in the country. "If you tell us about them, we will work to solve those quickly. We are working to provide easy services to investors."

BEZA Executive Chairman Shaikh Yusuf Harun said the Bangladesh Special Economic Zone in Araihazar upazila of Narayanganj was being jointly developed by the governments of Bangladesh and Japan on 1,000 acres of land.

He said 10 Japanese companies have already shown interest to invest there.

Shaikh Yusuf Harun said, "We are working towards establishing 100 economic zones across the country. Our economic zones will have all facilities for investment. Hopefully Japanese companies will invest more in economic zones."

BIDA Executive Member Mohsina Yasmin and JETRO Executive Vice President Kazuya Nakajo spoke on the occasion.

 

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The Civil Aviation Authority of Bangladesh (CAAB) has asked the Japan government to conduct a financial assessment of how the latter's revenue sharing with Bangladesh will be viable if it is entrusted with the job to operate the Dhaka airport's third terminal.

Japan has made a proposal to get the contract to operate and maintain the terminal, which is under construction with major funding from the Japan International Cooperation Agency (Jica), through the Public Private Partnership (PPP) under the government-to-government modality.

The Bangladesh government also gave a positive indication to Japan authorities instead of going for an open tender.

During Prime Minister Sheikh Hasina's visit to Japan in the last week of November, the issue of awarding the terminal's operation to the country will get priority in the agenda, according to sources at the civil aviation and tourism ministry.

A delegation of government high-ups, led by prime minister's Principal Secretary Ahmad Kaikaus, visited Japan this month at the invitation of the Japan's Ministry of Land, Infrastructure, Transport and Tourism.

Secretary to the civil aviation ministry Md Mokammel Hossain, who was part of the visiting team, met with 10 Japanese companies having experience in airport operation. They are IHI Corporation, Japan Airport Terminal Company, JFE Engineering Corporation, Narita International Airport Corporation, TAISEI Corporation, Sumitomo Corporation and some others, according to aviation ministry sources.

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The PPP Authority asked those companies to submit an expression of interest, said a ministry source.

State minister for civil aviation and tourism Md Mahbub Ali said Japan is pursuing the government for getting the third terminal's operational contract. Many other foreign companies, including Dnata and Swissport International Ltd, also showed interest.

As Japan is interested, the issue may feature in the agenda during the prime minister's visit, he also said.

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He said the PPP authority will appoint a transaction adviser to conduct a financial assessment of the proposals to see whether the revenue sharing with the government will be viable.

The total construction cost of the third terminal under the Hazrat Shahjalal International Airport Extension Project amounts to Tk21,300 crore, of which Tk16,300 is financed by Jica and the remaining Tk5,000 crore by the government.

The new passenger terminal is expected to be partially open in October next year but the government is yet to finalise the process of airport operation and management.

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Usually, the process to outsource airport services and management takes more than two years.

When the CAAB started the process to accept applications for ground handling and passenger services at the Dhaka airport, Japan showed interest in getting the contract, said Air Vice Marshal M Mafidur Rahman, chairman of the CAAB.

"We asked them to conduct a financial analysis of how much revenue they can generate and how much revenue they can share as the CAAB will pay off its loan from the income it gets through the airport operation," he said.

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He said the process of outsourcing the airport management will take two years. The government will go for a service contract primarily, which is a six-month process with only one year in hand before soft opening of the airport, he added.

The new international passenger terminal building is set to have a floor area of around 2.25 million square feet whereas the existing two terminals of the Dhaka airport have a space of around 1 million square feet together.

The airport's expansion is expected to increase its annual passenger handling capacity from the current 8 million to approximately 20 million, and the cargo capacity from 200,000 tonnes to 500,000 tonnes.

It will have 115 check-in counters, including 15 self-service, 66 departure immigration counters, including 10 automatic passport control counters, 59 arrival immigration desks, including five automatic check-in counters and 19 check-in arrival counters, while 16 arrival baggage belts will be set up.

According to the project design, the third terminal will have 12 boarding bridges and conveyor belts each.

 

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Dhaka and Tokyo are gearing up to expand their ties beyond trade and investment to defence collaboration and free trade in 2022, marking the 50th anniversary of diplomatic relations.

Discussion points on the issues will be thrashed out during Prime Minister Sheikh Hasina's high-profile state visit to Japan later this month, according to Masud Bin Momen, the secretary at the Ministry of Foreign Affairs.

The signing of a 'letter of intent' on bilateral defence cooperation, laying the groundwork for future agreements, will be high on Hasina's agenda in Tokyo, said Masud.

Official data reveals that Japan is Bangladesh’s single largest bilateral donor and under Tokyo’s Official Development Assistance programme, Dhaka has received $27.43 billion in grants and loans since 1972.
Tokyo’s development assistance covers a wide range of areas, from energy and power generation to social, economic and infrastructure development, including the massive mass rapid transit (MRT) project, the most expensive development initiative in Bangladesh’s history.

WHAT DHAKA, TOKYO SEEK TO ACHIEVE FROM A DEFENCE DEAL

Dhaka, under the leadership of Hasina, has laid out its defence ambitions by introducing the “Forces Goal 2030” in 2009 with an eye to massive expansion and modernisation of the Bangladesh Army, Navy, and Air Force.

The aim, later revised in 2017, is to build a three-dimensional force capable of conducting multi-platform warfare.

Bangladesh has already procured state-of-the-art military hardware and upgraded equipment, including attack helicopters, unmanned aircraft, and anti-aircraft missiles, mostly from China and India.

On the other hand, Japan’s legislature in 2015 repealed an almost six-decade-old clause in the constitution, which enshrined the far-east nation’s pacifist stance post-World War II. Since then, Tokyo has developed a regional strategy called 'Free and Open Indo-Pacific’, or FOIP. The key components of FOIP, according to Japan’s Ministry of Defence’s website, include trade, investment and infrastructure development as well as defence and security cooperation.

HIGHLIGHTS
  • Japan is Bangladesh’s single largest bilateral donor and under Tokyo’s Official Development Assistance programme, Dhaka has received $27.43 billion in grants and loans since 1972.
  • Dhaka, under the leadership of Sheikh Hasina, has signalled its defence ambitions with the introduction of the “Forces Goal 2030” in 2009, which aims to develop a three-dimensional force capable of conducting multi-platform warfare.
  • Bangladesh is already a part of Japan's 'Bay of Bengal Industrial Growth Belt' initiative, which forms the basis of projects such as the MRT line in Dhaka, the deep-sea port at Matarbari and terminal three of Hazrat Shahjalal International Airport. While the ‘BIG-B’ initiative primarily focuses on economy, infrastructure and development, it also allows Japan to expand its strategic influence in South Asia.
  • The process of finalising a Comprehensive Economic Partnership Agreement is expected to begin during Hasina’s three-day visit to Tokyo. This is part of a broader process towards a free trade agreement.
  • As Bangladesh is set to lose the trade facilities given to least developed nations, a survey found that a majority of businesses in the two countries expect Dhaka and Tokyo to sign an FTA.
Since 2014, Bangladesh has been a part of Japan's 'Bay of Bengal Industrial Growth Belt' or 'BIG-B’ initiative, Tokyo’s answer to China’s Belt and Roads Initiative, or BRI.

The projects being implemented under the initiative are the MRT line in Dhaka, the deep-sea port at Matarbari and terminal three of Dhaka's Hazrat Shahjalal International Airport.

China’s BRI is an ambitious plan to establish two new trade routes connecting the mainland with the rest of the world to develop an expanded, interdependent market and grow the country's economic and geopolitical power.

Although the ‘BIG-B’ plan primarily focuses on economy, infrastructure and development, experts have pointed to the inherent geo-strategic elements of the initiative, which Japan is using to increase its strategic influence in South Asia.

Last year, the Japanese Ambassador to Bangladesh Ito Naoki expressed his country's interest in expanding cooperation to defence with Dhaka, with an emphasis on maritime security.

More recently at a programme in Dhaka, Naoki hinted at Tokyo’s interest in supplying hardware and other defence equipment while talking about the expansion of relations with Bangladesh.

“I think we can emphasise further cooperation in defence and security. We are looking into the possibility of exporting defence equipment to Bangladesh as a Japanese defence contractor has shown interest in supplying hardware,” he said at the programme.

Foreign Secretary Momen says the goal of Hasina’s three-day trip, starting on Nov 27, is to elevate the existing "comprehensive partnership" to a “strategic" one.

In international relations terms, a strategic partnership represents the highest level of ties between two or more nations.

Humayun Kabir, a retired diplomat, elaborated on the parameters of a strategic partnership.

“When you talk about strategic partnerships, you consider things that are out of the box, outside of the bilateral bracket, and have a conversation about it,” he said.

Since the annulment of its pacifist stance, Tokyo has bolstered its defence cooperation with the US, which China, a historical adversary of Japan and a regional rival, finds suspicious, to put it mildly.

Defence procurement and development projects are at the heart of Dhaka's close ties with Beijing. And, with Dhaka now looking to expand cooperation in these areas with Japan, Secretary Momen was asked if it could jeopardise Sino-Bangladesh relations.

Brushing off any concerns, he said: “Bangladesh won’t engage in any conflict with anyone, period.”

“Our [Bangladesh’s] friendship with Japan is very old. So, if they want to expand their existing infrastructure projects like Matarbari deep-sea port, we would welcome it. We will not be able to work if we keep taking into account who said what or if anyone is offended.”

Dr Imtiaz Ahmed, a professor of international relations at Dhaka University, pointed out that the US, Japan’s closest ally, has long been seeking a more proactive approach to regional security from the island nation.

And, Japan's position on defence and security has been shifting since former prime minister Shinzo Abe's terms in office, according to him.

“Though Tokyo has adopted a different approach, they would like to compete with Beijing’s BRI, not in terms of security, but in terms of development. Both Japan and India approach the Indo-Pacific alliance strategy a little differently than the other two partners - the US and Australia.”

Prof Imtiaz, however, advised Dhaka to tread cautiously before agreeing to any arms deal with Tokyo, especially in relation to price and any other potentially implausible conditions attached to the sale.

“Dhaka should do its homework before agreeing to anything. If any strings are attached to the arms sales that may put Dhaka’s relations with Beijing in hot water, we should say no. Bangladesh should also survey the market for prices before agreeing to purchase any hardware,” he said.

FTA A TOP PRIORITY

Dhaka and Tokyo have been working for quite some time on the possibility of a free trade agreement, or FTA, to facilitate trade between the two countries.

Before drafting an FTA, both countries are mulling over an agreement in the vein of the Comprehensive Economic Partnership Agreement, or CEPA, between Bangladesh and India.

Foreign Secretary Momen said that the process of conducting a large-scale joint research and feasibility study on the integrated partnership agreement will be finalised during the prime minister's visit.

“This is the first step. Then things will progress step by step in line with the rules.”

The Japan External Trade Organization, or JETRO, and the Japan-Bangladesh Chamber of Commerce and Industry, or JBCCI, published the findings of a survey conducted in Dhaka in June on the possible outcomes of an FTA between the countries.

As many as 100 Japanese and 30 Bangladeshi multinational companies took part in the survey. JETRO's Country Representative Yuji Ando said at the time that 85 percent of the participants, or 111 companies, expect an FTA to be signed.

The survey found that 20 percent of Japanese companies could consider reducing production or shifting to Bangladesh’s competitors in South-East Asia, China, and India if Japan's preferential trade privileges are lifted after Bangladesh’s transition to a developing nation.

Japanese Ambassador to Dhaka Naoki said at the release of the survey that Bangladesh and Japan will need a new arrangement, such as an FTA, as the South Asian nation would no longer be entitled to the facilities under the Generalised System of Preferences after its elevation to the status of a developing nation.

Asked if a survey will be conducted by the governments of the two countries in continuation of the study by JETRO and JBCCI, Masud said the Japanese Ministry of Trade and Investment and its agencies may work on that in cooperation with JETRO.

Prof Imtiaz said Japan has increased investment in Bangladesh as part of the process of moving factories away from China.

“Free trade is not always free. We have to keep that in mind. Japan's interest has increased because it wants to move many industries away from China as China is becoming costly,” he said.

“They [Japanese businesses] are more interested in economic zones because if they can move from there, their profit margins will increase.”

With a population of around 170 million, Bangladesh's market potential also appeals to Japan, according to Prof Imtiaz.

"Geo-politics is always an issue. But the business community does not move with politics. It always sees profits.”

“However, we have to be careful not to damage other markets. If we do, we’ll face other problems."

Noting that trade and investment will be a major focus of the prime minister's visit, Foreign Secretary Masud said that there will be a host of meetings on Nov 30, for which Bangladesh has prepared a large delegation,
Representatives of the Bangladesh Economic Zones Authority, Bangladesh Investment Development Authority and Securities and Exchange Commission will take part in the meetings.

Hasina is also scheduled to meet executives of Japanese companies investing in Bangladesh's economic zones, according to the foreign secretary.

Masud said Bangladesh will emphasise projects in which Japan is interested. The Economic Relations Division is working on finalising a few projects, which may be presented to the Japanese officials, he said.

ROHINGYA ISSUE

Masud said Dhaka will seek Japan's cooperation in ensuring that more than a million of Myanmar's forcibly displaced Rohingya Muslims return home from Bangladesh.

“Historically, Japan always maintained a good relationship with Myanmar, which may have waned lately with the return of the military junta and the suspension of democracy. Still, Tokyo wields some influence since it invests heavily in the country’s infrastructure development, which I believe can be used to assist us with the repatriation process,” he said

Prof Imtiaz believes Dhaka can ask Tokyo to take a tripartite initiative, which China attempted before, to repatriate the Rohingya people.

"Both Myanmar and Bangladesh have good relations with Japan. A tripartite negotiation is very much possible. The prime minister [Sheikh Hasina] can stress the matter to her Japanese counterpart.”

 

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Japan is the largest bilateral development partner of Bangladesh. It has provided about $27 billion in grants and loans to Bangladesh since 1971. Japan is currently implementing some of the major infrastructure projects. The two countries are willing to elevate the relations to a strategic level during Prime Minister Sheikh Hasina's visit to Japan. Japanese Ambassador to Bangladesh, Ito Naoki, shared his views with Porimol Palma of The Daily Star.

TDS: The prime minister's visit to Japan scheduled for November 29-December 2 has been postponed. Why?

Naoki: We are working on the visit because it will be immensely beneficial for us to deepen our friendship. We still have a lot of room for developing our partnership and cooperation for peace and stability of the Indo-Pacific region. I hope the visit will take place sooner rather than later and elevate our partnership.

TDS: You have recently talked about the 2018 election's ballot box stuffing and become the talk of the town.

Naoki: It is not only me. All the like minded countries' missions here hope that there will be free, fair and participatory elections. I have been talking to all the interlocutors of mine during my assignment here. I expect in light of the efforts by the Election Commission and others concerned, the next elections will be better.

TDS: What does it mean to take the relations to a strategic level?

Naoki: In 2014, Prime Minister Sheikh Hasina and the then Japanese prime minister Shinzo Abe launched a comprehensive partnership. Since then, the friendship has developed and Japanese overseas development assistance to Bangladesh has exceeded the $3 billion mark. It is 10 times higher compared to the amount 10 years ago. So, our partnership needs to reflect the development. Also, Bangladesh's stature has been enhanced in the region. In the twin celebrations last year -- the birth centenary of Bangabandhu and golden jubilee of Bangladesh -- it [Bangladesh] took initiatives of regional connectivity, free trade, and offered assistance to Sri Lanka for economic management. Clearly, Bangladesh is playing a bigger role. Also, in the changing strategic landscape, we need to step up our cooperation on security. I think that will be something new in our relationship.

TDS: Can you elaborate on the security cooperation?

Naoki: We need to expand the exchange of officers, co-training, port calls by the self-defence naval ships. In January this year, two Japanese self defence ships paid port calls to Chattogram. That was the curtain raiser of the golden jubilee celebrations and they need a goodwill exercise with the Bangladesh Navy. Also, Bangladesh Air Force is showing strong interest in procuring mobile radar systems from a Japanese company. And, you also need to diversify the source of procurement of defence equipment. Already, the basis of cooperation is there for security and defence areas. So, once we can elevate our partnership to a new height, we can have this new type of cooperation between the two countries. Also, cyber security and ICT security are areas where Japan and Bangladesh should explore the possibility of collaboration.

TDS: Japan is advancing the Free and Open Indo-Pacific (FOIP) strategy. How will you engage Bangladesh in it and what is Dhaka's response?

Naoki: We regard Bangladesh as Japan's partner in FOIP. Under this vision, we have three pillars: shared values, pursuit of economic prosperity and cooperation on peace and stability. Shared values are democracy, market economy, respect for rules-based systems, free and open navigation. These are the values both Bangladesh and Japan respect and try to promote. And, as the landscape of security is changing and the situation is becoming even more challenging now, there is a good reason for us to cooperate and collaborate. In all of those pillars, we share our ideas so that we can promote pragmatic cooperation and pursue the FOIP.

TDS: What does practical cooperation include?

Naoki: Practical cooperation includes quality infrastructure building, regional connectivity, disaster management and prevention, maritime safety, capacity building of law enforcement officials, humanitarian assistance and climate change. For example, we are providing support to the development of Matarbari Deep Sea Port, metro rail, third terminal of Dhaka airport, an economic zone in Araihazar etc. I would stress that FOIP is an inclusive vision, not intended to contain or exclude any country.

TDS: What are the challenges facing the policy?

Naoki: If any country tries to challenge the international law, rules-based international order, we need to raise our concern and oppose the act. I think that will be the challenge for us. I don't see any difficulty for Bangladesh to pursue this same vision. Recently, Bangladesh spoke about a free, open, inclusive, peaceful and prosperous Indo-Pacific on the basis of international law. We share that idea. On that basis, we are so pleased to extend our practical cooperation to Bangladesh.

TDS: How do you advance FOIP when Myanmar's military regime and Rohingya crisis persist?

Naoki: Since February last year, Myanmar's situation has worsened. We sent messages to the Myanmar junta that they need to stop violence and release those detained and restore democratic processes. Those are essential factors to improve the situation. On the other hand, Rohingya have been in Bangladesh for more than five years. We applaud Bangladesh for sheltering them. Unfortunately, the situation has not improved and it may remain for even a longer period. So, the first thing is to create an enabling environment in Myanmar for repatriation. The way we sent messages to Myanmar will hopefully be instrumental towards this end.

TDS: Amid the global crises, funding for the Rohingya is declining. How to go about it?

Naoki: As long as the Rohingya stay here, we want their situation to improve. They need to be resilient and prepared for returning to Myanmar when the time is right. They need education, skills development and livelihood opportunities. The UN and international aid agencies and Bangladesh need to continue to work together. I assure that Japan will do its best to provide assistance for the Rohingyas and hope others will do the same.

TDS: In the wake of the Russia-Ukraine war, like many other countries, Bangladesh is also facing a crisis. How can Japan provide support?

Naoki: Every country is affected by the war. A peace process needs to be in place sooner rather than later. Bangladesh has already negotiated with the IMF for a loan. I hope it will be effective. Bangladesh requested Japan to provide $750 million for budget support. Japan provided such support in 2020 and last year. So, this year, since you requested, we are actively considering, but have yet to decide.

 

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Prime minister Sheikh Hasina’s visit to Japan, scheduled for November 29– December 1, has been postponed.

‘The prime minister’s visit to Japan has been postponed on a number of considerations, including their present political situation and Covid-19 related restrictions there,’ foreign minister AK Abdul Momen said at a press briefing on the 22nd Meeting of the IORA Council of Ministers at a city hotel.

He said that the prime minister was invited to visit Japan by her Japanese counterpart, but it was now suspended by the Bangladesh side as three ministers of their cabinet had recently resigned and Japan’s prime minister Fumio Kishida might face more questions in the present situation there.

At a separate briefing after a bilateral meeting with his Japanese counterpart on the sideline of the Indian Ocean Rim Association ministerial meeting, state minister for foreign affairs Md Shahriar Alam said that Hasina’s visit to Japan was postponed and the new date would be fixed soon.

‘In diplomatic affairs, things may change at the eleventh hour and that is why we did not make any official announcement regarding the visit till now,’ he said.

The state minister said that he had a discussion with Japanese state minister for foreign affairs Takei Shunsuke on the sideline.

‘I told him in a light tone there that Bangladesh’s election is its internal matter and he nodded,’ Shahriar said without further details.

Earlier this month, Japanese ambassador to Bangladesh Ito Naoki was summoned by the foreign ministry and he was conveyed messages a day after his remark on the 2018 elections at an event in the city.

‘We summoned the Japanese ambassador. We have conveyed necessary messages to him. We do not think that it is essential to disclose everything in details to the media and so we do not want to give any more statement in this regard,’ Shahriar wrote in a Facebook post on November 16.

On November 14, Japanese ambassador Ito Naoki said that they heard about ballot box stuffing by the police overnight before the polling began in 2018, which was something he had never heard of in any other country.

He also said that Japan expected that the next general elections here would be free and fair.

Shahriar, expressed his optimism that Banglades-Japan relations would further be strengthened through the upcoming visit of the prime minister to Japan.

He also hoped that the prime minister’s visit to Japan would benefit the common people of the two countries.

Foreign secretary Masud Bin Momen reportedly summoned the Japanese envoy at state guest house Padma on November 15 to convey Dhaka’s messages to Tokyo over his statement on the 2018 general elections.

 

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Prime Minister Sheikh Hasina on Tuesday inaugurated the Bangladesh Special Economic Zone, also known as the Japanese economic zone, in Araihazar upazila of Narayanganj.

She inaugurated the first economic zone under a government-to-government (G2G) arrangement virtually from her official residence Ganabhaban in Dhaka this morning.

The grand opening ceremony was held at the Special Economic Zone in Araihazar. The event was attended by Bangladesh Economic Zones Authority (Beza) Executive Chairman Shaikh Yusuf Harun, President and CEO of Sumitomo Corporation Masayuki Hyodo and Japanese Ambassador to Bangladesh Ito Naoki among many others.

Bangladesh Economic Zones Authority (Beza) expects $1.5 billion in investments and employment for about one lakh people as the zone becomes fully operational.

Beza Executive Chairman Shaikh Yusuf said the economic zone will facilitate technology transfer between Japan and Bangladesh. Besides, a separate One Stop Service Centre and Skills Development Centre will be established in the economic zone.

About the stakes of the Bangladesh government and Japan in the economic zone, he noted the share of Beza is 24%, Jica 15% and Sumitomo Corporation 61%.

According to Bangladesh Special Economic Zone (BSEZ) sources, Japanese investors are keen on investing in this economic zone to expand their business in Bangladesh.

BSEZ Managing Director Taro Kawachi said, "We are applying Japanese quality in Bangladesh. It will be an environment-friendly modern economic zone and by the end of next year, a number of companies will start manufacturing their products here."

Any local or foreign company can invest in this zone. Already 40 foreign companies have expressed interest to invest here, 30 of which are Japanese companies, he said.

Singer Bangladesh Ltd in a joint venture with Turkish company Arçelik and German company Rudolf have already started building their factories here. They secured 40 acres of land, of which Singer alone got 35 acres.

The multinational electronics and home appliance firm is looking forward to beginning production at the $78 million green factory by the end of 2023, primarily targeting the fast-growing local market alongside exploring export opportunities from the plant.

According to Beza sources, Japan's Onda Corporation and Nicca Chemicals are the two companies expected to sign investment agreements on 6 December to secure 10 acres of land each in the Japanese economic zone. Onda will produce gas metres and Nikka will produce chemicals.

Beza and Japan's Sumitomo Corporation are jointly working to develop this economic zone which began with Prime Minister Sheikh Hasina's visit to Japan in 2014. The matter was thoroughly discussed during the then-Japanese Prime Minister Shinzo Abe's visit to Bangladesh later that year.

In 2016, Japan International Cooperation Agency (Jica) undertook a feasibility study to establish the economic zone, and in the same year, the Japanese government recommended the appointment of the world-renowned Sumitomo Corporation as the developer.

After a feasibility study in 2018, Jica gave its opinion in favour of setting up a Japanese Economic Zone at Araihazar in Narayanganj.

Later, an agreement was signed between Beja and Sumitomo Corporation in 2019 to establish the joint venture economic zone.

Beza Executive Chairman Shaikh Yusuf said Beza started land acquisition and land development work in the proposed area in 2019.

Under the Japanese Economic Zone Infrastructure Development Project, the first phase of 500 acres of land development work is nearing completion, along with the construction of connection roads, retention ponds, and electricity and water supply systems, he said.

The construction of internal roads, gas, electricity and water supply lines has started. So far 180 acres of developed land have been handed over to the Bangladesh Special Economic Zone for setting up industrial plants. The remaining lands will be handed over soon, Shaikh Yusuf said.

 

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Prime Minister Sheikh Hasina's Japan visit could be rescheduled to April.

Newly-appointed Japanese Ambassador Iwama Kiminori today made the proposal to the PM on behalf of his country while calling on her at the Gono Bhaban.

PM's speechwriter M Nazrul Islam said this while briefing reporters.

He said the Japanese Ambassador had proposed the PM to visit Japan in March or April.

"The prime minister preferred April for her visit," he said.

Prime Minister Sheikh Hasina was scheduled to visit Japan from November 29 to December 1 last year.

 

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Implementation of 15 of the 29 Japan International Cooperation Agency (Jica)-funded projects are lagging far behind their targets due to issues including delay in land acquisition, procurement of equipment and selection of consultants, according to a Jica report.

Jica's Bangladesh office placed the progress report at a high-level portfolio review meeting, attended by officials of the Economic Relations Division (ERD), Jica and project directors, on Sunday.

The Urban Development and City Governance Project, for which Jica allocated 102 crore yen (over Tk 82cr) for the Japanese FY22 (April 2022-March 2023), has made zero progress so far in nine months due to delay in approval of the development project proposal and opening of account at the Bangladesh Bank.

Similarly, there was no progress in the Health Services Strengthening Project and Food Value Chain Improvement Project.

ERD Secretary Sharifa Khan and Jica Chief Representative to Bangladesh Ichiguchi Tomohide led their respective sides at the meeting.

The major reasons identified by Jica for the slow progress include delay in land acquisition, approval process and preparation of bidding and rebidding documents. Slow procurement and civil works also push some projects behind schedule.

Jica also pointed out the issue of increased construction materials prices at the meeting.

Material prices have seen an unprecedented surge due to post-Covid global economic recovery and the Russia-Ukraine War, they said.

"Concerns have been raised by contractors that the widely used indices, the BBS statistics, do not reflect actual market prices and largely deviate from other related indices after Covid," said Jica.

Earlier in March last year, Jica wrote to the ERD, asking it to increase the contract prices of the development projects funded by it.

Progress below 50% at the 15 projects

Jica, in its report, has identified 15 projects, progress of which remains below 50%.

The Food Value Chain Improvement Project is another one with zero progress.

People linked with the projects said that loans are given to businessmen from the project of Bangladesh Infrastructure Finance Fund Limited (BIFFL) funded by JICA.

The objective of the project is to improve credit access for agribusiness and food processing industries and to enhance the quality of processed food products as well as the efficiency of the business operation by financing and supporting capacity building of financial institutions and agribusiness industries in Bangladesh.

Jica's disbursement of funds has been on hold due to delays in the hiring of project consultants.

Disbursement rates are within 3-10% of the target in 5 projects, including important infrastructure projects.

Till December only 3% of funds were released for the Dhaka Underground Substation Construction project.

The objective of the project is to improve electric supply reliability and electric power supply and demand balance by constructing two underground substations in Dhaka, thereby contributing to an improvement of the investment environment of Bangladesh and nationwide economic development.

No bidders responded at the estimated price when tenders were invited for the project. Fund disbursement of the project is also stuck as contracting firms bid higher than the estimated price.

The Jica report mentions that the Dhaka Mass Rapid Transit Development Project (Line-1) funding is on hold due to the delay in the tender process. Only 10.9% has been disbursed in this project.

The Dhaka Mass Rapid Transit Company Ltd (DMTCL), the implementing agency, recently told reporters that the construction of the project will begin on 26 January, after which Jica's disbursements are expected to accelerate.

The MRT-1 is planned to be completed by 2026 by setting up underground stations at Airport, Airport Terminal, Khilkhet, Nodda, Notun Bazar, North Badda, Badda, Aftab Nagar, Rampura, Malibag, Rajarbag and Kamlapur.

Only 5.5% of funds have been disbursed for the Matarbari Port Development Project due to complications in land acquisition and re-tender of vessel procurement.

Another important project of the health sector is the Maternal Neonatal and Child Health (MNCH) and Health System Improvement Project, which has seen only 19.5% fund disbursement due to slow procurement of medical equipment, land problem in hospital construction sites and delay in submission of disbursement request.

Due to delays in implementation of civil works and re-allocation of loan the Haor Flood Management and Livelihood Improvement project's fund disbursement was only 17%.

According to the report, 12 projects are being implemented as per the target. More than 75% of funds have been spent on these projects. Although two of these projects have achieved less than 50% progress, they are still likely to meet the target.

Delay of DPP

The approval process is pending for the Revised Development Project Proposal (RDPP) of two projects and a new project proposal.

Delayed approval of the South Chattogram Regional Development project DPP caused a delay of six months in the project's getting underway.

Jica has promised to pay around TK2,500 crore for the project, which awaits approval from the Executive Committee of the National Economic Council.

The Natural Gas Efficiency Project, which will procure and install an additional 80,000 prepaid gas meters, is delayed because of pending approval of the revised DPP. Jica will provide more than Tk650 crore in the project.

Revised DPP for the Maternal Neonatal and Child Health (MNCH) and Health system improvement project sought a two-year extension year. Approval has been pending at the DGHS for more than three months.

Jica said ministries concerned need to proactively liaise with the Planning Commission to expedite the approval process and ERD should hold a monthly tri-party monitoring with the Planning Commission and Jica.

Two other upcoming Jica-funded projects are the Chattogram-Cox's Bazar Highway Improvement and Dual Gauge Double Line Between Joydebpur and Ishurdi Section project.

Jica said ERD needs to closely monitor the progress of DPP approvals.

 

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On January 30, 2023, Ambassador IWAMA Kiminori paid a courtesy call on Air Chief Marshal Shaikh Abdul Hannan, BBP, BUP, nswc, fawc, psc, Chief of Air Staff, Bangladesh Air Force.

Both sides cordially exchanged views on the bilateral cooperation in various fields, including strengthening defense relations between the two countries.

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