The Covid-19 pandemic poses a great challenge to the world economies but Bangladesh has become able to maintain constant economic growth amid this massive shock. The sustainability of Bangladesh’s economy is attracting the developing partners and investors of the country. Japan from the very beginning of the independence of Bangladesh is considered as an “all weather friend”.
Recently a new tone in the bilateral relations between the countries have been seen in the economic sector.
The Japanese ambassador in Bangladesh showed his interest to be a part of the developmental partner of Bangladesh. Besides, it is reported that Japanese investors are withdrawing their investments from China and South Korea and diverting the financial flow towards Bangladesh. Against such Backdrops, it is very rational to assess the bilateral economic opportunities in the post-Covid era
During global lockdown due to COVID-19, millions have lost their jobs, the poverty rate has doubled, and many businesses obliged to close down. The income of the vast majority of the population has been reduced to a larger extent. With the „contingency effect‟ and the effect of the „global village‟, exports touched the bottom while the importing countries themselves found it difficult to keep their economies stable. But Bangladesh put an example to successfully face the challenge and maintain the constant economic growth comparing other countries in Asia (See figure below). Most surprisingly, according to the United Nations, Bangladesh is one of the three countries in the world whose economic growth is increasing day by day.
The national goal of Bangladesh is now to lift the country towards a developed state by 2041 which needs an enormous infrastructural and communication development. Japan has already the second largest development partner of Bangladesh and the post-Covid scenario is suggesting that both countries can enrich their bilateral relations in the way forward. Japanese investment in Bangladesh increased 160% in 2019 compared to 2018 which is worth $72.9 million. Another $8.38 billion Japanese fund to refurbishment the transport sector was discussed on February 24, 2021 at the 4th meeting of the Bangladesh-Japan Joint PPP Platform. The amount will be spent on the construction of mega projects i.e., the south side of the outer ring road around the capital and Metro Rail Line-2 from Gabtoli to Demra (Chattogram Road). Besides, there was discussion on the Savar-Paturia road for the construction of a second Padma bridge with Japanese support.
Japan International Cooperation Agency (JICA) and the Japan External Trade Organization (JETRO) are engaging more recently to discuss the preferential free trade agreement and exploring potentials from special economic zones. Besides, the Japanese Ambassador Itu Naoki in different talks mentioned the developmental triumph of Bangladesh especially Dhaka Metro Rail, modern airport, Matarbari deep seaport under Moheshkhali-Matarbari Integrated Infrastructure Development Initiative, Padma Bridge and Bangabandhu Sheikh Mujib Railway Bridge that will change Bangladesh as well as the direction of Bangladesh-Japan bilateral relations.
Bangladesh is getting priority from Japan for the following reasons:
- Geographically strategic location of Bangladesh: bridging place of South Asia and Southeast Asia.
- Cheap labor facilities and quality products of the RMG sector.
- New investment opportunities in the manufacturing sector especially in the SEZs.
- Relatively stable economic growth amid Covid-19;and
- A huge population and thus a huge market.
A JETRO survey found that 70 percent of the existing Japanese companies in Bangladesh are keen on expanding their operations. Bloomberg reported that the number of Japanese firms in Bangladesh has tripled in the last 10 years reaching 300 vis-à-vis the transition from the lower income to the middle-income country. So far, the leading Japanese investors in Bangladesh are Japan Tobacco incorporation and Honda Motors. In the meantime, Mitsubishi Inc. announced plans to invest in Bangladesh in the construction sector of car and large industrial factories which may play an important role in accelerating the economic wheel of the country.
Moreover, due to the Pandemic, Japan has already declared incentives on diverting manufacturing facilities out of China and adding Bangladesh to a list of preferred destinations for relocating the factories. Bangladesh is preparing a special economic zone of approximately 1000 acres for Japan in Narayangonj nearly 32 kilometers away from the capital- Dhaka. The establishment of Araihazar Economic Zone is a $1 billion investment project, which will attract Japanese investment whose approximate value is $20 billion. 76% ownership of the special economic zone will be in the hand of Japanese Sumitomo Corporation. The zone has the
potential to be the best economic zone in Asia by overcoming challenges of business environment such as tax, custom’s clearance and foreign remittance as well as giving incentives.
To conclude, Bangladesh and Japan will celebrate the 50th anniversary of the establishment of bilateral diplomatic relations next year. With growing economic and developmental opportunities in the post-Covid period, Bangladesh is becoming strategically important to Japan. As a trusted friend of Bangladesh, it is expected that the bilateral relations in the economic sector
will be stronger in the days ahead.