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Japan-Bangladesh ties: Untapped economic prospective

Published : Tuesday, 18 April, 2023 at 12:00 AM  Count : 938

Japan-Bangladesh ties: Untapped economic prospective

Japan-Bangladesh ties: Untapped economic prospective

The economy of Bangladesh, one of South Asia's most free-market and trade-oriented nations, is steadily growing into one of the most promising and lucrative in the region Due to Bangladesh's 164 million consumers, growing middle class, increased purchasing power, domestic demand, readily available labor, and swift pace of economic development, Japan will be keen to improve its ties with Bangladesh. The country might also market itself as an appealing alternative site for Japanese enterprises trying to swivel away from China due to concerns about overdependence and supply chain disruptions in the wake of the pandemic and the Russia-Ukraine war. Japan is investing heavily in Bangladesh as Tokyo is involved in many projects in the country, including the Matarbari Port. Hence, economic ties with Japan can play a vital role in the progress of Bangladesh in the near future.

Since Tokyo recognized the People's Republic of Bangladesh on February 10, 1972, relations between the two countries have been cordial. The two nations enjoyed a cordial relationship that serves as a good example of development collaboration. Despite the fact that Japanese investment in Bangladesh is a recent phenomenon, the Father of the Nation Bangabandhu Sheikh Mujibur Rahman solicited Japanese investment during his 1973 visit to Japan. The turning point in luring Japanese investments in Bangladesh came with Shinzo Abe's visit in 2014. The Japanese investment in Bangladesh was stressed by Bangladesh's Prime Minister, Sheikh Hasina, in a manner similar to his father's economic diplomacy.

Japan had to use caution when forging ties with newly established Bangladesh because the United States, its closest ally, had backed Pakistan during the 1971 Liberation War. Nevertheless, Japan was one of the relatively few nations to offer assistance for the post-independence reconstruction of war-torn Bangladesh. Since then, Japan has taken a leading role in Bangladesh's development efforts.
Since 1972, Japan has generously provided to Bangladesh through Official Development Assistance (ODA) and has grown to be the country's top bilateral contributor. According to Ito Naoki, the former Japanese ambassador to Dhaka, Bangladesh is the country that receives the most ODA from Japan. After starting a Comprehensive Partnership with Bangladesh in 2014, Japan's financial support increased.

Japan sent Bangladesh more aid than any other nation for the fiscal year 2020-2021, totaling $2.63 billion. Japan has contributed a total of $24.72 billion since Bangladesh's independence, roughly equally divided between grants and loans. Bangladesh receives help from Japan in a variety of sectors, including social and economic growth, energy production, and the creation of both physical and intangible infrastructure. The official development assistance (ODA) that Japan provides to Bangladesh has turned out to be profitable for both nations rather than exploitative.

Bangladesh-Japan investment ties are growing in fields such as gas and coal, blue economy, health, and human resource development. The Matarbari deep sea port is a textbook example of how Bangladesh-Japan investment collaboration may be expanded to new heights. The Japanese private sector might be a major engine of economic progress in Bangladesh's emerging economy.

Bangladesh is attracting the interest of Japanese companies as a prospective new investment location. Ten years ago, only 82 Japanese companies had investments in Bangladesh. Successively, several Japanese companies have decided to invest in Bangladesh over the last ten years. Last year, 300 Japanese companies operated in Bangladesh, up from 278 in 2018, 260 in 2017, and 245 in 2016.

Following that, on August 12, 2020, Bangladesh and Japan announced a financing agreement that included Japanese investments in seven megaprojects in Bangladesh. When these initiatives are completed, the people of Bangladesh will be the true beneficiaries. One may also claim that these initiatives will aid Bangladesh's transition to a middle-income country.

Because of the manufacturers and large investors, Japanese trade businesses are eager to invest in economic zones, which can contribute to job development. Bangladesh's economy is largely believed to benefit greatly from its link with Japan, the world's third largest economy.
Japan has made major investments in Northeast India, one of our neighboring countries. In reality, due to the strategic location of the region, Japan is the only country that has been permitted to invest heavily in Northeast India. Bhutan, China, Myanmar, and Bangladesh share boundaries with Northeast India. All of these circumstances influenced the creation of one of Japan's defining foreign policy efforts, the "free and open Indo-Pacific" concept. While this was conceived by former Japanese Prime Minister Shinzo Abe, it has been carried on by successive administrations since then. As part of this, Japan has been seeking to maintain a rules-based order in the Indo-Pacific area.

Although Japan has been one of Bangladesh's closest development partners since its inception, it has recently been outsmarted by China, particularly with the introduction of Beijing's Belt and Road Initiative (BRI), of which Bangladesh has become a member.

While unveiling Japan's new 'free and open Indo-Pacific' strategy, Prime Minister Fumio Kishida stated that Northeast India, which is surrounded by land, still has untapped economic potential. Japan will establish the Bengal-Northeast India industrial value chain concept in collaboration with India and Bangladesh to support the expansion of the entire region, viewing Bangladesh and other areas to the south as a unified economic zone. Japan and India have previously established an Act East forum to pursue deals in Bangladesh and elsewhere.According to the plan, it will be part of Tokyo's bigger infrastructure development initiatives in the Bay of Bengal and Northeast India, with a focus on multilayer connectivity. Japan recently revealed its new Free and Open Indo-Pacific (FOIP) vision, which involves integrated development of Northeast India and Bangladesh as part of a larger Bay of Bengal community.

Japan is Bangladesh's most important Asian export destination. Bangladesh's exports to Japan have nearly doubled in the previous decade, but the country still has a lot of untapped trade potential. Bangladesh is one of Asia's most pro-Japanese countries, with 71 percent of Bangladeshis favoring Japan, according to a 2014 Pew Research survey. Bangladesh dropped its application for non-permanent membership in the United Nations Security Council (UNSC) in favor of Japan in 2014. Japan will undoubtedly get Bangladesh's backing for its ambition to become a permanent member of the UN Security Council.

Bangladesh is an important aspect in Japan's strategic-diplomatic agenda in South Asia. Bangladesh is one of South Asia's most free-market, trade-oriented countries, and it is rapidly emerging as one of the region's most potentially lucrative marketplaces with approximately 164 million customers. Bangladesh could possibly be one of Japan's most appealing investment destinations.

However, in order to become an investment-friendly hub for Japan, Bangladesh must improve its business climate, for example, by adopting fast-track projects. Moreover, the most important aspect for Bangladesh will be transfer of technological know-how. If Bangladesh can gain some technological enhancement from its relationship with Japan, a tech-giant, then the country will remain benefitted for decades. To create an equal playing field, Japan should allow duty-free access to Bangladeshi products. Coordinated efforts from both sides are essential to eliminate existing obstacles in their bilateral interactions, such as lengthy customs clearance procedures, double taxation, and foreign exchange issues.

Aside from economic factors, improved relations with Dhaka will enable Tokyo to rethink its power equation in South Asia beyond New Delhi. A tight relationship with Japan, on the other hand, will assist Bangladesh in realizing its full economic potential, confronting obstacles that may arise following its graduation from Least Developed Country classification, which will take effect in 2026, and diversifying its diplomatic contacts with big powers. Both parties can strengthen ties by exploring new paths of cooperation in vaccine production, healthcare, the blue economy, high-tech sectors, automobile manufacture, shipbuilding, and other areas.

Bangladesh became a development model over the past decade thanks to Prime Minister Sheikh Hasina's visionary leadership. How successfully she and her government managed relationships with neighbors and other international entities is a critical aspect of her extraordinary leadership. Over the years, Japan has also played a significant role in our development and progress. Bangladesh and Japan should cooperate to fortify their alliance with a clear strategy for economic cooperation in the upcoming year as they stand at this crucial crossroads in their relationship. PM Hasina will visit Japan from April 25 to 28 and we believe her upcoming visit will open new doors of economic opportunities for both the countries.

The writer is Chief Editor at Mohammadi News Agency (MNA) and Editor at Kishore Bangla






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