Bangladesh shares a rich history of friendship with Japan, a steadfast supporter of its development journey since gaining independence. Japan is one of Bangladesh’s most significant bilateral development allies. Bangladesh and Japan’s relationship has strengthened over time, characterised by mutual respect, collaboration, and similar principles. Despite the geographical distance, these two countries have formed a strong alliance based on economic cooperation, development assistance, and cultural links. This article dives into the historical framework of the Bangladesh-Japan connection, the forces motivating their collaboration, and the significance of this long-standing friendship. On top of that, Bangladesh is one of South Asia’s most open and trade-focused economies, and it is anticipated to become the world’s ninth-biggest consumer market by 2030. So, the need to need to nurture this relationship is immense.
On February 10, 1972, not long after Bangladesh achieved independence from Pakistan, formal diplomatic ties were established between Bangladesh and Japan. However, Japan’s participation in the region dates back to the 1950s, when it provided East Pakistan with financial support. Japan had its consulate in East Pakistan and was one of the first countries to recognise Bangladesh’s sovereignty after the liberation struggles in 1971. Since then, Japan began a partnership that has endured for decades.
Japan’s involvement in Bangladesh’s economic growth is one of the pillars of their bilateral relationship. Bangladesh received $1.09 billion in export income from Japan in the fiscal year of 2022, with a target of tripling that amount by the fiscal year of 2023. This is why economic cooperation is a cornerstone of the Bangladesh-Japan relationship. Japan has been a significant development partner for Bangladesh, offering critical financial help, technical knowledge, and building assistance. Japan has played an instrumental part in assisting Bangladesh’s infrastructure development, including constructing bridges, highways, and power plants. Japanese investments have aided the establishment of diversified industries in Bangladesh, providing jobs and promoting economic sustainability. Japan’s Official Development Assistance (ODA) has played a crucial role in developing numerous sectors in Bangladesh, including energy, transportation, and urban development. Japan’s contributions to developing critical infrastructure such as bridges, highways, and power plants have greatly enhanced Bangladesh’s connectivity and access to modern amenities.
For example, the Japan-financed building of the Jamuna Multipurpose Bridge, often known as the “Banga Bandhu Bridge,” played a critical role in connecting the country’s previously isolated northern areas with the national economy.
Japan is the 11th-largest export destination and the seventh-largest import source for Bangladesh regarding bilateral trade. In the last financial year, 2021-22, the bilateral trade amount was 3.79 billion dollars. Japan ranks 12th in terms of foreign investment in Bangladesh. Meanwhile, Japanese entrepreneurs have invested about 46 million dollars in Bangladesh.
Japan’s large aid programmes demonstrate its commitment to facilitating Bangladesh’s development. Japan has offered considerable development aid to strengthen various areas, including education, healthcare, agriculture, and disaster management. These efforts have improved living standards in Bangladesh and increased Japan’s reputation as a trustworthy development partner. Japan contributed $2.63 billion in aid to Bangladesh in fiscal year 2020-21, more than any other country.
Japan has donated an estimated $24.72 billion in grants and loans to Bangladesh since its independence. Japan keeps assisting Bangladesh in various areas, including energy and power development, social and economic growth, and infrastructural development. Bangladesh-Japan investment connections are developing in areas such as gas and coal, blue economy, health, and human resource development.
Japanese firms are evaluating Bangladesh as a lucrative investment location. Only 82 Japanese businesses owned stakes in Bangladesh ten years ago. This figure has risen during the last decade. About 70 Japanese companies were operating in Bangladesh in 2008 and 83 in 2010 in various types of business. But recently, this number has increased drastically. Now, nearly 350 Japanese companies are working in Bangladesh. As of last September, Japanese companies have invested about 460 million US dollars in Bangladesh.
Popular Japanese motorcycle brand Honda has set up its motorcycle factory in Bangladesh. Yamaha is building another factory with ACI Group. Japan Tobacco has invested about USD 147.6 million by acquiring the tobacco business of Akij Group; Nippon Steel has a joint venture with local company McDonald Steel Building Products.
Japanese investment has historically been directed at China’s low-cost labour market. Recently, China has expanded its industries and fortified its economic base, so the cost of manufacturing Japanese goods in China has naturally risen. This upward trend in production expenses has influenced the Japanese economy. As a result, Japan is increasingly restricting the Chinese market and shifting its focus to South Asia. The most advantageous characteristic of Bangladesh for Japan is that its labour market is more competitive than India’s.
An industrial zone has been proposed in Bangladesh as part of Japan’s investment plan. They will invest in setting up industries and building ports. They want to market the products produced in these industrial zones in North-East India, Nepal, and Bhutan. That is why they want to build a communication infrastructure that will be a game changer.
Japan will invest in three infrastructure projects in Bangladesh, including a new commercial port in the Matarbari area.
The landlocked northeastern region of India, including Tripura, will be connected with this port. However, they also want to capture the larger international market through this port.
Enhancing cooperation in agriculture, customs, ICT and cyber security, industrial development, intellectual property, ship recycling, and public transport metro rail was highlighted during the recent (April 25 to 28) official tour of the Honourable Prime Minister Sheikh Hasina to Japan. Both countries believe that Bangladesh-Japan relations will be strengthened through these activities.
Furthermore, Japan’s private sector investments in Bangladesh have played a substantial role. According to the data of Bangladesh Bank, Japanese companies have invested a maximum of five million dollars in the country’s construction sector, and the investment in the power sector is two and a half million dollars. Apart from this, Japanese companies have invested in various sectors, including gas and petroleum, trading, chemicals, pharmaceuticals, and leather products.
On the other hand, according to the survey report by The Japan External Trade Organization (JETRO), the number of profitable Japanese companies doing business in Bangladesh has increased. In 2021, 43.2 per cent of firms turned a profit. It jumped to 47.3 per cent last year. In addition, 20% of Japanese enterprises are neither profitable nor losing money. However, 32.7 per cent of businesses were at a loss last year. Meanwhile, 48.2 per cent of Japanese enterprises expected an increase in operating profit in 2018 compared to 2021. In addition, compared to 2022, 61.8 per cent of enterprises expect operating profit to climb this year. 36.4 per cent of companies estimate the same profit as last year this year. Furthermore, 1.8 per cent of the enterprises indicated concern that earnings might fall.
However, there is still hope, as the survey result says that 71.6 per cent of the firms revealed not just profit and loss but also plans to grow their operations in Bangladesh during the next couple of years. In terms of company expansion intentions, only India is ahead of Bangladesh. Following Bangladesh are Vietnam, Laos, Cambodia, South Korea, Malaysia, Taiwan, Singapore, and other Asian and Oceanian countries. In other words, Japanese firms have prioritised India and Bangladesh in their business growth strategies.
The Sunrise of the Delta continues the five decades-long friendship between Bangladesh and Japan, which, however, can not be explained in a single article. Needless to say, this friendly relationship between these two nations has enormous potential that can enhance economic development and tie through cultural enrichments, and it is not limited to bilateral but also multilateral affairs.
Author- MD Talebur Islam
