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Both Bangladesh and Japan governments are likely to start working on free trade agreement (FTA) after a survey found that the majority of Bangladeshi and Japanese companies operating here are in favour of signing it to retain competitiveness after the GSP facility ends.
Sources said the Bangladesh side showed interest when a delegation of Japan Chamber of Commerce and Industry (JBCCI) shared the findings of the survey with Senior Secretary of the Commerce Ministry Tapan Kanti Ghosh at a meeting on Wednesday.
The JBCCI had earlier shared the findings of its survey with the Japanese government and got a positive hint of starting a discussion on the FTA.
Before this, the Japanese government had shown reluctance to have a discussion on the FTA when the Bangladesh Ambassador to Japan in a letter to the country's foreign ministry in November 2020 requested that a joint survey be conducted.
Officials at the Japanese Ministry of Foreign Affairs informed the Bangladesh side that they would not work on the FTA unless demand was raised from the business community.
Sources said an eight-member JBCCI delegation led by its Director Yuji Ando as chairman of the FTA standing committee shared the findings of the survey with the commerce ministry senior secretary in presence of other high officials of the FTA wing of the Commerce Ministry on Wednesday.
They also shared the findings of the annual survey of Japan External Trade Organisation (JETRO) where the condition of the Japanese companies doing business in Bangladesh was seen encouraging.
The JETRO survey finds Japanese companies operating in Bangladesh want a business expansion plan for next two years and Bangladesh position is better than other Asian and Oceania countries, including Vietnam and Myanmar, in the choice of Japanese companies.
Official sources said the commerce ministry senior secretary requested the delegation to inform of the Bangladesh side's interest to start discussion on the joint FTA survey as the ministry of economy, trade and industry (METI) is responsible to work on it.
He also sought the full text of the JBCCI survey to look into the details.
When contacted, Standing Committee Chairman Yuji Ando said the Japanese government is now working on the possibility of starting a group study, but he said any decision is yet to come.
Mr Ando, also the JETRO Dhaka chief, said the JBCCI will push the Japanese government to work on the issue.
Tapan Kanti Ghosh told the FE that the survey has given an incitement to the demand situation but there is need to continue work to assess its impact on different aspects.
'Bangladesh side will obviously do its own study to assess many issues as there are various duties imposed on Japanese products though Bangladesh enjoys duty free access," he added.
But the senior secretary said it is needed to create a favourable business environment before 2026 when the GSP facility will not exist.
The JBCCI survey conducted during August-October on 300 companies found 85 per cent of the companies responded to signing a bilateral FTA between Japan and Bangladesh while 88 per cent of Bangladeshi and multinational companies expected the FTA with focus on tax reduction.
The respondents expressed concern over losing competitiveness in most aspects if Bangladesh signs FTA with China before Japan hinting that textile machinery and steel products from Japan would face adverse impact due to customs duty after the abolishment of the GSP facility.
The survey got responses from 70.4 per cent of Japanese companies operating here and from 19.4 per cent of Bangladeshi and multinational companies (MNCs).
Of the respondents, 53 were from the service sector, followed by 50 that export products manufactured in Bangladesh, 39 that import from third countries to Bangladesh and 33 that export products manufactured in Bangladesh to third countries.