Rising exports of BD goods to Japan

It's a welcome piece of news that the export of apparel to Japan from Bangladesh fetched $1.22 billion during the first nine months of the current financial year. The earnings during the corresponding period of the last financial year were around $850 million. Thus, the export revenues went up by nearly 44 per cent during the period under review. The notable growth of apparel exports, however, was in line with the trend witnessed in the bilateral trade with Japan in recent years.

The value of overall exports to Japan which was $1.44 billion in 2018 continued to grow until 2022 barring the two pandemic-hit years. In 2022, Bangladesh fetched $1.71 billion from exports to Japan and apparel contributed the most. The uptrend is expected to continue this year as well. However, there is one not-so-encouraging development in the bilateral trade between the two countries. The trade balance moderately favours Japan, and the deficit has been going up constantly amidst talk of signing a free trade/preferential trade agreement between the two countries. The immediate past ambassador of Japan in Bangladesh while addressing an event organised by the Japan-Bangladesh Chamber in Dhaka in October last year sounded very optimistic about the bilateral trade reaching $20 billion in 2030 with each country sharing half of it. The size of the bilateral trade now is more than $3.0 billion.

The trade growth envisaged by the Japanese envoy over the next seven years would be very difficult to achieve on the part of Bangladesh unless some improvements are made in policy issues and beyond. Obviously, the focus should primarily be on apparel that now helps the country earn the most revenues from Japan, a non-traditional export destination. Both the government and the businesses concerned will have to do a lot to enhance their presence in the Japanese apparel market which is worth over $24 billion. The Bangladesh readymade garment exporters will have to know the product-based demand in that country and work accordingly, keeping an eye on the quality issues. A good number of apparel sector leaders are now in Japan as members of Prime Minister Sheikh Hasina's entourage. They are expected to make interactions with Japanese stakeholders in furthering the prospects of apparel exports to that country.

In addition to boosting exports to help offset the trade imbalance with Japan now and also in the future, what will be needed most is luring more Japanese investments to Bangladesh. At the moment more than 340 Japanese firms are operating in this country, but their total investment is worth less than $500 million. A survey done recently by the JETRO (Japan External Trade Organisation) has found that Japanese companies are eager to expand their operations in Bangladesh. Japan has been moving their investments in a big way from China to other Asian countries. Their investments have been more in medium to higher technology-based industries. To attract such investments, Bangladesh needs to ensure skilled manpower, necessary infrastructures and integrated logistical services. Besides, reform of taxation and government incentives will be necessary to remove discrimination, if there is any, between local and foreign companies. Greater Japanese investments would also help protect Bangladesh's interests better if the two countries finally strike an FTA or a PTA.