The Financial Express

Bangladesh as a business destination — Japanese perspective

| Updated: October 24, 2017 12:06:28

Bangladesh as a business destination — Japanese perspective
Bangladesh has been found to be an attractive business destination in a recently released survey report of the Japan External Trade Organisation (JETRO). Although there are some ifs and buts, the report mentions some key features that make Bangladesh a preferred place for Japanese business people to do business here compared to 19 other countries in the Asia and Oceania region, some of whom are Bangladesh's fierce competitors. 
True, the findings, some of which have been hailed as positive and pro-business, reflect not a general but a subjective reflection of how Japanese business people look at the business climate in Bangladesh. It's all about putting under scanner the indexes of business confidence that are varied in nature and scope. Circumstances influencing business confidence vary from country to country -- reliant on factors from within and without. In case of Bangladesh, political unrest was not only recognised as one of the key factors responsible for the low level of business confidence in the recent past, it was also this factor which was responsible for a whole lot of other factors going haywire.
As for the JETRO survey on Bangladesh's current business environment, the highlights are workers' wage and cost of production. The survey finds Bangladesh as the most economical in terms of workers' wage both in manufacturing and non-manufacturing sectors. Compared to Japan, cost of production in Bangladesh is less than half (49.5 per cent), while it is 81.9 per cent in China, 73 per cent in Vietnam and 80.6 per cent in India, according to the survey. The survey, as mentioned already, is essentially about business conditions -- congenial or otherwise - as evaluated by Japanese firms and business houses located in the Asia and Oceania. The survey team interviewed the chief executive officers (CEOs) of as many as 9,590 Japanese companies in 20 countries in the region during 2014-15. The issues mainly focused in the survey dealt with profit forecasts, business confidence of the CEOs, expansion plans, cost of local production, management concerns, procurement sources and export destination, expectation for economic integration and wages. According to the inputs provided, Bangladesh is far ahead of Vietnam, Sri Lanka, Thailand and Pakistan on the cost indicator and is in a better position than Sri Lanka, Pakistan, Indonesia, Cambodia, India, the Philippines, and China on the labour wage indicator. More than 67 per cent respondents said they would like to expand their business operations in Bangladesh in the next one or two years in view of growth potential, lesser costs and an easy-to-secure labour force.
Although Bangladesh still holds more points in overall confidence index for Japanese companies, the trend is experiencing a decline in some important indicators compared to those in the past years. In Bangladesh, the survey was carried out on 49 Japanese firms operating in the country. As per the survey, Bangladesh was ranked 5th in the JETRO survey 2015 with 67.4 per cent of Japanese firms being positive for expansion; in 2014, the expansion outlook was 71 per cent and in 2013, 79.4 per cent. The confidence of the Japanese CEOs in Bangladesh also declined to 63.3 points in business confidence index in 2015 for operating profits which was 71.1 in the previous year. The survey report also said that the Japanese firms were witnessing declining trend in the country, especially since 2013.
More than 57 per cent Japanese CEOs working in Bangladesh think quality of the employees is not up to the mark here, 50 per cent of them would like to think more on quality control. Moreover, 56.3 per cent of the CEOs flagged customs clearance as complicated and 70.6 per cent consider local procurement a big problem. As a result, only 22.5 per cent Japanese firms operating in Bangladesh procure raw materials locally. There are 230 Japanese companies doing business in Bangladesh.
Given the perspective from which these inputs were gathered, there is no reason to believe that these are essentially Japan-centric and do not reflect a general picture about the country's business environment. In fact, what has come out in respect of the various indicators, especially those relating to inadequacies, is an authentic presentation of the areas needing serious attention. In various meetings, seminars and workshops these issues are commonly cited as impeding our business climate. Now that these have come in a concrete and quantified manner from none other than one of our most prospective trade and investment partners, efforts from all relevant quarters are necessary to address them in a methodical way.

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