Bangladesh Investment Development Authority (BIDA) Executive Chairman Ashik Chowdhury has emphasised the need to shift the focus of foreign direct investment (FDI) from its monetary volume to the number of jobs it creates.
"I would personally prefer a $10 million investment that creates 1,000 jobs over a $100 million investment that generates only 100 jobs," he remarked on Sunday while speaking as the chief guest at a discussion on the findings of the "2024 Survey on Business Conditions of Japanese Companies Operating Overseas in Asia and Oceania."
Held at a hotel in the capital, the event was jointly organised by the Japan-Bangladesh Chamber of Commerce and Industry (JBCCI) and the Japanese Commerce and Industry Association in Dhaka (JCIAD).
Chowdhury stressed the importance of job creation for Bangladesh's economic growth and urged Japanese investors to increase their presence in the country, creating employment opportunities and improving the quality of human capital.
He noted that Bangladesh has the potential to become a regional manufacturing hub that will serve markets beyond its borders.
Presenting the survey report, Japan External Trade Organisation's (JETRO) Country Representative for Bangladesh Yuji Ando highlighted the nuanced landscape of Japanese business operations in Bangladesh, marked by a mix of current challenges and optimistic future projections.
After India, Bangladesh is the second choice of Japanese companies for business expansion in the next one to two years, considering its competitiveness in cheap labour and the domestic market, the JETRO survey found.
Though 45 per cent of companies forecast lower operating profits amid political instability, 57.7 per cent still prefer Bangladesh for business expansion.
Bangladesh is also among the top choices as China's position is record low in the survey, which found 6.6 per cent of companies want to contract business in 2025.
Ninety-four per cent of Japanese companies mentioned political and social instabilities as the top risk factor for their business, followed by unclear policy management and insufficient infrastructure.
The increased labour cost in the members of the Association of Southeast Asian Nations (ASEAN) is a cause for concern for Japanese firms in their plans for expansion in many Asian countries and Oceania.
In light of the data since 2010, JETRO also found the percentage of companies intending to expand in Bangladesh in the region has always been at the top for the last 15 years, like India.
Though 67.4 per cent of companies mentioned local market demand as their intention for business expansion, almost 40 per cent said the increase in exports to Japan is among the reasons.
The survey found the highest 51.2 per cent response for expansion in sales, followed by 37.2 per cent in new business development and 39.5 per cent in high value-added production.
However, 73.3 per cent of Japanese manufacturing companies in Bangladesh mentioned high-value products and 53.3 per cent identified general-purpose products.
In Bangladesh, 41.9 per cent of companies expected profits in 2024, which is the second lowest in Asia and Oceania in terms of profit forecast rate.
Besides, 74.2 per cent of Japanese companies count local firms as competitors, while 62.4 per cent consider Japanese ones so, followed by Chinese ones (42.4 per cent).
Some 61 per cent of the 73 Japanese companies in Bangladesh pointed out low labour cost and market scope, as well as growth potential, as the top two competitiveness factors.
In the case of India, political stability is also among the reasons. This is what Japanese companies demand in Bangladesh as well.
Though the increase in local procurement is an important factor for production cost reduction, the local procurement rate in Bangladesh is very low, according to the survey.
Speaking at the event, Japanese Ambassador to Bangladesh SAIDA Shinichi noted that the country's business environment is gradually improving.
He expressed hope that the ongoing efforts to strengthen bilateral ties would lead to mutually beneficial outcomes for both nations.
In his welcome speech, JBCCI President Tareq Rafi Bhuiyan Jun highlighted that the success of the existing Japanese companies in Bangladesh could serve as a catalyst for attracting more FDI.
"Satisfied investors can become ambassadors to attract new investments. Addressing their existing challenges is crucial for encouraging further Japanese investment," he said.
He also underscored the need for continuous dialogues among businesses, governments, and stakeholders to maintain a positive momentum.
The JBCCI president noted that with its strategic location, young workforce, and a government committed to creating a business-friendly environment, Bangladesh is poised to become a regional economic powerhouse.
He added that Japanese companies, with their expertise and commitment to quality, can play a pivotal role in this transformation.
JBCCI Secretary General Maria Howlader and Vice-President of JCIAD Yuji Wagata also spoke at the event, reinforcing the call for stronger collaboration to maximise investment opportunities.
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