Tapping Japanese investment

Reports on expansion of business and relocation of factories from top Asian manufacturing hubs such as Japan and China have been in the air for sometime. Despite the ongoing political unrest hindering flow of businesses, it would be totally unwise to conclude that overseas investors have turned away from investing here in Bangladesh. The country is still considered an attractive investment destination because of the definite edge it has over many other probable investment destinations in terms of the advantages it offers.
This has been pointed out in a recent study by the Japan External Trade Organisation (JETRO) which shows that most Japanese firms operating in China consider Bangladesh as the second best investment destination after India. For sometime now, industries located in China by both Chinese and foreign investors have been exploring viability for relocation of their production bases in countries like India, Bangladesh, Vietnam, Thailand and Cambodia. Rise in wages and difficulties in expansion in China have prompted many to move away. As for the Japanese investors, the case calls for an urgency to shift existing production units from China as well as launch new fresh units in suitable locations elsewhere. Japanese entrepreneurs have been shifting their investments to other countries since its government announced the 'China plus one' policy in 2008 to reduce over-dependence on China. The JETRO study says, around 72 per cent Japanese firms in China want to expand their operations in Bangladesh, while 78.2 per cent prefer India, followed by 66 per cent Vietnam and 60.9 per cent Thailand respectably. The JETRO conducted the study on 10,078 firms of 20 countries in Asia and Oceania region during the October-November period of 2014.
The distinct edge that Bangladesh has over all other potential investment destinations is too well known - low-cost labour. Though not an admirable trait in view of its being commonly perceived as unjustly low, cheap labour continues to lure investors from abroad. The JETRO study found Bangladesh as offering the lowest worker wage among its competing countries. In the manufacturing sector it is $100 a month, and closest to Bangladesh is Cambodia with $113. Japanese investors also think that Bangladesh has the widest room for cost cutting, according to some 84 per cent of the CEOs in the survey.
Furthermore, the cost of production in Bangladesh in comparison to that of Japan is less than half (48.7 per cent), while it is 77 per cent in China and 71 per cent in Vietnam. Japanese corporate heads feel that there are better trade opportunities in Bangladesh in the current year (2015), as more than 70 per cent of the CEOs surveyed are expecting profits to rise in the country. On the flip side, despite abundant work force, the study finds Bangladesh at the bottom in the quality of labour. An average worker's productivity in Bangladesh has been found to be as low as 31.6 per cent as against 77.8 per cent in Sri Lanka, 68.4 per cent in Pakistan, 44.4 per cent in China and 42.1 per cent in India. This being the case, it is inevitable that until the quality of labour is improved by another 10-15 per cent from the existing level, low-cost labour alone is not going to help the cause of the Japanese investors who are seemingly well disposed towards investment in Bangladesh. This has to be taken by all concerned as a plain and clear message.