A new era of Japan-Bangladesh partnership
On Wednesday, in a joint statement with Japan's Prime Minister Kishida Fumio, Prime Minister Sheikh Hasina declared that Bangladesh and Japan's bilateral relations have been elevated to a "strategic partnership" from the previously "Comprehensive Partnership."
During the bilateral talks held in Japan, the two sides discussed several topics from Moheshkhali-Matarbari Integrated Infrastructure Development Initiative to the Bay of Bengal Industrial Growth Belt (BIG-B) initiative and economic partnership as well as the Rohingya issue.
The memorandums of cooperation (MOCs) signed at Prime Minister Kishida's Office in Tokyo will facilitate more cooperation in agriculture, metro rail, industrial upgrade, ship recycling, customs matters, intellectual properties, defence, ICT and cyber security.
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The Business Standard spoke to four experts for their insight on what this partnership could mean for Bangladesh in terms of economy, business and international relations.
'A sign that Bangladesh has reached a high level of maturity and competence'
Dr Lailufar Yasmin, Professor and Chairperson, Department of Intern Relations, University of Dhaka
The spirit and comprehensiveness of the bilateral relationship between Japan and Bangladesh meant a strategic partnership was in the offing. Eventually, through the Prime Minister's visit to Japan, that has been established.
The strategic partnership is not always a military or defence partnership. It is a long-term partnership where two countries identify where their interests converge, and what they can do about it to get benefitted from it. The collective actions can be bilateral, as well as multilateral.
The 'upgradation of the relationship' was a need of the time. The Japanese Prime Minister's announcement of the strategic partnership also shows that Bangladesh has reached to a level of maturity and competence that the country can offer a lot of things to a country like Japan that was not possible before.
And therefore, a number of countries are now asking for establishing a strategic relationship with Bangladesh. A dialogue between the EU and Bangladesh also started last year.
These events are a reflection of the fact that Bangladesh has been able to consolidate its position in the international sphere. And now, these two countries can see the qualitative transformation of their bilateral relations.
'More investment, innovation, technology transfer and export diversification in the offing'
Md Sameer Sattar, President, Dhaka Chamber of Commerce and Industry (DCCI)
Japan is a longstanding development partner of Bangladesh. It is providing financial and technical support to Bangladesh for improving regional connectivity, transport infrastructure, power and energy, the metro rail and the Maheshkhali-Matarbari Integrated Infrastructure Development Initiative (MIDI). Japan has also been playing crucial roles in order to promote the private sector, improving competitiveness and the country's brand image, and capacity development of the human resources of Bangladesh.
Considering bilateral trade and investment exposure, Japan emerged as the 11th largest export destination and 7th largest import sourcing country of Bangladesh, recording total bilateral trade of $3.79 billion in FY2021-22. Moreover, Japan is the 12th largest source of FDI stock to Bangladesh with a $457.98 million investment. The growing presence of Japanese companies in Bangladesh is also the cornerstone for strengthening the economic partnership between both countries.
The deeper comprehensive economic engagements developed over the last 50 years between Bangladesh and Japan elevated our bilateral relationship towards a strategic partnership level. The journey of strategic partnership will be further broadened by the current Japan visit of our Honourable Prime Minister Sheikh Hasina. This is also evident from the signing of bilateral agreements and instruments, encompassing agriculture, customs matters, defence, ICT and cyber-security, industrial upgrading, intellectual property, ship recycling and metro rail.
This unprecedented development broadening bilateral strategic economic partnership will encourage more Japanese investment, innovation, technology transfer and export diversification in Bangladesh – creating a positive linkage with the overall business landscape of the country along with reaping the demographic dividend.
There are still huge untapped business opportunities in Bangladesh. Japan can consider investing in joint ventures and technology transfer in various promising sectors, including agro-processing, shipbuilding, electronics, jute, energy, automobile, light-engineering industries, ICT in Hi-tech parks, 4IR technologies, industrial skills development, SME development and varied service sectors to improve our productivity, efficiency, position in the global value chain, and the ability to cater to global market demands.
The impact of the growing strategic partnership between Bangladesh and Japan is evident from the survey of JETRO. The survey revealed that 68% of Japanese companies in Bangladesh are planning to expand their businesses in Bangladesh. Alongside, Japan – being the third-largest developed economy and partner of many FTAs – can make a business synergy for Japanese investors to harness our investment dividends.
In this connection, the strategic partnership will steer to negotiate an early possibility of signing a bilateral Economic Partnership Agreement (EPA) which may position Bangladesh to avoid the erosion of 97.9% Duty-Free Quota Free (DFQF) access of Bangladeshi products to the Japanese market during the post-LDC era.
Moreover, the establishment of a Special Economic Zone for Japanese investors in Narayanganj is a milestone move for all potential investors. The Bay of Bengal Industrial Growth Belt (BIG-B), one of our high-priority and multifaceted infrastructure connectivity projects, patroned by Japan with the country's first deep seaport in Matarbari will add value to local industrial and supply chain development leveraging existing and potential Japanese businesses to invest in Bangladesh.
'This partnership will create an industrial and connectivity hub centring Bangladesh'
Dr Zaidi Sattar, Chairman, Policy Research Institute of Bangladesh (PRI)
In light of PM Sheikh Hasina's visit to Japan and the eight agreements and MoUs signed between the two nations, the relationship between the two Asian nations is now elevated to a 'strategic partnership' that goes beyond economic and trade interconnectedness.
The MoUs signed between Bangladesh and Japan are also part of Bangladesh's Indo-Pacific Outlook (IPO); a major foreign policy paradigm with trade implications in the post-LDC era. It will also determine how Bangladesh interacts with its partners in the Indo-Pacific region.
The most strategic component of the agreements is the idea of creating an industrial and connectivity hub centred around Bangladesh. There are some key implications for these agreements. I would like to focus on how these agreements are congruent with the IPO.
For instance, these MoUs can have major implications for the ongoing power and port project at Matarbari in Cox's Bazar district. As a consequence of this agreement, we can expect that the Matarbari port will be augmented into a deep-sea port which can be accessed by oceangoing mother vessels that cannot now access Chattogram port.
The port is planned to be a major transhipment hub connecting Bangladesh with other countries in the region, which would enhance trade and commerce activities. The idea of an industrial hub in Bangladesh centring around the establishment of a deep-sea port in Matarbari was first tabled in 2020 by former Japanese Prime Minister Shinzo Abe.
A $2 billion JICA-GOB project comprising a 1200 MW coal-fired power plant, with port docking facilities for coal-carrying vessels, is already under implementation at Matarbari with completion expected in 2027. This project is now substantially augmented with Matarbari becoming a deep-sea port for which the current Japanese PM Kishida recently committed another $1.27 billion.
During the visit, PM Sheikh Hasina also discussed the Moheshkhali-Matarbari Integrated Infrastructure Development Initiative (MIDI) and the BIG-B Initiative for the development of Southern Bangladesh to connect the Bay of Bengal and its neighbouring regions. I believe that economic growth in the region can be boosted through augmented trade and investment between Bangladesh, Nepal, Bhutan and the North Indian States as well, via transit access to Bangladesh sea ports for all of the regions mentioned.
In short, the graduation of the bilateral ties between Bangladesh and Japan into a strategic partnership can contribute to strengthening trade relations, increasing investment, generating employment, and promoting infrastructural development, thereby stimulating economic growth for not only Bangladesh, but also the isolated regions in Northeast India (India), Nepal, and Bhutan, as well as the contiguous regions of the Bay of Bengal through increased volumes of and reduced trade barriers.
Likely, a strategic partnership would also bring about a higher volume of investment in infrastructure development. On one hand, such investments could attract private investors, international companies and mobile industries, to invest in the region, thereby strengthening its economic landscape. On the other hand, I believe that linking the deep-sea port with internal and international road and rail connectivity could augment trade and economic activities eventually leading to the emergence of an industrial growth belt of the future to match those in East Asia.
'Timely move as LDC graduation is knocking on our door'
Rizwan Rahman, Former President, Dhaka Chamber of Commerce and Industry (DCCI
From a business standpoint, the strategic partnership between Bangladesh and Japan is a timely move as we are just three years away from LDC graduation. The MoU on establishing a framework to jointly explore the possibilities of upgrading Bangladesh's industries will be very helpful in this regard.
Comparatively, in terms of FDI and infrastructural investment, Japan has the most confidence in Bangladesh. It has always chosen Bangladesh as one of its investment destinations. Even among neighbouring countries, Japan has traditionally prioritised Bangladesh. But in order to boost confidence in us further, we need to strengthen our local business environment and our entrepreneurs.
We also need to reciprocate; whatever support we receive from them, we have to give it back to them in kind. We have to give them proper service, better than that given by our competitors. For example, we are better than Vietnam in terms of labour efficiency, but we lag behind in terms of logistics. So, there is room for improvement.
In terms of sharing technology and knowledge, what we would like to see is that the Japanese experts themselves implement the technology here.
We should also highlight the Araihazar Economic Zone and its successes to attract more investors to our economic zones.
