Doulot Akter Mala

Japanese investors are now considering Bangladesh as a lucrative investment destination by shifting their eyes from China.

Due to the recent spat over territorial dispute with China and availability of cheap labour in Bangladesh, the Japanese investors are rating Bangladesh as a 'favourite choice', trade and industry sources in Tokyo said.

In several occasions, Bangladesh government also invited investors from the world's third largest economy to explore the existing' favourable opportunity' in Bangladesh.

In a recent meeting in Tokyo, held on the occasion of annual meeting of World Bank (WB) and International Monetary Fund (IMF), Bangladesh also received positive signal from the Japanese investors.

A high-powered government delegation of Bangladesh, headed by Finance Minister AMA Muhith, held several meetings with the Japanese investors on the sideline of the annual meeting.

The Bank-Fund meeting ended October 14.

An 11-member delegation of Bangladesh joined the annual meeting along with a number of side-events with the Japanese investors and other stakeholders.

Finance Secretary Fazle Kabir, adviser to the Prime Minister Gowher Rizvi, Economic Relations Division Secretary Iqbal Mahmood and Bangladesh Bank Governor Atiur Rahman were the members of the delegation, among others.

Chief Executive Officer (CEO) of Mitsubishi Bank met the Bangladesh Bank (BB) governor and expressed the desire to divert some of its investment from China to Bangladesh.

BB governor, who is also the chairman of the loan approval committee of the board of Investment (BoI) of Bangladesh, appreciated the interest of Japanese investors to invest in Bangladesh as the country is following standard guidelines of IMF and also have achieved a good performance rating by global rating giants.

Already, Japan International Cooperation Agency (JICA) is playing an active role financing different development projects of Bangladesh including Mass Rapid Transit (MRT) and Padma Bridge project.

Task-force for promoting BD-Japan investment:

Following the increased interest of Japanese investors and also with the proposal of the Japanese envoy in Bangladesh, the government formed a task-force in November last comprising of trade leaders and government officials.

In the first meeting, chaired by Dr MA Samad, the executive chairman of Board of Investment, the Japanese ambassador in Bangladesh Shiro Sadoshima stressed the need for easy visa processing and work permits and favourable financial regulations.

The Japanese envoy also stressed the need for appropriate implementation of letters of credit, deregulation of money transfer settlement and proper shipment of bills of lading.

Earlier in October, Shiro Sadoshima met the Prime Minister Sheikh Hasina and said major Japanese companies are interested to invest in Bangladesh's various sectors, including food processing industries.

The taskforce aimed to explore the prospective areas of Japanese investment in Bangladesh, identify the problems in attracting investment from the world's third largest economy and make recommendations to remove the hurdles facing by Japanese companies operating here.

It will also identify the areas of cooperation for the promotion of business between the two countries.

Positive performance ratings and IMF guidance for ECF:

After the latest visit in Japan on the occasion of the annual Bank-Fund meeting, the Bangladesh delegation observed a high-level of confidence among the Japanese investors due to positive ratings by the global rating agencies Moody's and Standard and Poor (S&P).

The rating agencies said Bangladesh's involvement in Extended Credit facility (ECF) worked as a major indicator to rate its economic performances positively.

"IMF monitors the Bangladesh economy. Amount of loan is not important. Bangladesh is with the IMF. Partnership in the monetary policy gears up confidence of both rating agencies and investors," Dr Atiur Rahman said.

IMF gives guidance on external and local borrowing, credit expansion, broad money creation which Bangladesh is following as a condition of the ECF fund.

Bangladesh received its first tranche of ECF in April and second installment is due on January next.

Amendments in VAT Law and Bank Company Law are the major two conditions of the IMF against release of the US$1.0 billion ECF for Bangladesh. The Parliament recently passed the VAT law which will be implemented from July 1, 2015.

"Compliance of international standard guidelines intensified confidence of both Japanese government and its private sector investors. Economy will run smoothly if a country can follow the professional guidelines of IMF," Dr Atiur Rahman said.

Bangladesh's export-import trade volume with Japan:

The two-way trade volume of Bangladesh and Japan is around $2.0 billion. The export from Bangladesh to Japan has been recorded at around $500 million, which is on the rise after Bangladeshi products got duty-free access.

Some 208 Japanese companies were registered for $1.24 billion investment in Bangladesh by December 2011 with employment opportunity for 45,000 people.

An official estimate shows Japan has provided about $10 billion assistance to Bangladesh since the establishment of diplomatic relations between the two countries in 1972.

According to the available figure, Bangladesh exports nearly 70 items to Japan but only seven-eight items constitutes 90 per cent shares of the total export in Japan.

The export items to Japan are shrimp, leather, footwear, apparels, jute and jute goods, chemical fertilizer, handicrafts, camera lenses, etc. On the other hand, import from Japan to Bangladesh includes raw materials for industrial use, machineries, vehicle-new and used, equipments under development projects, electronics etc.

The writer is special correspondent of the FE