A file photo shows workers sewing clothes using a Japanese brand machine at a readymade garment factory in Dhaka. The business expansion outlook of the Japanese firms in Bangladesh declined again in 2016 compared to that of the previous two years.
The business expansion outlook of the Japanese firms in Bangladesh declined again in 2016 compared to that of the previous two years as the firms are struggling with operating profit, showed a recent survey of Japan External Tread Organisation.
The survey titled ‘Business Condition of Japanese Companies in Asia and Oceania 2015’ directly interviewed chief executive officers of Japanese firms in 20 countries.
In Bangladesh, the survey was carried out in 49 Japanese firms which have operations 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 2015 (Diffusion Index) for operating profits which was 71.1 in the previous year.
The survey also said that the Japanese firms were witnessing declining trend in the country, especially since 2013.
Bangladesh, however, still is the highest point holder in the confidence index whereas China and Thailand got 20.7 points and 21.8 points respectively.
‘That means their business performance in Bangladesh will improve in 2016. The expectancy of business performance of Japanese firms in China and Thailand is poor and might not pick up,’ said the survey.
‘In spite of expectancy for expansion of operations in next 1 or 2 years, Japanese firms showed modest downtrend in last 4 to 5 years in Bangladesh and other countries such as China, Myanmar, Vietnam, India and Thailand.
Especially since 2013, downtrend of Bangladesh and China is much severe whereas expectancy for expansion is getting higher in Myanmar,’ it said.
Asked about the issue, former adviser to caretaker government Mirza Azizul Islam told New Age that the political uncertainty fuelled the declining trend.
‘We always had this energy and infrastructure challenges which have their effect. The political uncertainty has fuelled the confidence erosion of the foreign investors,’ he said.
The survey also said that comparing with other neighbouring countries, Bangladesh was found in a stressed situation to gain profit and ranked one of the lowest in profit generation where Pakistan, China and Philippines showed much more better situation.
The survey said that Bangladesh was found in a volatile condition because of problems related to quality of employees, competitors, local procurement and quality control.
As per the survey, 57.1 per cent CEOs think quality of employees were not up to the mark when 70.6 per cent CEOs pointed out local procurement as the biggest problem.
Like previous year, Bangladesh was found to be most economical in terms of workers’ wages both in manufacturing and non-manufacturing sectors, said the survey.
Workers’ wages in manufacturing sector in Bangladesh is US$ 100, followed by Sri Lanka $145, Pakistan $185, India $230 and China $424.
The wages in non-manufacturing sector in Bangladesh was $215.
Cost of Production in Bangladesh compared to Japan is found less than half or 49.5 per cent while the cost in other countries especially in China, Vietnam and India was 81.9 per cent, 73.0 per cent and 80.6 per cent respectively.
Source: New Age