A survey report released on Sunday last by Japan External Trade Organization (Jetro) said most Japanese firms operating business in China favours Bangladesh as the second best investment destination in the region after India.
The choice has been accredited to lowest production cost from its low labour cost. While the labour cost is US$ 403 in China per month, it is $100 only in Bangladesh and $ 239 in India. Japanese investors have already visited Bangladesh with Prime Minister Shinzo Abe last September making their choice known to the government and business the community here. They are at work to relocate their investment in South Asia focusing on Bangladesh as a good investment destination.
Japanese firms are also relocating business from China to India, Vietnam and Thailand.
AS per the Jetro report some 71.7 percent Japanese-affiliated firms in China as the survey report said want to relocate operations in Bangladesh, with 78.2 percent favouring India, 66 percent Vietnam and 60.9 percent Thailand, official of the trade and investment promotion agency of Japan has been quoted as saying.
Jetro that has been conducting such surveys since 1987 took opinions of 10,078 firms from 20 countries. It also directly interviewed the chief executives of the firms between October and November last year to conduct the survey — A survey of Japanese Affiliated Firms in Asia and Oceania for the Year 2014.
It said Bangladesh is offering the lowest worker wage among its competing countries. Workers’ wages in the manufacturing sector in Bangladesh is $100 a month while it stands at $113 in Cambodia.
Japanese investors also think that Bangladesh has the widest room for cost cutting, According to some 84 percent of the CEOs in the survey. In comparison to Japan, the cost of production in Bangladesh is less than half (48.7 percent), while it is 77 percent in China and 71 percent in Vietnam.
Japanese corporate heads feel better trade opportunities in Bangladesh is awaiting in 2015 as some 71 percent of the CEOs surveyed are expecting profits to rise in the country.
Jetro’s Dhaka office published the highlights on early last week while stressing the need for improving worker efficiency in the country by providing basic education and vocational training.
Bangladesh so far ranked the lowest in quality of employees. The average rate of workers’ productivity in Bangladesh is 31.6 percent, while it is 77.8 percent in Sri Lanka, 68.4 percent in Pakistan, 44.4 percent in China and 42.1 percent in India, the study shows.
It suggested Bangladesh government should focus more on signing free trade agreements (FTA) with countries of the Asia and Oceania region to boost regional trade and its supply chain. The survey portrayed that the highest utilisation of FTA is made by firms engaged in the textiles trade.
“FTA is the means to trade facilitation in the Asia and Oceania region, not only a generalised system of preference but through two way trade. It is high time that Bangladesh should consider FTAs seriously,” it said.
Investment from Japan rose three times to $94.37 million in 2013, compared to the previous year and it is expected to grow steadily over the coming years. Japanese firms may use Bangladesh to enjoy duty free export of garments to EU and such other countries, besides exporting to the home market.
Source: Weekly Holiday