Special Correspondent: Naoki Ito, the Japanese ambassador to Bangladesh, said that Japan considers Bangladesh as perfect destination for investment after the post pandemic recovery environment. Japan instigating its companies to shift investments in Bangladesh from China and adding Bangladesh to a list of preferred destinations for relocating the factories may give the South Asian nation’s economy a boost.
The island nation’s nudge to relocate companies comes at a time when a Special Economic Zone is in the making in Bangladesh to lure Japanese firms’ production facilities. The industrial zone sprawling on 1,000 acres of land in the Araihazar subdistrict, 32 kilometers away (about 20 miles) from the capital Dhaka, is expected to bring in $20 billion in Japanese investments, according to the Bangladesh Economic Zones Authority.
Japanese manufacturers have already been seeking lower labor costs and supply-chain diversification by moving some output out of China for years as wages rose and infrastructure in countries like Vietnam and Bangladesh improved. Over the last 10 years, the number of Japanese companies operating in Bangladesh has tripled to about 300, according to Ito.
Japan has allocated $350 million in special loans to develop the $1 billion industrial zone, Ito said, making it the largest such assistance for an SEZ in Asia.
The Araihazar industrial park, which will be operational by 2022, is seeking to draw new investments from automakers, such as Suzuki Motor Corp. and Mitsubishi Corp., according to Ito. Japan Tobacco Inc. and Honda Motor Co are among the largest Japanese investors in the South Asian nation so far.
Bangladesh occupies a geographically strategic location linking South Asia and Southeast Asia. One of the world’s most populous countries, Bangladesh has 160 million people residing in a land area that’s just about 40 percent of Japan.
The South Asian economy, which grew an estimated 5.2 percent in the year ended June, sees 7.4 percent expansion in the current financial year. While that’s slower than the 8.2 percent pace it previously forecast, it still puts the nation ahead of regional peers on the growth metric.
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