February 7, 2023
BANGKOK — More and more Japanese companies are entering Bangladesh at a rapid pace as the country’s large population and steadily developing infrastructure are expected to drive future economic growth.
There is also a desire on the part of companies to diversify their supply chains. While expansion has mainly been seen in the apparel industry until now, the country is likely to attract attention in future across a wide range of industries including information technology.
“Bangladesh is not yet a widely known country, but it has great potential,” said Yasuaki Tsukahara, president of Growth Cars and Solutions Bangladesh Co. The company rents out cars with chauffeurs for business travelers at local Japanese firms and entities in Bangladesh.
The company started the business in June last year, anticipating an increase in the number of businesspeople needing transportation as Japanese companies accelerate their expansion into the area. The number of clients has been steadily increasing since last autumn, and the company is getting a positive response.
According to the Japan External Trade Organization (JETRO), the number of Japanese companies in Bangladesh increased from 70 in 2008 to 338 in 2022. The country’s population of about 169 million is larger than Japan’s, but its per capita gross domestic product is only about $2,500 (about ¥320,000), about one-sixteenth that of Japan’s, so there is thought to be significant room for growth.
So far, companies from various countries – mainly clothing companies – have been increasing their presence in Bangladesh. From Japan, in addition to the apparel industry, companies include general trading firms such as Mitsubishi Corp. and Sumitomo Corp., construction company Shimizu Corp. as an infrastructure developer, and Nippon Express Holdings Ltd. as a logistics provider.
The IT industry is also likely to be powerful in the future as the Bangladeshi government is focusing on human resource development under the slogan “Digital Bangladesh.”
While its neighbor India is known as an IT powerhouse, Nagano Prefecture-based IT company Thesaurus Inc. plans to establish a corporation in Bangladesh as early as this spring.
“Bangladesh has a large population and is capable of competing with India,” said Chief Executive Officer Takehiko Arai.
Military coup in Myanmar
The rapid development of infrastructure in the country is also behind this trend.
Bangladesh’s first urban rail service, Dhaka Metro, was launched late last year in the capital city of Dhaka. The Japan International Cooperation Agency (JICA), Mitsubishi Corp. and Marubeni Corp. have been involved in the project. The 12-kilometer line that was opened was equipped with Japanese technology in the platform gates and other areas. Bangladeshi Prime Minister Sheikh Hasina and other dignitaries attended the opening ceremony.
Terminal expansion work is also underway at the international airport in Dhaka. Last December, an industrial park called the Bangladesh Special Economic Zone (BSEZ) was opened in the suburbs of the capital. It is the first such site developed by a Japanese company, with Sumitomo Corp. and JICA both involved, in partnership with the Bangladeshi government.
“In the future, we will be able to manufacture higher value-added products,” said an official from a major trading company.
One of the reasons why Japanese companies are starting businesses in Bangladesh one after another is to secure a diverse supply network in preparation for political instability in neighboring countries. Although a number of Japanese companies had been expanding their operations in neighboring Myanmar, the military coup in 2021 led to a widespread rethink of doing business in the country.
“Many people came to Bangladesh because their business in Myanmar had slowed down,” said a Japanese expatriate in Dhaka.