Cut complexities for greater Japanese investment: experts
Japanese investors in Bangladesh are facing six issues when conducting business in the country due to complicated regulations, according to the Centre for Policy Dialogue (CPD).
Japanese investors have to endure a complex repatriation process for profits, convoluted customs procedures, delays in export and import shipments, lack of skilled IT professionals, inadequate internet connectivity and difficult foreign exchange regulations, said Syed Yusuf Saadat, a research fellow at the CPD.
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There are currently more than 310 Japanese companies operating in Bangladesh with total investments of around $400 million.
Saadat made these comments during a presentation on “Bangladesh-Japan partnership for the next development journey” organised by the CPD at The Westin Dhaka yesterday.
The CPD suggested ensuring a simple process for foreign investors to access low-interest working capital loans from domestic lenders and to make it easier for local enterprises to get international loans.
The civil society think-tank said an adequate number of officials should be employed in customs for handling freight, and the customs authorisation system should be digitalised.
Following Bangladesh’s graduation from a least-developed country, the country will need to increase its economic diversification, skills and productivity, it added.
Addressing the event, Planning Minister MA Mannan alleged that corruption has increased in line with the increase in development activities.
“We would like to eliminate it but as a democratic country, we need to take time to change the rules and regulations in this regard,” Mannan said while terming the corruption as cancer.
However, he ruled out the possibility of corruption at higher levels.
Regarding the potential of a free trade agreement with Japan, the planning minister said it would be meaningful and fruitful for both countries, and the commerce ministry is working on it.
Ito Naoki, Japan’s ambassador to Bangladesh, said increasing the ratio of foreign direct investment to the country’s gross domestic product is critical.
“And to attain that, we expect further progress in the ease of doing business,” he added.
Naoki suggested that local industries must be more diversified and went on to say that introducing new technologies is necessary for productivity growth while workforce development is also essential.
“Young and talented Bangladeshis should be ahead of the curve in regards to innovation,” the Japanese ambassador said.
He believes the expansion of foreign direct investment in Bangladesh, particularly from Japan’s private sector, will help the country address those challenges.
Naoki said regulatory and structural reforms should continuously move forward.
“We hope the government will take up the issues that Japanese companies face, including delays in customs clearance, various taxations, restrictions on the telegraphic transfer of import payments, discrimination of export incentives between domestic and foreign companies, and improvement of the business environment in export processing zones and special economic zones.”
According to the Japanese ambassador, the Dhaka Mass Rapid Transit (MRT) Line 6 will start commercial operation in December while the Japanese Economic Zone in Araihazar will soon be ready for investment.
Prof Rehman Sobhan, chairman of the CPD, said there are a number of major development projects in Bangladesh that are being funded by Japan.
He hoped that Japan will remain involved with the local energy sector and climate change issue as well.
Asif A Chowdhury, president of the Japan-Bangladesh Chamber of Commerce and Industry, alleged that corruption has increased at an alarming rate along with the implementation of a number of development projects.
He also suggested giving attention to improving the ease of doing business situation to attract more FDI from Japan.
Yuho Hayakawa, chief representative of the Japan International Cooperation Agency in Bangladesh, said the country is important to Japan for three reasons — the strong bond between the two countries, the fact that Bangladesh needs development projects to reduce poverty, and its stable policies.
Hayakawa added that Bangladesh is the top Japanese official development assistance receiver in the world.
Moderated by Fahmida Khatun, executive director of the CPD, Kazi Nabil Ahmed, a member of parliament, Shahabuddin Ahmed, the ambassador of Bangladesh to Japan, Kenta Goto, professor of economics at Kansai University, and Khondker Golam Moazzem, research director of the CPD, also spoke at the event.