Japanese companies operating in Bangladesh have highlighted political and social instability as the primary threat to the business environment.
Additionally, unclear government policies, shortages in electrical infrastructure, ambiguity and complexity in laws, and bureaucratic red tape are also seen as major risks.
These details were pointed out in a survey by the Japan External Trade Organization (JETRO).
The survey noted that after the political shift on August 5, Bangladesh’s business confidence index dropped from 41.8 percent to 6.6 percent.
However, it is expected that this index will rise to 43.5 percent in 2025.
Japan has identified Bangladesh as the second most favorable country for business expansion after India. Furthermore, around 58 percent of the companies reported that they are interested in expanding their businesses in Bangladesh.
The JETRO survey results indicate that Japanese business owners have prioritized low labor costs and market opportunities for growing their business in Bangladesh.
Due to cheap labor and market potential, 61.3 percent of Japanese companies have placed Bangladesh at the top in terms of business environment.
Additionally, 29.3 percent cited the easy availability of workers and employees, 20 percent appreciated the linguistic advantage, and 14.7 percent mentioned company tax exemptions, incentive facilities, and specialized human resources as factors favoring Bangladesh.
However, the biggest barrier to sourcing products in Bangladesh is the local product quality and technological capacity. There is also a lack of competent suppliers for the required raw materials and spare parts. The survey recommends focusing on increasing local procurement to reduce production costs.
According to JETRO survey, 50 percent of Japanese companies in Bangladesh could see increased profits this year compared to last year.
It also highlights that Japanese companies working in Sri Lanka will see the highest profits among Asian and Pacific countries in 2025. After Sri Lanka, Pakistan, India, the Philippines, Vietnam, and Bangladesh follow in terms of profitability.
The JETRO survey, carried out in August-September of 2024, included 175 Japanese companies operating in Bangladesh, along with along with 13,727 Japanese companies across the Asia-Pacific region.
Among the competing companies in the Bangladeshi market, local companies hold the leading position with a market share of 74.2 percent. Japanese and Chinese companies follow, with market shares of 69.7% and 42.4%, respectively.
Bd-pratidin English/ Afia
