On February 10, 1972, half a century ago, Bangladesh received official recognition as a sovereign nation-state from Japan. The two nations have maintained a cordial relationship ever since, earning the ‘good model’ title for development cooperation. Japan is described as ‘an all-weather,’ ‘trustworthy,’ ‘dependable,’ or ‘time-tested friend’ of Bangladesh in the country’s foreign policy discourse. Japan provides the most development and economic assistance to Bangladesh, second only to India. It has benefited from approximately $25 billion in economic and development assistance from Japan since 1972.
Japan played a crucial role in Bangladesh’s overall socio-economic development in the last fifty years. However, Japan’s relationship with Bangladesh was upgraded from a comprehensive relationship to a ‘strategic’ one last April. Earlier people tended to view their bilateral relationship in a reductionist manner initially based on foreign direct investments, loans, and grants. Now, the relationship is shifting, considering the changing geo-political landscape due to the Ukraine war, the Taiwan crisis, and The USA’s pivot to Asia. Against such a backdrop, it is important to shed light on the evolving dynamics of the Bangladesh-Japan partnership and how it can create a win-win situation for both.
Changing matrix of cooperations
Regarding Japan’s ODA policy to South Asia, Bangladesh, from a marginal country, has gradually been replaced as Japan’s priority country. For instance, in 2010, Bangladesh received a 5.8% composition ratio of JICA’s total projects in South Asia, which increased to 34.4% in 2019. In December 2023, Japan exported ¥20.3B and imported ¥17.1B from Bangladesh, resulting in a positive trade balance of ¥3. 21B. In 2022, Bangladesh exported $1.69B to Japan. The main products exported from Bangladesh to Japan were non-knit men’s suits ($294M), knit sweaters ($252M), and knit t-shirts ($217M). During the last 27 years, the exports of Bangladesh to Japan have increased at an annual rate of 9.05%, from $163M in 1995 to $1.69B in 2022.
Japan is now one of the biggest consumers of ready-made clothing (RMG). Bangladesh’s RMG exports to Japan have nearly quadrupled over the last ten years, and in the most recent fiscal year, Dhaka received $1.09B from Japan. This year, the two nations aim to increase their RMG earnings threefold. There were already over 300 Japanese businesses doing business in Bangladesh. An economic partnership agreement between the two nations is anticipated to be signed soon, which could increase manufacturing and draw in more foreign businesses.
Bangladesh established a 1,000-acre special economic zone in 2022 with help from the Japan International Cooperation Agency. Thanks to this economic zone, Bangladesh has seen a rise in private-sector investment. According to a survey conducted by the Japan External Trade Organization (JETRO), 73.2% of the 57 companies interviewed said Bangladesh is their top priority for business expansion; 61% said the country has high growth potential. The pandemic began in China, so Japanese businesses had to broaden their product offerings. Bangladesh will have an opportunity because of this.
Strong ties to Japan will enable Bangladesh to take advantage of its full economic potential, meet the challenges that will arise once it leaves the Least Developed Country category in 2026, and broaden its diplomatic ties with major powers. By looking into new areas of collaboration in the fields of vaccine development, healthcare, the blue economy, high-tech industries, automobile manufacturing, shipbuilding, etc., both parties can strengthen their relationship.
A paradigm shift in geo-political and strategic ties
In recent years, Japan has begun to emphasize political and strategic issues related to developing a comprehensive partnership with other nations. Concerns about local, national, and international politics and security are growing, especially in the Indo-Pacific region. Bangladesh is significant to Japan’s strategic calculations due to its direct access to the Indian Ocean and its strategic location between South and Southeast Asia. From a sea perspective, Bangladesh is close to the Bay of Bengal, and from a land perspective, it is situated between South Asia and Southeast Asia. This geographic trump card will be used because of the shift in global economic power toward the Indo-Pacific Ocean region.
Japan views the Indian Ocean as a lifeline because nearly all of its maritime trade goes through the area. Any disturbance in the Indian Ocean will complicate Japan’s international trade situation. As part of the Indo-Pacific Strategy, Japan advocates a free and open Indo-Pacific (FOIP) region and establishes a rules-based maritime order in the Indo-Pacific zone, where Japan considers Bangladesh a crucial actor.
The ‘China factor’ in Japan’s foreign policy enhanced South Asia’s importance in its foreign policy projections. Gradually, China has emerged as one of Japan’s critical concerns in its backyard of the East Chian Sea and the Bay of Bengal. Additionally, Japan participates in the Quadrilateral Security Dialogue (QUAD). In the context of global geopolitics, Bangladesh is vital for Japan. Bangladesh was among four countries selected by the Japanese government to receive defense aid under the Official Security Assistance (OSA), which is aimed at providing equipment, supplies, and infrastructure development assistance to partner countries in the form of grants rather than loans, to ‘reinforce’ the region’s ‘comprehensive defense architecture.’ The ‘Forces Goal 2030’ was announced in 2009 to significantly enlarge and modernize the Bangladesh Army, Navy, and Air Force. Bangladesh is in quest of modernizing its military might and diversifying its security basket.
Bangladesh is also becoming more politically and economically influential on the global scene. Conversely, sound diplomatic ties with Japan will help Bangladesh successfully implement its ‘Look East’ Policy. Ultimately, both Japan and Bangladesh have demonstrated a desire to collaborate closely on blue economy and maritime security issues. Bangladesh has already announced its Indo-Pacific Outlook—maintaining stability, security, and prosperity. Non-traditional security threats that Bangladesh faces include drug trafficking, human trafficking, terrorism, and piracy in the maritime zone. Japan has stated that it is prepared to assist Bangladesh in resolving these matters, as there are shared interests in the broader Bay of Bengal and Indo-Pacific region.
Japan’s BIG B: What’s for Bangladesh?
The Bay of Bengal Industrial Growth Belt (BIG B), part of Japan’s FOIP initiative for the Bay of Bengal region, has now emerged as the most crucial cornerstone of Japanese strategy. The three pillars of the Bay of Bengal Industrial Growth Belt (BIG-B) are energy, transportation, industry, and trade. BIG-B envisions Bangladesh becoming the center of the regional economy and stepping beyond its borders, acting as a point of entry for South and Southeast Asia to establish closer interregional ties.
Under the BIG-B initiative, Tokyo is building infrastructures in the Southern Chattogram region, including Chattogram-Cox’s Bazar Highway and the establishment of the Moheshkhali-Matarbari Integrated Infrastructure Development Initiative (MIDI) Authority, which will promote the Bay of Bengal-Northeast India industrial value chain concept in cooperation with India and Bangladesh to foster the growth of the entire region.
Bangladesh will expand more quickly if its three main cities, Dhaka, Chattogram, and Cox’s Bazar, are developed utilizing Japanese expertise and massive projects are carried out. The MRT line in Dhaka, the deep-sea port at Matarbari, Terminal 3 of the Dhaka Airport, and the economic zone at Araihazar are the principal projects carried out under BIG-B in Bangladesh. Tokyo’s largest investment in Bangladesh, the MRT project in Dhaka, has changed transportation in the nation’s capital. Dhaka is advancing its infrastructure and connectivity to reach its targets of being a High-Income Country by 2041 and an Upper Middle-Income Country by 2031.
Following Japanese PM Kishida’s Vision for BIG B, his administration gave Bangladesh $1.27 billion in funding for three infrastructure projects, one of which is the construction of a new commercial port in the Matarbari region that will connect Bangladesh to nearby landlocked Indian states like Tripura as well as Nepal and Bhutan. The Matarbari Port can become a hub of energy, logistics, and industry in Bangladesh and enhance connectivity between Bangladesh and its neighboring countries. This could be a win-win scenario for Bangladesh and Japan. It would be a force multiplier to further coordinate these efforts with already-existing mega-regional projects like the Master Plan on ASEAN Connectivity (MPAC) 2025, Asian Highways, Trilateral Highway, South Asia Subregional Economic Cooperation (SASEC) Road Connectivity Project, and the Bangladesh, Bhutan, India, and Nepal (BBIN) subregional initiative.
The significance comes from Bangladesh’s economy requiring massive investment flows to build infrastructure, upgrade technology, expand productivity, and create many jobs through a fundamental shift towards industrialization.
Bangladesh has indeed assumed a new role in the region largely due to spectacular economic success over the past two decades and the rise of two giant Asian powers – China and India- within close proximity to Bangladesh. While the relationship between Bangladesh and Japan has remained friendly and primarily confined to official channels for decades, there is still room to tap the full potential of their bilateral relationship. Bangladesh and Japan have developed immense goodwill at the government-to-government and people-to-people levels over the last fifty-two years. The twenty-first century is the ‘Asian Century.’ While Japan is the third largest economy in the world, Bangladesh is a rising economic power. Thus, these two countries with many similar norms and values can work together for a prosperous Asia.
Saume Saptaparna Nath is currently enrolled in the master’s program at the Osaka School of International Public Policy, Osaka University. She achieved the Japanese Government Scholarship Monbukagakusho in 2023. She also works as a Research Associate at the KRF Center for Bangladesh and Global Affairs.
