In early 2008, the Japanese government introduced the ‘China Plus One Strategy,’ aiming to diversify its manufacturing reliance by establishing business operations in other countries.
This move came as China’s production costs rose and skilled labor became scarce, impacting the profitability of Japanese investors in China.
The strategy’s success became evident as merchandise shipments from Bangladesh, particularly garments, saw remarkable growth.
Between 2008 and 2010, apparel exports surged by over 175%. Notably, Japan became Bangladesh’s first Asian export destination to surpass the $1-billion earnings mark in 2015-16, further strengthening bilateral trade ties.
Even during the peak of the Covid-19 pandemic in 2019-20, Bangladesh continued to ship goods worth $1.20 billion to Japan, showcasing resilience amidst supply chain disruptions.
In 2022-23, local exporters registered a substantial 40.74% year-on-year growth, amounting to $1.90 billion in exports to Japan, indicating increasing demand for Bangladeshi goods.
Japan has emerged as a significant source of investment for Bangladesh, with foreign direct investment (FDI) increasing by 7.61% annually between 2019 and 2022. Sectors such as garments, engineering, construction, healthcare, and motorcycles have attracted Japanese investments.
Establishing a dedicated Japanese Economic Zone in Araihazar, Bangladesh, anticipates around $1.5 billion in FDI.
Japanese investments are expected to expand further as companies express confidence in Bangladesh’s investment climate, with 71.6% planning to expand operations in the region.
Both countries are considering an Economic Partnership Agreement (EPA) through a joint study to solidify trade relations.
Around 85% of local and Japanese companies operating in both nations support signing a free trade agreement, safeguarding duty benefits after Bangladesh graduates from the least-developed country group in 2026.
As trade and investment relations continue to flourish, Japanese Minister for Economy, Trade, and Industry, Yasutoshi Nishimura, is scheduled to visit Dhaka to attend a business summit on Bangladesh-Japan trade and discuss the EPA’s joint study with Commerce Minister Tipu Munshi.