Dhaka, Bangladesh (CU)_ Japan may give a boost to Bangladesh’s economy by adding the South Asian nation to a list of favored factory relocation destinations as it moves its manufacturing facilities out of China. The Japanese ambassador to Bangladesh, Naoki Ito said, “As the pandemic started in China, Japanese companies needed to diversify their supply chains further. This will provide an opportunity for Bangladesh.”
Japan’s push to move businesses comes during the time when a Special Economic Zone is being built in Bangladesh to attract the production facilities of Japanese companies. According to the Bangladesh Economic Zones Authority, an industrial zone extending over 1,000 acres in the Araihazar sub-district, 32 kilometers (about 20 miles) from the capital Dhaka, is projected to bring in $20 billion in Japanese investment.
Japanese producers are moving some production out of China for years as wages increased in China and infrastructure improved in countries such as Vietnam and Bangladesh, fulfilling the Japanese expectations of lower labor costs and diversification of the supply chain. The Ito states that the number of Japanese companies in Bangladesh has tripled to about 300 in the last 10 years. Japan has also issued special loans of $350 million to build the $1 billion industrial zone which makes it the largest SEZ aid in Asia.
The Ito states that the Araihazar industrial park which will start by 2022 is aiming to attract new investment from car manufacturers, such as Suzuki Motor Corp. and Mitsubishi Corp. Japan Tobacco Inc. and Honda Motor Co. are so far the biggest Japanese investors in Bangladesh.
