Japan to help Bangladesh’s transition to a high-income economy

Q:  Your Excellency, we deeply appreciate your time and the opportunity to engage with you in this interview. Having witnessed a remarkable transformation in Bangladesh, including a significant shift in government, your insights are invaluable. As a key development partner of Bangladesh, we would be grateful to hear your perspective on these changes. How do you view the current developments, and what is your outlook on the continued progress of Bangladesh’s development journey, particularly with Japan’s ongoing support? Additionally, how do you assess the overall situation at this critical juncture?

A: Thank you very much for the opportunity to participate in this interview. Allow me to provide an overview of the perspective shared by both the Japanese government and myself, as the current Ambassador to Bangladesh.

It has been over three months since the establishment of the interim government, and from the outset, the country’s transition process began. The Japanese government has expressed its hope that Bangladesh will continue its journey towards stable development, underpinned by a peaceful and democratic political transition.

Since the founding of Bangladesh, Japan has not only focused on enhancing the country’s infrastructure and strengthening its industrial base but has also consistently worked on a range of critical issues. These include improving governance, strengthening local governance, enhancing the quality of healthcare and education, as well as disaster prevention and addressing climate change. I have underscored these areas of cooperation since the beginning of the new government.

In August, I had the opportunity to make a courtesy call to the Chief Advisor’s Office, during which I reiterated the fundamental stance of the Japanese government. I recall that shortly after the new government’s establishment, Bangladesh experienced severe flooding in the southeastern regions. From a humanitarian perspective, and in light of our longstanding friendship, Japan swiftly extended emergency grant aid to assist those affected by the floods.

Beyond the immediate support for rehabilitation and reconstruction in the flood-stricken areas, Japan has remained committed to supporting Bangladesh’s broader development and prosperity. This includes advancing economic and business cooperation as well as fostering people-to-people exchanges. We have reaffirmed our commitment to ongoing infrastructure projects and have expressed our readiness to remain flexible in addressing the evolving needs of the government and the country.

Q. As Bangladesh approaches its graduation from the Least Developed Country (LDC) status in 2026, it marks a significant milestone in its development journey. In this context, how do you perceive the role that Japan can play in supporting Bangladesh to successfully achieve this transition?

A. Regarding Bangladesh’s graduation from LDC status, it is important to focus on the current state of bilateral relations between our two countries. This graduation signifies that Bangladesh is entering a new phase of development. From Japan’s perspective, it also means that Japanese businesses will no longer benefit from the preferential treatment currently granted to LDC countries.

As you may be aware, such a transition requires a solid foundation, and we are committed to offering our support in this regard. Specifically, we have engaged in a series of discussions aimed at realizing an Economic Partnership Agreement (EPA), which would be an expanded version of the Free Trade Agreement between Bangladesh and Japan. We held the first round of meetings this past May, and a follow-up meeting took place just last week. Through these ongoing discussions, we are exploring various avenues through which we can contribute to facilitating Bangladesh’s successful graduation.

Q. Could you kindly share any new initiatives or understandings that Japan may be considering offering in support of this partnership?

A. As this matter is still under discussion, I am unable to provide specific details at this stage. However, we have engaged in discussions with our counterparts here regarding the Economic Partnership Agreement, which, as you know, is not solely focused on tariff negotiations. While a Free Trade Agreement primarily deals with tariff negotiations—where we may offer lower tariffs in exchange for similar concessions—the Economic Partnership Agreement encompasses a broader range of topics.

For example, it includes areas such as trade facilitation, where we can explore ways to streamline customs procedures. It also looks at improving the business environment, ensuring that businesses can operate under favorable conditions. There are certainly areas where both countries can work together to create better opportunities for investment, which presents a shared challenge for both Japan and Bangladesh.

Q. Japan’s development philosophy has long focused on supporting and empowering its partners through infrastructure and connectivity, which are key pillars of development cooperation. Projects such as the Big B project, the Narayanganj EPZ, and the Metro Rail are all examples of this philosophy in action. In your view, how can Bangladesh leverage these foundations to progress to the next level of development? Additionally, how do you envision Bangladesh playing a more prominent and regionally significant role as an important player in the future?

A. The areas you mentioned, where we have extended our support, are crucial for facilitating the ease of doing business for Japanese companies operating in Bangladesh. Improving connectivity is a key component of the BIG-B (Bay of Bengal Industrial Growth Belt) project, as you highlighted, with the development of the Matarbari Sea Port being a central focus. Thanks to the strong commitment from both the government and the private sector, we have engaged in substantial discussions on this topic.

Through our development assistance, we have supported the establishment of the power plant and the deep-sea port. However, to further enhance connectivity, additional efforts are needed to make the area more attractive. This includes improving road and railway connections as well. It is essential to consider expanding the connectivity of Matarbari to other regions of the country.

Looking beyond Matarbari, last year we began discussions on the potential for regional connectivity, initially focusing on India. However, we should now also consider expanding connectivity to countries like Bhutan and Nepal. This approach should encompass both domestic and regional connections.

Japan remains firmly committed to supporting infrastructure development in Bangladesh, and we are ready to engage in discussions to identify further needs and explore the necessary steps forward.

Q. A report from JETRO last year indicated that 72% of Japanese companies are willing to expand their investments within the next one to two years. Previously, sectors such as garments, engineering, construction, healthcare, and motorcycles have received significant investment. Can we expect to see increased investments in these areas, or should we anticipate the emergence of new investment sectors?

A. I would have to say both yes and no. You have mentioned our commitment to the Special Economic Zones, as well as the fundamental change in the government. The Japanese government is cautious about how business-friendly the current administration will be. We are eager to facilitate and support the diversification of industries here and contribute to improving the overall business environment.

If the Bangladeshi government is committed to attracting more investment, we believe diversification is possible. However, it is important to remember that this will depend on the joint efforts and willingness to create an environment that attracts more diverse investments.

Q. Bangladesh has made tremendous improvements in its economy and healthcare and is on track to graduate with a low-skilled labor force. However, going forward, Bangladesh will need a skilled workforce to fulfill its aspiration of becoming a high-income country. Japan has shown a keen interest in preparing Bangladesh for this transition, as well as taking advantage of the demographic benefit, with 65% of the population in Bangladesh being between the ages of 18 and 60. In what ways can Japan contribute to enhancing skills and developing the workforce in Bangladesh?

A. Regarding the utilization of the young generation, this is a very important issue for both of us. As you mentioned, the strength of the economy and business sector lies in the large number of young people who are eager to learn and improve their skills, enabling them to work in other countries as well.

As you may be aware, Japan is facing the challenges of an aging society, and what we especially need, particularly in rural areas, are skilled, talented young people who are ready to work in Japan. To address this, we have recently introduced a new framework called the Specified Skilled Workers Program. This program allows us to invite and accept a certain number of workers from specific countries, within certain categories, and under specific conditions.

In the case of Bangladesh, we have just begun organizing proficiency tests for caregivers, agricultural workers, and construction workers. These are some of the key areas where we are prepared to receive labor forces with a certain level of skill. Our aim is to select high-quality workers from Bangladesh who can pass the proficiency tests and master basic knowledge of the Japanese language, so that we can welcome skilled and talented labor forces from your country according to our standards.

You may ask whether the scope of these sectors will expand. In the future, there may be discussions on that, but our fundamental stance is to encourage young people to explore these opportunities. If they are ready to apply, we are prepared to offer these opportunities.

Q. Is there a specific number of employees or people that you are looking at?

A. No, it’s different from other countries. As far as I know, in the case of other countries, they set targets like 10,000 to 100,000 people. However, in our system, it depends on the needs of individual industries or companies. Each company requires a certain number of workers with specific skill levels, but the Japanese government does not have a system that allocates workers in bulk. What we can offer is to set the framework for qualified individuals from select countries, but we do not have a numerical target or specific quota in place.

Q. Bangladesh’s economy has been a great success, particularly due to the RMG sector, which contributes 80-85% of foreign income. However, there is too much focus on a single export area. This is the right time for Bangladesh to diversify its export basket. How can Japan assist in this effort, and how do you view Bangladesh’s diversification plans?

A. I should first mention the efforts made by the government of Bangladesh, as we recognize that the fundamental challenge you are facing is how to move beyond a situation where the RMG sector is the sole contributor to foreign income. As you’ve mentioned, Japan has been investing in various sectors, and we have strong economic relations. However, what Bangladesh needs is the diversification of its industries.

A Memorandum of Cooperation (MOC) was signed between the Ministry of Commerce of Bangladesh and the Ministry of Economy, Trade, and Industry of Japan last year, focusing on the Bangladesh-Japan Industry Upgradation Partnership. Through this, we aim to invite Japanese companies to explore and support sectors beyond RMG by conducting surveys or research in these fields. This is a concrete way in which we are ready to contribute.

Furthermore, we have a framework called the Public-Private Economic Dialogue (PPED), which has been in place since 2014. In this forum, we discuss not only improvements to the business environment but also identify sectors where diversification is needed. The next round of discussions was planned for the summer of this year, but due to the political changes in the country, we are now seeking to reschedule this meeting. While I cannot specify the sectors at this moment, during the last meeting, we identified areas where there is interest in promoting diversification.

It is important that the public and private sectors collaborate to identify what is beneficial for both sides and what is needed to create favorable conditions. Although I cannot say which specific sectors will be prioritized, discussions are ongoing in the relevant fields.

Photographs: Eivan Sardar

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