With the Bangladesh economy in the first phase of its Covid Reopening, the country will be eagerly looking forward to attracting foreign investors to provide a much-needed stimulus. The Foreign Minister and the Commerce Minister sounded optimistic in their statements on the prospects of some Japanese manufacturing companies relocating from China to Bangladesh. On May 20, the Commerce Minister Tipu Munshi said, “The main point is how much investment we can attract when the factories will be relocated.” The Daily Star confirmed this outlook on May 21 in a report that quoted Foreign Minister Dr Abdul Momen, who said that “the Japanese embassy in Dhaka last week sent him a list of factories that want to relocate from China to Bangladesh”.
It is understandable that in the post-Covid era, many major US and Japanese firms might want to pull out of China and seek alternative partners to bolster their supply chain. However, there are still some major obstacles that Bangladesh needs to overcome before one can expect a major influx of foreign investment, particularly any capital being diverted from China. In The Daily Star report mentioned above, the Foreign Minister himself set off the alarm. He warned that foreign investors often express their dissatisfaction over bureaucratic tangles that stand in the way of business operations and obtaining various licenses. “They particularly complain about the poor services at the Bangladesh Bank, the commerce ministry and the National Board of Revenue,” the FM added. Ouch!
Let us analyse the facts. There is no doubt that after the US imposed tariffs on Chinese products, and after the outbreak of Covid-19, the US, the EU and Japan are looking elsewhere for cost-savings and to ensure safety and security. Japan has earmarked USD 2.2 billion of its record economic stimulus package to help its manufacturers shift production out of China. On May 21, Bangladesh’s Embassy in Beijing sent our Foreign Office a message indicating that some Japanese investors were exploring Bangladesh as a possible sourcing destination. Quoting Japan External Trade Organization (JETRO) officials in Beijing, the embassy said the 34 out of 690 Japanese firms registered in China have so far revealed the relocation plan. Unfortunately, JETRO declined to name the Japanese firms willing to relocate from China.
Therefore, we need to conclude that there is no guarantee that Japanese firms are packing up from China and heading for Bangladesh. As they say, there are so many steps “between the cup and the lip”. Bangladesh needs to act in a proactive manner to seize the opportunity that the new circumstances has offered.
The President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) wrote a letter to the country representative of JETRO on May 12 calling for facilitating the relocation. The FBCCI also wrote to the Confederation of Asia Pacific Chambers of Commerce and Industry to encourage its member nations to relocate firms to Bangladesh.