More than RMG needed to tap Japan market

Industry insiders say

Bangladesh is missing opportunities to boost export earnings from Japan by relying heavily on garment shipments while struggling to tap demand for products such as footwear, leather goods and food items, industry insiders say.

Garments account for more than 80 percent of Bangladesh’s exports to Japan, leaving considerable scope to diversify into higher-value products. However, exporters need to address energy shortages and meet Japan’s stringent quality and compliance requirements to turn that potential into higher export earnings.

Bangladesh already exports jute and jute goods, leather products, fish and shrimp, plastic goods, and information technology and IT-enabled services to Japan, according to the Export Promotion Bureau (EPB). Sector leaders say exports could be expanded by shipping more agricultural products, higher-value garments and man-made fibre apparel.

Food and vegetable products offer another potential avenue for growth, particularly given demand among Japanese consumers and expatriate Bangladeshis. However, Bangladesh has struggled to capitalise on this opportunity because exporters have difficulty meeting Japanese quality and compliance standards.

Mostafa Abid Khan, chief executive officer of the Bangladesh Foreign Trade Institute (BFTI), said Bangladesh needed to diversify its exports to Japan, including within the garment sector.

The country should increase shipments of man-made fibre garments, while footwear and leather goods also hold significant potential in the Japanese market, he said.

Bangladesh could substantially increase earnings from these sectors over the next few years if exporters diversified their products and improved quality and compliance with Japanese standards, Mostafa said.

However, energy shortages in the domestic industrial sector could constrain production and limit the country’s ability to tap the market, he added.

Attracting more Japanese investment could also create opportunities for export diversification. More than 350 Japanese companies currently operate in Bangladesh across various sectors, including trading, manufacturing and infrastructure development, according to business leaders.

Japanese manufacturers, ranging from motorcycle producers to apparel companies, contribute to employment generation and industrial development through technological upgrading. 

Japanese small and medium-sized enterprises are also exploring opportunities in Bangladesh’s IT, logistics and other service sectors, industry insiders have said.

Business leaders in both countries expect more Japanese companies to enter Bangladesh following the implementation of the Economic Partnership Agreement (EPA). The two countries signed the agreement on February 6 this year, but it has yet to come into force.

Japan is already a significant destination for Bangladeshi exports. Bangladesh’s annual exports to Japan have exceeded $1 billion since fiscal year 2015-16 (FY16). Two-way trade between the countries crossed $3 billion in FY18, according to the EPB.

Japan also supplies Bangladesh with a wide range of products, including iron and steel, vehicles and accessories, ships, machinery, mineral fuels, medical and surgical instruments, plastics and electrical machinery, according to Bangladesh Bank data.

Prime Minister Tarique Rahman is expected to visit Japan from October 26 to 29, During the visit, the two countries are expected to elevate their existing strategic partnership to a comprehensive strategic partnership (CSP), The Daily Star has learnt from officials involved with the proceedings.