Compared to Japan, The Production Cost is Almost Half in Bangladesh
About 71 percent of Japanese companies doing business in Bangladesh are not satisfied with the business environment. Out of this 26.2 percent companies are completely dissatisfied with the business environment. The remaining 45 percent of companies said they were “somewhat dissatisfied.”
The country’s companies gave this opinion in a survey of Japan External Trade Organization (JETRO). JETRO presented the results of the survey in an event organized at the Metropolitan Chamber of Commerce and Industry (MCCI) auditorium in Gulshan, the capital on Wednesday. The survey was conducted on Japanese companies operating in various countries in Asia and Oceania or the Pacific region. 214 Japanese companies operating in Bangladesh participated in this survey conducted in August-September last year.
Meanwhile, despite being dissatisfied with the business environment, about 72 percent of Japanese companies said they are interested in expanding business in this country. Because the cost of doing business in this country is still low.
4,392 Japanese companies from the Asia and Oceania region participated in the survey. They were asked which country is their first choice for business expansion. In response, 72.5 percent companies mentioned India as their first choice. Bangladesh is in the next position. Vietnam, Singapore, Australia, New Zealand, South Korea are also below Bangladesh in the interest of Japanese to expand business. The current size of the Bangladeshi market and the future potential for market expansion are playing a major role in creating Japanese investment interest in the country.
Bangladesh is the top choice for cheap labor
The survey asked, where and why Bangladesh is ahead in terms of business environment compared to other countries. In response, Japanese companies have put Bangladesh on the list of preferences in four areas. The areas are cheap labour, easy availability of workers and employees, easy availability of specialized manpower and engineers and existing markets.
In the survey, 51.7 percent of Japanese companies ranked Bangladesh as the top business environment for ‘cheap labour’. Myanmar and the Philippines are the Japanese’s second and third choices due to cheap labor, respectively.
46.6 percent of the respondents put Bangladesh in the second choice list in terms of getting general workers and employees. In this list, the Philippines is at the top of the Japanese people’s choice. Apart from this, Bangladesh is the third preferred country for the Japanese in terms of domestic market size. India and Indonesia are in the first and second positions in this regard. And Bangladesh is their third choice in terms of availability of specialized manpower and engineers. In this case, the Japanese’s first and second choices are Pakistan and Sri Lanka respectively.
Big challenges in business management
last year; In other words, the two main challenges faced by the Japanese in conducting business in Bangladesh in 2022 were the procedural complications in issuing customs clearance and the volatility of foreign exchange prices. The main challenges facing Japanese companies in doing business in Bangladesh in 2021 are shortage of skilled workers and rising wages. 73.2 percent of Japanese companies surveyed said the first challenge was the complexity of the customs system. And 72.6 percent of companies said that the volatility of foreign exchange prices is a major challenge in business.
In addition, 67.4 percent of Japanese companies cited the difficulty of purchasing raw materials locally, 65 percent of electricity problems and 63 percent of rising raw material prices as business challenges.
Half of the production cost is in Bangladesh
In general, the survey was asked, what is the cost of production of goods in any country. In response to this, it can be seen that the cost of producing products in Japan is 100%, the cost of producing those products in Bangladesh is less than 60 percent. Cost of production is lower than Bangladesh only in Cambodia and Laos. Production cost in Cambodia is 54.2 percent, compared to 48.8 percent in Laos.
Among the 19 countries that participated in the survey, Bangladesh ranks third in terms of low production costs.