The untapped potential of Bangladesh-Japan trade

Over the past five decades, the relationship between Bangladesh and Japan has evolved into a mutually beneficial and symbiotic partnership and has yielded positive results for both countries.

Bilateral relations have grown significantly – trade and investment have emerged as important factors contributing to this progress. Along with the United States and the European Union (EU), Japan has established itself as one of Bangladesh's major trading partners. Over the years, Bangladesh's exports of apparel and readymade garments (RMG) products to Japan have grown steadily, currently accounting for about 83 percent of the country's total exports to Japan. Furthermore, footwear and leather goods exports to Japan are of significant importance, although they account for 2.4 percent of total exports to the East Asian country. Notably, exports of leather products have grown consistently, reaching a peak of 4.1 percent in FY 2020-21. Bangladesh's fish exports to Japan are also gradually increasing, albeit at a slower pace.

A new turning point in Bangladesh-Japan ties?

Bangladesh's imports from Japan have also increased significantly. Japan serves as a significant source of various raw materials, including steel and iron. In 2020, the largest imports from Japan to Bangladesh were primarily iron and steel, followed by Japanese vehicles, vehicle parts and accessories, and man-made staple fibers.

Despite all this, there is untapped trade potential on both sides. The actual export value of certain items falls below their potential export value, indicating an opportunity for Bangladesh to expand supply of these items to the Japanese market. Notably, there are significantly unexplored export routes such as knitwear, textiles, shrimp and frozen products. Similarly, Japan could also expand its export product range for Bangladesh, including diesel-powered trucks, compression-ignition internal engines, waste and scrap iron and steel, and other machinery items.

Bangladesh and Japan have the potential to significantly enhance their trade relations and tap into various opportunities. Here are some areas where the trade potential between Bangladesh and Japan could be further explored:

1. Garments and Textiles: Bangladesh is a major exporter of garments and textiles, and Japan is a significant consumer market. Strengthening trade in this sector could be mutually beneficial. Japanese companies can source garments and textiles from Bangladesh, taking advantage of its competitive manufacturing capabilities and cost-effectiveness.

2. Infrastructure Development: Bangladesh has been investing heavily in infrastructure development, including roads, ports, and power plants. Japanese companies have expertise in infrastructure construction and can participate in these projects through investments, technology transfer, and joint ventures. Collaboration in this area could bolster bilateral trade and economic growth.

3. Pharmaceuticals: Bangladesh's pharmaceutical industry has been experiencing growth and has the potential to expand further. Japan, with its advanced healthcare sector, could be an attractive market for Bangladeshi pharmaceutical products. Collaboration in research and development, as well as the export of generic medicines, could be explored.

4. Information Technology and Software Services: Bangladesh has a growing IT sector, known for software development and IT-enabled services. Japanese companies can benefit from outsourcing IT services to Bangladesh, taking advantage of its skilled IT workforce and competitive costs. Joint ventures and partnerships in the IT sector could be explored to tap into this potential.

5. Agricultural Products: Bangladesh produces a variety of agricultural products, including seafood, fruits, and vegetables. Japan, as a net importer of food products, presents an opportunity for Bangladesh to expand its agricultural exports. Ensuring compliance with Japanese quality and safety standards would be crucial to accessing the Japanese market.

6. Renewable Energy: Japan has been actively promoting renewable energy sources following the Fukushima nuclear disaster. Bangladesh, with its potential for solar, wind, and hydro energy, can attract Japanese investment and expertise in renewable energy projects. Collaboration in this sector could contribute to sustainable development and trade growth.

To tap into this potential, it is important for both Bangladesh and Japan to engage in trade promotion activities, exchange business delegations, facilitate trade-related information sharing, and address any existing trade barriers. Additionally, strengthening diplomatic ties and signing trade agreements can provide a framework for enhancing bilateral trade and investment cooperation.

It's worth noting that the actual trade potential and opportunities may evolve over time, and it's essential for businesses and policymakers to stay informed about market trends, regulations, and emerging sectors to make the most of the Bangladesh-Japan trade relationship.

Bangladesh and Japan have a long and friendly relationship, dating back to the early 1970s. In recent years, bilateral trade between the two countries has grown significantly, reaching $3.5 billion in 2021. However, there is still significant untapped potential for trade between Bangladesh and Japan.

One area where there is significant potential for growth is in the export of Bangladeshi agricultural products to Japan. Japan is a major importer of food, and Bangladesh is a major producer of rice, vegetables, and fruits. There is a growing demand for Bangladeshi agricultural products in Japan, and there are a number of opportunities for Bangladeshi exporters to tap into this market.

Another area where there is potential for growth is in the export of Bangladeshi services to Japan. Bangladesh has a large and growing pool of skilled workers, and there is a growing demand for Bangladeshi services in Japan, such as IT services, engineering services, and medical services. There are a number of opportunities for Bangladeshi service providers to tap into this market.