Japan has been a long-standing friend of Bangladesh in its development efforts to the effect that its bigger foreign assistance recipient is Bangladesh.
At this moment, Japan is involved in several game-changing projects like the Matarbari deep-sea port and power plant, the metro rail in Dhaka city and the building of the third terminal at Hazrat Shahjalal International Airport.
Recently, The Business Standard spoke with the Japanese Ambassador in Bangladesh, Naoki Ito, to have an understanding of Japan's footprints in Bangladesh.
Japan has been a generous and big donor to Bangladesh's development and we have at least three big ongoing projects, which are about to reach completion – the metro rail, Matarbari and the other is the airport's third terminal. What else are you thinking of? What other infrastructure projects are coming up from the Japanese side?
When the two leaders exchanged visits in 2014, Prime Minister Sheikh Hasina and then Prime Minister Shinzo Abe, those visits became the driving force in developing our partnership in a very comprehensive manner.
And one of the key initiatives then was the BIG-B. That is the Bay of Bengal Industrial Growth Belt initiative. Those projects you mentioned are in line with this initiative.
The idea was to construct an industrial corridor between Dhaka, Chattogram and Cox's Bazar. So, Japan has been doing these mega projects based on that initiative and we will continue to do so.
You said "the Dhaka metro, airport extension, Matarbari, and what else?" Our responsibility is already heavy, though we will look into further possible cooperation.
On Dhaka metro – now, we are working on line 6 and half of this 20 km project will be opening in December this year. Then line-1 work will start in September-October this year. It would take three to four years. That is the airport line and also the Purbachal line.
And then JICA and ADB have already committed to line 5. Recently, the managing director Mr Siddique said that 130km of the metro will be complete by 2030. So, for another eight years to come, we need to work on construction, expansion and the start of the metro rail so that it can work as a public transportation mode for the people in Dhaka.
For the airport extension, there will be a soft opening probably before the end of next year. Commercial operation will begin possibly in late 2024. So, it's very important for us for JICA and those companies involved to complete this airport project, that will be of an international standard and be the face of the nation.
Having a state-of-the-art airport is not everything, having the right kind of operation is equally important. Is there any part of the project that is related to improving the operation of the airport?
Now, I think, as part of JICA's technical cooperation project, they are sharing ideas for airport planning. So, whether the Japanese companies can do the management and operation as well, is yet to be decided.
But at least, for the planning stage, whoever is going to take charge of the operation and management, I think two companies from Japan – one is Japan Airlines subsidiary company, another is the airport building company of Haneda Airport - these two companies are now involved. But the idea is to come up with a specific idea of what sort of airport function should be prepared to make it an international standard airport.
Some say that so far the Dhaka airport is currently functioning mainly for the passage of Bangladeshi workers going overseas. But that needs to be changed. You can't get a reflection of Bangladesh inside the airport at all. The restaurants and lounges are only a handful.
These, along with basic facilities like customs clearance, should be improved. I think this new international airport will meet the requirements of the 21st century's growing economy.
Metro Rail is a very new thing in Bangladesh. Our track record with the government running the transportation sector is quite bad. Is there management training for the metro rail?
DMTCL will run this operation but I think a large number of people will be trained in operation and management by Japan. They will go to Delhi, which has a successful metro rail service that's also developed by Japan. They have experience and a good track record. They will be trained by Indian organisations and also Indian instructors will also come here for training. So, those who work for DMTCL can learn from India's experience. Japan will provide technical education and technology transfer.
We'd like to hear a bit about Matarbari where progress is slow. When do you expect it to gain momentum? The road from Matarbari to the highway is in terrible condition.
Transportation from Matarbari is very important and its road condition is not the most advanced. The length of the Chittagong - Cox's Bazar road is 130 km but it took me five hours. The government is really keen to develop this highway knowing that once the port is completed, the number of trucks and other vehicles will jump up.
Japan has a Public Private Partnership (PPP) platform framework with Bangladesh from four years back. There are five to six projects in this framework — including the Chittagong-Cox's Bazar highway. But the government has not decided on whether to go for PPP or Government-to-Government financing for this project.
We are at the first stage of Matarbari development where the focus is on the construction of the coal-fired power plant. The port was necessary to help the coal plant function. That was how the Matarbari port was initially developed. Now they have a big plan to develop this Matarbari deep seaport in three phases.
The first one is the current one. Already there is a 300-metre-long berth which is functional and some ships are using this berth since December 2020. Beyond that, they plan to have LNG and LPG terminals with container facilities. That's the second stage. And the third stage is to construct a container port in a full-fledged manner with a big capacity of container yard.
So, by the time the third stage is complete, Matarbari is expected to be an energy hub, transportation hub and industrial hub. Behind the port, an industrial zone will be set up.
When will the Matarbari power plant come into operation?
We do not know the exact date yet. I think the first phase will commence in 2024. I understand that the first two units of the power plant will be completed within two years. There has been a little bit of delay and it was inevitable due to the Covid situation. In spite of it, those who are involved with the work have been doing a very good job. So, I think, everybody involved is happy with the way the construction is going on right now.
Also, the Dhaka Metro was delayed by one year. But under the circumstances, the delay should be acceptable.
What kind of investment do you think the Japanese industrial park is going to attract?
The special economic zone in Araihazar is to be completed before the end of the year. This year, we are celebrating 50 years of establishing diplomatic relations between our two countries - a milestone year for our partnership.
We are so pleased and proud of the fact that the Dhaka metro rail will start operation before the end of the year and also that we will complete the Araihazar Special Economic Zone in this milestone year. It's quite an achievement for our partnership.
Now, this Araihazar zone is named Bangladesh Special Economic Zone. This is going to be the first special economic zone with international standard infrastructure and facilities. We expect this economic zone will attract investment from not only Japanese companies but also international companies.
We expect investments to come from a hundred companies gradually totalling $1 billion in this zone. Not initially, but eventually. We still don't know what kind of companies will come. But we hope companies in the automotive sector, motorbikes, food processing, chemical logistics and some other light engineering companies will invest here.
But, the global situation right now will naturally have some impact on the investment decision. A large number of Japanese companies have shown interest already. So, my hope is that they can reach an investment decision soon although the Covid-19 and Ukraine situation may delay things. But eventually, the number of companies in the zone will reach 100 with a $1 billion investment.
All of those are really impactful development for the economy of Bangladesh. The corridor is not only to be done by Japan and JICA but others as well.
Like this economic zone, the Mirsarai special economic zone was also developed based on the same vision of BIG-B. When we talk about BIG-B, some people say it is Japan's idea. But that's not the case, it is a Bangladeshi initiative - a joint initiative. Along this corridor, you have the largest special economic zone in the Mirsarai - Bangabandhu Shilpa Nagar Special Economic Zone. And also, Chattogram is now developing further.
The Bay terminal concept is also part of BIG-B. Chattogram is now improving its city functions. They are talking about this metro line, sewerage system, etc. The JICA has done the marine drive in Chattogram. So, you don't really need to just talk about what Japan does in this BIG-B area.
BIG-B is a concept of industrial corridor building. In Japan, we did the same in Tokyo, Osaka to Fukuoka. That was the backbone of high growth in Japan in the 1960s and 1970s. Our hope and expectation are that Bangladesh will learn from what we achieved in a high growth period by building an industrial corridor between Dhaka-Chattogram and Cox's Bazar.
I think Matarbari is at the core of this BIG-B. It will be a game-changer. With prioritisation by the government, and also coordination among various stakeholders we could accelerate the pace of work.
What's your take on the potential of the automotive industry flourishing in Bangladesh?
The automotive industry is mainly for the domestic market. Whether it is cars or motorbikes, initially productions have to target the domestic market. Currently, one of the Japanese automotive companies, Mitsubishi, is doing a feasibility study with the Ministry of Industries. They are looking at eventual export possibilities with an initial eye on the domestic market. That is how these manufacturing industries are coming to Bangladesh. It's not really easy to find an export-based industry in Bangladesh.
It is a challenge to build an export industry, to diversify exports. Bangladesh's RMG and textile sectors will continue to thrive. Although 80% of the export basket occupied by one sector is not a well-balanced development. Still one can safely say within a short period of time, the RMG sector's performance will not drastically dip and come down.
We really need to think about how this industry can be even more competitive, in comparison to China and Vietnam. This is why you need to do more automation of the industry.
You need to go for man-made fibre and also need to set up backward linkages for the textile industry. Through such efforts, I think the textile industry needs to grow much stronger. The important thing is, I believe, textile and RMG are going to remain the main items of export for Bangladesh. Then comes the leather industry for sure. Pharmaceutical is a possibility. Home appliance is another possibility, Walton is doing a great job.
In Japan, one problem you are having is population decline. I think there is a huge demand for caregivers. I think for Bangladesh that is an opportunity. What do you think?
We have a G2G memorandum of cooperation on technical interns in 2018. In 2019, we agreed on MOC on some specifically skilled workforce. Based on these memoranda, Japan expects that Bangladesh will be able to supply some of the young talented people to Japan, including in sectors such as caregiving and nurses.
We decided to allow foreign people to work in some of the specific sectors, not only as caregiver nurses but also in restaurants, agriculture, construction and so forth.
Accordingly, around 100 people were going to Japan in various fields, mainly in construction, every year till the Covid-19 pandemic stopped it. But, if you look at Bangladesh, it's a promising country because it has a young population with a 2% rate of fertility. So, we have expectations but there are some challenges like the need for skills and language training. I think these are the areas you need to work on, we need to collaborate.
Also, we have not started to implement skills test examinations locally in Bangladesh. In 10 other countries, Japan is conducting skills tests. I think that needs to start in Bangladesh. Recently, one Bangladeshi national went to Japan to work for a Japanese hospital. This person took the test in Manila.
There are two types of tests - the skills test and the Japanese proficiency test. This young man passed both tests. Now he is working in Japan as a caregiver. If we can start conducting tests here in Bangladesh then I think that will help increase the flow of high-skilled workforce from Bangladesh to Japan.
Is Japan doing anything to hold these tests?
That's something we are discussing at the government-to-government level. Your overseas employment ministry is really keen to do this.
What is the status of the Free trade agreement (FTA) with Japan?
The ministry of commerce requested an FTA in November 2020. We have been discussing the possibility of starting what they call a joint study of FTA. Hopefully, during this 50th anniversary of Japan-Bangladesh ties, we can start the meeting of the joint study on FTA.
Right now Bangladesh enjoys duty-free access to 98% of items to Japan. The initial motivation for Bangladesh to do an FTA with Japan is to extend this market access to the level of LDCs, even after graduating from the LDC status. But we cannot simply extend it. We need a new trade agreement. There is no system in Japan to just extend this LDC preferential tariff status beyond LDC graduation. We will need to come to an agreement on FTA or even deeper and larger agreements like the economic partnership agreement (EPA). I think the EPA is better for Bangladesh to be closely connected with the Japanese economy.
Bangladesh also needs to have some new rules to be integrated into the regional and global supply chains. If Bangladesh and Japan can talk about wider areas of the economic partnership agreement, I think it will be better for both economies.
When you talk about free trade agreements, then tariff regimes need to be more liberalised and become much freer. But, if the government sticks to the current level of tariffs and taxes for imports from Japan to Bangladesh, it will not be very easy to sign an agreement.