57% Japanese firms eye expansion in Bangladesh on strong demand: Jetro survey

Around 56.9% of Japanese firms in Bangladesh plan to expand operations over the next one to two years, placing the country on par with Vietnam and above the global average of 45%, according to a survey by Japan External Trade Organization.

The expansion intent is lower than India's 81.5% but higher than Pakistan's 63.4% and the Asean average of 46.3%, underscoring Bangladesh's growing appeal as an investment destination.

The survey, conducted between 19 August and 17 September 2025, was unveiled at a Japan Business Day event jointly organised by the Embassy of Japan in Dhaka and Jetro today (30 March).

Domestic demand drives growth

Robust domestic demand remains the primary driver, with 66.7% of firms citing local market growth—closely aligned with the global average. 

Low labour cost, market scale growth potential, ease in recruiting local staff, fewer linguistic/ communication problems, are the top five advantages of the investment environment, as per the survey.  

On the other hand, investors flagged key risks, including political or social instability (94.4%), time-consuming tax procedures (81.5%), policy uncertainty (66.7%), administrative delays (66.7%), and weak legal frameworks (66.7%).

Officials acknowledge challenges, promise reforms

Chowdhury Ashik Mahmud Bin Harun noted the survey predates the February election, adding that more real-time data would improve policy responsiveness. He admitted persistent challenges such as tax complexity and licensing hurdles, but expressed optimism about ongoing reforms.

"Clearly, we haven't done enough, and there is still a lot to be done," he admitted, while expressing optimism about ongoing reforms backed by strong government commitment.

Despite these challenges, the survey signals improving business sentiment. Bangladesh recorded an 11.9 percentage-point rise in the share of companies expecting operating profits to increase in 2026 compared to 2025. It also showed that 29.4% of firms view local companies as their main competitors—the highest among surveyed markets.

At the event, Japan's Ambassador to Bangladesh, Shinichi Saida, highlighted growing prospects for foreign direct investment (FDI), citing political stability following the February election as a key confidence booster.

He cited political stability and policy direction as key to boosting foreign direct investment. 

Emphasising the significance of the Economic Partnership Agreement (EPA), the envoy noted that such frameworks should be assessed from a long-term perspective spanning decades, rather than short-term gains.

Non-manufacturing sectors lead expansion

Non-manufacturing sectors are driving expansion, with 62.2% of firms planning growth compared to 47.6% in manufacturing. Export opportunities, competitive advantages, and demand for value-added products were cited as secondary factors.

For 2026, Bangladesh recorded the highest rise—11.9 percentage points—in firms expecting profit growth. Meanwhile, 29.4% of companies identified local firms as key competitors.

Around 350 Japanese companies are currently operating in Bangladesh, and the number is gradually increasing.

Rashed Al Mahmud Titumir, Prime Minister's Adviser on Finance and Planning, has urged Japanese investors to significantly expand their footprint in Bangladesh, calling for a strategic shift from Official Development Assistance (ODA) to stronger private sector investment.

"While Japan has long been a key development partner, the government envisions a new economic model to support sustainable economic growth," he said.