Japan urges Bangladesh to sign EPA by this year, ease business rules to attract its FDI

Japan has called on Bangladesh to sign the Economic Partnership Agreement (EPA) within this year and to implement key reforms—such as simplifying business procedures, overhauling customs processes, and ensuring consistent, investor-friendly tax policies—to attract more Japanese investment.

During the Japan–Bangladesh Public–Private Joint Economic Dialogue (PPED) held in Tokyo in April, Japanese officials highlighted several obstacles that need urgent attention, including unstable economic zone incen​tives, long visa and work permit approval times, banking practices not aligned with international standards, and shortages of skilled labour and infrastructure.

Infograph: TBS

The dialogue took place ahead of Chief Adviser Muhammad Yunus's visit to Japan in May, and the minutes of the meeting were circulated this week among relevant ministries, a copy of which has been obtained by The Business Standard.

EPA seen as key to sustaining trade after LDC graduation

Bangladesh's trade and investment relations with Japan now hinge on the timely signing of the EPA. The seventh round of negotiations concluded in Tokyo from 3–12 September, covering goods, services, investment, e-commerce, and intellectual property.

Commerce Secretary Mahbubur Rahman told TBS yesterday that the final round of negotiations was completed in September.

"The negotiations are over. Japan has sent us its tariff and service schedules, and we have shared ours with them. After reviewing, we found both sides' documents are aligned," he said.
"We aim to complete all legal procedures through the Ministry of Law by November to enable signing in December. However, Japan may need more time to finish its legal process. The EPA will be signed once they are ready."

Currently, Bangladesh enjoys duty-free access to the Japanese market under its LDC status. This privilege will end upon graduation next year, after which Bangladeshi exports will face an 18% tariff. The EPA is intended to maintain duty-free access and expand trade across 17 priority sectors.

According to the Export Promotion Bureau, Bangladesh's exports to Japan reached $1.41 billion in FY25, representing 2.92% of total export earnings.
Bangladesh Bank data shows that Japanese foreign direct investment (FDI) stood at $500 million as of 2024, while JETRO data indicates that 330 Japanese companies currently operate in Bangladesh—57.7% of which plan to expand operations.

Japanese firms such as Lion Corporation, ONODA, and NICCA Chemical Co. Ltd have already acquired land in the Bangladesh Special Economic Zone to establish facilities.

In response to concerns raised by Japanese officials and businesses during the Japan-Bangladesh dialogue in April, Siraz Uddin Miah, principal secretary to the chief adviser, also assured Japan that the EPA would be signed this year and that challenges facing Japanese investors in Bangladesh would be addressed.

The Bangladesh delegation at the dialogue was led by Principal Secretary Siraz Uddin Miah, while Japan's delegation was headed by Takehiko Matsua, vice minister of the Ministry of Economy, Trade and Industry (METI) and the Ministry of International Affairs.

The Japan-Bangladesh Economic Dialogue serves as the only platform for comprehensive discussions on business integration and economic cooperation between Bangladesh and Japan. This forum's previous dialogue was held in April 2023.

Japanese side urges swift reforms and stable policies

At the Tokyo dialogue, Japanese officials and business leaders pressed Dhaka to accelerate the EPA signing and address long-standing issues impeding investment.

Gaku Yoda, Deputy Director General at Japan's Ministry of Economy, Trade and Industry (METI), emphasised the need to conclude the EPA quickly, noting its importance for Bangladesh's smooth transition from LDC status in 2026.
He said both governments must "listen to companies' voices" and "cooperate to create a smoother business environment."

Kukubu Fumiya, Chairman of the Japan–Bangladesh Committee for Commercial and Economic Cooperation, described the early conclusion of the EPA as "an urgent issue," saying that 85% of Japanese companies in Dhaka expect it to be finalised this year.

JETRO Country Representative Ando Yuji noted that despite the change in government, Japanese firms remain optimistic about business expansion in Bangladesh over the next one to two years—particularly in chemical fibre, export-oriented, and domestic market–focused industries.
He cited major hurdles such as visa and work permit delays of up to 14 months, sudden changes to tax incentives in economic zones, and banking procedures not compliant with international standards.

JICA's South Asia Director General Yamada Tetsuya observed that Bangladesh's FDI-to-GDP ratio remains very low—just 0.3%—due to complex regulations, inadequate infrastructure, and a shortage of skilled workers. He said JICA is supporting reforms to improve productivity and investment readiness.

Executives from Japanese firms also raised specific concerns. KAFCO Japan sought stability in gas supply contracts, while ONODA Inc. announced plans to set up a prepaid gas meter assembly plant in Narayanganj's Special Economic Zone.

Simada Mitsuo, director for the South and Central Asia emerging regions division of the Ministry of Agriculture, Forestry and Fisheries (MAFF) in Japan, presented on the current state of collaboration in the food and agriculture sector between Japan and Bangladesh.

He pointed out that improving the business environment and eradicating unclear procedures are important from the Bangladesh side.

Bangladesh promises reforms and swift EPA signing

In response, Principal Secretary to the Chief Adviser Siraz Uddin Miah, who led the Bangladesh delegation, reaffirmed that the government aims to sign the EPA this year and address Japanese investors' challenges.
He said steps are underway to ease visa issuance, work permits, and customs procedures, and pledged to review problems faced by companies such as ONODA and KAFCO.

Bangladesh's Ambassador to Japan, Md Daud Ali, said the interim government under Chief Adviser Yunus is pursuing broad reforms to strengthen the rule of law and investor confidence.
He acknowledged the language barrier as a key obstacle and proposed establishing training centres in Bangladesh to provide Japanese language and technical education. He also expressed interest in expanding vegetable exports to Japan.

Bida Director General Md Ariful Hoque said efforts are underway to raise FDI from 0.3% to 3% of GDP, supported by policy consistency, anti-corruption measures, and stable resource supplies.

Bangladesh Bank official Abu Saleh Mohammed Shahab Uddin assured that payment-related issues have been resolved and that reserves and exchange rates are now stable.
Meanwhile, NBR Member Md Moazzem Hossain said customs and tax reforms are progressing, with the National Single Window nearing completion and the new Customs Bond Management System (CBMS)—launched in January 2025—expected to significantly reduce clearance times and improve transparency.