CBGA Annual Review Series: How Did Bangladesh and Japan Consolidate Their Relations in 2023?

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The roots of Bangladesh-Japan bilateral relations trace back to Japan’s steadfast support for an independent Bangladesh, being the first OECD country to recognize its independence on February 10, 1972. This historic moment laid the foundation for diplomatic ties between the two nations.

In 2023, the diplomatic relations between Bangladesh and Japan underwent a significant transformation, advancing from a “Comprehensive Partnership” to a “Strategic Partnership.” This evolution not only signaled an intensification of collaboration but also underscored Bangladesh’s growing global influence and diplomatic maturity. The strategic partnership extends beyond military considerations, emphasizing a long-term collaboration built on shared interests for mutual benefit. The pivotal visit of Prime Minister Sheikh Hasina to Japan played a crucial role in cementing this upgraded relationship. Bilateral discussions resulted in essential agreements and Memorandums of Cooperation (MOCs) spanning diverse sectors, including agriculture, metro rail, industrial upgrades, defense, ICT, and cybersecurity.

Notably, defense ties reached unprecedented levels, with Japan extending Official Security Assistance to Bangladesh, contributing to the region’s comprehensive defense architecture. Beyond diplomatic strides, the economic collaboration between Bangladesh and Japan has achieved notable progress. Involvement in infrastructural development, energy cooperation, and various economic projects reflects a joint commitment to shaping a future characterized by sustainability and shared prosperity.

Strengthening Ties: Bangladesh-Japan Diplomatic Relations in 2023

In 2023, the diplomatic relations between Bangladesh and Japan reached new heights with the visit of Prime Minister Sheikh Hasina to Japan. The commitment to cooperation between these two nations has not only continued but has evolved into a strategic partnership, signifying a mature and comprehensive relationship. The elevation from a “Comprehensive Partnership” to a “strategic partnership” reflects Bangladesh’s increased global standing, showcasing its competence and maturity in international affairs.

The strategic partnership is not limited to military aspects but encompasses a long-term collaboration where both countries identify shared interests for mutual benefit. Bangladesh’s maturity and competence are highlighted by the fact that it can now offer valuable contributions to countries like Japan. This development aligns with a broader trend where multiple nations express interest in establishing strategic relationships with Bangladesh, reflecting its consolidated position on the global stage.

Elevated Bilateral Talks and Key Agreements

During the bilateral talks in Japan, various critical issues were discussed, ranging from infrastructure development initiatives to economic partnerships and addressing the Rohingya crisis. The joint statement with Japan’s Prime Minister Kishida Fumio announced the elevation of bilateral relations to a “strategic partnership.” Memorandums of cooperation (MOCs) were signed, paving the way for enhanced collaboration in agriculture, metro rail, industrial upgrades, defense, ICT, and cybersecurity. Notably, the defense ties between Japan and Bangladesh have deepened, with Bangladesh being selected to receive Official Security Assistance. This underscores the growing importance of defense collaboration in the region and reflects Japan’s commitment to reinforcing the comprehensive defense architecture.

Bangladesh-Japan Indo-Pacific Declaration: A Strategic Milestone

The recent Indo-Pacific declaration between Bangladesh and Japan signifies a strategic milestone, elevating their diplomatic ties to unprecedented heights. Rooted in shared values and mutual interests, this declaration unveils a comprehensive roadmap for cooperation, encompassing crucial domains from maritime affairs to defense and global challenges. The joint commitment to a free and open Indo-Pacific showcases the strategic foresight of both nations. Beyond geopolitical considerations, it underscores their dedication to stability, adherence to international law, and fostering shared economic prosperity. Emphasis on maritime cooperation for the development of the blue economy positions Bangladesh and Japan as responsible stewards of marine resources.

This declaration represents a balancing act from Bangladesh, navigating global geopolitics while strengthening regional alliances. Beyond the strategic implications, it stands as a testament to the enduring friendship between the two nations. By addressing global challenges collectively, from security issues to humanitarian concerns, Bangladesh and Japan showcase a commitment to regional stability and a shared vision for the future.

Bangladesh – Japan Key Developments 2023

Development Description
Strategic Partnership Declaration Bangladesh and Japan declared a strategic partnership, signaling a shift from a Comprehensive Partnership to a more comprehensive and collaborative relationship.
Memorandums of Cooperation (MOCs) Diverse MOCs were signed, covering areas such as agriculture, metro rail, defense, and ICT, showcasing the depth and breadth of collaboration between the two nations.
Defense Ties Strengthened Bangladesh was selected to receive Official Security Assistance (OSA) from Japan, indicating a strengthening of defense ties and regional security collaboration.
Infrastructure Hub Development Agreements, particularly those related to the Matarbari port, reflect a vision of Bangladesh as an industrial and connectivity hub in the Indo-Pacific region.
Indo-Pacific Outlook (IPO) Alignment Agreements align with Bangladesh’s Indo-Pacific Outlook (IPO), signaling a strategic foreign policy direction with trade implications post-LDC status.
OSA Grant Aid (November 15, 2023) Japan provided an OSA grant aid of 575 million yen to Bangladesh, deepening security cooperation and contributing to maintaining international peace and security.
Trade Agreements and Economic Partnership Japan’s utilization of trade agreements like EPA and GSP facilities underscores the significance of creating a competitive investment climate.
Infrastructure Development Projects Ongoing projects, including the Matarbari deep seaport and Dhaka Mass Rapid Transit, financed through ODA loan packages, contribute to Bangladesh’s infrastructural development.

Bangladesh-Japan Energy Cooperation Soars to New Heights in 2023

In 2023, Japan and Bangladesh showcased significant achievements in their energy cooperation efforts, signifying a deepening partnership in the sector. A pivotal moment occurred with the signing of a substantial Japanese ODA loan agreement amounting to 217,556 million yen for the Matarbari Ultra Super Critical Coal-Fired Power Project (VII) by the Japan International Cooperation Agency (JICA) and the Government of Bangladesh. This agreement marked a crucial step toward addressing Bangladesh’s energy needs and fostering sustainable development.

Furthermore, the visit of Bangladesh’s Prime Minister, Sheikh Hasina, to Japan catalyzed groundbreaking collaborations between Japanese businesses and Bangladeshi investors. This was particularly evident in joint ventures for gas infrastructure, healthcare facilities, information technology projects, and the development of solar and gas-based power plants with a combined capacity of 1500 MW. Noteworthy Memorandums of Understanding (MoUs) were inked during this visit, including agreements for the construction of a high-efficiency 700MW combined cycle gas-fired power plant in Anowara, Chattogram, and collaborative funding for new solar power projects.

The strategic cooperation extended to various sectors, with Doreen Group and Marubeni partnering for solar power projects, and Asian Entech Power Corporation Limited and Marubeni Corporation investing in new power projects with a combined capacity of 600MW. Additionally, Parker Bangladesh Ltd. and Sumitomo Corporation signed an MoU for the cooperative development of a 200MW floating and ground-mounted solar power plant in Bangladesh. The leaders of both nations acknowledged the remarkable progress in projects funded by the BIG-B initiative, particularly the Matarbari deep-sea port. This port, set to become a center of energy, logistics, and industry, holds immense potential for enhancing communication and trade activities between Bangladesh and neighboring countries. The planned expansion of Matarbari into a major transshipment hub underlines Japan’s commitment to leveraging its technological expertise to drive economic growth in the region.

Bridging Economic Frontiers: Bangladesh-Japan Ties in 2023

Elevating Trade Partnerships: Bangladesh and Japan’s Collaborative Success in 2023

The historical trade dynamics between the two countries, dating back to 1988, paint a picture of continuous growth. The total trade value surged from $1.92 billion in 1988-1992 to an impressive $16.61 billion in 2018-2022. Japan’s exports to Bangladesh and imports from the country have shown a steady upward trajectory, emphasizing the balanced nature of this economic interchange. The increasing trade values underscore the strength of the diplomatic and economic ties between Bangladesh and Japan.

Bangladesh’s Trade Relation with Japan (1988-2022) in billion $

Year Total Trade Import Export 
1988-1992 1.92 1.57 0.35
1993-1997 2.11 1.66 0.44
1998-2002 2.36 1.81 0.56
2003-2007 2.97 2.21 0.76
2008-2012 4.85 3.63 1.21
2013-2017 8.68 4.38 4.30
2018-2022 16.61 9.59 7.09
2023 3.9 2.02 1.9

During FY22, Japan and Bangladesh engaged in substantial trade activities. Japan’s exports to Bangladesh amounted to $1,353.85 million, while imports from Bangladesh stood at $2,576.30 million. This exchange highlighted the significant role both nations played in each other’s economic landscapes. Japan, as a major exporter, provided Bangladesh with diverse goods and services, while Bangladesh, as a prominent importer, met its economic requirements through Japanese products.

Moving into FY23, the trade relationship between Japan and Bangladesh continued to flourish. Japan’s exports to Bangladesh saw a notable increase, reaching $1,901.58 million. On the other side, Bangladesh’s imports from Japan slightly decreased to $2,022.20 million. This indicates a continued robust trade relationship, with Japan maintaining its position as a key contributor to Bangladesh’s imports.

The surge in Japan’s exports to Bangladesh in FY23 may signify increased demand for Japanese products in the Bangladeshi market, showcasing the adaptability and attractiveness of Japanese goods to the local consumer base. Meanwhile, Bangladesh’s sustained imports from Japan underline the reliability and quality of Japanese products meeting the country’s diverse needs.

Moreover, in the fiscal year 2023, Bangladesh and Japan witnessed a substantial surge in bilateral trade, reflecting a robust economic collaboration between the two nations. Despite local and economic challenges, Bangladesh’s exports to Japan reached an impressive $1.6 billion, experiencing a remarkable Year-on-Year growth of 45.62% from the previous fiscal year. This surge is particularly notable in the Ready-Made Garment (RMG) sector, where Bangladesh’s overall RMG exports grew by more than 10%, showcasing the resilience of its economy. Simultaneously, Japan’s exports to Bangladesh have seen consistent growth, reaching $9.59 billion in the period from 2018 to 2022, underlining the mutual benefits of this thriving trade relationship.

Economic Collaborations and Development Assistance

Japan and Bangladesh, having cultivated strong economic ties over the last 50 years, showcase a relationship grounded in mutual cooperation. Bangladesh stands as the largest recipient of Japan’s development and economic assistance, receiving approximately $25 billion since 1972. This assistance, with a focus on sectors like information and communication technology (ICT), tourism, transportation, and agriculture, underscores Japan’s commitment to fostering growth in Bangladesh.

Bangladesh-Japan RMG Relations Soar in FY23: 45.62% Surge in Apparel Exports

In the fiscal year 2022-23, Bangladesh and Japan’s economic ties reached new heights, particularly in the Ready-Made Garment (RMG) sector. Despite local and economic challenges, the bilateral trade relationship witnessed a remarkable 45.62% growth in apparel exports to Japan. The Bangladesh Garment Manufacturers and Exporters Association reported a significant increase, with earnings reaching $1.22 billion during the July-March period, compared to $849.64 million in FY22. This surge contributes to the overall success of Bangladesh’s RMG sector, which experienced a 45.62% boost in export income to $1.59 billion. The positive trend underscores the resilience and prosperity of the strategic partnership, positioning Bangladesh as a key player in Japan’s apparel market.

Economic Collaboration and Labor Connection

Furthering economic collaboration, Bangladesh is poised to sign a MoU with Japan for a Mitsubishi factory feasibility study, showcasing a deeper level of economic engagement between the two nations in 2023. Additionally, recognizing the rising demand for foreign workers, Japan collaborates with Bangladesh to strengthen their labor connection. A joint seminar organized by the Bangladesh Embassy in Tokyo, in partnership with JITCO, underscores Bangladesh’s potential as a source of skilled human resources for Japan.

Business Sentiment, Future Prospects, and Trade Agreements

Japanese enterprises express a positive outlook on Bangladesh’s economic prospects, with 71.6% expressing a desire to expand operations. The survey conducted by the Japan External Trade Organization (Jetro) highlights Bangladesh as the second-most preferred country for business expansion in the Asia and Oceania regions. Business sentiment is driven by factors like competitive labor costs and export potential, although improvements in the business environment, particularly in customs clearance procedures, are identified as necessary.

The prospect of an Economic Partnership Agreement (EPA) is crucial, offering a pathway to enhance the competitive investment climate. As the GSP facilities’ utilization rate remains high, trade agreements like EPA become instrumental, especially considering Bangladesh’s ineligibility for GSP after LDC graduation. Overall, the positive operating forecast for 2023, with expectations of profit increases, cements Bangladesh as an attractive investment destination in the eyes of Japanese companies.

Infrastructural Development and Collaborative Projects

In 2023, Japan significantly contributed to Bangladesh’s infrastructural development through the 40th Official Development Assistance (ODA) agreement, directing $2.5 billion to transformative projects. Notably, progress on the Matarbari deep seaport, anticipated to be fully operational by 2026, and the Dhaka Mass Rapid Transit (MRT) project, already easing traffic congestion, highlight the substantial impact of Japan’s investments in Bangladesh’s infrastructure.

Japan-Bangladesh Metro Rail Collaboration: Transforming Urban Transit in 2023

In 2023, Japan and Bangladesh forged a transformative partnership with the inauguration of the Rail Mass Rapid Transit Line-1 (MRT-1), symbolizing a pivotal moment in urban infrastructure development. Spearheaded by the Japan International Cooperation Agency (JICA), this collaborative effort marked a significant leap forward in modernizing Dhaka’s transportation landscape.

The MRT-1 project, encompassing both underground and elevated sections over a total length of 31.241 km, received substantial financial support of Tk39,450.32 crore from JICA, underlining Japan’s commitment to Bangladesh’s metro rail ambitions. The ambitious timeline for completion by 2026 reflects a shared vision for rapid progress.

With an estimated capacity to accommodate eight lakh passengers daily, MRT Line-1 promises reduced travel times, taking only 25 minutes from the Airport to Kamalapur and 21 minutes from Natun Bazar to Purbachal. As part of a broader strategy, Bangladesh envisions a total of six metro rail routes in Dhaka by 2030, showcasing a commitment to sustainable and efficient urban transportation.

This collaborative initiative holds the potential to alleviate traffic congestion, enhance connectivity, and contribute significantly to the economic and social fabric of Dhaka. The Japan-Bangladesh Metro Rail Collaboration in 2023 stands as a beacon of progress, symbolizing a shared commitment to shaping the future of urban transit in Bangladesh.

Bangladesh-Japan 2023: Strengthening Bonds through people to people connections

In 2023, the bilateral ties between Bangladesh and Japan witness a remarkable surge, fueled by a dynamic blend of tourism and educational collaborations. The influx of Bangladeshi students to Japan reaches new heights, with 2,606 students choosing Japan as their preferred destination for higher education.

MACES, a key player in facilitating educational connections, has played a pivotal role by placing over 1,500 Bangladeshi students in Japanese universities. Notably, a significant majority of these students opt to build their future in Japan, successfully securing positions in top companies.

As of June 2023, Japan’s Ministry of Justice records 24,940 Bangladeshi nationals among the registered foreigners, underlining the growing presence and integration of the Bangladeshi community in Japan.

The cultural exchange between the two nations is vibrant, as showcased by the “Japanese Film Festival 2023.” Collaboratively presented by the Embassy of Japan, Japan Foundation, Institute of Modern Languages (University of Dhaka), and American International University-Bangladesh (AIUB), the festival brings together the richness of Japanese cinema. The event, featuring six acclaimed films spanning various genres, captivates audiences and fosters a deeper understanding of Japanese culture.

Moreover, the Bangladesh Japan Cultural and Friendship Exchange Forum adds a creative touch by organizing a children’s painting competition on Japanese Culture and Custom. This initiative not only engages the young minds of Bangladesh but also promotes cultural appreciation and understanding.

Looking ahead, the future holds promising prospects for the Bangladesh-Japan relationship in the spheres of tourism and education. The growing number of Bangladeshi students in Japan signifies a strengthening academic bond, while cultural events and exchanges continue to build bridges between the two nations. As 2023 unfolds, the trajectory of this relationship points towards deeper connections, mutual understanding, and shared opportunities in the realms of tourism and education.

The evolving Bangladesh-Japan Strategic Partnership not only signifies a deepening of diplomatic ties but also unlocks a wealth of untapped business opportunities and economic synergies. This collaborative venture encourages Japan to explore diverse sectors, including agro-processing, shipbuilding, electronics, jute, energy, automobile, light-engineering industries, ICT in Hi-tech parks, 4IR technologies, SME development, and various service sectors. The objective is to elevate Bangladesh’s global standing, enhance productivity, efficiency, and meet the demands of the global market.

The impact of this strategic partnership is palpable, as revealed by a JETRO survey indicating that 68% of Japanese companies in Bangladesh are planning expansions. As a major economy, Japan has the potential to leverage these partnerships for mutual benefit, solidifying its role in shaping Bangladesh’s economic landscape.

Looking ahead, the strategic partnership lays the groundwork for negotiating a bilateral Economic Partnership Agreement (EPA), ensuring Bangladesh’s continued access to the Japanese market. This foresight becomes particularly crucial in safeguarding against potential challenges post-LDC (Least Developed Country) status. Japan’s support emerges as a pivotal factor in navigating this transition, assuring sustained economic growth for Bangladesh beyond the year 2023. In essence, the future beyond 2023 holds the promise of a strengthened partnership that not only fosters economic growth but also navigates challenges with resilience and foresight.

Series Editor
Delwar Hossain, PhD is Professor of International Relations, University of Dhaka, Bangladesh.

Contributor
S. M. Saifee Islam is a Research Associate at the KRF Center for Bangladesh and Global Affairs (CBGA).

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