Bangladesh stands at a pivotal juncture in its development journey. With a dynamic economy characterized by rapid industrialization and expanding global integration, the nation is poised to unlock unprecedented growth through enhanced trade and investment. As Bangladesh prepares for its graduation from Least Developed Countries (LDC), the need to diversify industries, attract higher-value investments by foreign investors, and build resilient infrastructure has never been more critical. At JICA, our commitment is to facilitate this journey by promoting sustainable policies that enhance both domestic and international investor confidence as well as fostering bilateral economic partnerships and reinforcing infrastructure.
Economic Transformation in Bangladesh
Over the past few decades, Bangladesh has transformed from an agrarian economy into a vibrant industrial hub. This transformation is driven in large part by the robust growth of ready-made garments, which accounts for more than 80% of country's exports.
However, as shown in the country-wise comparative analysis of GDP per person employed among south and south-east Asian countries, the labor productivity of Bangladesh is still low.
In addition, foreign direct investment (FDI) flow is only 0.4% of GDP, which is significantly lower than neighboring countries.
According to the survey among potential foreign investors, challenges for attracting more FDIs are mainly derived from both regulation and infrastructure aspects. Difficulties in regulation include (a) unpredictable and inconsistent tax rules, (b) complicated licensing/approval procedures, and (c) complicated customs procedures. And infrastructure bottleneck includes (d) shortage of industrial zones and industrial clusters, (e) logistics issue including inefficient cargo handling, (f) unstable power supply with frequency variation beyond the permissible level.
As the country aspires to graduate LDC and become an upper middle-income nation, Bangladesh needs to overcome the challenges and further transform economic structure with a strategic blueprint to elevate productivity and competitiveness including the measures to attract more FDIs.
JICA's Strategic Engagement in Bangladesh
JICA's engagement in Bangladesh is anchored on a deep-seated belief in the transformative power of strategic international cooperation. Over the years, JICA has played a crucial role in reinforcing the foundation of Bangladesh's economic infrastructure, supporting key sectors that drive trade and investment. In addition, JICA has been recently focusing more on its cooperation in the area of policy/regulation reforms to improve investment climate in Bangladesh. Our initiatives are designed to address both immediate developmental needs and long-term strategic goals, thereby ensuring that the benefits of growth are both inclusive and sustainable.
Policy Advisory and Institutional Reforms
Effective policy frameworks are essential for fostering an investor-friendly climate. JICA supports Bangladesh in streamlining bureaucratic processes and aligning domestic regulations with international best practices. By engaging with government agencies and regulatory bodies, we contribute to policy dialogues and actions that facilitate institutional reforms. These reforms are critical in creating a transparent, predictable, and efficient regulatory environment that encourages both local and foreign investments.
Infrastructure Development
Robust infrastructure is indispensable for a thriving economy. Recognizing this, JICA has been actively involved in financing and implementing projects that enhance transportation networks, energy supply, and attract invest- ments. These projects reduce logistical constraints, lower operational costs, and improve the overall business environment. Enhanced infrastructure not only benefits domestic enterprises but also attracts international investors by mitigating risks associated with supply chain disruptions and inefficiencies.
To that end, JICA has been financing the Bangladesh Special Economic Zone (BSEZ) in Narayanganj, the country's first world class economic zone, which provides state-of-the-art infrastructure, streamlined regulatory processes, and investor-friendly facilities. By offering plug-and-play facilities, uninterrupted utilities, and the incorporation of best Japanese practices, BSEZ is expected to serve as a model for future industrial zones in Bangladesh.
Furthermore, aiming to establish Moheshkhali in Cox's Bazar as logistics, energy and power, and industrial hubs, JICA has been actively involved in preparing the master plan and developing port facilities, power plants, energy terminals, and transport infrastructure under the Moheshkhali-Matarbari Integrated Infrastructure Development Initiative (MIDI) framework. JICA-financed Matarbari Deep Sea Port, once operational, will enhance regional connectivity, reduce dependency on existing congested ports, and facilitate smoother trade logistics. Additionally, the infrastructure projects within MIDI will help stabilize power supply and support large-scale industrial investments.
Technical Cooperation and Capacity Building
A critical component of our support is the implementation of JICA's technical cooperation aimed at elevating institutional capacities. Through dispatch of JICA experts, specialized training, and development of systems and mechanisms, we enable our governmental counterparts to be well-equipped to meet global standards, thus reinforcing the nation's industrial development and diversification.
Japanese experts have been working in Bangladesh Investment Development Authority (BIDA) and Bangladesh Economic Zone Authority (BEZA), two key organizations for industrial development, for their capacity development. JICA's cooperation also extends to human resource development of private companies in information technology and manufacturing.
The Industrial Competitiveness Enhancement Project (ICEP) focuses on developing linkages between local and foreign companies in the light engineering and plastics industries, as well as human resources development in those industries. Through technical training, business matchmaking, and assistance in policy implementation, ICEP is helping to create a more competitive and investment-friendly industrial landscape.
In addition, JICA has been supporting capacity-building initiatives to prepare relevant stakeholders for trade agreement negotiations, which are essential for Bangladesh graduating from LDC in 2026. Through targeted training programs, Bangladeshi government officials have been gaining expertise in Free Trade Agreement (FTA) and Economic Partnership Agreement (EPA) negotiation strategies, regulatory alignment, and trade facilitation measures, enabling them to engage effectively in future trade discussions with Japan and other countries.
Looking Ahead
JICA's unwavering dedication to Bangladesh's journey toward prosperity is reflected in our sustained efforts to strengthen trade and investment, which will continue to serve as critical levers of change. Bangladesh's economic transformation, driven by both traditional strengths and emerging opportunities, necessitates a coordinated approach that leverages global best practices and fosters robust partnerships. At JICA, we are committed to supporting Bangladesh in harnessing these opportunities by facilitating investments that create value, spur economic diversification, and uplift communities.
