Japanese organizations want to expand despite pandemic: survey

The pandemic is showing no signs of abating but still 41.8 % of Japanese companies in Bangladesh during 2020 wanted to expand business within the next two years, regarding to a survey by Japan Exterior Trade Organization (Jetro).

However, 70.3 % had sought to take action in 2019.

In 2020, another 49.3 % believed that their functions will stay the same while 6 % pondered over choosing retrenching.

Besides, 3 % wanted to shift overseas withdrawing investments, failing woefully to bear the down sides of the ongoing Covid-19 fallouts.

The "2019 JETRO Survey on Business Condition of Japanese Companies in Asia and Oceania" was released on March 2021.

Over 300 companies are conducting business in Bangladesh and the quantity has been rising recently due to continuous monetary growth within the last decade.

Those expressing intent to expand business in Bangladesh cite growth potential and sales increases enabled through exports and the domestic industry.

In line with the Jetro report, 9 % of the firms in Bangladesh have already recovered from the pandemic's effects, 31.3 % expect to go back to normalcy in the first half of 2021 and 34.3 % in the next half.

The report said a change in the trading environments in Vietnam, Bangladesh and India had a positive effect on business performance.

Many investors mentioned that the shift of production to Vietnam and Bangladesh, due to the US-China trade friction, had a confident impact.

Jetro said further improvement of the business enterprise environment in Bangladesh was first necessary for more competitiveness and future investment.

Some 66.7 per cent of Japanese companies explained that their key challenges were in hometown procurement of recycleables and elements while 56.1 per cent in customs procedures.

The report discovered that 48.9 % likely to generate an operating benefit in 2020, down 16.7 percentage points from 65.6 % in 2019.

In contrast, 32.4 per cent be prepared to incur an operating loss, up 14.7 percentage tips from 17.7 % in 2019.

Regarding operating earnings forecast, Bangladesh stands in the lowest posture while South Korea the best with 71.8 per cent, exceeding 60 per cent in Taiwan, Australia, and China.

For 2020, 16 per cent expect an increase in operating income over 2019, down 17.1 percentage points from 33.1 % in 2019.

The proportion of companies expecting a decrease in operating profit was 65.6 %, up 26.8 percentage points from 29.8 % in 2019.

A complete of 52.8 per cent expect a rise in operating profit in 2021, up 10.7 percentage things from the 2020 forecast (42.1 %) in 2019. Bangladesh will expect a rise by 38.3 % in 2021.

Yuji Ando, region representative of Jetro, said Bangladesh gets the potential to build up businesses but must improve environment bottlenecks.

He said investors face different hassles like frustrating customs procedures, difficulty found in local procurement of recycleables and components, electric power shortages and wage hikes.

According to him, in recent years the wages of workers and employees have improved in Bangladesh.

Besides, Japanese companies haven't any possibility to borrow from community banks in Bangladesh, that they sometimes need to face a good shortage of performing capital.

The study took comments of 13,399 Japanese organizations engaged in manufacturing and non-manufacturing sectors in 20 Asia and Oceania countries between August and September this past year.

The report said business confidence had fallen to its lowest level due to the Covid-19 pandemic whereas the deterioration was slight in China.

Even the intentions towards business expansions within the next a couple of years hit a fresh record low.

The impact of changes in trading environments including the US-China conflict and a decline popular due to the Covid-19 pandemic have had a negative impact on the companies' motivation to expand their business.

Even less than such a harsh environment, 50.9 per cent of the firms in India and 53.5 % in Pakistan are still motivated towards expanding business in the next one to two years.