Japanese firms see promise in Bangladesh, but they attach great importance to economic, political, and social stability, said Tanaka Akihiko, president of the Japan International Cooperation Agency.
“They hate unpredictability,” he told The Daily Star in an interview in Dhaka on July 2.
Tanaka, who arrived in Dhaka on July 1, is scheduled to leave today. During his visit, he attended a commemoration for the victims of the July 1, 2016 terrorist attack at the Holey Artisan Bakery in Dhaka.
He also met Prime Minister Tarique Rahman, several ministers, and top government officials.
The JICA chief said the discussions reaffirmed both countries’ commitment to accelerating major Japanese-backed projects and reviewing their progress, including the third terminal of Hazrat Shahjalal International Airport, metro rail or Mass Rapid Transit (MRT) projects, the Matarbari deep-sea port and associated connectivity infrastructure, and other strategic investments.
During the interview, he also defended the quality and long-term value of Japanese-funded infrastructure in Bangladesh.
Tanaka spoke about Japan’s Indo-Pacific strategy and Bangladesh’s role, the factors behind rising interest rates on JICA loans, the implications of Bangladesh’s graduation from the least developed country category, and the Economic Partnership Agreement (EPA) signed between the two countries earlier this year.
He also shared his assessment of Bangladesh’s economic outlook, saying the country’s long-term prospects remain strong despite recent economic and political challenges, and expressed optimism that improved governance and transparency would attract more Japanese investment.
Currently, official direct investment stands at over $400 million, with around 340 to 350 Japanese companies operating in Bangladesh.
Asked about Japanese firms’ investment, Tanaka said they highly prioritise economic, political and social stability.
“They tend to be more cautious than many of their international counterparts when evaluating investment destinations, placing significant emphasis on policy consistency, transparency and long-term certainty.”
He hoped the recently signed EPA between Bangladesh and Japan would create a more favourable business environment and encourage greater Japanese investment.
“As economic cooperation frameworks improve, businesses find it easier to engage,” said Tanaka, who served as president of the National Graduate Institute for Policy Studies, Japan, before taking the helm of JICA.
However, he said stronger institutions and improved governance would remain essential for Bangladesh to attract more Japanese manufacturers and investors.
Responding to a query on the implementation of Japanese-funded projects, the JICA president said bureaucratic procedures and recent political transitions had slowed some of Bangladesh’s major infrastructure projects.
Tanaka acknowledged delays in several Japanese-backed projects, including MRT Lines 1 and 5, although he rejected suggestions of any fundamental disagreement between JICA and the Bangladesh government.
“Broadly speaking, we do not have any difference with the government…. We [both] agree that procurement and bidding processes should be expedited so that construction can move ahead.
“This [the delay due to procedures and political changes] is not unique to Bangladesh…. In government bureaucracy, sometimes certain parts of projects are delayed, while other parts undergo very detailed investigation and review. Naturally, that takes time.”
He added that JICA had originally expected procurement and bidding processes to proceed more quickly.
“After the political changes and the transition period, we had to adjust to new circumstances. We hope that both the government and JICA will resolve all remaining issues and move forward,” said Tanaka, also a former professor of international politics at the Institute for Advanced Studies on Asia at the University of Tokyo.
Tanaka rejected criticism that Japanese-funded infrastructure projects are more expensive than those financed by other development partners.
“We do not consider Japanese-funded projects to be costly. Costs should always be evaluated against quality and the final results.
“If the quality and outcomes are identical, perhaps one can compare the costs directly. But in many cases, the quality and long-term benefits of Japanese-funded projects are much higher.”
He cited Dhaka’s metro rail system as an example of Japan’s focus on quality infrastructure investment.
“We hope people find it comfortable and convenient…. We are very appreciative that people have accepted the service so warmly.”
According to Tanaka, the success of MRT Line-6 demonstrates the long-term value of investing in high-quality infrastructure.
The JICA president said Bangladesh occupies a critical position in Japan’s vision of a “Free and Open Indo-Pacific”.
“The centre of global economic activity is increasingly shifting towards the Indo-Pacific region. Japan wants to remain part of this dynamic development.”
He described Bangladesh as an important partner in promoting regional connectivity and economic integration.
One of the key projects under this vision is the Matarbari deep-sea port, which Tanaka said would help address growing bottlenecks in Bangladesh’s trade infrastructure.
“Chattogram port is increasingly becoming a bottleneck for the movement of goods. To overcome this constraint, Bangladesh needs a very powerful port, and that is why Matarbari is so important.”
Responding to a query, Tanaka said Japan had previously envisioned broader regional connectivity initiatives linking Bangladesh, Myanmar and Southeast Asia.
“When Myanmar was under a democratic government, we envisioned stronger east-west connectivity from Thailand through Myanmar to Bangladesh and northeast India.
“We also considered north-south connectivity involving Nepal, Bhutan and Bangladesh.”
However, the political situation in Myanmar has effectively halted those plans, which Tanaka described as unfortunate.
Responding to concerns over rising interest rates on Japanese development loans, Tanaka said changes in the global economic environment had made adjustments unavoidable.
“Inflation and changing economic conditions affect interest rates everywhere. As a provider of development finance, JICA also has to adjust its financing terms according to economic conditions.”
However, he said concessional financing should be assessed not only based on interest rates but also repayment and grace periods.
“A loan with a long repayment period remains highly concessional even if interest rates increase.
“Personally, I would like to provide our loans as concessional as possible. But JICA also has a responsibility to maintain financial soundness.”
Tanaka said Bangladesh’s long-term trajectory remained positive despite recent economic and geopolitical challenges.
“Covid-19 and geopolitical disruptions, including tensions in the Middle East, have affected Bangladesh’s economy.”
He stressed the importance of improving macroeconomic management, strengthening public finances, and increasing tax revenues to support future investment.
“From our perspective, macroeconomic conditions need to continue improving. The government’s financial position also needs strengthening, and tax revenues should increase so that necessary investments can be made.”
Despite the challenges, Tanaka expressed confidence in Bangladesh’s future growth prospects.
He added that sustaining high growth would require diversification beyond the garment sector and deeper integration with regional and global markets.
“Our partnership with Bangladesh is very strong. We would like to continue this course in the years ahead.”
