Manufacturers globally are building factories in Bangladesh, attracted by cheap labor and a growing consumer market. Japanese company Lion began constructing a BDT 1.8 billion (USD 15.3 million) factory at the Bangladesh Special Economic Zone (BSEZ) to produce toothbrushes and dish soap by late 2025. Lion aims to boost product supply in Bangladesh, partnering with local firm Kallol Group.

Kazuo Mabuchi of Lion’s South and Southeast Asian division sees significant growth potential in the market. Sumitomo Corp. and the Bangladeshi government started developing the 190-hectare BSEZ in 2020, backed by the Japan International Cooperation Agency. Nine companies have reserved spots or signed contracts to establish factories.

The BSEZ, Bangladesh’s first industrial park with flood prevention and top-tier infrastructure, aims to attract more businesses with ready-to-rent factories by 2025. Japanese wigmaker Artnature plans to build a factory at BSEZ, seeking to diversify operations from the Philippines.

Artnature chose Bangladesh for its labor availability and cost benefits compared to Southeast Asia. British company Pladis, owner of Godiva and McVitie’s, is also setting up at BSEZ. Taro Kawachi, head of the zone’s operating company, noted increasing interest from Chinese firms, potentially due to U.S.-China trade tensions.

Bangladesh’s garment industry accounts for 80% of exports, but the government seeks to diversify by attracting foreign businesses. Net foreign direct investment in Bangladesh reached $3 billion in 2023, double the 2014 figure, drawing funds from the U.S., Europe, China, and South Korea.

Businesses are attracted by Bangladesh’s cheap labor, with the average monthly pay at $114, half that of neighboring countries. The domestic market also shows promise, with 60% of the 170 million population under 30. GDP per capita is expected to reach $4,000 by 2028.

Despite opportunities, businesses face challenges with customs delays, infrastructure issues, among others.

Source: Nikkei Asia