Japan is beating out China in a race to build Bangladesh's first deep-water port as the region's powers jostle for a foothold in the Indian Ocean.

Construction of the 18-meter-deep port at Matarbari on Bangladesh's southeast coast is set to start by January, the Japan International Cooperation Agency said in an emailed response to questions from Bloomberg News. That's bad news for a stalled China plan to build a port about 25 km (15 miles) away.

"I'd imagine there's only room for one port," said Krispen Atkinson, a maritime analyst at IHS Inc., citing the cost to build railway lines and approach channels. "There are probably political reasons behind it as well. If you're looking to build a port and want Western support as well, would a port financed by China be the favored option?"