Japan is incentivizing its companies to shift manufacturing out of China and adding Bangladesh to a list of preferred destinations for relocating the factories, moves that could give the South Asian nation’s economy a boost.

"As the pandemic started in China, Japanese companies needed to diversify” their supply chains further, Naoki Ito, the Japanese ambassador to Bangladesh, said in an interview. "This will provide an opportunity for Bangladesh.”

Japan’s nudge to relocate companies comes at a time when a Special Economic Zone (SEZ) is in the making in Bangladesh to lure Japanese firms’ production facilities. The industrial zone sprawling on 1,000 acres in the Araihazar subdistrict, 32 kilometers away from the nation’s capital Dhaka, is expected to bring in $20 billion in Japanese investments, according to the Bangladesh Economic Zones Authority.