The CAP appreciates Bangladesh's recent growth. But it notes problems of governance, such as discontinuity in government policy, corruption and worsening law and order, have become serious under a bipolar confrontation between the ruling BNP and the Awami League (AL). "As a result, Bangladesh can not maximize its potential for development and economic growth," it said.

"The continuing confrontation between the two main political parties even after three peaceful regime changes since 1991 is a major destabilising factor for people's livelihood and social stability in Bangladesh," Japan says.

The CAP, revised after six years, reaffirms that Japan will continuously support Bangladesh's self-help efforts in development in accordance with the Poverty Reduction Strategy Paper (PRSP) issued by the government last October.

Japan believes the implementation of PRSP will bring Bangladesh to the achievement of the United Nations Millennium Development Goals (MDGs).

Aiming the ultimate target of 'poverty reduction', the new Country Assistance Programme puts three priority goals: (a) economic growth, (b) social development with human security and (c) governance. To attain those goals the programme identifies 12 priority sectors, specifically private sector development, information and communication technology (ICT), tourism, transport, power, agriculture and rural development, education, health, environment, arsenic mitigation, disaster management and governance.

The CAP says Bangladesh's economy in recent years has grown at an annual rate of around 5 per cent, and trade and investment with Japan are beginning to expand. As economies develop and economic partnerships strengthen in the whole of Asia, there is a great possibility that South Asia will develop into a major market and investment destination for Japan in future.

Japan criticised the recurrence of hartals saying, "Hartals not only directly hit the lives of general citizens, especially those who live below the poverty line, but they also serve as an obstacle to investment and education."

"Reforming inefficient state-owned enterprises and the financial sector, which is unable to expand savings and investment, and to allocate resources efficiently is a must in aiming to improve macroeconomic productivity and expand incomes," it said.

"The effective use of natural gas, a valuable domestically produced natural resource, is indispensable for economic growth, and the key is the efficiency in terms of both production and consumption," the CAP added.

When formulating and implementing its assistance, Japan will give full consideration to crosscutting issues such as gender and the environment, and in the long run make an effort to comprehensively introduce a gender perspective into each programme and project and ensure it contributes to environmental conservation.

To develop the private sector, which is expected to drive economic growth leading to poverty reduction, it is essential to improve investment climate regarding both regulatory framework and physical infrastructure.

ICT is expected to have a rapid growth in the course of industrial diversification and also play a vital role as infrastructure for industrial development. As for tourism, the advantage is that it helps enhance Bangladesh's external image, in addition to contributing to foreign currency earnings, regional development and employment creation.

Provision of infrastructure such as transport and electric power is important for improving an investment climate, and it has a direct effect on poverty reduction. Moreover, Japan will provide assistance for agriculture and rural development, which buttress economic growth, and are important from the perspective of securing employment for the people living below the poverty line.

Given that approximately 80percent of the population living in poverty resides in the rural areas and disparities exist between rural and urban areas, Japan will comprehensively tackle this issue in advancing rural development, while incorporating the perspective of social development.

Education and health will get high priority in Japanese assistance. Environmental issues including countermeasures for arsenic mitigation and disaster management are also important.

The issue of the Chittagong Hill Tracts also poses a great challenge to Bangladesh from the perspective of human security. Even after the peace agreement signed in 1997, ethnic minorities face various issues including oppression and hardship. What is required is effective assistance offered in combination with public protection and administration and capacity building for ethnic minorities.

Improving governance is indispensable for effective and efficient promotion of poverty reduction through economic growth and social development. In addition, improvements in human rights, democracy, law and order and the judicial system will form the foundation of peace and stability of the society.

In the area of governance, Japan will focus on reforming the civil service system and police reform and development of PRSP implementation and monitoring system, help attaining independence and transparency in management of implementing agencies through specific projects and help establish effective local administration systems through promotion of decentralisation and capacity building of the community.

With respect to the results of Japan's assistance, Japan will monitor various indicators related to MDGs and PRSP, among others, including both quantitative and qualitative indicators, in collaboration with the Government of Bangladesh and other donor countries and agencies. At the same time, by reviewing the impact of its assistance, Japan will maximize the use of this review to improve its subsequent assistance policies.