By Safen Roy
BANGLADESH has long been seen as a strategic point in South Asia.
Between its neighbours, Myanmar, Bhutan, Nepal, China and India – Bangladesh has come forward with prospects in development that will shape the regional development in the coming years.
Bangladesh is a member of the Belt and Road Initiative (BRI) since 2016 and has obtained substantial sums of investment for development projects from China.
During Chinese President Xi Jinping’s visit to Dhaka in 2016, the two countries signed 27 investment and financing agreements worth about $24 billion.
Chinese investment in Bangladesh is over $38 billion, along with the $13.6 billion invested in joint ventures earlier, making China the single largest investor in Bangladesh.
Bangladesh has the second largest Chinese investment under the BRI with the high levels of investment in its territories next to Pakistan, Sri Lanka and Myanmar.
During his 2019 visit, Prime Minister Sheikh Hasina of Bangladesh was also assured by Beijing that it would better fit its Belt and Road Initiative (BRI) projects with the growth goals of Bangladesh.
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Most recently, on December 10th, 2020, Chinese investment turned its hands to major infrastructure builds in Bangladesh.
Engineers in Bangladesh installed the 41st span of the Padma Multipurpose bridge. China also proposed building the Padma Multipurpose bridge on a build-own-transfer basis by investing $2 billion or 70 percent of the project cost out of US$3.6 billion.
Meanwhile a Chinese bank will loan a further $3 billion for the construction of the rail link following the bridge.
The development is viewed as prestige project given the many obstacles which have stalled construction in the past.
This bridge will also help to show Bangladesh’s rise as an emerging economy.
Analysts have begun to suggest that the time may be right for Bangladesh to begin looking to grow ties with the Greater Bay Area in southern China.
The Greater Bay Area encompasses nine cities of Guangdong province and the Special Administrative Regions (SARs) of Macau and Hong Kong.
The Guangdong-Hong Kong-Macau Greater Bay Area in southern China, which encompasses the most accessible and economically prosperous zone of the world, is one of the most prominent of the mainland urbanisation initiatives.
The aim of the greater bay area is to build a world-class urban cluster that could also rival bay-based global cities like San Francisco. Bangladesh’s proximity to China helps, but that is not all and new infrastructure projects will level up Bangladesh to allow more comfortable access to China.
The country could also consider diversifying into the technology sector and grow ties with Shenzhen.
Shenzhen is presently home to more than 3 million firms, including tech giants including Tencent, DJI and Huawei, and is considered a hi-tech hub in southern China. According to the Greater Bay Area Outline Development Plan, Shenzhen would maintain its leading position as a capital for innovation and imagination.
Bangladesh aims to establish 100 economic zones by 2025. Bangladesh is in the midst of construction of the Bangabandhu Hi-Tech City. The country’s special economic zone fully equipped IT/ IT-enabled services and hi-tech industries in Gazipur.
By creating its tech hub, Bangladesh can diversify. The countries IT SEZs may pave the way into a different sector. The government also wishes to generate money by use of its human capital which will employ the nation’s youth.
Chinese investment in Bangladesh has been growing in the last years with greater investment in projects. In the past couple of years, China has invested more money in Bangladesh than any other country.
According to a report by the United Nations Conference on Trade and Development, Bangladesh saw a record foreign direct investment in 2018, with the country receiving around $3.6 billion a tremendous 68 per cent higher than 2019.
Furthermore, the international supply chains have bloomed and expanded, and this offers Bangladesh, a country close to China, to find more new strategies of developing its economy because of the many opportunities established in the Greater Bay Area .
In addition, there are also greater opportunities for small enterprises both in China and Bangladesh. This may be relevant still especially to those who see the Belt and Road initiative as being too daunting. Looking at the region today, we see that Hong Kong has become an international financial hub
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Chinese money is seen as a better alternative to traditional ADP and World Bank Loans. It also creates competitiveness on the geographical location of Bangladesh on who will invest first: China India or Japan.
But these are not without challenges. In the past, there has been concern over Chinese companies investing in projects in Bangladesh. Chinese firms are seen by many local businesses as and are not constrained in the same way as many Western companies by extraterritorial anti-corruption rules.
Many Bangladeshi Businesses claim that Chinese businesses send low bids only later to raise costs or adjust credit terms. For other foreign investors who fear that Chinese companies can push them out of lucrative contracts or knock them out of the market, this is a toxic combination using unfair business practices.
Never the less China’s relationship with Bangladesh is outstanding, and it is believed that both nations will not stop but will maintain their relationship by engaging in various socio-economic projects.
Despite the severe economic setbacks it has experienced, being a densely populated and non-city state, Bangladesh is likely to attract more investments, and this is highly accelerated by its close relationship with China.
The China Bangladesh partnership can pave the way for regional development as well. And that was shown by the progress of the Padma Multipurpose bridge.
In the future, if Bangladesh invests its most valuable human resources to the development of the greater Bay area, it will likely be the launch of a booming technology sector and a new stage of competition between rival powers and competing interests.
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