China is prepared to invest $9 billion over the next decade to help Bangladesh modernise/upgrade its rail/road/sea linkage. And Japan, the biggest investor in the country at present, is helping it build a new deep-sea port.
A slew of ambitious projects have been approved by Prime Minister Sheikh Hasina Wazed, with an eye on ensuring the country’s future economic development and catalysing job creation. The Awami League government, according to Dhaka-based media reports and analysts, has drawn up a 20-year-long economic development programme. India is not far behind others. It is investing heavily in Bangladesh in recent times in expanding its existing rail, road and port network. It will help Dhaka in setting up a new deep-sea port at Paira. The Chinese proposal to build such a port at Sonadia near Chittagong has just been shelved in Dhaka over issues relating to ‘economic viability’.
The major advantage to Bangladesh accrues from its strategic location. The greater Bengal landmass is important for several unrelated major international development programmes in the long term. Bangladesh figures prominently in India’s ‘Look East’ and ‘Act East’ policy initiatives, as Delhi seeks to expand its economic outreach to Myanmar, Thailand and beyond. The timing is right for New Delhi as both countries are wary of growing Chinese geo-political importance in the region. Bangladesh is also in the focus of Thailand’s ‘Look West’ drive.
Again, Bangladesh and eastern Indian states figure prominently in the intertwined and ambitious Silk Road and Silk belt economic initiative spelt out by China. Beijing envisages a massive expansion of international trade, business and tourism through a comprehensive rail, road and sea transport linkage – traffic connectivity reaching from Shanghai to Venice eventually.
Experts point out that Asia’s biggest country has already completed part of the great road chain to link different regions from Myanmar to Iran. If the Sonadia port were built, it would have given China a naval presence in the South Asia’s eastern seaboard, in the manner of the Gwadar port in Pakistan. Also, the location of the port would have been strategically very close to the Andaman Islands. In the background of past hostilities, present tensions and uneasiness between China on the one hand and Japan, Philippines, Indonesia, Vietnam and other countries over its territorial claims in the South and East China Sea, the South Asia region is currently witness to heightened diplomatic activity of late.
In view of the massive Chinese offer for developmental and other assistance to Bangladesh, Japan is reportedly considering an urgent reset in its economic ties with Dhaka.
India is also upgrading its economic relationship with Myanmar and especially Bangladesh. It has recently given a $1 billion aid for several projects in Bangladesh and won sizable orders in helping the country improve its somewhat inadequate railway services. The objective is to strengthen the system so that it is able to cater to present and future needs of the nearly 160 million population of Bangladesh. Indian firms are building two major power-generating units to produce over 6000 megawatts of power in the years ahead.
The NTPC is setting up a 1300 MW plant close to the Sundarbans area in Khulna. Bangladesh has plans to meet its ever-growing power needs by increasing its daily production capacity to around 60,000 megawatts over next three decades. Russia is building two nuclear power stations at Rooppur.
India is currently sending around 600 megawatts of supply daily to Bangladesh from Tripura and West Bengal. Until recently, Japan and India dominated the field when it came to investing in Bangladesh projects. China has been a late entrant. However, Chinese textile firms are known to be outsourcing their production of relatively low cost clothes and garments to Bangladesh, to cut costs.
They had asked for plots of land in Bangladesh where they could set up units. This was difficult for two reasons. First, land is scarce in a country that has to live with the world’s highest population density. And as the experience of Myanmar shows, in making investments abroad the Chinese do not always share either their technology or engage much local manpower. The Chinese were not happy over the scrapping of the Sonadia port project. But unlike Thailand, which has achieved a certain standard of living over the years, they are aware that for Bangladesh to turn down offers for international assistance would be more difficult. For six specific projects, Beijing has offered a hefty loan at two per cent interest to Dhaka, according to Dhaka-based media. Payback is over a 15-year period with a five-year grace period relief.
However, if past experience is any indication, Bangladesh can be somewhat picky in accepting financial help from abroad, its officials highly adept in reading the fine print of agreements. For the ongoing construction of the second major bridge over the Padma, the country summarily rejected a World Bank offer for financial help as the lenders sought to impose ‘a few conditions’. And Dhaka has not hesitated to scupper the Sonadia port project despite long drawn negotiations with the Chinese.
In fact, in recent years, relative to its size, Bangladesh may have ended up attracting the maximum foreign investments in South Asia. This, despite the relative coolness to its economic development among hardline Arab countries such as Saudi Arabia, or Turkey, of late. Along with Pakistan, these countries have registered their protest to Dhaka over the trials and execution of extremist Islamic leaders and their followers involved in killing, raping and looting of minorities living in Bangladesh. Interestingly, this did not prevent Pakistan-based textile companies from outsourcing part of their production to Bangladesh.
When it comes to selecting a suitable donor, Dhaka can now exercise a well-considered choice among China, India, Japan and Russia, to give only a few examples. Its recent decisions make it clear that it does not believe in putting all its eggs in one basket.
India and Bangladesh
On July 21, 2016, the prime ministers of India and Bangladesh jointly inaugurated, through video-conferencing, Asia’s largest Integrated Check-Post (ICP) at Petrapole, 95 km from Kolkata, in North 24-Parganas district of West Bengal, with the West Bengal chief minister too joining on the occasion. This is regarded as a landmark development towards strengthening bilateral trade as well as the border management process.
The Petrapole ICP, encompassing a modern land customs station, with ancillaries spread over nearly 100 acres, will have adequate passenger amenities, facilities for currency exchange and customs clearance, cargo processing and inspection, warehouse and cold storage, quarantine laboratory, etc. for the expeditious clearing of goods and the facilitation of movement of people. It will also ensure comprehensive security oversight on the movement of materials and people. The significance of this development can be appreciated by considering the fact that more than 50 per cent of India-Bangladesh trade is undertaken through this ICP. During 2015-16, trade valued at more than Rs. 15,000 crore was transacted through this point, which is more than all the land ports and customs stations of India, with about 1.5 lakh trucks and 15 lakh people passing through it.
Indian Prime Minister Narendra Modi, who has notably emphasised India’s ties with its neighbors, will be making a two-day visit to Bangladesh this weekend. India’s relations with Bangladesh have certainly witnessed a significant upswing over the past decade, some persistent challenges notwithstanding. Bilateral trade has risen to $7 million.
In 2012, Hasina was invited to Tripura, where she received an honorary doctorate from the University of Tripura. When Modi opened a second plant in December 2014, Hasina’s energy advisor Tawfiq-e-Elahi Chowdhury was in attendance. Modi agreed to a request from Chowdhury and Tripura Chief Minister Manik Sarkar for India to sell 100 MW of power to Bangladesh.
This is not to say that the relationship has been without challenges. In fact there have been a number of setbacks. The Teesta river water treaty had to be scuttled at the last minute in 2011, due to pressure from Mamata Banerjee, the West Bengal chief minister who has agreed to accompany Modi this weekend but did back out at the last moment.