'Bangladesh needs to widen its own vision in our relationship with China to look at broader areas of comprehensive partnership in trade and investment'
Bangladesh needs to widen its vision in relationship with China to look at broader areas of comprehensive partnership in trade and investment, said experts.
Eminent economists, envoys and ambassadors made the comment while addressing a virtual dialogue titled "Bangladesh-China Development Cooperation: Experience and Outlook" organized by the Centre for Policy dialogue (CPD) on Thursday.
They opined that China had a comprehensive agenda for the global economic partnership and in the Asian region on a much wider range of trade and investment and technical cooperation.
“China has been thinking about a wider comprehensive economic partnership and relation with South Asia for a long time. They had a vision for relation with the Bay of Bengal. This is known as the long-term strategic thinking,” said Rehman Sobhan, founder chairman of CPD.
Few things Bangladesh needed to keep in mind was that the world, as it was going to evolve over the next 25 years, was going to be an Asian world led by China, said Rehman.
Asia was going to be the fastest-growing region in the world, which would widen the gap between Asia and other parts of the world, said the economist.
"It is a huge opportunity - both in trade and investment, which is going to be a part of Bangladesh’s strategic vision and it will highly depend on our relationship with China," said Rehman.
"Bangladesh needs to widen its own vision in our relationship with China to look at broader areas of comprehensive partnership in trade and investment. So, the strategic issue for Bangladesh is to visualize how we are going to develop a value chain with China already developed with South East Asia," he added.
Meanwhile, Li Jiming, Chinese ambassador to Bangladesh, also called for widening the China-Bangladesh relationship and building political trust.
“Chinese investment in Bangladesh is very important for China. We are investing in light to heavy industries and switching investment from low value to value added and mobile and telecommunication,” said Li Jiming.
"We should consider Chinese investment as a broader vision instead of a narrow vision. We need to join hands to increase political trust," said Li.
However, the Chinese investors faced difficulties such as lack of infrastructure, bureaucracy, inefficiency of government officials and lack of skilled workforce, the envoy said.
In attracting more investment, the envoy urged Bangladesh to improve its investment environment, upgrading workforce skill and providing more vocational training.
Li also urged Bangladesh to promote through promotional activities to Chinese investors.
In response to the call of speakers, State Minister for Foreign Affairs M Shahriar Alam said that Bangladesh was working on increasing trade and investment cooperation with China as there was growing interest from the Chinese investors to invest here.
“In last few years, there is a significant boost in relation with China and it has become an important partner,” said Shahriar, addressing as chief guest.
About 800 acres of land is allocated in Anwara upazila of Chittagong for a dedicated Special Economic Zone for Chinese investors. Upon completion, it will attract a huge amount of Chinese investment, said the junior minister.
"We are working very closely with the Chinese authorities and all-out cooperation will be provided to the Chinese investors," he added.
Meanwhile, experts also urged to use the Chinese currency of Yuan (RMB) as a means of exchange between Bangladesh and China to expedite transactions.
“We can use RMB as a trading currency, which would faster the trading. A good number of countries are doing this and why not Bangladesh,” said Md Mahbub ur Rahman, chief executive officer of Hongkong and Shanghai Banking Corporation (HSBC) Bangladesh.
Where to invest
The Chinese government is offering duty free market access for 97% of Bangladeshi products. Attracting investment in those products is very crucial for the country.
“When we want to visualize inflows of Chinese investment, we should think about how it is going to invest in the value chain, which will connect us to Chinese markets as well as in major exports markets,” said Rehman Sobhan.
“The challenge for Bangladesh is to attract Chinese investment for their markets taking advantage of duty free market access,” said Mostafizur Rahman, a distinguished fellow of CPD.
He also urged the Chinese government to extend the duty free market access for Bangladesh beyond 2024, when it will graduate to a developing country.
Talking on the investment opportunity, Mahbub said there is a huge opportunity of investment in ICT, health, education and backward linkage of RMG especially in manmade fiber.
We should focus on made in Bangladesh but made for China as there is a big domestic market.
AK Enamul Haque, a professor of Economics, East West University, urged to diversify Chinese investment.
Most of Chinese investment is in infrastructure and this should be diversified. For increasing investment, there is a need for private to private initiatives, said Enamul.
On the other hand CPD executive director Fahmida Khatun stressed on compliance issues by the investors.
“Some observers think that Chinese investments do not give adequate attention to the governance issues e.g. compliance with various international standards, such as labour, environment, legal protection, procurement, good governance practices etc,” said Fahmida.
The quality of investment will depend on how much these concerns are addressed by both the government. Therefore, more transparency is needed on these issues. In this respect data on various types of investments, their terms and conditions, monitoring etc. should also be made available for public consumption, she added.
Chinese Investment in Bangladesh
China had replaced the United States as Bangladesh’s top investor in 2018. China held the position in FY2019 as well by investing $1.2 billion in Bangladesh.
Bangladesh is also receiving a number of investments under the Belt and Road Initiatives (BRI). The bulk of the investments have come following Chinese President Xi Jinping’s visit to Bangladesh in October 2016.
During the visit of the Chinese President to Bangladesh, an understanding was reached regarding implementation of various government to government (G2G) and business to business (B2B) projects.
In total, China promised about $40 billion investment in Bangladesh. A total of $24.45 billion was in bilateral assistance for infrastructure projects and $13.6 billion in joint ventures. In addition, $20 billion in loan agreements was committed.