Last year the Australian government published a white paper “Australia in the Asian Century” to set out a vision for how Australia should boost economic, cultural and strategic ties with its regional neighbours to benefit from Asia’s re‑emergence as an economic powerhouse.
It is an impressive document that provides insight into how far ahead Australian policymakers think about the future.
In many ways, the paper is just old wine in a new bottle as Australia has been progressively integrating with Asia since the 1980s, when it unilaterally liberalised its trade and financial policy regimes.
There is one clear message; Australia is ready to do business with Asia. Whether bilaterally, or multilaterally via APEC and ASEAN, the white paper clearly states that if there is connection to be made or a trade deal to be cut, Australia is interested. And this presents opportunities for Bangladesh.
If Australian businesses are looking to diversify their supply chains and business operations in Asian markets, Bangladesh fits perfectly into this strategy.
Here’s one example of how Bangladesh could benefit from the Australian white paper. Australian pension funds which manage retirement savings, have close to $1.5 trillion in assets. A lot of this money is under-utilised because fund managers feel there is a shortage of good places to invest. Globally, asset managers manage funds worth about $62 trillion and are constantly looking for new projects.
Why not attract some of those funds for Bangladeshi infrastructure projects? The Padma bridge, a 8-lane expressway from Dhaka to Chittagong or a new deep sea port?
Forget the global asset pool, if we could attract 0.2% of the $1.5 trillion in Australian pension assets, that would bring in $3 billion alone for the Padma bridge.
With nearly 160 million people, Bangladesh has the 5thlargest population in Asia. Surely, being the 5th largest country in the world most populated continent, we should be able to do better than bring in 0.2% of Australian pension fund assets?
Let’s broaden the canvas a little. About 200 million of Asia’s poorest people live in the corridor between Bangladesh, North-east India and Bihar. At the very least, these people need food security (grains and agricultural produce) and energy supplies (coal and gas to fire power plants). And there is also a growing middle class in Bangladesh and Bengal.
Australia is well known as one of the world’s largest producers of coal, LNG (gas) and agricultural produce. The eastern corridor of South Asia could benefit enormously from more bilateral trade with Australia in these product categories.
But first, you need a decent port for this entire supply chain. We all know that Chittagong can be the key that can turn this spigot for Bangladesh, Nepal, Bhutan and the eastern Indian states. So why isn’t it happening? What is stopping a consortium of Bangladeshi conglomerates such as Summit, Bashundhara or Western Marine Shipyard from going to Melbourne, where Australia’s pension fund industry is mainly based, and making a pitch for investment in Bangladesh?
With $10 billion, invested across critical infrastructure such as a deep sea port in Chittagong and rail networks between Bangladesh and India, there should be a pretty good return on investment.
Australian mining giants BHP Billiton and Rio Tinto and agricultural exporters like Cargill and logistics specialists like Visy, would all benefit from the increased trade created by that sort of investment.
And it would not be one-way traffic. Bangladesh has duty-free access to Australia for our RMG and leather exporters. Improved infrastructure will get their exports to market in Australia and elsewhere more efficiently. Bangladesh could even help build ships to ply the Chittagong-Perth route, because shipbuilding is a high value-add manufacturing industry where we have a comparative trade advantage over Australia.
So, if such opportunities are staring us in the face, why are they not happening?
Part of the answer is it is not being allowed to happen.
The Bangladesh Government recently received interest from private companies to build the deep sea port in Chittagong. But the media reports the Government rejected the possibilities of a privately-financed deal and is looking to develop the port under a Government-to-Government contract.
In other words, the Bangladesh Government wants to beg the Chinese, Indian and other Governments to build the port for us via some sort of aid package even when private investors are willing to do the same on a commercial basis.
Reports like that shock me beyond disbelief.
Why does the finance minister pay lip-service to PPP (Public-Private Partnership) financing, if he discards similar options for the hardest and biggest projects?
Moreover, supply chain infrastructure has nothing to do with the government. Unlike education, health or social services, which are more traditional areas of public policy concern, supply chain infrastructure should be entirely a matter for the private sector. If it makes economic sense, if there is a business case for it, it will happen.
Business supply chain investments do not need government finance, they only need a government thumbs-up. But try telling that to the dinosaurs running our economy.
It is astounding to see how our policymakers are afflicted by this bizarre poverty of the mind that leads them to constantly obsess about financing infrastructure on the cheap with aid money. I don’t get it, and I am pretty sure I am not the only one. It has to change.
The Australian government has added some new seats for bilateral partners to their Asian high table for trade and investment growth.
Do we believe that we are deserving of a seat on that table? Do our policymakers have the maturity and the confidence to think of Bangladesh as an equal with others in Asia? How we answer this question will determine whether we grow at 6% or 9-10% in the next decade or so.
