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Amid Pandemic, Bangladesh Asks China to Fund Additional Projects

Kamran Reza Chowdhury
Dhaka
2020-07-07
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Workers in Dhaka construct an elevated expressway, a project implemented by Chinese company Sinohydro, July 7, 2020.
Workers in Dhaka construct an elevated expressway, a project implemented by Chinese company Sinohydro, July 7, 2020.
Kamran Reza Chowdhury/BenarNews

Amid concerns that Bangladesh is starved for funds while fighting the COVID-19 pandemic, the Finance Ministry has asked China to consider funding additional infrastructure projects, according to analysts and a copy of the proposal seen by BenarNews.

In a letter to the Chinese Embassy, parts of which were obtained by BenarNews, the Economic Relations Division (ERD) of the Ministry of Finance proposed nine projects valued at about U.S. $6.4 billion (542.7 billion taka), while dropping requests for four others from a list of 27 joint development projects agreed by the two sides in 2016.

“The coronavirus pandemic has caused huge damage to the economy of Bangladesh. The economic activities have slumped and the government revenue collection is not satisfactory. The government needs money to continue the development projects,” Mustafizur Rahman, an analyst with the Center for Policy Dialogue private think-tank, told BenarNews.

“The government wants to finish the projects despite the coronavirus pandemic. So it has been seeking funds from different sources including the Chinese government, the World Bank and Asian Development Bank,” he said.

Some of the nine new projects involve construction of roads, bridge and ports possibly linked to the One Belt, One Road initiative of Chinese President Xi Jinping, according to analysts.

‘Premature’

Bangladesh is one of the countries targeted for OBOR, Beijing’s geopolitical strategy to build a modern-day Silk Road through a network of ports, railways, roads and trade routes to connect China to markets in Southeast Asia, South Asia and beyond.

During an October 2016 visit to Dhaka, Xi and Bangladesh Prime Minister Sheikh Hasina witnessed the signing of a memorandum of understanding regarding funding for development projects in Bangladesh. The Chinese government announced at the time it would provide $25 billion (2.1 trillion taka) for 27 development projects.

China’s footprint in Bangladesh’s economy has expanded massively since then, with Beijing now the South Asian nation’s biggest foreign investor, according to official figures in December 2019. Beijing outpaced Washington as Bangladesh’s top investor in 2018, when overall Chinese investment reached $1.03 billion – a 16-fold increase from its investments in 2016.

Responding to BenarNews’ requests for comment about the May 21 letter outlining the proposal for the nine projects, Bangladesh economic officials said the proposal was not final. The letter included a proposal to construct an institute of technology to be named for Hasina.

“Why don’t you write about some projects we are working on? These projects have yet to be finalized – please consider the interest of the country,” Shariar Kader Siddiky, the joint secretary in-charge of the ERD Asia desk, told BenarNews.

“If you write at the premature stage, it affects our diplomatic relations with China. China officially told us not disclose anything before finalization.”

Siddiky said the Chinese funds were needed to pay for necessary projects.

“If we can implement the projects in time, we will not fall into a debt trap,” he said.

The Chinese embassy in Dhaka did not respond to a request for comment.

COVID-19

Bangladesh reported its first coronavirus case on March 8, leading the government to impose a shutdown that ran from late March to the end of May. But the spread of the pandemic has accelerated since then, with authorities on Tuesday reporting a cumulative tally of 168,645 COVID-19 cases and 2,151 deaths.

Former ambassador Humayun Kabir, the acting president of a local think-tank, the Bangladesh Enterprise Institute, said the government’s current focus is battling the pandemic while restoring the economy and continuing development projects.

“Bangladesh is seeking funds from China for its development needs. There is some criticism in media that Bangladesh has been aligning with China instead of India. But actually this is not the case,” he told BenarNews.

“This is because a country’s foreign relations is determined by its own national interests and priorities. Bangladesh is seeking money from China for implementing development projects.”

The projects

In addition to the technology center named for Hasina and valued at $155.4 million (13.17 billion taka), the ERD proposed a sewage collection system for Dhaka valued at $120 million (10.17 billion taka), expansion of the power grid valued at $805 million (68.2 billion taka), and a comprehensive management and restoration project for the Teesta River valued at $853 million (72.3 billion taka).

Other requests include $250 million (21.2 billion taka) in funding to purchase oil tankers and coal carriers; an upgrade to the Barisal-Patuakhali-Kuakata road valued at $535 million (45.36 billion taka); May bridges on rural roads valued at $800 million (67.8 billion taka).

The letter from Masuma Akter, ERD deputy chief, to Liu Zhenhua, economic and commercial counsellor at the Chinese embassy in Dhaka, suggested that funding for four other projects be dropped. He wrote that funding would be available from other sources without elaborating.

Those projects are a four-lane highway linking Dhaka to Sylhet, a coal-fired power plant in Gazaria, a metering project for the Bangladesh Power Development Board and an extension to increase production at the Barapukuria coal mine.

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