Deals with China a turning point for Bangladesh
Proper implementation of the agreements signed between Bangladesh and China will open a new horizon in the economy, business leaders and economists said.
The visit of Chinese President Xi Jinping yielded the signing of 27 deals, where Bangladesh will receive $24.45 billion in assistance from China.
Thirteen Bangladeshi entities also signed 13 joint venture agreements with the same number of Chinese companies involving $13.6 billion, to boost trade between the two nations.
Terming the deals a turning point for Bangladesh, they suggested the government be sincere and skilled in negotiations for execution of the deals, so that both Bangladesh and China become winners.
"The signing of the agreements indicates a positive Bangladesh. The world now sees Bangladesh as the next rising tiger," said Abdul Matlub Ahmad, president of the Federation of Bangladesh Chambers of Commerce and Industry.
The Chinese government and private sector investors understand that Bangladesh is a lucrative place for investment, as the country has been witnessing more than 6 percent year-on-year economic growth for several years now, Ahmad said.
"The agreements are historic as Bangladesh has never seen such big investments and trade deals, worth nearly $40 billion. It has become possible due to continuous road-shows by the private sector and the government's continued efforts."
For the implementation of the agreements, the government should form a committee headed by the Bangladesh Investment Development Authority or BIDA, where the private sector would be included.
The committee will follow up on the progress of negotiations and implementation of the Chinese commitments. The committee should be formed as soon as possible so that the investment from China comes soon. The committee will prepare the assessment report every month and the BIDA will guide the committee, he said.
Every deal will be meaningful for Bangladesh as China has surplus investment funds and China also needs to import a lot of goods, especially jute and jute goods, leather and leather goods and seafood from Bangladesh.
Ahsan H Mansur, executive director of Policy Research Institute, said the mood of Chinese commitments across the world and South Asian perspective proves that China is ready to invest in Bangladesh, both in the private sector and government projects. For example, China gave $46 billion to Pakistan, $20 billion to India and $1.4 billion to Sri Lanka, as it has surplus funds for the improvement of infrastructure and export development.
"So this time, China has committed nearly $40 billion for Bangladesh. We need to negotiate effectively for the fund, but at the same time, we have to keep in mind whether we have the capacity to spend the huge fund or not," Mansur said.
"Yes, we have the need for infrastructure. But the issue is whether we are ready or not. Do we have ready information on the cost of the fund?"
"Before receiving the fund, we have to analyse the project costs and cost of benefit of the projects," he said.
"We must not spend money for unnecessary projects. We must use the fund for our essential infrastructure projects," he added.
"First of all we need internal preparation for using the fund. Otherwise, it will open scope for corruption in the spending of such funds. We need to safeguard the fund."
Zahid Hussain, lead economist at the World Bank's Dhaka office, said: "We need to do a lot better in attracting Chinese direct investments. Hundreds of Chinese investors have come and gone in recent years without any palpable results."
"Most of these failures are attributable to the high cost of doing business in Bangladesh, which in turn are attributable to deficiencies in our institutions and infrastructure."
"These problems can be addressed relatively quickly if we can speed up progress in implementation of the Chinese Investment Zone that the Bangladesh government has already approved," said Hussain.
Humayun Rashid, acting president of Dhaka Chamber of Commerce and Industry, described the agreements as a turning point for Bangladesh's economy.
"Our cost of doing business will come down significantly if the agreements on improving infrastructure are implemented. We need infrastructure, power and higher export earnings for development of the country and China can help us attain those goals."
However, the implementation of those agreements is a challenge. "We have to negotiate for a win-win situation."
Mahmud Hasan Khan Babu, vice-president of Bangladesh Garment Manufacturers and Exporters Association, said Bangladeshi businesses will become more competitive globally if the agreements are implemented.
Most of the agreements have been signed to meet the demand for infrastructure, like construction of the Payra seaport, he said.
If the Payra seaport is developed, vessels from Bangladesh will not need to go to Colombo or Singapore to carry outbound goods, he added.