Infrastructure Projects in Bangladesh: Tokyo to invest under new arrangement

Japan is going to invest in Bangladesh's infrastructure projects under a new arrangement in which its companies will work under the government-to-government system without participating in any bidding.

The Land, Infrastructure, Transport and Tourism Ministry of Japan, and the Public Private Partnership (PPP) Authority of Bangladesh will soon float a joint public private project management platform to this end.

The platform, to be comprised of permanent members from both the countries, will select Japanese companies for implementing the projects. It will also mobilise funds and monitor project implementation, say officials of the PPP Authority that works under the Prime Minister's Office.

The development comes amid commitments of billions of dollar from China and India for several infrastructure projects in Bangladesh. Chinese and Indian companies have already started working in the projects either through limited bidding or without it.

The PPP Authority officials could not say how much money would be invested under the new arrangement or how the funds would be mobilised.

Syed Afsor H Uddin, chief executive officer of the PPP Authority, and Yasuki Kaibori, deputy minister of Japan's land, infrastructure, transport and tourism ministry, signed a memorandum of understanding (MoU) in Japan in June.  

“The PPP Authority will first identify infrastructure projects such as highways, ring roads, subways, and economic zones after having discussions with the ministries concerned,” an official of the PPP Authority told this newspaper yesterday.

“The joint management platform will then select a project for implementation.

After the selection, the company will carry out a feasibility study.”

Japan has been providing Bangladesh with nearly $2 billion as soft loans every year since fiscal 2012-13.

Apart from this, Tokyo will invest under the new arrangement, and Japanese banks will help with financing, said PPA Authority officials.

They also said the PMO last month sought the finance ministry's opinion on the new arrangement. And the ministry gave a positive feedback, saying there will be quality work under such projects.

Recently, China has pledged around $21.5 billion for large infrastructure projects in Bangladesh. Chinese companies will implement the projects.

Besides, India has committed around $7 billion. Indian companies will get work through selected bidding. And 65 to 75 percent of the materials to be used in the projects will be imported from India.

In a report published on December 8, Nikkei Asian Review, a financial newspaper of Japan, said Tokyo reached an understanding with Dhaka to build highways and other structures in Bangladesh under an exclusive arrangement.

Japan seeks to capitalise on this and other opportunities to surpass China, which has a much larger infrastructure footprint in developing countries due to its huge edge in pricing, it said.

“For instance, the Chinese accounted for 55 percent of Africa's infrastructure projects in 2015, compared with Japan's slim 1 percent market share. In the Middle East, China had a 17 percent share compared with Japan's less than 2 percent,” mentioned the report.

The Chinese are ahead in other parts of the world as well, such as Asia, Oceania and Europe.

With many of the Chinese projects delayed or revised, the Japanese government is trying to seize what it sees as a good opportunity to catch up, it added.

In a policy speech last month, Japanese Prime Minister Shinzo Abe said Japan's infrastructure exports increased by 10 trillion yen ($89 billion) in five years.

Still, the Chinese and South Koreans continue to enjoy pricing and political advantages over Japan.