Dhaka: A range of Chinese-backed projects in Bangladesh have exhibited subpar performance, prompting concerns among experts. This concern arises in the context of Sri Lanka and Pakistan, where economies have suffered due to the burden of Chinese debt. Bangladesh-based Daily Asian Age has reported on the situation.
The relationship between China and Bangladesh has been a topic of heated discussion in recent years, with China's increasing interest in involving Bangladesh more deeply in the Belt and Road Initiative (BRI). While China is collaborating with Bangladesh on various development projects, reactions to China's involvement have been mixed.
Globally, it's been noted that Chinese financial agreements have adversely affected economies, including those of Sri Lanka, Pakistan, Zimbabwe, Angola, Nigeria, Sudan, and Serbia, as reported by Daily Asian Age.
Chinese investments in Bangladesh are also encountering challenges. The Payra Power Plant, a joint initiative of China and Bangladesh, has encountered difficulties in repaying Chinese loans, exacerbated by a dollar crisis and raw material shortages. Without swift resolutions, the Payra Power Plant could face closure in a few months.
In fiscal year 2022, China invested $465.17 million USD (13.5% of total foreign direct investment) and Hong Kong invested $179.22 million USD (5.2%) in Bangladesh, as per the Bangladesh Bank's annual report. The top investor was the US with $661.12 million USD (19.2%).
Chinese companies are facing issues too. South China Bleaching and Dyeing Limited, a 100% export-oriented Chinese company, invested $150 million USD in Dhaka's Export Processing Zone, employing 10,000 workers. The company has garnered a solid reputation globally for its textile and clothing products.
Calvin Ngan, the managing director of South China Limited, emphasized people-to-people connections and the positive direction of Bangladesh-China interactions. He spoke of the Overseas Chinese Association's efforts to distribute vaccines and donate PPE to communities.
Shah Mohammad Mahboob, director general of International Investment Promotion at the Bangladesh Investment Development Authority (BIDA), noted gradual improvement in Bangladesh's business environment, turning the country into a South Asian investment hub.
The release of funds to the Payra Port Authority from the Bangladesh Infrastructure Development Fund (BIDF) has raised concerns over dwindling foreign currency reserves. The International Monetary Fund (IMF) has suggested excluding the BIDF from reserve calculations.
Experts like Dr. Wahid Uddin Mahmud and Dr. Zahid Hussain have urged caution in handling Chinese financial schemes and reducing reliance on external debts.
As China's involvement and investments continue in Bangladesh, stakeholders are grappling with ensuring financial sustainability and avoiding pitfalls experienced by other countries in their dealings with China.
