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China set to pull out of two railway projects

TOTUU

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Dude we are going in circle with no end in the horizon ! Some company asking for more money is nothing new, this is business as usual. Seller will try to get the most for their product and a buyer will try to pay as little as he can is how real life is.

The problem is when the lender requires you to get a Contractor of Lenders choice without any bid. In that case BD will end up paying more.
Why would BD pay more for products and services when it doesn't have to ?

This is not a China vs West issue, but just a business deal that needs to get sorted out.
Yes, you are right. Where you misunderstood is in this sentence"The problem is when the lender requires you to get a Contractor of Lenders choice without any bid. In that case BD will end up paying more."

I don't know why you guys don't know about this kind of cooperation, it's a very common way of cooperation ah, what the hell is wrong with you guys, how do you think this kind of way needs competitive bidding? This kind of seller pays to sell the product ah, India's high-speed rail, Indonesia's high-speed rail, all this kind of cooperation.

What would make you think that this approach is unreasonable, that it is going to sign an unreasonable price?

I can give an example of this type of cooperation within China. In China, in order to promote the popularity of agricultural machinery, the government leads banks and agricultural machinery companies, and farmers can get loans from banks to buy products from designated agricultural machinery companies. If the price is unreasonable and not beneficial to the farmer, then the farmer will not sign the agreement. By the same token, regardless of the type of cooperation, if the agreement is unreasonable, the agreement will not be signed.

You always start with the assumption that the government will sign an unreasonable agreement, is that a reasonable assumption?


If the Bangladeshi company can do the project well at one-third of the price, then the most reasonable option for the Chinese company is to subcontract the project to this Bangladeshi company and at the same time sign another project elsewhere so that it can make more money. There is no such thing as employing only Chinese workers as you said above, unless the Chinese company is stupid.

These rumors are always full of illogicalities that make no sense except to make people angry at the Bangladeshi government and China.
When I see information from Transparency International or other NGOs, I have to think more about what is behind their words, which are themselves an extension of Western power.
 

Destranator

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I don't think we are in Sri Lanka situation of debt trap. In fact we just lent them 200m to bail them out on the Hambantota port payments.

The thing to watch is National debt to GDP ratio, so you can service (or better, pay off) debts. Bangladesh in this respect is doing a lot better than other developing countries.

Sri Lanka's issue was that their GDP total was not sufficient to service the humongous infra debts...

Current debt to GDP for India (for example) is around 90%, whereas that for Bangladesh is around 44% (and that, with two dozen mega infra projects ongoing). This railway thing is a tiny project in relation to the other ones.



@Destranator bhai am I right, or am I right? :-)
You are correct. However, what is more important is to watch out for is how much we are spending each year to service foreign loans.

Bangladeshi taka is useless outside of Bangladesh. We need to watch out for forex drain. Our forex reserve of $45 billion is minuscule if you consider the fact that our annual import bill is $51 billion plus, meaning if we suffer a major disaster like a devastating earthquake destroying factories and roads, we won't be able to export goods for several months. Forex would run out very soon due to existing import demand + cost of sourcing emergency supplies and disaster equipment.

On the topic, Bangladesh should refuse any foreign financing which:

1. forces us to spend extra
2. does not allow us to choose contractors
3. does not allow us to choose source of labour
4. does not allow us to choose equipment and materials
 
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khansaheeb

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If the economics dont work either party is free to walk away.

Chinese loans exist to facilitate their interests as is the case with all countries. BD will need to look to alternatives to fund this.
Yes, or Bangladesh can give the projects to India.
 

EasyNow

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@EasyNow bhai, do most phased contracts have an escape clause that says contracts can be terminated halfway or one-third of the way, provided it is a phased contract and provided non-performance is an issue (dependent on third party scrutiny)? What are the penalties per non-performance clause usually (a forfeited security deposit of some sort)?

In this case it is not a phased project of course (could be). But in some cases that can be feasible and then does the financier get only money for that specific phase completed? Is that something within the norm as you have seen? Seems you have some experience with this....

I ask because there was this shady Indian contractor who started completing a specific part of the Mongla- Khulna railway line who could not complete it, and bribed the bank to get the the security money to split town later. The Indians never came back. Bank people who disbursed the funds should have been put in jail.

Our rules are so lax and people so corrupt...
I'm not an expert buddy, but yes phased contracts are usually designed with certain milestones (pre scheduled goals) pre agreed. Milestones are ambitious and often used by parties as a get out. Penalties are also pre agreed, usually contracts do stipulate that there will be certain warnings, fines etc before a contract can be cancelled completely.

Yes majority payment is paid by phase, usually linked to the achievement of milestones. Often fixed quarterly payments are also made to make sure the company has cashflow to keep the work progressing.

There is another element in this scenario, which is the authority of the signatory. Does the railway authority have the power to enter into a contract of this size and type - which is a no. It needed final sign off from the PMs office for approval and this didn't happen. So no agreements have actually been finalised till then.

Thirdly, contracts can be voided if they are the result of corruption or bribery. I'm not saying there has been in this case, but these are the options available to parties in this situation.


Re Indians, everyone knows how corrupt this lot are. At least China will overcharge and build a competent railway, can't say the same for Indians.

The bank staff certainly should have been prosecuted in your example. In this case as it is being financed by the Chinese, it is unlikely a BD bank would ever see the cash. It will be paid directly to the contractor when BD signs off that certain works have been completed to satisfaction.
First of all, this is a done deal with the signatures of both parties legally affixed.

Before the final contracts were drawn and signed, it was just an MoU.

So there were plenty of time to evaluate these projects, its' costing or financing.
The negotiation should be done at this stage whether it is a request for a lower or better price, etc.

A contract is a contract.

If either party felt aggravated by the terms and conditions of these contracts once they are signed, the matter should brought up at the highest level between the two nations diplomatically and in the silence since it is a G2G project.

Now China should be the bitter party as this matter have been and will be politicized by her opponent to badmouth her internationally.

These goodwill projects will be propagated as unfair deal and debt traps.

So IMO China should cancel these projects immediately and Bangladesh is at liberty to reopen fresh tenders by inviting all international contractors or banks to finance them.

But of course, these Chinese companies involved must be compensated for their losses in any alteration or cancellation. :coffee:

It's not a done deal:

However, uncertainty remains until signing the agreement.
The deal is only done when it's signed off by the competent authority, which is the BD govt not the railway authority. China knows that very well, which is why it is not making a fuss.
 

bdslph

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both parties has faults ... both wants some extra sweet .every one loves sweets.. now if they cancel this project same story they will get new company they will also do the same both sides will get sweets it will end up costing more then before :)
 

nautilaceae

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Here is China's offer,

We finance the project, therefore
we will charge you three times the regular bid unlike other builders and
there is no competitive bidding.
And oh we bring the entire construction crew from china.

This what we call sub-prime offer, kinda like subprime lending ! This is when the lender thinks you can't get a better deal than the one lender is offering. China is basically trying to fund work for its own workforce in BD.
China forced Western corporations to share technologies and methods to get access to local markets.
BD should do the same with China.
Country that funds the project always get the contracts, that's how the business operates. There're countless example around the world. Why do you think Japan firms grabbed all bullet train related contracts in India?

If China was charging 3x more for comparable quality of work, what is stopping BD from walking away? Infrastructure business isn't monopoly. Are BD officials all stupid, or Chinese so retarded to think they could overcharge 3x? Or maybe we just don't have the full details, or it's part of the hard bargaining process.

Technology transfer? Nobody signs a contract with a gun on his head, British Raj is over. If a company doesn't want to technology-transfer, no one could force them. Western corporations weigh the con's and pro's before signing any deal, why do you assume they are so weak in front of Chinese like Indians in Gulwan? :lol:


Blow to Make in India, Japanese companies grab all key bullet train contracts
http://www.deccanherald.com/content/654492/big-blow-make-india-japanese.htm

"Still, several Indian officials said it was by and large accepted that Indian companies would not have a major part to play in the bullet train project. Japan will get major leeway because the bullet train is largely funded by a 50-year loan provided by its government, said a close aide of Modi, who spoke on condition of anonymity."

1624205429510.png
 

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fallstuff

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Country that funds the project always get the contracts, that's how the business operates. There're countless example around the world. Why do you think Japan firms grabbed all bullet train related contracts in India?

If China was charging 3x more for comparable quality of work, what is stopping BD from walking away? Infrastructure business isn't monopoly. Are BD officials all stupid, or Chinese so retarded to think they could overcharge 3x? Or maybe we just don't have the full details.

Technology transfer? Nobody signs a contract with a gun on his head, British Raj is over. If a company doesn't want to technology-transfer, no one could force them. Western corporations weigh the con's and pro's before signing any deal, why do you assume they are so weak in front of Chinese like Indians in Gulwan? :lol:


Blow to Make in India, Japanese companies grab all key bullet train contracts
http://www.deccanherald.com/content/654492/big-blow-make-india-japanese.htm

"Still, several Indian officials said it was by and large accepted that Indian companies would not have a major part to play in the bullet train project. Japan will get major leeway because the bullet train is largely funded by a 50-year loan provided by its government, said a close aide of Modi, who spoke on condition of anonymity."

View attachment 755150
Yes, you are right. Where you misunderstood is in this sentence"The problem is when the lender requires you to get a Contractor of Lenders choice without any bid. In that case BD will end up paying more."

I don't know why you guys don't know about this kind of cooperation, it's a very common way of cooperation ah, what the hell is wrong with you guys, how do you think this kind of way needs competitive bidding? This kind of seller pays to sell the product ah, India's high-speed rail, Indonesia's high-speed rail, all this kind of cooperation.

What would make you think that this approach is unreasonable, that it is going to sign an unreasonable price?

I can give an example of this type of cooperation within China. In China, in order to promote the popularity of agricultural machinery, the government leads banks and agricultural machinery companies, and farmers can get loans from banks to buy products from designated agricultural machinery companies. If the price is unreasonable and not beneficial to the farmer, then the farmer will not sign the agreement. By the same token, regardless of the type of cooperation, if the agreement is unreasonable, the agreement will not be signed.

You always start with the assumption that the government will sign an unreasonable agreement, is that a reasonable assumption?


If the Bangladeshi company can do the project well at one-third of the price, then the most reasonable option for the Chinese company is to subcontract the project to this Bangladeshi company and at the same time sign another project elsewhere so that it can make more money. There is no such thing as employing only Chinese workers as you said above, unless the Chinese company is stupid.

These rumors are always full of illogicalities that make no sense except to make people angry at the Bangladeshi government and China.
When I see information from Transparency International or other NGOs, I have to think more about what is behind their words, which are themselves an extension of Western power.
Both of you are essentially saying Capital rules with a straight face ! It is ironic that both of you are probably proud communists !

The objections to the contract in its present from is from the Office of the PM of Bangladesh. There is a prior instance where a Chinese company contract was cancelled because of the bribery paid by the Chinese company to BD politicians and bureaucrats. So what is happening here is nothing out of the ordinary !
 
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nautilaceae

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Both of you are you essentially saying Capital rules with a straight face ! It is ironic that both of you are probably proud communists !

The objections to the contract in its present from is from the Office of the PM of Bangladesh. There is a prior instance where a Chinese company contract was cancelled because of the bribery paid by the Chinese company to BD politicians and bureaucrats. So what is happening here is nothing out of the ordinary !

The objection to this
Which part of what I said abt infrastructure business isn't true. Why you get so personal? If I'm communist, then you must be Hindu.

Buyers always want lower price, citing high cost. Malaysian govt renegotiated deals with Chinese firm too. It's all business. But that doesn't mean seller is truly overcharging or loan is subprime as you claimed. Instead of deflecting, tell me why Japanese firms grabbed all bullet train related projects in India. :lol:
 

fallstuff

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america built 240000 km of rail by end of the 19th century

how is it that south asia still cant build decent rail today
This is truly tragic.
They're building 25-30 story office buildings in BD, but they can't modernize 50 miles worth of train tracks.
 

fallstuff

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Which part of what I said abt infrastructure business isn't true. Why you get so personal? If I'm communist, then you must be Hindu.

Buyers always want lower price, citing high cost. Malaysian govt renegotiated deals with Chinese firm too. It's all business. But that doesn't mean seller is truly overcharging or loan is subprime as you claimed. Instead of deflecting, tell me why Japanese firms grabbed all bullet train related projects in India. :lol:
Can you tell me if that was a no-bid contract between Japan and India ?
The agreement with China is a no-bid contract with a take it or leave it clause ! You understand what a no-bid contract is, right ?

The following link is the financing agreement between Bangladesh Railway and Asian Development Bank (ADB). You can see for yourself what an agreement is unlike China where China does not want to disclose documents for everyone to see ! Recently Chinese ambassador to Bangladesh got angry cause vaccine price was disclosed. It is sad that China did not wish to be transparent about Vaccine in times of global pandemic.



You can see in Pg-40 of the following document that how ADB says all procurement over $15,000.00 must be done by International Bidding.
 
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Bilal9

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I'm not an expert buddy, but yes phased contracts are usually designed with certain milestones (pre scheduled goals) pre agreed. Milestones are ambitious and often used by parties as a get out. Penalties are also pre agreed, usually contracts do stipulate that there will be certain warnings, fines etc before a contract can be cancelled completely.

Yes majority payment is paid by phase, usually linked to the achievement of milestones. Often fixed quarterly payments are also made to make sure the company has cashflow to keep the work progressing.

There is another element in this scenario, which is the authority of the signatory. Does the railway authority have the power to enter into a contract of this size and type - which is a no. It needed final sign off from the PMs office for approval and this didn't happen. So no agreements have actually been finalised till then.

Thirdly, contracts can be voided if they are the result of corruption or bribery. I'm not saying there has been in this case, but these are the options available to parties in this situation.


Re Indians, everyone knows how corrupt this lot are. At least China will overcharge and build a competent railway, can't say the same for Indians.

The bank staff certainly should have been prosecuted in your example. In this case as it is being financed by the Chinese, it is unlikely a BD bank would ever see the cash. It will be paid directly to the contractor when BD signs off that certain works have been completed to satisfaction.



It's not a done deal:



The deal is only done when it's signed off by the competent authority, which is the BD govt not the railway authority. China knows that very well, which is why it is not making a fuss.
Thanks for your detailed reply, A lot to know and remember...
 

Bilal9

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This is truly tragic.
They're building 25-30 story office buildings in BD, but they can't modernize 50 miles worth of train tracks.
They can and they did. MAXX has already doubled Akhaura to Laksam line.

In fact the whole doubling of Dhaka - Chittagong line is supposed to be their responsibility.

Maybe Chinese firm has lower cost or MAXX is busy with other projects.





 

nautilaceae

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Can you tell me if that was a no-bid contract between Japan and India ?
The agreement with China is a no-bid contract with a take it or leave it clause ! You understand what a no-bid contract is, right ?

The following link is the financing agreement between Bangladesh Railway and Asian Development Bank (ADB). You can see for yourself what an agreement is unlike China where China does not want to disclose documents for everyone to see ! Recently Chinese ambassador to Bangladesh got angry cause vaccine price was disclosed. It is sad that China did not wish to be transparent about Vaccine in times of global pandemic.



You can see in Pg-40 of the following document that how ADB says all procurement over $15,000.00 must done by International Bidding.
Yes, Indian bullet train was a bid contract, yet Japanese company grabbed all key projects. Isn't it all the more worryingly wrong? :lol:

End of the day, bid or no-bid, disclosure or not, makes no difference when one side is providing the fund. That's how the real world business works. India-Japan agreement includes Make in India clause, through which manufacturing facilities will be set up. After winning the bid, at least 70% of the parts are to be imported from Japan, lol. Japanese breach of contract or Modi corruption? :lol:

Make in India setback: 70 per cent of bullet train's parts to be made in Japan (businesstoday.in)

Don't keep deflecting, the vaccine fiasco was BD official's screwed up, China gave BD a lower price than Sir Lanka. If you can't be honest abt this, your credibility is seriously in doubt, like Indian vaccine maker who took BD money but reneged. :lol:
 

fallstuff

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Yes, Indian bullet train was a bid contract, yet Japanese company grabbed all key projects. Isn't it all the more worryingly wrong? :lol:

End of the day, bid or no-bid, disclosure or not, makes no difference when one side is providing the fund. That's how the real world business works. India-Japan agreement includes Make in India clause, through which manufacturing facilities will be set up. After winning the bid, at least 70% of the parts are to be imported from Japan, lol. Japanese breach of contract or Modi corruption? :lol:

Make in India setback: 70 per cent of bullet train's parts to be made in Japan (businesstoday.in)

Don't keep deflecting, the vaccine fiasco was BD official's screwed up, China gave BD a lower price than Sir Lanka. If you can't be honest abt this, your credibility is seriously in doubt, like Indian vaccine maker who took BD money but reneged. :lol:
Indians took the money and failed to deliver, I blame the BD Govt for even to agree to buy all the vaccines only from India, it was stupidity on their part. They put all the eggs in one basket ! Failure to deliver on pledges and contract is very typically Indian, unlike the Chinese ! Yes I said it, Chinese folks deliver on time.

What is sad is China was playing price politics with a needed vaccine something China promised it would never do.

In reality China wants to be like the dominating West, well China is following the same formula.

No bid contract are always a bad idea.

We are just going to disagree on the topic, so further replies are pretty pointless !
 

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