• Monday, July 22, 2019

Is Bangladesh falling into a Chinese 'debt trap'?

Discussion in 'Bangladesh Defence Forum' started by Black_cats, Jul 12, 2019.

  1. Black_cats

    Black_cats SENIOR MEMBER

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    Is Bangladesh falling into a Chinese 'debt trap'?
    By Zobaer Ahmed | 21h ago

    https://m.dw.com/en/is-bangladesh-falling-into-a-chinese-debt-trap/a-49556829-0

    Bangladeshi Prime Minister Sheikh Hasina's official visit to China last week seemingly succeeded in bolstering ties between the countries. During the trip, both sides inked a host of agreements, including two deals to provide loans to the Bangladeshi power sector, worth $1.7 billion (€1.52 billion).

    BUSINESS | 14.05.2019
    • Bangladesh’s IT industry set to boom
      [​IMG]
      The countries also expressed interest in accelerating the work related to the Bangladesh-China-India-Myanmar Economic Corridor (BCIM EC) project, an initiative aimed at expanding the economic ties of the four countries that together are home to nearly 3 billion people.

      Bangladesh and China turned their relationship into a strategic partnership in 2016, and, in recent years, Chinese investment in the South Asian country has risen rapidly.

      As part of Chinese President Xi Jinping's Belt and Road Initiative (BRI), Beijing and Dhaka signed deals worth $21.5 billion covering a raft of power and infrastructure projects. To date, pledged BRI-related investment in Bangladesh stands at around $38 billion, estimates Standard Chartered, a British bank.

      Chinese money
      China has pumped more money into Bangladesh than any other country over the past couple of years. Bangladesh saw a record inflow of foreign direct investment (FDI) in 2018, with the country attracting some $3.6 billion of FDI, 68% higher than in the preceding year, according to a report by the United Nations Conference on Trade and Development (UNCTAD). China alone accounts for almost a third of this investment, worth over $1 billion.

      Bangladesh now increasingly relies on Chinese money to achieve its ambitious target of producing 24,000 megawatts of power by 2022, up from 17,000 megawatts now. The Padma Bridge, a major road-rail project across the Padma river, is being built by the China Major Bridge Engineering Company. And China's Exim Bank is providing $3 billion for the construction of the rail link accompanying the bridge.

      Read more: Bangladesh: A small tiger economy with big plans

      "Chinese investment is a welcome addition for Bangladesh, because it creates a new source of funding," Ahsan S Mansur, executive director of Dhaka-based Policy Research Institute, told DW. "Traditional sources of funding are not adequate for emerging economies like Bangladesh."

      Chinese money brings with it other advantages, Mansur said. "It creates a bit of competitive environment. It prompts countries like Japan and India to also come forward and invest."

      RELATED SUBJECTS
      Bangladesh has announced an ambitious plan to set up 100 special economic zones by 2030. Many Chinese companies appear interested in investing in these zones. Zhejiang Jindun Pressure Vessel Co Ltd., for instance, has offered to invest $5 billion in one such site near Chittagong.


      A debt trap?
      In South Asia, Bangladesh is the second-biggest receiver of Chinese investment, behind Pakistan. But not everyone seems optimistic about the development, with many warning that the growing reliance on Chinese money will make Dhaka beholden to Beijing.

      Critics point to Sri Lanka's experience, where Colombo had to cede control of its southern port of Hambantota to China on a 99-year lease after it failed to repay its debts.

      Mansur, however, said it would be more beneficial for Bangladesh to draw direct investment from China rather than debt financing.

      "Chinese investment comes in both equity and debt. The infrastructure projects are mostly carried out through debt financing," Mansur said. "So I would rather be interested in equity, not debt."

      Read more: China: A loan shark or the good Samaritan?

      It's too early to say that Bangladesh is falling into a debt trap, some experts argue. Bangladesh's total external debt at the end of 2018 stood at around $33.1 billion, and the share owed to China doesn't seem big, they say.

      "The loans granted to Bangladesh by China so far account for just 6% of the total debt," Zahid Hussain, lead economist of the World Bank's Dhaka office, told DW. "There is not enough information as to the grounds on which the loans have been granted," Hussain said.

      However, the analyst didn't want to call the Chinese investment a "debt trap."

      "It presents both risks and opportunities. The information we have so far doesn't point us to a debt trap scenario."

      Skeptics, however, remain worried about China's growing economic influence over Bangladesh.

      Why is India concerned?
      But trade and investment may not always have the last word when it comes to international relations. In 2016, Dhaka quietly killed a deep sea port project that China proposed to build at Sonadia, in southeastern Bangladesh. New Delhi expressed concern about the project, which if completed would have brought the Chinese presence closer to India's Andaman and Nicobar Islands.

      Nevertheless, China's increasing economic clout in South Asia presents a huge challenge for New Delhi, not for economic reasons, but for political and security reasons, said Siegfried O. Wolf, director of research at the South Asia Democratic Forum (SADF), a Brussels-based think tank.

      Read more: Modi woos Sri Lanka, Maldives as India fends off Chinese influence

      "China has a port facility [Hambantota] in Sri Lanka, they have Gwadar [in Pakistan], they are building a port facility in Myanmar [Kyaukpyu] – this gives India the feeling of being surrounded by China. This is the military dimension of Indian concern," Wolf told DW.

      The expert also warned that by pumping investment, China gains political influence over the governments. "So there is a threat for India that China might influence the government of Bangladesh." This influence may also have an economic dimension, Wolf said. "We have seen China driving out other countries from the market. For instance, it has become very difficult for French and German companies to get contracts in African countries."

     
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  2. Atlas

    Atlas FULL MEMBER

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    চার্বাক কহেন, "যতদিন বাঁচবে সুখে বাঁচ, দরকার হলে ঋন করে ঘি খাও, একবার দেহ চিতায় ভস্মিভুত হলে পুনরায় সেটা আর ফিরে আসে না! "

    Translation :

    As long you live, live happily. Even take debt and waste it on buying ghee and other expensive things, because after burning your body on pyre , it will never return to the earth - the greatest of the greats Charvak.

    So no need to develop industry and other necessary things, no or few vocational training, just take debt and work on some development and dream to go moon, and beat your own drum. So eat drink and be merry.

    দুই দিনের দুনিয়া,এছাড়া উপায় কি!


    @UKBengali your opinion about this debt trap is more than welcome ;).​
     
    Last edited: Jul 12, 2019
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  3. Bilal9

    Bilal9 ELITE MEMBER

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    Ha ha - these Muni-Rishees were even more materialistic than modern day Americans. For me, Ghee consists of something like this,

    [​IMG]

    On a more relevant note, every time the Chinese decide to invest projects in Bangladesh, the MFA in India starts bedwetting behavior. They got to learn minding their own business for a change.
     
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  4. Atlas

    Atlas FULL MEMBER

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    Yes this car is perfect example :D .  I am sure if charvak lived in these days he would use car instead of ghee. So ঋন করে বিলাস বহুল গাড়ি কেন...... .

    However I am not against Chinese debt, but I want their debt and also investment from China alongside others. I just want don't want to be totally dependant on then, because no alliance is forever in world.

    And I want our people to be skilled people too, so vocational training should be very important, and govt should focus on it.

    If we can make well trained people, they can do better works in Bangladesh, and when they will be sent to aboard, they will bring more remittance.

    Also I wish we will start industrialization, so that we can at least reduce our dependency on import.
     
    Last edited: Jul 13, 2019
  5. UKBengali

    UKBengali ELITE MEMBER

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    Nothing to worry about.
    BD is now getting multi-billion US dollars of FDI from China as well as loans that will top out at a maximum of 30 billion US dollars. The loans all come with 20 year repayment period, 5 year grace period and interest rate of 2-3%.
     
    Last edited: Jul 13, 2019
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  6. Atlas

    Atlas FULL MEMBER

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    Loan with low interest is good, but we must not be totally dependent on loan only. I want us as industrialised nation and I believe that we are capable of it. We need to focus on various things too.

    And we also need some better pace. The problem of our country is we start and finish everything very slowly. And our ministers are talkative!

    Did you read the epic remark of home minister ? We don't need to go to London, but we will see the beauty of Thames on the bank of buriganga.

    So after Los Angeles, and California, now we have Thames too!

    I am really worried now! 8-)

    https://www.bd-journal.com/bangladesh/78869/টেমস-দেখতে-লন্ডন-নয়-বুড়িগঙ্গায়-গেলেই-হবে-স্বরাষ্ট্রমন্ত্রী

    And then a nice reaction!

    http://www.dainikamadershomoy.com/post/206276

    Here is the copy and paste of a magnetic part from the second link .

    For the rest you ( and other Bangladeshi fellas too) should read the article. It's very true isn't it? ;) @UKBengali.
     
    Last edited: Jul 13, 2019
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  7. Al-zakir

    Al-zakir ELITE MEMBER

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    If Bangladesh does not become wealthy by 2030 per your claims, I’ll hold you accountable for false propaganda and rooz hasar e ami tumar gola tippya darmu misa maaton er laigyaa, ready taikyoo!!!:devil:
     
  8. UKBengali

    UKBengali ELITE MEMBER

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    Do so by all means.;)

    Economy is growing 8% a year now and I expect sustained 8-9% growth average next decade.

    While not a wealthy country, it should have reached "middle-income" levels by then with a good infrastructure system in major cities like Dhaka and Chittagong, and excellent road and rail connectivty across the rest of the country.

    PS - Expect a very strong military by then that would even make India nervous,:devil:
     
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  9. Pakistan Space Agency

    Pakistan Space Agency FULL MEMBER

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    Well done Bangladesh. Very happy for you brothers.
     
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