Bangladesh avoids Chinese debt trap, building biggest bridge with own funds

[The Ronin]

NEW DELHI: Bangladesh, one of India’s closest allies in the neighbourhood, has smartly avoided falling into the Chinese debt trap. Drawing lessons from experiences of Nepal, Sri Lanka and Maldives, it has decided to construct its biggest infrastructure project from its own finances.

Seen as a major achievement of Prime Minister Sheikh Hasina as she seeks re-election, the 20-kilometre-long rail and road bridges over Padma river are being built by self-generated funds to the tune of about Rs 30,000 crore in local currency. The bridges, along with connecting highways over what is often described as one of the world’s most treacherous rivers, are expected to be completed in the next few years.

“There is no international funding for this project and budget has been generated from Bangladesh’s own budget to avoid any repayment or debt trap,” said a person aware of the matter.

The railroad bridge over Padma river which the World Bank had earlier refused to fund will be part of the Asian Highway connecting Bangladesh with India and Southeast Asia, and generate trade and investments. “It is Hasina’s dream project and will be a major non-BRI (China’s Belt and Road Initiative) connectivity link in South Asia,” the person said, adding the World Bank had earlier refused to fund project on charges of corruption which were baseless. Subsequently Hasina decided to go ahead to generate own resources to fund the mega initiative.

Bangladesh government officials told ET that the bridge would establish a strategic link through capital Dhaka between economically backward southwest Bangladesh and the rest of the country, which is witnessing an economic boom following a decade of stability. The Asian Highway Priority Route No 1 and Trans Asian Railway will be built through the bridges over Padma river, they said.

One of the officials, who spoke on condition of anonymity, said that Bangladesh’s gross domestic product (GDP) would increase 1.26 per cent and regional GDP of southwest Bangladesh would increase 2.3 per cent from the expected spurt in trade and investments. Around 67 per cent of the project has been concluded as of last month when Hasina reviewed the venture.

While some Chinese firms are involved in the execution of the project selected through tenders, the initiative has no exposure to Chinese funds. Bangladesh has been cautious in accepting loans from China and has on occasions rejected Chinese firms vying for infrastructure projects and even blacklisted Chinese firms.

“Bangladesh is uniquely positioned to take advantage of its location in the eastern region of South Asia and the Padma bridge project will play a key role in that endeavour,” said an expert on regional connectivity, who did not wish to be identified. “The country will be a centre point of different initiatives that seek to connect Bhutan, India and Nepal with the ASEAN and other East Asian countries.”

The expert said that with deeper trade, investment and connectivity linkages within the sub-region, Bangladesh can benefit from new markets, new import sources of high quality and better priced products, and increasing opportunities for transport and logistics services.

The erstwhile Khaleda Zia regime in Bangladesh had strong reservations against granting connectivity and transit to the neighbouring countries on the pretext that it would infringe on the sovereignty of Bangladesh. The Sheikh Hasina-led government, however, realised that granting connectivity and transit was a win-win situation for Bangladesh. India’s grant of fresh $2 billion for infrastructure development will also contribute to building corridors for sub-regional connectivity.

https://economictimes.indiatimes.co...ridge-with-own-funds/articleshow/66531817.cms

 

[Jlaw]

So bangadesh will use its own money to pay Chinese firms to construct the bridge instead of borrowing from China and using Chinese firms to build the bridge.

 

[Kandari-Hushiyaar]

So bangadesh will use its own money to pay Chinese firms to construct the bridge instead of borrowing from China and using Chinese firms to build the bridge.

You can discard all the articles coming from India which are politically prejudiced. That country is going through it's right wing phase - journos, actors, players all are into ultra nationalist right wing ideology. Good thing Our Cousin Bengal is standing strong against this fascist surge.

 

[Mage]

So bangadesh will use its own money to pay Chinese firms to construct the bridge instead of borrowing from China and using Chinese firms to build the bridge.

Even if BD takes loan so it has to be paid back. Eventually itsi own money anyway. At least some construction works are given to Locals.

 

[mb444]

So bangadesh will use its own money to pay Chinese firms to construct the bridge instead of borrowing from China and using Chinese firms to build the bridge.

Not as simple as that. International donors refused to finance the project due to corruptions. Hasina went ahead and implemented the project anyway. In its construction for some elements Chinese firms won tender and were contracted.

This project in its inception did not have any chinese input, it is not part of obor initiative in any way.

It is a water shed moment for BD. It showed that BD can finance it's own projects. It immediately lead to climbdowns by international lenders and subsequent loan deals have been made with much lower interest rates.

International lending is a business... global interest in developed economics is on average about half of one percent. Countries like Japan have negative interest. Good money to be made by lending to countries at 2-3%.

The article above is hindutva nonsense. This bridge had no connection with the Chinese whatsoever.

 

[Bilal9]

Not as simple as that. International donors refused to finance the project due to corruptions. Hasina went ahead and implemented the project anyway. In its construction for some elements Chinese firms won tender and were contracted.

This project in its inception did not have any chinese input, it is not part of obor initiative in any way.

It is a water shed moment for BD. It showed that BD can finance it's own projects. It immediately lead to climbdowns by international lenders and subsequent loan deals have been made with much lower interest rates.

International lending is a business... global interest in developed economics is on average about half of one percent. Countries like Japan have negative interest. Good money to be made by lending to countries at 2-3%.

The article above is hindutva nonsense. This bridge had no connection with the Chinese whatsoever.

A lot of the auxiliary approach roads, supporting infrastructure etc. are built by at least the Army Engg. Corps and Abdul Monem Company, one of the larger construction groups in Bangladesh. Their top tier standards of work is certainly no worse than Chinese contractors which participate in Bangladeshi projects and definitely better than the Indian low bidder companies which do not belong to the top tier group there.

Here is a video on how they renovated the Dhaka Shahjalal Runway at night-time while being active (11 PM to 8 AM)! You can get this accomplished with fast curing cement and asphalt...

 

[Hasan89]

India getting desperate now. Trying to make it look BD is on their side and China is bad. Lol. Trying to bad name China using BD’s this project as an example

 

[Michael Corleone]

Not as simple as that. International donors refused to finance the project due to corruptions. Hasina went ahead and implemented the project anyway. In its construction for some elements Chinese firms won tender and were contracted.

in my opinion it was a desperate attempt to slow down the growth to exert external political influence

 

[babbarsingh]

So bangadesh will use its own money to pay Chinese firms to construct the bridge instead of borrowing from China and using Chinese firms to build the bridge.

Yes at own terms.

 

[haidian]

China is stupid, she was the biggest borrower of the world bank in the world for over 2 decades and used to borrow as much as she can from whatever sources.

 

[Bilal9]

China is stupid, she was the biggest borrower of the world bank in the world for over 2 decades and used to borrow as much as she can from whatever sources.

Some say the World Bank is a bank that is run by, and for benefiting the interest of, Neoconservatives.

I am curious what the official stance (and non-official ones too) about Neocon interests in China. Is there a lot of opposition against Neocons?

 

[mb444]

Some say the World Bank is a bank that is run by, and for benefiting the interest of, Neoconservatives.

I am curious what the official stance (and non-official ones too) about Neocon interests in China. Is there a lot of opposition against Neocons?

As with all multinational lenders they are in for it themselves. It is an expression of neo colonialism from certain positions.

The purpose of everyone of these institution is to open up the markets of the countries they are lending to for the benefit of the lender nation and without impacting the tariff or protectionist wall of the lending nations.

Neo conservatism beyond politics is a meaningless term. No western political thoughts or movement is about to relinquish its dominance of over global affairs. Western philosophy is to maintain the status quo period.

With relation to China the philosophy is simple, check China rising. It was exploited for its abundant labor in the 70s onwards. It was allowed to borrow heavily from 90s onwards. China deftly maneuvered through the issues and have managed to raise itself up the development ladder.

But for all its outward development it faces massive challenges. They caved in face of trump bullying tariff wars.

Bottom line .... international lenders are there to serve the current power structure . China or any lending country needs to weigh up the risks as the dice is loaded in the favour of lenders.

 

[babbarsingh]

You can discard all the articles coming from India which are politically prejudiced. That country is going through it's right wing phase - journos, actors, players all are into ultra nationalist right wing ideology. Good thing Our Cousin Bengal is standing strong against this fascist surge.

That is a temporary phase.

 

[Sanchez]

Indians are always quick to dirty mouth China, regardless of facts.