Having faced obstacles – from serious to routine- in three large investment projects, some are wondering if China’s economic plans are facing problems in Bangladesh due to non-economic causes. Speculations are on that the Rohingya situation for which China gets regularly blamed for backing Myanmar could be one factor for its less than a cheery journey.
The other could be the Government’s reluctance to send wrong signals to India who continue to be a long time and multiple level partner of Bangladesh with a long relationship history. With 2018 elections drawing close, the ruling party needs to put on a charm drive for all friends to make sure nothing goes astray.
Media reports about China’s investor status rose after the richest investor in Bangladesh faced problems in three projects. The latest such instance was in China’s bid to become a strategic partner of the Dhaka Stock Exchange (DSE). It was expected to be a smooth sail as China’s offer was significantly higher than its rival bidder, India. But the official regulatory body Bangladesh Security Exchange Commission(BSEC) which the Finance Ministry controls raised concerns about the bid, preventing stock market trader controlled DSE from signing China in.
Media sources mention in private that India had managed to influence the Government installing the bid but no concrete evidence is offered. But such talk reflects the rising extra-economic conflict between Indo-China over investment in Bangladesh. Latest reports however look much better for China as media says that the concerns raised by BSEC have apparently been addressed by the Chinese investors consortium and seas look calmer for it.
Two other major Chinese deals have misfired or been stalled. One is the negotiations to buy off Chevron gas extraction operations in Bangladesh and the other is Chinese investment in the deep sea Sonadia port. While Chevron has since withdrawn its offer to China, the Sonadia proposal is just not moving.
Of Chevron and Sonadia
Chevron had decided to move out after it felt that the long-term investment potential in Bangladesh gas sector was low given its declining gas reserve. Chevron had made the offer to a Chinese private company Himalaya Co and talks were on. But it’s reported that Bangladesh’s energy czar company, Petrobangla ‘convinced’ Chevron to stay back and the deal with China collapsed.
Why Chevron would want to stay back is a puzzle as nothing had changed and no new reserve has been found. The Government is rather tight lipped on the decisionmaking process and hasn’t encouraged discussions either. Some say, China in the energy sector earned Indian dislike who put pressure though no evidence for this is given either. While all of these are rumours but the consistency of rumours around Bangladesh Government’s slight hesitation about green lighting China’s investment is too frequent to be ignored.
Somadia deep sea port project is stalled although Bangladesh initially sought support in 2010 and progress was made significantly by 2012. However, an expected MOU supposed to be signed in 2014 wasn’t and since then progress has been slow. But since Chinese President’s visit came in 2017 which was the peak of Sino-Bangla relations, extra-economic consideration appear to be less here. But it hasn’t stopped speculations.
Bangladesh lacks capacity to handle international investment?
It’s a fact that Bangladesh doesn’t have a history of handling complex negotiations with a sovereigncommercial partners and is uneasy about going ahead without extra caution. But the delays are sending signals about the future investment scenario in Bangladesh to other potential partners too. If it turns out that Bangladesh can’t handle mega deals, future proposals will be less.
While various factors are responsible for such delays, that China’s stock has fallen in Bangladesh is no secret. It is seen as the power wielder behind the Rohingya crisis and officials are unhappy about China’s role in this. The refugee crisis has particularly hit the official bureaucracy much as the crisis has made them look unprepared and not able enough to handle it. So, if they make negative noises about China, it would be understandable.
The role of China in the Padma Bridge project is extensive, but these are as infrastructure project construction related contract, much simpler to manage. However, China definitely seeks strategic investment in Bangladesh but the response of the local government is too sluggish for it’s liking.
China has mostly cultivated the Bangladeshi business class and has clout there, but its social contact is quite low with few friends outside the commercial world. Additionally, its Myanmar policy has made it much less liked.
Its popularity in Bangladesh lay in its ability to balance Indian clout but after the Rohingya influx, some vague reassement is being done. That allows the much larger and better spread Indian circle of influence to exert itself. India knows that it can’t fight the Chinese ‘dollars for investment’ game but the extra-economic pressure points have increased for India since the Rohingyas arrived, much at China’s cost.
Things are moving and not moving but it’s probably not just economic policy.
*Source: https://southasianmonitor.com/2018/03/22/chinese-investment-plans-face-hurdles-bangladesh/
