What OBOR means for Bangladesh

Md Mazadul Hoque | Published: October 15, 2021 20:28:43

In today's world, the way of doing business is changing fast. Economic corridors as a vehicle of trade expansion are drawing much of the attention these days. It is easier to enter international markets through economic corridors. Bangladesh is also gunning for newer routes connecting its neighbours. One of the initiatives is Bangladesh-Bhutan- India-Nepal (BBIN) motor vehicle agreement. Intraregional trade will be much easier through this route. So, when it comes to connectivity, Bangladesh is seizing every opportunity. However, Bangladesh is lucky enough that China never ignored the country in this particular arena. Certainly, the pace of economic growth largely depends on infrastructure development and China is supporting it in many ways in this connection.
China, the world's second largest economy, took an initiative named "One Belt One Road (OBOR)," widely known as Belt and Road Initiative (BRI). The idea of OBOR was conceived by Chinese President Xi Jinping in 2013. Close to 70 economies in the world are going to be connected under the OBOR initiatives. The countries are in three continents and they are home to 4.4 billion people who will enjoy benefits of the trillion dollar OBOR projects. The economies under OBOR constitute around 40 per cent of global gross domestic product (GDP). Xi Jinping launched both the Silk Road Economic Belt and the 21st Century Maritime Silk Road initiatives under OBOR in 2013. The objective of the New Silk Road initiative is to develop connectivity apart from support in infrastructure development in a bid to improve trade and economic relations with the ASEAN, central Asian and European countries..
There are six economic corridors under OBOR. They are: (1) New Eurasia Land Bridge (NELB); (2) China-Mongolia-Russia (CMR) Economic Corridor; (3) China-Central Asia-West Asia (CAWA) Economic Corridor; (4) China-Indochina Peninsula (ICP) Economic Corridor; (5) China-Pakistan (CP) Economic Corridor, (6) China-Bangladesh-India-Myanmar (BCIM) Economic Corridor.
It is to be noted that BCIM economic corridor, one of the major routes under BRI, runs through Bangladesh. Actually, it connects China's Yunnan province with Bangladesh, Myanmar and Kolkata in India through road, rail, water, and air links. Through the BCIM economic corridor, the trade volume of Bangladesh in the region will increase many times. The BCIM, endorsed during the first inter-governmental study group meeting in Kunming in December 2013, targets better regional integration, connecting the sub-regions of South Asia, Southeast Asia and East Asia. It is expected to change the infrastructure development landscape of Bangladesh within the shortest possible time.
Some Memorandum of Understandings (MoUs) were signed between Bangladesh and China in presence of Chinese President Xi Jinping in 2016 during his short stay in Dhaka. China promised to invest about $40 billion in Bangladesh. An amount of $24.45 billion was in bilateral assistance for infrastructure projects and $13.6 billion in joint ventures. In 2016, Bangladesh and China signed deals on eight projects costing more than $ 9.45 billion financed by China. Of the eight, the Padma Bridge rail link project involves $ 3.3 billion, the power plant project in Payra $1.9 billion, digital connectivity project $1.0 billion and the power grid network strengthening project $1.32 billion. From 2009 to 2019, China made investments worth $9,750 million in various transportation projects in Bangladesh. Around 56 per cent of China's total investment was made in the energy sector in Bangladesh.
Bangladesh's energy and transportation sectors need huge investments in order to achieve economic targets set in the second Perspective Plan 2021-2041. Investments to the tune of around 1.5 per cent and 1.0 per cent of GDP respectively will be needed by 2040 in these two sectors. It is gratifying to note that BRI projects are linked with energy and transportation sectors in Bangladesh. The BRI projects will help bridge the infrastructure gap. Besides, the BRI projects are focusing on cultural exchange between China and Bangladesh. Since inception of the BRI in 2013, China has been extending its scholarship programme for Bangladeshi-born learners. The procedures relating to study in China have been relaxed. In 2016, China accepted a total of 4,905 Bangladeshi students. As part of the BRI programme, the number of Confucius institutes across the world increased from 440 to 548.
If Bangladesh is able to make investment worth $20 billion in infrastructure development, around $300 billion is expected to be injected into its economy by foreign entrepreneurs in the next 20 years. Vietnam spent about 10 per cent of its GDP on infrastructure development over the past one decade. In the last five years, Vietnam had been able to attract $60 billion in FDI compared to Bangladesh's $3-4 billion. So there is no alternative to infrastructure development. The under-construction special economic zones would provide a great relief for Bangladesh in attracting FDI in near future. So financial assistance from China-led OBOR project should be utilised properly. Without China, it would be tough for Bangladesh to attain economic progress.
Md Mazadul Hoque is
an economic affairs analyst.
mazadul1985@gmail.com