Joining the highway of Asian economic growth

After Prime Minister Sheikh Hasina's recent visit to China, we can now delve deep into a cost-benefit matrix of what we have got and what we could or should have gotten. Apparently confused by the humiliating defeat of the Congress-led United Progressive Alliance (UPA) in the Indian parliamentary elections, the Awami League government has reactivated the 'Look East' diplomacy nodes once again. It's a welcome development that Banglasdesh is diversifying its diplomatic portfolio. But since China is not run by uninformed persons, the leaders of the Chinese Communist Party know very well whom to deal with for long-term relations.
A few deals have been signed with China. However, there was no firm commitment from the Chinese side regarding the most important and biggest issue -- the construction of the Sonadia Deep-Sea Port, which could cost about $14 billion. Dhaka and Beijing have signed two agreements, one Memorandum of Understanding (MoU) and two exchanges of letters (EoLs) to enhance mutual cooperation in sectors like trade and investment, power generation and climate change. Of the two agreements, one is on establishing a coal-based 1,320 megawatt (mw) power plant in Patuakhali, and the other on economic and technical cooperation between China and Bangladesh. The MoU is on the construction of a multi-lane tunnel under the Karnaphuli river in Chittagong. The EoLs are on the exchange of a second batch of calamity rescue equipment between Bangladesh and China and over a feasibility study on flood prevention and management in Bangladesh.
The issue of constructing the Sonadia Deep-Sea Port came up in the talks, but a cold response from the Chinese side had led to its status as "Let's continue the discussions".
As proposed by China, the two sides had earlier agreed to sign a framework agreement on the deep-sea port during the Bangladesh PM's visit. But the deal became uncertain just before she left for China on June 06. Officials at the Foreign Ministry said Dhaka had declined to sign the agreement on the deep-sea port following differences of opinion and a shift in the Chinese position. They said China had agreed to provide a soft loan for the port construction, but later changed its mind and offered a commercial loan. China also set the precondition that it would do the design, construction and operation of the port. The conditions that China had put forth seemed unreasonable.
During the official talks with Chinese Premier Li Keqiang in Beijing, Prime Minister Sheikh Hasina also sought support for five other mega infrastructure projects, and Kequiang assured her of taking necessary steps.
Highlights of the deals are:
(a) The 1,320-megawatt coal-based power plant will be set up in Kalapara upazila of Patuakhali.
(b) The four other deals signed included an agreement, a memorandum of understanding and two exchanges of letters to enhance cooperation in sectors like trade and investment and climate change.
(c) The issue of constructing the Sonadia Deep-Sea Port figured prominently in the talks, and the two sides agreed to continue discussions.
(d) There was no firm commitment from the Chinese side regarding the construction of the deep-sea port, which could cost about $14 billion.
(e) China had agreed to provide soft loan for the port construction, but later changed its mind and offered a commercial loan. It also set the precondition that it would do the design, construction and operation of the port.
(f) The Chinese side itself had offered to expand zero-tariff facility to 95 per cent Bangladeshi goods going into China to have a more balanced bilateral trade. However, China backed out at the last moment.
(g) During the talks, the PM mentioned that Bangladesh attached highest importance to its relations with China.
(h) The foundation of these relations was laid by Father of the Nation Bangabandhu Sheikh Mujibur Rahman during his visits to China in 1952 and 1957 as a minister, she said.
(i) China has always been a reliable development partner, and so far it has contributed immensely to Bangladesh's socio-economic development.
(j) The seventh Bangladesh-China Friendship Bridge and Bangabandhu International Conference Centre in Dhaka bear testimony to the Dhaka-China friendship.
(k) Bangladesh welcomes the peaceful rise of China and wishes to remain as an active partner in this 'Asian Century'.
UNIQUE GEOGRAPHICAL LOCATION: Bangladesh cannot remain aloof from the highway of Asian economic growth. It must get itself increasingly involved in the development efforts of the region as a whole. The country's unique geographical location that has made it a close neighbour of both India and China, makes such involvement possible.
This position again promises it far greater road and railway connectivity with these economic giants. The seaport of Chittagong is a plus point in the deals with these two countries. Bangladesh can benefit greatly from its relations with both of these countries.
RMG DEAL: One should welcome the BGMEA's success of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) in signing an agreement with Oriental International Holding, a Chinese company, to develop a new garment industrial park in Munshiganj.
The planned agreement to build the 470-acre industrial park in Gazaria is budgeted to cost $1.2 billion, and it will be one of the largest-ever investments in Bangladesh. When completed, it will provide a huge boost to the ready-made garment (RMG) industry. Oriental has agreed to develop land, roads, and power plants, and build structures for sale to BGMEA and BKMEA (Bangladesh Knitwear Manufacturers and Exporters Association) factory owners. Its plans envisage setting up of accessory factories to supply raw materials, thereby reducing costs and improving productivity.
Taken together with China's agreement to construct a tunnel under the Karnaphuli River in Chittagong, the RMG deal set the seal of success on the visit, and it is a further sign of healthy relations between Bangladesh and China.
Building new factories is vital to the RMG industry, which accounts for over 80 per cent of our export earnings. This project can help in both securing vital jobs for the RMG workers and acting as a beacon to attract new investment from companies seeking to relocate to Bangladesh.
With many garment factories requiring remediation and safety improvements, finding land on which modern, safe, and more productive factories can be developed is a highly urgent priority for the economy.
The Munshiganj project has been facilitated by the government through allocating land at Baushia. It should proactively seek more land, which can be set aside in such a manner that it would be able to attract further investments.
Dr. Anu Mahmud is an economic analyst and a columnist.       anumahmud@yahoo.com