The recent trends of foreign policy of the Bangladesh government may be delineated as: i) maintaining a balanced relationship with the USA, India, China and Japan, ii) carefully crafted relationship with India, iii) more cooperation with the neighbouring countries like Bhutan, Nepal, and Myanmar, iv) good relationship with the EU countries, v) fraternal relation with the Arab countries and Malaysia and vi) assigning importance to Look East Policy.
CONTEXT OF LOOK EAST POLICY FOR BANGLADESH:
* Bangladesh's geographical location between two major regions of Asia-South Asia and Southeast Asia-provides a unique opportunity for the country to benefit from greater cross-border movement of goods and services, investment flows, and enhanced human contact.
* Bangladesh is one of the most disconnected countries in the region, deprived of its status as a key node on the silk route.
* Discussion is shifting toward concrete measures to establish Bangladesh's connectivity through the establishment of the Asian Highway and the Trans-Asian Railway network.
* The Look East Policy, especially concerning Japan and China, if carefully nurtured, may open up huge development opportunities for Bangladesh that can materially affect the long-term welfare of its population. The focus of the Look East Policy would largely be on China, Japan and Korea but Myanmar should be included because of its geographical location.
* In 2012, China, Korea and Japan (CKJ countries) exported some $3,522 billion of goods and services as compared with $2,212 billion by USA and $7,339 billion by the EU.
* In terms of imports, the values are $3,820 billion by CKJ, $3,306 billion by USA and $8,458 billion by the EU. While the EU is the clear leader in world trade, accounting for 33.3 per cent of global imports, at 15 per cent the CKJ area imports exceed that of USA (13 per cent) by a handsome margin.
* Apart from growing income, the CKJ has two other features that stand out from the perspective of a developing economy like Bangladesh. First, the CKJ countries have traditionally achieved large current account surpluses owing to their strong export orientation. Over time the foreign reserve levels have swelled. With reserves estimated at $3.9 trillion, China sits at the top of the global list of owners of foreign reserves, followed by Japan at number 2 ($1.3 trillion). With $368 billion, Korea is placed at number 8. These levels of reserves, especially in China and Japan, are unprecedented and speak volumes about the financial strength of these economies. Second, all CKJ countries are exceptionally well endowed with technical knowledge, design and engineering capabilities in the area of infrastructure development. These capabilities are comparable to those found in the USA and the EU.
* Combined with surplus foreign resources, these capabilities make the CKJ countries an attractive source of supply of infrastructure projects to developing economies. The infrastructure marvels achieved are obvious to a visitor to these countries. Japan, arguably, also has superb urban planning skills that can be well appreciated when visiting Tokyo.
* Bangladesh can get expert advice and technical assistance from Japan to re-engineer the Dhaka city layout and transport network, thereby considerably improving the productivity of Dhaka city while also making it more liveable.
l Bangladesh's trade with South Asia and Southeast Asia has been on the rise since the early 2000s and about 40 per cent of the total trade currently takes place with this regions. Southeast Asia is increasingly becoming a major source of imports for Bangladesh.
RATIONALE FOR BANGLADESH: Bangladesh is eager to diversify and increase its export markets. It has already successfully penetrated the US and EU markets for its exports but the vast CKJ market remains virtually unexploited.
Along with rapidly growing income in the CKJ area, especially China, that is growing much faster than either in the EU or the USA, the export market opportunities for Bangladesh is immense.
The resource-rich CKJ countries are looking for investment opportunities in developing Asia to diversify their investment portfolio. The RMG (ready-made garment) experience has firmly established Bangladesh's claim to be an attractive destination of these new investments.
The geographic advantage of Bangladesh in terms of its location as the gateway between Western Asia and Eastern Asia makes it a potentially attractive hub for the transit of trade and commerce between the CKJ countries in the east to the Southern and Central Asian countries in the West.
India alone is a huge market. Additionally, the open access of Bangladesh to sea on the Southern borders makes it a natural choice for sea trade and regional transport hub. The related development of infrastructure-rail, roads, sea ports-can be attractive opportunities for infrastructure investment by the countries of CKJ.
Transit-related infrastructure needs apart, the overall infrastructure investment requirements of Bangladesh are immense. The availability of surplus financing in the CKJ countries along with their globally competent infrastructure-building capacities makes them a hugely attractive supply source for infrastructure development in Bangladesh.
CHALLENGES FACED BY BANGLADESH: Along with the supply of urban land, the infrastructure supply has become a binding constraint for Bangladesh to accelerate the growth beyond the 6.0 per cent rate. The Look East Policy provides a natural and attractive solution to easing the infrastructure constraint. It will not be automatic or simply based on diplomatic gestures. The development of the  East Policywill require a solid implementation framework first. Some of the important policy elements of that framework include the following:
(i) A well-thought-out land procurement and land development policy for foreign private investment. In that regard, it is especially important to quickly and satisfactorily resolve the current impasse surrounding the land transfer to the Korean EPZ (export processing zone) in Chittagong.
(ii) Ann export promotion strategy for the CKJ areas based on a careful review of markets, products, cost structure, import flows and domestic capabilities.
(iii) Exchange of business delegations to explore potential trade and investment opportunities.
(iv) Adoption of turn-key type procurement policies for infrastructure financing to avoid procurement related corruption problems and delays.
Sensitive political issues may be raised by India and the USA in view of the China angle. But by adopting a sensible economic approach these concerns can be neutralised. After all, despite all the noise, India and the USA are among China's largest trading partners. So, there is no reason why Bangladesh should not decide its own economic cooperation policies in a way that best serves its economic needs and interests based on a sound engagement strategy and implementation capacity.
WAY FORWARD: This requires the government to develop a sound  East Policythat contains the following four pillars: (a) trade expansion, (b) expansion of foreign private investment in Bangladesh, (c) regional connectivity and (d) modernising the infrastructure of Bangladesh through high visibility infrastructure projects.
Japan's commitments for up to Y 600bn ($ 5.9bn) in economic assistance over the next five years will be focused primarily on a number of high-profile infrastructure projects like the proposed 1200MW coal-fired power plant at Matarbari in Chittagong, Ganges barrage, multi-modal tunnels under the Jamuna River, a railway bridge over the Jamuna River, a multi-modal Dhaka eastern bypass, and the ecological restoration of four rivers around Dhaka.
Japanese Prime Minister Shnzu Abe has recently observed, "Bangladesh has great economic potential. In order to realise its potential and expedite further growth, Japan has come up with the concept of the Bay of Bengal Industrial Growth Belt [BIG-B]."
It is in Bangladesh's interest to develop a Look East Policy (LEP) that will accelerate our economic relations with other countries in Asia. The key elements of this are fourfold: 1) Investment: the right modalities for economic zones and engage in thorough research to do a sector mapping for each country to see which are the most likely sectors; 2) Trade: an assessment should be made on our import and export mix. Do we produce the range/mix of products that, for example, are in demand in China, Japan or Korea? What is the tariff structure for import of their products? Perhaps reduced tariffs or duties on their imports can facilitate greater market access for our products; 3) Regional Connectivity: Developing BCIM-EC (Bangladesh, China, India and Myanmar economic corridor) or likewise Japan's BIG-B proposal; 4) Infrastructure improvement.
The Bangladesh government should ensure effective follow-up to the Abe visit to capitalise on the geographic position of the country as a new re-export and logistics hub in the region for Japanese companies. This is the key to the economy achieving 7.0 per cent+ growth on a sustained basis. Â
Dr. Shamsul Alam is Member, General Economics Division, Bangladesh Planning Commission. The article is adapted from a speech he delivered as a panelist in the symposium 'LOOK EAST: Asia's Economic Integration and Bangladesh's Perspectives' organised by Japan External Trade Organisation (JETRO)", Government of Japan and ERIA (Economic Research Institute for ASEAN and East Asia) held in Dhaka on December 01, 2014 at Bangabandhu International Conference Centre.
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