Economy
BD won’t fall into Chinese Debt Trap: AK Abdul Momen
Bangladesh strongly ruled out the possibility of falling into any Chinese debt trap as the return on its investments is much higher than the cost of the funds, said Foreign Minister AK Abdul Momen at Bangladesh Business Summit 2023.
Foreign Minister said there is a wrong perception among many people that Bangladesh would slip into a Chinese debt trap.
“No way… no way,” Momen said.
He made the comments in reply to questions from Richard Quest, CNN’s Business editor-at-large, at the Bangladesh Business Summit.
The 3-day summit, organized by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), partaken at the Bangabandhu International Conference Centre in Dhaka to showcase the country’s progress and potential to both global and local investors.
The debt-trap question has surfaced as Bangladesh has borrowed heavily from many countries, including China in recent years to pull off its growth targets. The bankruptcy of Sri Lanka, whose largest lenders include China, in 2022 has cemented the worries.
But Foreign Minister said Bangladesh has received many loans from international agencies with Japan being the largest bilateral lender.
“We are taking loans from all sources on a very prudent basis and in a calculative way.”
Of the $72.3 billion foreign loan, the World Bank accounts for $18.2 billion, followed by the Asian Development Bank ($13.3 billion), Japan ($9.2 billion), Russia ($5.1 billion), China ($4.8 billion) and India ($1.02 billion).
Whatever investments have been made with the debts, the return on the investments is higher than the cost of the funds, Momen said.
Bangladesh has a low risk of external and overall debt distress despite higher external borrowing in recent terms, said the International Monetary Fund in February.
Commerce Minister Tipu Munshi said it was true that the war has inflicted sufferings on the country.
“Yes, I can understand that people are suffering for the high price, but the government is trying to sort it out.”
However, Bangladesh is doing well despite some challenging situations, he said. “For instance, export incomes have increased amid the global economic turmoil.”
The commerce minister admitted that the worry remains due to the lingering war.
He is optimistic about continuing the development journey as the country is benefiting from demographic dividends and the business climate is conducive.
The commerce minister spoke about the government’s investments in the education sector.
“We have to go for various types of investments in the sector, particularly for work-related education such as vocational training and technical education. This will help our economy.”
Quest questioned whether the upcoming election would be free and fair.
Responding, the foreign minister said the government has organized thousands of elections over the last 14 years.
“All institutions have been developed for a free, fair, transparent and credible election.”
“We have put in place transparent ballot boxes and we have an independent election commission with full authority. Therefore, we believe the upcoming election would be free, fair and credible.”
The government established a level-playing field, he said, urging all parties to participate in the elections.
When Quest pointed to people’s perception of whether the government has turned into authoritarian and anti-democratic, the foreign minister said there are both right and wrong perceptions.
“Unfortunately, in our society, people falsify many things. But in the long run, people behave very smartly and when they vote, they vote for us. Every class of the population is very happy with the performance of the present government,” he claimed.
In a separate session, Prime Minister’s Private Industry and Investment Adviser Salman F Rahman, said “We want a real export-based Bangladesh from where software, as well as hardware, will be exported. Already a number of companies are producing hardware.”
In order to support the fast-growing economy, the government is building a deep-sea port in Matarbari. It will go into operation in 2026.
Everybody is surprised that Bangladesh has made tremendous progress despite not having a deep seaport, Rahman said. “We are increasing the capacity of Chattogram port, Mongla port and Payra port.”
“It will be a real game-changer for us when the deep seaport becomes operational.”
Speaking about the sources of finances, the adviser said Japan is bankrolling the Matarbari port project.
“We are talking to companies in Singapore, Saudi Arabia, and the UAE for the management of the port.”
The government is going to hand over the Chattogram port to private operators for its management.
“In fact, today we are going to sign an MoU with Saudi Arabia,” Rahman said.
He ruled out the chance of Bangladesh facing a Sri Lanka-like situation.
The Island nation plunged into a serious crisis last year after its foreign currency reserves dried up.
Owing to escalated commodity prices, Bangladesh’s reserves have slipped to a six-year low of $31.15 billion, meaning it has fallen by about 30 percent from the $44.14 billion recorded in March last year.
“We are not going to hand over the ownership of the ports. So, there is no worry that our economy will face a situation that the Sri Lankan economy had faced,” said Rahman.
The British journalist wondered how Bangladesh would transform itself into a digital nation when he had to spend two hours traveling a distance of two kilometers.
“We are in a growing stage. Our infrastructure development is taking place. The metro rail is already operational and the elevated expressway is going to be operational. If you come back after five years, you will just need 20 minutes instead of two hours,” Rahman answered.
During her presentation, Tini Sevak, vice president for audiences and data at CNN International, said a green supply chain would have a greater effect on companies in the coming days.
Bangladesh has already begun its journey to modernize its workplaces following a number of disasters a decade ago. Today, the country has the highest number of green garment factories in the world.
“Technology will be a key factor too for the future growth of companies,” Sevak said.
The summit also aims to draw foreign direct investment (FDI).
FDI to Bangladesh rose 13 per cent year-on-year to $2.89 billion last year. But the inflow has been far lower than the expected level given the country’s business volume and potential of the economy.
In recent times, globally FDI was impacted across many industries due to the supply chain disruptions stemming from the pandemic, the war and major layoffs by technology companies, Sevak added.
Rob Bradley, senior vice-president for ad sales and digital commercial strategy at Warner Bros. Discovery for Asia Pacific and Latin America, Md Jashim Uddin, president of the FBCCI, Xiangchen Zhang, deputy director-general of the World Trade Organisation, and Laurent Olmeta, CEO of CMA CGM Asia Pacific Limited, a logistics company, also spoke.
Economy
Diplomats, Journalists from Russia and Africa Forge Alliance to Develop Information Strategy
Russia and Africa have joined forces to craft a comprehensive information strategy, as revealed during the Second International Journalists Forum held on Thursday, April 18, both online and offline.
Organized by the Russian-African Club in collaboration with the Faculty of Journalism and the Faculty of Global Studies of Lomonosov Moscow State University, and backed by the Secretariat of the Russia-Africa Partnership Forum of the Russian Foreign Ministry, the forum drew a diverse array of participants. Diplomats, government officials from African nations, media executives, producers, TV hosts, journalists, public figures, scholars, educators, and representatives from cultural and media sectors converged, totaling around 100 individuals from 32 countries spanning Russia, Africa, the Middle East, India, Bangladesh, and Brazil.
The forum, moderated by Alexander Berdnikov, Executive Secretary of the Russian-African Club, featured notable figures such as Anna Gladkova, Louis Gouend, and Ilya Shershnev from Lomonosov Moscow State University. Oleg Ozerov, Ambassador at Large of the Ministry of Foreign Affairs of the Russian Federation, and Head of the Secretariat of the Russia-Africa Partnership Forum, conveyed a welcoming address stressing the pivotal role of truthful media in shaping perceptions of current events. He also highlighted the significance of the upcoming Russia-Africa Ministerial Conference scheduled for November in Sochi, emphasizing the need for a robust information framework to facilitate productive discussions.
Elena Vartanova, Dean of the Journalism Faculty of Lomonosov MSU, extended greetings and underscored the intensified efforts of the Russian-African Club ahead of the university’s 270th anniversary. Yves Ekoué Amaiso from Togo emphasized the imperative of devising a unified media strategy amidst the ongoing political, economic, and information dynamics influenced by the Global West.
Subsequent speakers, including Zenebe Kinfu, Leonard Dossou, Ondua Ovona Joseph Julien, and Tokologu Tau, deliberated on the growing Western influence on African media and proposed concrete measures to bolster collaboration between Russian and African journalists.
Jamal Othman, Head of the Main Department for Media Content Monitoring in Libya, shed light on his organization’s role in combating misinformation and promoting tolerance.
Ilya Shershnev reiterated the significance of advancing preventive journalism, announcing plans for an innovative training course encompassing areas such as public diplomacy, fake news mitigation, and peacebuilding, underscoring Moscow State University’s commitment to fostering a new frontier in the information domain.
Renowned Indian expert, professor, and journalist Dwivedi Ratnesh highlighted Russia as a blueprint for India in terms of governmental support for national media activities, balancing control with respect for journalists’ independent and constructive opinions.
Maxim Reva, Deputy Editor-in-Chief for Economics at the African Initiative news agency, showcased the agency’s three correspondent points established directly in Africa – in Mali, Niger, and Burkina Faso. He underscored the paramount importance of personal communication between media professionals and the audience. Reva also pointed out the significant potential of African graduates from Soviet and Russian universities who have emerged as leading specialists in African countries.
Joining the session online from Cameroon, Club expert, International Journalist, and Academician of Petrovsky Academy of Sciences and Arts, Sergei Chesnokov, participating in the fourth investment forum, highlighted the keen interest of Cameroonians in the Russian delegation, expressing a desire for an equal partnership.
Patrick Boyanga Bozi, President of the Congolese Diaspora in Russia, expressed confidence in Africans’ immunity to correctly perceive information, stemming from the historically friendly relations between Russia and Africa.
Entrepreneur Georges Romain Zobo from Congo, a graduate of a Soviet university, stressed the necessity for practical measures to provide information support to small and medium-sized agricultural businesses in Africa.
Said Ali, President of the Malagasy diaspora in Russia, endorsed the Russian-African Club of Lomonosov Moscow State University’s activities, deeming it a pivotal organization for advancing the Russian agenda in Africa.
Africanist and writer Igor Sid highlighted Africa’s perennial role as a source of new perspectives, generously shared with the global community.
Concluding the proceedings, Alexander Berdnikov, Executive Secretary of the Russian-African Club of Lomonosov Moscow State University, affirmed that all proposals from the forum participants would be considered by the Journalists Association of Russia and African Countries. The forum’s main thrust emphasized the necessity of crafting an information strategy to bolster Russian-African relations.
The World Bank reported that approximately $3.15 billion is illicitly transferred out of Bangladesh each year through offshore accounts.
Citing the State of the Tax Justice Report 2020, the World Bank stated that the offshore financial wealth of Bangladeshis is estimated at 0.7% of the nation’s GDP.
“Including losses from corporate abuse and offshore tax evasion, tax revenue losses are estimated at over $700 million,” the World Bank stated in its latest Bangladesh Development Update report published on 2 April. This amount equals 2.2% of the country’s total revenue income in fiscal year (FY) 2019-20.
In the Development Update report, the World Bank noted that illicit capital flows into offshore accounts from Bangladesh have been increasing.
Referring to the latest Global Financial Integrity Report 2021, the bank mentioned: “Between 2009 and 2018, as much as $3.6 billion on average per year has been laundered from Bangladesh through trade mis-invoicing.”
The World Bank highlighted that Bangladesh’s illicit capital outflow through offshore accounts is high compared to some of the country’s peer nations in its Development Update report.
Currently, Bangladesh ranks 54th among 133 countries in the Financial Secrecy Index, which assesses the extent to which a country’s tax and financial systems facilitate individuals in concealing their finances from the rule of law, according to the World Bank.
The bank further stated that Bangladesh ranked 44th globally and 3rd in South Asia in terms of illicit outflows through trade mis-invoicing.
The International Monetary Fund (IMF) has once again lowered its growth forecast for Bangladesh’s economy to 5.7 percent for the current fiscal year of 2023-24. This revision was outlined in the IMF’s World Economic Outlook released on Tuesday, April 16.
The IMF’s revised projection highlights various global and local challenges, including persistent high inflation, unemployment, reduced remittance inflow, and a decline in industrial investment targets.
This marks the second time the IMF has reduced its economic growth forecast for Bangladesh. In October of last year, it initially projected a 6 percent growth rate, down from its previous prediction of 6.5 percent for the FY2023-24 period.
The IMF’s growth forecast follows a recent announcement by the Asian Development Bank (ADB), which stated that Bangladesh’s GDP is expected to expand by 6.1 percent in FY 2023-24, driven by export growth.
Earlier this month, the World Bank also weighed in, stating that Bangladesh’s growth will be subdued due to reduced private consumption affected by high inflation. It forecasted a GDP expansion of 5.6 percent in FY 2023-24, below the average annual growth rate of 6.6 percent recorded over the decade preceding the Covid-19 pandemic.
