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.
