Since its fifty years landmark of independence, Bangladesh is witnessing rapid economic upliftment. The country has shown its capacity by tackling the economic shock amid the Covid-19 pandemic, maintaining positive economic growth, accelerating trade and investment partnerships with its development partners, and ensuring developmental transition by initiating mega-projects and creating investment opportunities.
Infrastructure megaprojects are the critical catalyst for accelerating economic growth for a developing country like Bangladesh. In the ongoing budget for the fiscal year 2021-22, Bangladesh allocated BDT 47,283 crore from the total annual development program (ADP) to implement 12 megaprojects, including those on the fast-track list, to strengthen the country’s communication, power, and energy sector. These fast-track projects are expected to change the landscape of the increasing need for communication and power infrastructural demand.
Though Bangladesh relies on self-funding for the Padma Bridge, for its remaining projects, the country has been relying primarily on loan grants and aid from its development partners— China, Japan, Russia, and India. As the country is on the highway of developmental transition, Bangladesh wants to maintain good contact with all the parties. However, the warning of China in joining the QUAD and the US sanctions on RAB signaled that the country is facing the dilemma of ‘side picking.’ The worthy need to be more cautious to stay neutral and continue the development transition.
China has been the major trading and investing partner for Bangladesh since 2015. Besides, among the ongoing fast-track nine megaprojects, the highest three projects have been funded by China. Japan provides funding for the Dhaka metro rail and Matarbari deep seaport; Russia and India have been financing one project each. Because of this substantial external loan, the debt management of multi-dollar projects has often been raised. Some economists express concern—referring to Pakistan’s Gwadar port and Sri Lanka’s Hambantota—whether Bangladesh is falling under the “debt trap” joining China’s Belt and Road Initiative (BRI). However, Bangladesh’s prudent and selective engagement with China’s BRI has aided Dhaka in evading the illusions of the debt trap. For instance, the country called off the Chinese-funded Sonadia deep seaport project due to its economic vulnerability arising from its close location with the other deep-sea port already on-built at Matarbari.
On the other hand, India—the closest neighbor of Bangladesh, has been unable to match China’s big-ticket infrastructural investments in Bangladesh. As a result, only the India-funded fast-track mega project Maitree Super Thermal Power Plant is expected to be in operation by June this year. But unfortunately, other India-funded infrastructure projects face deferrals and upward cost amendments.
Japan—a trusted and all-weather development partner of Bangladesh—has supported Bangladesh in achieving sustainable infrastructure development with environmental and social considerations. As a result, Bangladesh has received the highest Official Development Assistance (ODA) from Japan since 1972. Japanese contribution has been vital in infrastructure and human resource development, including the major projects implemented under BIG-B. The e Dhaka Mass Rapid Transit (MRT), the deep-sea port at Matarbari, the Jamuna Railway Bridge, the Hazrat Shah Jalal International Airport terminal three, and the economic zone at Araihazar. Compared to other development partners, Japan provides funds with less stringent conditions, low-interest rates, and high grace periods that have brought the two friendly nations even closer.
The rapid pace of economic development, growing middle-class with higher purchasing power, and huge domestic demand of around 165 million people are attracting all of its development partners to invest in the mega-projects of Bangladesh. For instance, the recent Chinese proposal for Chattogram Metro rail in return for a stake in a ‘smart city’ immediately came after South Korea completed a pre-survey mission and proposed USD $6 million grant aid on introducing metro rail in Chattogram. South Korea is also keen on funding soft loans for Dhaka metro rail Line-4 construction with only a 0.1-0.5 percent interest rate. Besides, new mega projects are on the list to be kicked off under the budget for fiscal 2021-22.
According to the mid-term policy statement (2020-21 to 2022-23), Bangladesh is highly focused on transport and communication development, seemingly the prerequisite for a developed country. The construction of the Bangabandhu Rail Bridge over Jamuna River, the first subway in Dhaka, the Dhaka-Ashulia Elevated Expressway Project (DAEEP), the MRT Line-1, and Line-5, Dhaka-Chittagong high-speed train, and Cox’s Bazar Runway extension projects are all set to begin. These upcoming projects are lucrative opportunities for the development partners to gain mutual benefits and have earned the reputation as a “hot spot for global investment” in South Asia. In this case, Bangladesh has successfully kept a balance between various powers prioritizing economic diplomacy above all other stakes.
To summarize, Bangladesh is going to be uplifted from the LDCs by 2026 and it has created aspirations among the common people for more facilities and better life. The megaprojects are contributing to transforming the economy and achieving a high mid-income country status by 2041. Bangladesh has been concerned about the sustainable financing and economic viability of mega-projects. The geostrategic position of Bangladesh between South Asia and Southeast Asia, constant economic growth, relatively higher political stability than before, and cheap labor with a large market have been offering competitive opportunities in investment for the developing partners of Bangladesh.
The author is currently working as a Research Assistant at the Central Foundation for International and Strategic Studies (CFISS) based in Dhaka. He finished his master’s in International Relations from the University of Rajshahi, Bangladesh.