India Experts at an international conference in Dhaka have spoken about their concerns over the “debt trap” of China’s flagship belt and road initiative (BRI) in which Bangladesh has joined.
Fahmida Khatun, executive director of the Center for Policy Dialogue (CPD) that organised the conference on Sunday, said “debt should be managed well and debt sustainability issue should be closely monitored in order to avoid any possible debt traps”.
India experts Prof Sachin Chaturvedi, director general of India’s Research and Information System for Developing Countries (RIS), also shared the “inherent flaws of and concerns” about the BRI which he saw as an “alternative development cooperation” model.
But he said, in practice countries “often fail to negotiate a good contract that respects their own development priorities and get trapped in the undisclosed and opaque terms of engagement”.
Chinese expert Prof Cheng Min of the Institute for Bangladesh Studies of the Yunnan Academy of Social Science, Kunming, however, said the BRI has provided “good conditions” for the establishment of the China-Bangladesh free trade area.
“On this basis, China and Bangladesh still need to make continuous efforts to take positive measures,” she said.
Bangladesh joined the BRI during Chinese President Xi Jinping’s visit to Dhaka in 2016.
The initiative aims to rebuild the old Silk Road to connect China with Asia, Europe and beyond through massive infrastructural spending.
However, the initiative has been the subject of controversy in many western capitals, particularly Washington, which views it as merely a means to spread Chinese influence abroad and trap countries into debt through “nontransparent” projects.
India did not join the BRI, citing concerns over China’s projects with Pakistan. Some analysts say India is not comfortable with Bangladesh’s participation in the initiative.
Industries Minister Nurul Majid Mahmud Humayun said BRI is “significant” for Bangladesh which he said has “multidimensional economic ties with China”.
He termed it an “emerging opportunity” and said “lots of efficient activities” are needed to seize that opportunity.
“We have to ensure win-win cooperation with China and other countries,” he said.
NATIONAL INTEREST FIRST
The BRI promises to deliver physical and soft infrastructure to foster connectivity and economic development across its corridor.
The two-way trade between Bangladesh and China is $16.4 billion in 2017, with an average annual growth rate of about 20 percent since the establishment of diplomatic ties in 1975.
It is heavily in favour of China. China’s direct investment in Bangladesh was $228 million in 2018.
Through the BRI, China intends to engage in the global economy mainly through investments in infrastructure.
A number of measures have been rolled out to materialise the ideas in Bangladesh. During his visit to Bangladesh, President Xi promised about $40 billion investment in Bangladesh – $24.45 in bilateral assistance for infrastructure projects and $13.6 billion in joint ventures.
In addition, $20 billion in loan arrangements was committed.
Foreign Secretary Md Shahidul Haque said Bangladesh has not confined itself to BRI only.
“We are looking beyond,” he said, referring to Bangladesh’s joining the Washington’s Indo-Pacific Strategy in this region.
He said Bangladesh will be joining to all initiatives “as long as it serves our interest”.
“We’ll try to avoid to joining to any military alliance,” he said, adding that “when we negotiate, we negotiate for the national interest. Nothing else, nothing else would determine our negotiation technique”.
The India experts, Prof Chaturvedi, highlighted the flaws and concerns of the initiative.
“BRI is being viewed as a development initiative as participating countries are benefiting from investments by China in infrastructure projects,” he said.
But the “scepticism towards the projects, motivations and intents in the BRI countries’ continues,” he said.
“Partner countries often bring in issues like transparency in BRI projects; projects do not factor environmental aspects; local labour is not employed in project construction, operations and other work; etc.
“Further, lack of local participation, lack of inclusivity, lack of economic and project viability and increased risk of debt hangovers are manifestations of the inherent gaps in BRI.
“Local resistance to BRI projects in partner countries in worrisome. For instance, Myanmar is willing to scale down the Kyaukpyu Port over concerns over mounting debt.
“Likewise, there were protests over local employment in Thailand and Lao PDR in the high speed rail project.
“Sri Lanka’s disappointment with Hambantota Port is widespread now. This has perhaps the reason that led Sri Lanka to invite India and Japan for joint development of Colombo Port,” he said.
“ASEAN as a whole has not yet developed a common understanding about the significance, progress and challenges associated with BRI and Chinese influence in ASEAN.
“Malaysia postponing certain BRI projects in 2018 and later negotiating with China signify the problem of unilateral conceptualization of development projects.”
WAY FORWARD FOR BANGLADESH
Fahmida of CPD said for Bangladesh, BRI provides opportunity to seize benefits, particularly in the areas of trade, investment, connectivity, education and tourism, through strong ties with countries particularly in the Southern Asian region, more specifically, with China and India.
“Realisation of the BRI objectives will also help Bangladesh in achieving the SDGs,” she said.
But for implementation of BRI projects, she said, Bangladesh will require trade facilitation reforms. Bangladesh has to mobilise domestic resources through tax reform and public-private partnership.
“Selection and planning of BRI projects should be sound with a full understanding of the economic and social benefits that will be created though such projects,” she said.
“For timely completion of projects and minimise cost overrun, public disclosure of BRI projects, terms and conditions of project finance, and monitoring, reporting and anti-corruption measures should be in-built in the project implementation mechanism”. India experts