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Chinese Takeaway In Bangladesh? – Analysis

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By C. Raja Mohan

Padma Bridge

With the World Bank punishing Bangladesh by withdrawing support to one of the nation’s major infrastructure projects -a $3 billion dollar multipurpose bridge over River Padma -Dhaka is hoping that China will step into the breach. Could India pitch in too? Might Delhi and Beijing collaborate on a transformative economic venture in Bangladesh and build a new basis for India-China regional cooperation in the Subcontinent?

At the end of June, the World Bank withdrew the offer of providing finances worth $1.2 billion for the project, which would connect the underdeveloped southwestern parts of the country divided from the rest by the mighty Ganges. The Bank alleged corruption at the “high levels” in Bangladesh and Dhaka’s reluctance to facilitate international investigation into the charges. Angered by the move, the Sheikh Hasina government has accused the World Bank of playing politics.

Bangladesh
Bangladesh

Critics of the Bank say it is wrong to punish the people of Bangladesh in the name of corrupt officials. Sheikh Hasina and the Awami League deny the corruption charges and are eager to implement the project. Dhaka now needs to either overcome the differences with the Bank or find alternative sources of financing. With the Bank stepping back, few traditional bankers would want to support the project. The one exception is obviously cash-rich China. If Beijing takes a strategic decision to back the project, finances should be no problem. Senior officials in Dhaka have been hinting that a Chinese company based in Australia is interested in forming a consortium of companies to move the project forward.

The Padma Bridge is far too important for Bangladesh and the subcontinent -some say it could add nearly one per cent to the nation’s annual GDP -for India to remain a mute spectator to the current intense debate in Dhaka. Delhi could help in more than one way. It could lend its good offices to resolve Dhaka’s current disputes with the World Bank and Washington. Alternatively, India could offer part of the financial support to the project and encourage its large construction companies to build a consortium with Chinese
corporations.

Sonadia Port

Building a deep water port on the Sonadia Island off the southeastern coast has been one of Dhaka’s major ambitions in the infrastructure sector. With the country’s main port at Chittagong unable to host large ships, Sonadia is critical for a nation whose economy and trade and rapidly growing.

Besides serving the commercial needs of Bangladesh, the Sonadia port could become a regional shipping hub for northeastern India, Nepal, Bhutan, Myanmar and China’s Yunnan province. Initial estimates for the project stood at around $3 billion.

Given China’s reputation for efficient implementation of large-scale infrastructure projects, Dhaka unsurprisingly turned to Beijing. With its growing interest in integrating Yunnan into south and southeast Asia, and developing maritime access to its landlocked regions, China was quick to show interest. Beijing designated the China Harbour Engineering Company, which built the Hambantota port in southern Sri Lanka, as the lead firm from the Chinese side.

Any talk of China building ports in South Asia, of course, raises the red flag in Delhi. But India’s strategic community should pause, at least for a moment, for Beijing is signalling its interest in the joint development of the Sonadia port with India. After all, if the Sonadia port is about creating a regional logistical hub, it makes sense for India to explore the opportunities for joint development of infrastructure projects in the subcontinent and beyond in collaboration with China.

For now though, the ball is in the court of Dhaka, which must develop a sensible framework for attracting foreign participation in the Sonadia project.

Joint projects

A world class port at Sonadia makes no sense without the rapid development of its natural hinterland and the promotion of physical connectivity within it. With eastern India, Bangladesh and Yunnan on an impressive growth path and Myanmar opening up to international business, the demand for a logistical hub at the heart of the Bay of Bengal can only grow. Every one in the region wants trans-border rail and road corridors. China, on its part, has already done much. India talks but moves a lot slower and has done much less for regional connectivity.

The missing link, however, is substantive India-China cooperation in the development of regional infrastructure. Instead of competing with each other, Delhi and Beijing can promote joint development of much needed infrastructure in the region, whether it is building a bridge over Padma or a port at Sonadia.

(The writer is a Distinguished Fellow at Observer Research Foundation, Delhi)

Observer Research Foundation

ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

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