Bangladesh Juggles Chinese, Japanese Interest


In recent months, both Bangladesh and Japan have appeared to be committed to taking the bilateral relationship to a new level. And the Bay of Bengal Industrial Growth Belt (BIG-B) has emerged as a cornerstone of Japan’s strategy for South Asia.

The BIG-B concept consists of infrastructure improvement for industrial development, creating a better environment for investment, and improving solidarity and connectedness.

Japanese Prime Minister Shinzo Abe paid an official visit to Bangladesh on September 6, 2014. The visit took place just three months after Bangladeshi Prime Minister Sheikh Hasina visited Tokyo. The exchange is a clear manifestation of Japan’s interest in revitalizing bilateral relations between two friendly countries.

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The Abe administration has vowed to unlock Bangladesh’s huge potential, expedite growth, and take advantage of its geostrategic position. On his last visit to Bangladesh, Abe announced $5.9 billion in aid over the next four or five years to establish the country’s first deep-sea port and build other major infrastructure, most notably a highly efficient power plant.

Japan has already approved $1.18 billion to build the coal-fired Matarbari Power Plant. The facility will be operated using Ultra Super Critical technology, in which Japan is a world leader. As a result, thermal efficiency will significantly increase and toxic emissions will be a fraction of those in the U.S. and France. By 2020, this plant will supply 15 percent of Bangladesh’s energy needs.

Along with 65 senior officials, Abe was accompanied by 22 CEOs from sectors such as trading, construction, energy, power generation, infrastructure development, IT, textile, RMG, pharmaceuticals and automobiles. “I came here with 22 top leaders of business, ranging from infrastructure to safe water, with a strong hope of doing business in Bangladesh,” Abe told a forum in Dhaka.

Bangladesh demonstrated its own eagerness to create a win-win situation, with several positive initiatives. Dhaka has already decided to withdraw its own candidacy for a nonpermanent seat on the UN Secretary Council, and back Tokyo’s bid instead – a sign of its gratitude for Japan’s continued assistance.

The government of Bangladesh has also promised to establish a separate economic zone solely for Japanese investors in Chittagong, and to make special allocations in existing Export Processing Zones (EPZs).

In his opening address at the Japan-Bangladesh business forum in Dhaka, JETRO Chairman and CEO Hiroyuki Ishige said, “As economic integration in Asia is progressing, Japanese companies are expanding from East Asia to South Asia. I am confident that Bangladesh, which is located at the junction of these two regions in Asia, will play a great role in the future. I hope that, in this forum, companies of Bangladesh and Japan will deepen their understanding and exchange to help expanding the economic partnership between both countries.”

Bangladesh described the visit as a “milestone” in relations between two friendly countries. Abe also said both countries had entered “a new level of cooperation.”

Japanese investment in China has fallen nearly 45 percent over the past eleven months. With both Japanese companies and the Abe administration seeking new markets, Bangladesh has a rare opportunity.

Japanese investors are aware of the political instability, poor governance, bureaucratic complexity, and corruption in Bangladesh. Japan’s Ambassador to Bangladesh Shiro Sadoshima clearly alluded to this, when he that his embassy’s mission was to encourage greater Japanese investment in Bangladesh, but that the ultimate decision would be taken by investors based on the prevailing environment. Sumitomo Corporation President & CEO Kuniharu Nakamura noted, “We want to expand business in Bangladesh but we need policy support from the government.”

One significant question is the response of China, presently Bangladesh’s largest economic partner. During his Southeast Asia tour in October 2013, Chinese President Xi Jinping unveiled a plan to create a “Maritime Silk Road” to boost connectivity between the Pacific and Indian Oceans.

Beijing indicated that this initiative was a priority. This plan will apparently focus on infrastructure development, including ports in Bangladesh, Sri Lanka and Pakistan. However, Chinese officials have yet to unveil the details of the plan. In the meantime, Tokyo came forward with a more detailed and generous plan, which will counter the deepening Chinese influence in the Indian Ocean Region.

Nonetheless, Dhaka’s support for China’s Maritime Silk Road initiative and for a new China-Bangladesh-India-Myanmar (CBIM) economic corridor could prove a major challenge to the development of Japan-Bangladesh relationship. The Bangladesh government will need to be proactive – and skillful – in balancing relations with the two giant rivals.

ASMG Kibria is a PhD candidate at Australian National University.

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