Economists and diplomats on Thursday stressed the need for Bangladesh’s integration into the Chinese value chain system to tap more investments from the country as well as to explore the East and Southeast Asian markets close to the second largest economy in the world.
At a virtual dialogue titled ‘Bangladesh-China Development Cooperation: Experience and Outlook’, they also recommended exploration of the possibility of converting a portion of Chinese loans to Bangladesh into equity investments.
At the programme organised by the Centre for Policy Dialogue, Chinese ambassador to Bangladesh Li Jiming proposed signing of two memorandums of understanding between the two countries on monetary cooperation accepting Chinese currency yuan in trade settlement and government-to-government public private partnership attracting more Chinese investment into Bangladesh.
China can give loans in yuan worth $5 billion to the Bangladesh Bank to diversify foreign exchange reserve if the both countries enter into a currency swap deal, he said.
The Chinese ambassador also said that it was needed to increase promotion of Bangladesh as an emerging market to Chinese people and investors.
Signing a MoU on monetary cooperation accepting yuan as currency for trade settlement and G2G PPP would facilitate more Chinese investment in Bangladesh, he said.
CPD chairman Rehman Sobhan said that Bangladesh needed to set much wider vision in relationship with China as the country would lead the Asia in economic development contributing 50 per cent of the global growth in next 25 years.
The most important issue is to target Chinese investment in line with the Chinese current economic restructuring to tap the market as well as the East and Southeast Asian markets, which would control the global economic growth, he said.
Even the Chinese vision is not only limited to East and Southeast Asia rather its vision is pan-Asian integration.
‘So, design investment strategy targeting Chinese investors and look at broader areas of comprehensive economic partnership in the areas of trade, investment and technical cooperation,’ he said.
He also suggested that the finance ministry consider the proposal of $5 billion Chinese loans to the central bank to diversify its foreign currency reserve.
Rehman also advocated the concept of converting a portion of Chinese loans into equity investment to minimise risk of debt trap.
‘Examine the existing projects being implemented with Chinese loans to see which projects could be converted into equity investment,’ he said.
For example, the Karnaphuli Tunnel Project may be a commercially marketable product and can be converted a part of Chinese loan into equity and Chinese investors may become a partner of the investment, he said.
He said that a Sri Lankan port was operating efficiently under such system.
State minister for foreign affairs Md Shahriar Alam said that Bangladesh’s main focus was to bring more Chinese investment, reduce further Bangladesh’s trade gap with China and enhance economic cooperation with the country.
The government is working closely with the Chinese authorities to know the requirements of Chinese importers and investors, he said.
Bangladesh appears to be the third destinations after Vietnam and Cambodia for Chinese investors as the government has allocated 800 acres of land at Anowara in Chattogram for the investors, he said.
He also said that bilateral trades could be conducted through yuan as trading currency.
Bangladesh ambassador to China Mahbub Uz Zaman said that Chinese private sector was showing increasingly higher interest to invest in Bangladesh. The country requires more Chinese investment and greater trade expansion in line with its future development goals, he said.
Bangladesh Enterprise Institute president M Humayun Kabir said that Bangladesh should suggest China to develop a globally standard template on lending, repayment and economic cooperation to avoid any possible debt trap amid allegations that the country was putting many countries into debt trap through giving loans.
HSBC Bangladesh chief executive officer Mahbub Ur Rahman said that the local entrepreneurs should focus on Chinese market under the concept of ‘made in Bangladesh-made for China’.
CPD executive director Fahmida Khatun moderated the dialogue.
CPD distinguished fellows Debapriya Bhattacharya and Mustafizur Rahman, Bangladesh Institute of Peace and Security Studies president ANM Muniruzzaman and East West University economics professor AK Enamul Haque, among others, also spoke at the dialogue.
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