Bangladeshi Chinese Investments Face Difficult Obstacles

Chinese investments in Bangladesh are facing grim challenges. The Payra Power Plant, which was constructed through joint initiatives of China and Bangladesh, has met a stumbling block in repayment of Chinese loans. The situation has become even more aggravated with dollar crisis and shortage of raw materials. If these drawbacks cannot be overcome immediately, the Payra Power Plant may come to a closure within a few months.

According to the annual report of the Bangladesh Bank, China invested $465.17 million (13.5% of total foreign direct investment in Bangladesh) and Hong Kong invested $179.22 million (5.2%) in the July–June period of FY22, talking the total Chinese investment to $644.30 million.

The USA was the top investor with $661.12 million in investment in FY2022, which was 19.2% of the total foreign direct investment, the central bank report shows.

A 100% export-oriented Chinese company called the South China Bleaching and Dyeing Limited has invested $150 million in the Dhaka Export Processing Zone (EPZ) with an employment of 10,000 workers and employees.

As a rapidly growing multinational organization in Bangladesh, South China Limited has earned a solid reputation both locally and globally in the textile and clothing sectors over the years.

With its state-of-the-art technology and a highly competent management team, the company has successfully etched its brand name worldwide as a reliable manufacturer of textile products.

Laying emphasis on people-to-people contact, Calvin Ngan, who is also the managing director of South China Ltd, said, “In China, Chinese New Year also means Spring celebration, it is a moment for gathering, for expressing our thanks and to give blessing to our friends and family.”

“The Overseas Chinese Association in Bangladesh is home to all Chinese in Bangladesh. Our mission is to foster a relationship between two nations and two cultures. During the past two years, our organization has worked with authorities concerned to distribute vaccines and donate PPEs to people,” said Calvin.

“The past three years of the pandemic have been a stormy winter for many of us. Fears and worries loom over our heads. We faced and overcame challenges that were not seen in our generation,” he said.

“2023 is a very special year. It is the year of the rabbit. The pandemic winter has ended, and spring has come. We see our motherland opening up the border, no more quarantine. Flights between Bangladesh and China are increasing. Economic and cultural activities begin to pick up. We are seeing more Chinese coming to Bangladesh and more Bangladeshi going to China, said the Ocab president.

“We are here to seek a win-win relationship between Bangladesh and China. Together we must maintain peace and prosperity for both countries to build a better future for our generations,” Calvin Ngan added.

Addressing the event, Shah Mohammad Mahboob, director general of International Investment Promotion of the Bangladesh Investment Development Authority (BIDA), said the business environment in Bangladesh has marked a gradual improvement in recent years as the country has become a hub of investment in the South Asian region.

He also said the BIDA, in cooperation with the stakeholders concerned, is ensuring One-Stop services to entrepreneurs and businesses to invest in different sectors.

Director of Hong Kong Economic and Trade Office in Bangkok Sheung-yuen Lee, in his speech, said Hong Kong has become one of the leading investors in Bangladesh, pouring $1.8 billion to date mainly in the textile and energy sectors. Bilateral trade has already reached over $1 billion.

The government is set to provide an additional €170 million or $183 million to the Payra Port Authority from the Bangladesh Infrastructure Development Fund (BIDF).

This will bring the total amount released to the port authority to €247 million or $266.38 million.
The BIDF was established in March 2021 to finance development projects in Bangladesh using foreign reserves. So far, the Payra Port project is the only project funded by the BIDF, with €77 million already disbursed in four phases.

Under a tripartite agreement, the Payra Port Authority will receive a loan of €524 million ($564.88 million) from the government through Sonali Bank over the next three years, to be repaid in seven years with a 2% interest rate. Half of the interest will go to the BIDF and the other half to Sonali Bank.
Despite concerns that the release of funds will further decrease the foreign currency reserve, the central bank is expected to release the funds as per agreement.

As of 8 February, the country’s foreign exchange reserve was $32,639 million, central bank data shows.
An official of Bangladesh Bank on condition of anonymity said the fund will be released amid the ongoing foreign reserve crisis in the country because there is an agreement on this. However, he said a decision has been taken not to fund any more projects under the BIDF for the time being.

The Capital and Maintenance Dredging of the Ramnabad Channel project, which has a cost of Tk4,950 crore, will create a 75 km channel with a depth of 10.5 meters, allowing ships with a capacity of 40,000 tons to use the Payra Port.