Bangladesh is trying to engage in various sub-regional connectivity projects via road, rail, and sea routes with India.
This article is part of the series — India–Bangladesh Relations @50: Commemorating Bilateral Ties.
Sheikh Hasina’s unprecedented electoral success that brought her to power for a record fourth time in 2018 has opened up a plethora of opportunities for sub-regional partnership, with Bangladesh acting as a bridge between India and Southeast Asia. This, in turn, has opened up new economic opportunities for Dhaka and the nations in the Bay of Bengal region. The pandemic did negatively impact economies of the region but the process of regional economic integration is irreversible.
The last decade has witnessed an unprecedented economic growth in Bangladesh, which was once described as a basket case. Even critics of the Hasina regime would agree that a steady growth rate of seven percent in the past decade has pushed Bangladesh closer to acquiring the status of a middle-income country. Dhaka would parallel cities in eastern India in terms of cash flow, with a fast-emerging middle class.
Japan, which is working closely with India to develop a segment of infrastructure in Bangladesh, is thinking big when it comes to its investments in Bangladesh. It is incentivising its companies to shift manufacturing facilities out of China and has added Bangladesh to a list of preferred destinations for relocating the factories, according to a recent Bloomberg report.
A Special Economic Zone (SEZ) is being set up in Bangladesh to lure Japanese firms’ production facilities. The industrial zone sprawling on 1,000 acres in the Araihazar sub-district, 32 kilometres away from Dhaka, is expected to bring in US$ 20 billion in Japanese investments. The Bloomberg report quoted the Bangladesh Economic Zones Authority, where the Authority stated that over the last 10 years, the number of Japanese companies operating in Bangladesh has tripled to about 300.
It is PM Hasina’s contribution that has transformed a least developed country such as Bangladesh into a developing country now, going by economic indicators. Her first term as Prime Minister (1996–2001) was a warm-up phase, coming after years of decay and deadlock caused by the assassination of Sheikh Mujibur Rahman in 1975. It, however, faltered as the BNP-Jamaat alliance took over and unleashed a reign of violence, corruption, religious extremism, and militancy that lasted for a full term of five years from 2001. In 2008, she came up with her party’s manifesto, ‘Charter for Change-Vision 2021,’ and managed a landslide victory in the parliamentary election held on 29 December 2008. She became the PM for the second consecutive term in 2014, against all odds.
The Central Bank’s — Bangladesh Bank — data indicate that the country had received FDI worth US$ 961 million in 2008–09, while FDI inflow increased to US$ 2,454.81 million in 2016–17. Bangladesh received US$ 2,607 million worth of foreign investment from July to May in 2017-18, according to the latest data of Bangladesh Bank.
Connectivity between Bangladesh and neighbouring countries, including India, has received a great boost in the past 10 years as well. Bangladesh is playing a leading role in the Bay of Bengal Initiative for Multi Sectoral Technical and Economic Cooperation (BIMSTEC), which groups together Bangladesh, India, the Maldives, Sri Lanka, Thailand, Nepal, and Bhutan in a forum for multilateral cooperation.
Bangladesh is uniquely positioned to take advantage of its location in the eastern region of South Asia. It will be a hub for initiatives that seek to connect Bangladesh, Bhutan, India, and Nepal with ASEAN and other East Asian countries. With deeper trade, investment, and connectivity linkages within the sub-region, Bangladesh can benefit from new markets and new import sources of high-quality and better-priced products.
Bangladesh is trying to engage in various sub-regional connectivity projects via road, rail, and sea routes with India. These connectivity projects can create more trade opportunities for Bangladesh and the Northeastern states of India. Notwithstanding the pandemic, India launched several connectivity initiatives with Bangladesh in 2020 across sectors that will enable further economic integration of the region. Further regional connectivity between Bangladesh and its neighbours is expected to happen during the implementation of the planned concept of the “Blue Economy.”
The erstwhile Khaleda Zia regime in Bangladesh had strong reservations about granting connectivity and transit to Bangladesh’s neighbours, on the pretext that it would infringe on the sovereignty of the country. It was the Hasina-led government that realised that granting connectivity and transit was a win-win situation for Bangladesh as, apart from earning revenue, it would allow local entrepreneurs to access the markets in Northeast India and beyond, and it will enable greater people-to-people contact in a smooth way.
The challenges before PM Hasina in the next three years — who has an unprecedented parliamentary majority — would be to guard against falling into a Chinese debt trap, to fight corruption, and to strengthen institutions to maintain economic growth.
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Dipanjan Roy Chaudhury is the Diplomatic Editor The Economic Times.
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