The government looks to tap Chinese investment into Bangladesh by awarding them a special economic zone as well as availing loans at cheap rates from Beijing, said Commerce Minister Tofail Ahmed yesterday.
He made the comment at a discussion on “Bangladesh-China Relation: Achievement and Expectation" organised by the Economic Reporters' Forum (ERF) at the CIRDAP auditorium in Dhaka.
The discussion came days ahead of Chinese President Xi Jinping's upcoming visit to Dhaka.
"He also visited Bangladesh when he was the vice-president of his country. He is now coming to Bangladesh as the president. This only proves that how deep the relations are between the two nations," the minister observed.
Tofail said many countries have problems with other countries. "But Bangladesh has good relations with China, India, Russia and the US. This proves the diplomatic farsightedness of our prime minister."
He added the government has decided to set up 100 special economic zones across the country. Work for around 20 such zones has already started. The government plans to award one of those SEZs to China to attract Chinese investment, he said.
He further said China is gradually moving away from garment manufac-turing and many Chinese businesspeople believe Chinese manufacturers have the opportunity to relocate their businesses to Bangladesh.
"So, we will give them an SEZ to bring in Chinese investment,” he said, adding that both the countries have expressed their willingness to that end.
Currently, China is Bangladesh's largest trading partner, although the trade balance is heavily tilted in favour of the Asian giant.
Bangladesh imports products worth $10 billion from China and exports products worth $800 million, said the commerce minister quoting data from the Export Promotion Bureau.
Export to China grew by 25 percent in the first quarter of the current fiscal year, whereas total export went up by
only 4 percent, he added.
He said export to China would soon surpass the $1 billion mark and Bangladesh's overseas sales would stand at $2 billion to the world's second-largest country within two to three years as China has offered Bangladesh duty-free benefits formore than 5,000 items.
Talking about trade deficit, the minister said Bangladesh's trade deficit with India is debated more compared to that with China.
Tofail said India has granted Bangladesh duty- and quota-free access to all of its products except alcohol and tobacco. But the Bangladeshi exporters have not yet attained capability to utilise the export opportunity, he observed.
"We have to increase our competitiveness."
He also talked about any free trade agreement with China, saying Bangladesh would be cautious about the issue.
“We have already got duty-free benefit to the Chinese market for our products. Why should we go for the FTA with the country? Already China's export to Bangladesh is more compared to its import. If Bangladesh goes for the FTA, how much we will be benefited?"
Most of the countries in the world
except the US have given duty- and quota-free market access to Bangladesh, he said.
During Chinese President Xi Jinping's upcoming Dhaka visit, a number of memoranda of understanding between the two countries would be signed.
The commerce minister said Bangladesh has developed its capacity to implement projects on its own funds. Still the country is borrowing from China at 2 percent with tenures up to 20 years, but these rates could not be compared to those of the World Bank and the Asian Development Bank.
But Chinese financing entails one problem as the biddings are unsolicited and do not go through a tender process. During usual tendering process Bangladesh can negotiate hard for the rates and terms and conditions for a loan.
"We have even proposed that there should be competition among the Chinese companies. If there is a tendering process among the competing Chinese companies, Bangladesh will still be benefitted."
Tofail also said Bangladesh wants to maintain peaceful relations with all countries in the world for further development of the country.