Chinese FDI in Bangladesh sees huge jump

Foreign direct investment (FDI) from China to Bangladesh has jumped by about 200 per cent year-on-year to $418 million in the past seven months, according to Chinese ambassador Li Jiming.

"Over time, China has become Bangladesh's largest trading partner," he said, adding that Bangladesh is China's third largest market for engineering contracts in South Asia.

Jiming was speaking at the China-Bangladesh Economic and Trade Cooperation Forum 2021 and inauguration of the seventh council of the Chinese Enterprises Association in Bangladesh (CEAB), held virtually yesterday.

"Even amid the Covid-19 pandemic, our bilateral trade and investment bucked global trends, fully demonstrating the resilience and vitality of China-Bangladesh cooperation during such a crucial period of time," the ambassador said.

From January to July this year, the trade volume between China and Bangladesh reached $13 billion, up 58.9 per cent year-on-year. At the same time, Chinese contractors in Bangladesh registered turnover of $3.18 billion, up 59.5 per cent year-on-year.

Jiming went on to say that China and Bangladesh are both in a critical stage of revitalisation and development following the advent of Covid-19.

He also said that his country attaches great importance to building economic and trade cooperation mechanisms with Bangladesh.

Besides, after the zero-tariff benefit afforded to 97 per cent of Bangladesh's exports to China took effect, shipments to the East Asian nation have posted double-digit growth.

During the January-July period, Bangladesh's exports to China increased by about 38 per cent year-on-year, Jiming said. Up till March this year, the total value of FDIs in Bangladesh stood at about $20 billion, of which China provided around $1.4 billion.

Most Chinese investment comes in the local power sector, which received about $443 million as of May this year, according to data from Bangladesh Bank.

According to data compiled by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), bilateral trade between China and Bangladesh was about $12 billion in 2019-20 fiscal year, which was heavily tilted towards China.

However, emphasising on the need for low-carbon energy development, the ambassador said China will no longer build new coal-based power projects in Bangladesh.

While striving to achieve its carbon peak by 2030 and carbon neutrality by 2060, China will also strongly support Bangladesh's green and low-carbon energy development, he added.

According to the Chinese envoy, his country encourages its enterprises to strengthen their exchanges and cooperation with businesses in Bangladesh, especially those in the manufacturing sector, to accelerate green development.

Since 2008, the Bangladesh government has approved 18 coal-based power plants as a part of its plan to generate 40,000MW of power, of which 35 per cent from coal-fired plants, by 2030.

However, the government, earlier this year, approved a proposal to scrap 10 of the 18 coal-fired power plants as construction work on the projects had made no progress in years.

China is investing in at least a couple of coal-fired projects right now, including the second phase of the Payra Thermal Power Plant, a joint venture with Bangladesh.

The Chinese ambassador also congratulated the newly elected CEAB President Ke Changliang, chief representative of the China Civil Engineering Construction Corporation in Bangladesh, and Secretary General Wang Xiaojiao, chief representative of China CAMC Engineering Co Ltd in Bangladesh, and other executives of the association.

Addressing the programme, various business leaders of Bangladesh urged Chinese investors to increase their investment in the country as a development partner and assured them of providing a safe and secure environment.

Salman F Rahman, the prime minister's adviser on private industry and investment; Md Sirazul Islam, executive chairman of Bangladesh Investment Development Authority; Md Nazrul Islam, executive chairman of Bangladesh Export Processing Zones Authority; Shaikh Yusuf Harun, executive chairman of Bangladesh Economic Zones Authority; Md Jashim Uddin, president of the Federation of Bangladesh Chambers of Commerce and Industry; and other business leaders from both countries spoke at the programme.