Bangladesh Economy: News & Updates

[eastwatch]

TATA HALTS BANGLADESH INVESTMENT

Tata had planned to build a power plant, steel mill and fertilizer factory
Indian industrial giant Tata has said it is suspending work on a $3bn investment in Bangladesh because of delays by the government.
Tata planned to build a power plant, steel mill and fertiliser factory in the country, making it the single biggest investment in Bangladesh.

On Sunday, senior Bangladesh ministers said general elections due in January made it hard to accept the proposals.

A government spokesman said they hoped Tata would return to Bangladesh.

The announcement by Tata was made after a meeting between its negotiators and officials of Bangladesh's Board of Investment.

"We are extremely disappointed and frustrated... we thought the projects were good for the country's economy, for the people and the balance of payment," Alan Rosling, executive director of Tata Sons, told journalists in Dhaka.

He said they had discussed the issue with senior ministers and key officials for the past two days.

"All of them appreciated our proposals, but they could not go beyond politics," Mr Rosling is quoted as saying by Reuters.

Politics

The BBC's Waliur Rahman in Dhaka says the government is hesitant about reaching an agreement on a big investment plan ahead of the elections.

Reports say some politicians and economists have said that Bangladesh should not rush to accept Tata's proposals because they may eventually go against Bangladesh's interests.

But ministers say the delay is not due to any "anti-India" bias.

Bangladesh has however found it hard to attract money - total foreign direct investment (FDI) in Bangladesh since 1972 has totalled $3bn.

The World Economic Forum (WEF) said in a 2004 report that Bangladesh was one of the most uncompetitive places to do business.

============================================
Thanks arihant for posting the above BBC link on TATA investment in BD. When the news of US$3 billion TATA investment proposal was floated, I was overwhelmed with joy, because it would create wealth, employ thousands and REDUCE balance of trade with India.

After reading this news probably in Hindustan Times (Internet edition), I wrote them a letter welcoming the TATA projects, which they have published. However, after deeply thinking about the essence of these projects I was awakened with the worry of hollowing out effects of these projects on the economy of BD.

You have to read my opinion here in a very logical mind and you have to accept that I am writing it in an open mind and not as a ploy to do India bashing. Why should there be a hollowing effect when TATA was supposed to invest in factories, produce power, steel and fertilizer?

I have no adverse opinion about the power sector, but I disagree that the steel mills and fertilizer factory would have benefitted BD. Please note the following:

1) Steel Mills : TATA did not want to build fully integrated steel mills, where iron ores are smelted in the furnace at 1600*c to produce steel, the steel ingots are then transported to a varieties of shops like, bar shop, plate shop, angle shop, channel shop etc. Instead, TATA just wanted to EXPORT the steel ingots to India.

More value added goods that are produced in the shops I have noted above are then to be done in India. So, TATA wanted to build only that facility that burns the BD natural gas, but did not want to build those shops that produce more value-added finish goods.

2) Fertilizer Factory : Outwardly innocent as steel mills, fertilizer was also to be produced with the use of BD natural gas, and then the whole lot was to be exported to India. This fertilizer would have helped India to produce more rice and wheat, but at the expense of BD's own agriculture.

Urea is an ammonia-based fertilizer and its raw material is natural gas or CH4. In the processing plants, nitrogen is caught from the air and carbon is removed from CH4. By multiple stage processing the CH4 is converted into NH3 then to NH4. this is the liquid form of urea.

BD gets more benefits if it uses the entire urea output in its own farmland. A 500,000 ton use of urea would produce an extra 2,500,000 ton of rice under optimum conditions. So, when TATA exports 1/2 million ton urea to India, our production loss is 2.5 million ton of food. Can someone do the arithmatics to find out the market values of 1/2 million ton urea and 2.5 million ton of rice.

Considering all those points above, now I do not regret that the GoB has technically rejected the TATA investment proposal. In fact, we do not need TATA types of projects in BD, because it would not help our own economy.

 

[eastwatch]

Tata wanted gas for all of its projects when BD does not have enough gas to even meet current demand. Tata was given the the choice of coal but they declined.
Currently a Korean company proposed a 8 billion dollar investment to convert coal to gas and produce 5000 MW of electriciy for 50 years. I am really excited to dig into it.

I am excited about the South Korean peroposal. Can you elaborate it a little?

 

[TopCat]

I am excited about the South Korean peroposal. Can you elaborate it a little?

I am also waiting for the details. I saw that in the newspaper that they submitted the proposal with the PM office. It also said a UK company will provide the conversion technonlogy in one of the coal mine and they said the reserve could be converted to 50 years worth of gas to produce 5000 MW power. And 85% of coal can be converted underground. The details of the technology is still a mystery to me but they said they going to use steam, co2, o2 etc and some sort of combustion underground.

Yet I am not falling for it as most private companies exeggertate things only to win the contract.

 

[idune]

Currently a Korean company proposed a 8 billion dollar investment to convert coal to gas and produce 5000 MW of electriciy for 50 years. I am really excited to dig into it.

Coal gasification is prohibitively expensive to be a viable option for Bangladesh. Then there are more coal needed for gasification path then regular coal plant, therefore depletion will be faster. I am surprised folks are jumping on seeing numbers without realizing the reality.

If this was a cost effective option yes then by all means. Until then our best bet would be clean tech applied in US and China around traditional coal plant. Besides, Bangladesh coal has much less sulpher (0.3-0.5%) contents than indian (4-5%) or in other countries.
I

 

[arihant]

Business hazards need to be banished to lure investment

Traders, economists blame gas, power shortages, law and order slide for glum scene

Sunday August 23 2009 00:56:56 AM BDT

Economists and businessmen said yesterday that disruptive gas and power supplies, lack of logistic and infrastructure supports as well as extortion are mainly discouraging the private sector from investing in the country.(The Independent)

Talking to The Independent, economists Kazi Kholiquzzaman and Abu Ahmed and businessman Mir Nasir echoing the same views observed that if the entrepreneurs are not assured of adequate gas and power supplies, logistic and infrastructure support and improved law and order, they would not feel encouraged to invest in the private sector.

At the moment, Petrobangla supplies 1,850 mmcfd to 1900 mmcfd of gas against a demand of more than 2,000 mmcfd to 2,100 mmcfd. On the other hand, Power Development Board (PDB) can supply 3,700 megawatt electricity to 4,200 megawatt against the present official demand of 5,000 megawatt electricity. However, the unofficial demand reaches 5,500 megawatt to 6,000 megawatt at peak hours. As a result, the country's industrial sectors have long been facing serious setbacks.

However, Petrobangla sources claimed that the demand hits 2,000 mmcfd to 2,100 mmcfd for only a few hours a day only. On average, the daily demand hovers around 1,650 mmcfd, they added.

On the other hand, PDB officials said due to shortage of gas many gas-fired power plants remain inoperative. If a smooth supply of gas can be ensured to PDB's power plants, some 500 megawatt to 550 megawatt power can be generated.

Businessman Mir Nasir said the two major energy sources gas and power are urgently needed to expand trade and business.

"But we are not getting gas and power as per our required demand. How and in what way will we expand our business? As we are failing to ensure gas and electricity supplies to our industries, their output has been hampered seriously. And at one stage, many industries and factories have failed to run their operation," said the former president of Federation of Bangladesh Chamber of Commerce and Industry (FBCCI).

Apart from these, the businessmen are not being encouraged to invest due to deterioration of law and order, he observed.

"The government will have to ensure law and order to run our business. Recently, the garments sector is again becoming restive. If unrest is created in the garments sector again, it would not possible for the industry owners to continue their business," he pointed out.

He also said adequate infrastructure facilities and an investment-friendly environment will have to be ensured.

"We don't have sufficient infrastructure and logistic support from the government side," Mir Nasir said.

Replying to a query about expansion of his own business, the entrepreneur said he suspended expanding his business due to the reasons mentioned.

"Not only me, but many other entrepreneurs too have refrained from expanding their business. If the government doesn't create an investment-friendly environment, the entrepreneurs will not come up with investments," the businessman said.

Talking to this reporter, Professor Abu Ahmed said assurance of utilities such as gas and electricity is a prerequisite for any kind of investment. Unfortunately, the country is facing severe handicaps in providing these services, he added.

"How the businessmen will conduct business if the government does not supply them required volumes of gas and power. On the other hand, the businessmen are also not getting logistic support from the government. If this situation continues, it would not be possible for expansion of industry and investment in the country," he observed.

The economist also observed that rampant extortion has also been frustrating the businessmen. "This should be stopped," he added.

Replying to a query, Abu Ahmed said although the banks have been facing excess liquidity, businessmen are not showing their interest in borrowing loan from the financial institutions in order to expand business thanks to a lack of confidence.

"Our entrepreneurs have been losing their confidence in the authorities as they have yet to create a congenial environment for doing business in the country," the economist added.

Kazi Kholiquzzaman said the businessmen are facing many problems including capital and environment.

"The government will have to ensure supply of adequate power and gas, build up confidence and create suitable environment for doing business," he added.

He said when the banks are experiencing excess liquidity, businessmen are not feeling interested to borrow money from the banks as they have yet to see an environment conducive to running their business.

"The government will have to take initiatives in a bid to encourage businessmen in the country," Kazi Kholiquzzaman added.

 

[Narkun]

Bangladesh exports to India to reach $1 bln by 2011

DHAKA (Reuters) - Bangladesh's exports to India will reach at least $1 billion by the end of 2011 as customers in that India now find several of its neighbour's products attractive, a business leader said on Sunday.

"Our main focus will be the consumers of north-eastern states of India who preferred Bangladesh products including food items, textiles, melamine products and toiletries" said Abdul Matlub Ahmad, President of India-Bangladesh Chamber of Commerce and Industry.

"At the moment negotiations are continuing with India to raise export quotas of ready-made garments to 20 million pieces from 8 million now," Ahmad told Reuters in an interview.

Ahmed is also chairman of Nitol-Niloy Group of Industries, a conglomerate.

Bangladeshi manufacturers started to export bricks to India from last week, a new item on the export list.

Initially Bangladesh will export 400 million bricks worth $40 million to Tripura.

Ready-made garments are the principal export of Bangladesh, which accounts more than 80 percent of the total export earnings of the country.

Bangladesh's exports grew 10.3 percent to $15.56 billion in the 2008/09 fiscal year that ended in June, the lowest growth in six years, data showed, reflecting falling demand as a result of the global economic slump.

Ahmad said exports of Bangladeshi products such as processed foods, cement, plastics, sheet glass, dry fish, furniture and stone chips will grow 10-fold in the next two years.

He said that new Bangladeshi products such as melamine and scrap steels were also finding their way into the north-eastern provinces of India.

"Brick export to India opened up a new but strong potential window for Bangladeshi manufacturers and that will enormously help reduce our trade gap with India," Ahmad said.

This will however hit the local real estate sector as prices of bricks had already more than doubled in the past two years, traders said.

Also, the export to India will encourage business people to set up brick manufacturing fields close to the Indian border to make quick cash and would likely pollute the climate through harmful emissions, environmental groups say.

Most brick fields in the country do not have emission control systems.

Bangladesh imports goods -- mainly vehicles, chemicals, food items, fabrics, cotton and machineries -- worth more than $3 billion from India, India buys about $400 million worth of goods from Bangladesh, they said.

 

[eastwatch]

GOVT SETS $17.6 billion EXPORT TARGET FOR 2009 - 2010
Monira Begum Munni

The government has set an ambitious $17.6 billion export target for the current fiscal year despite objection by a major export grouping and warnings by multilateral agencies that the shipment would be hit by global downturn.

The government's Export Promotion Bureau (EPB) has set the target, which sees a robust 13 per cent or more than two billion dollars increase in shipment from the exports of $15.56 billion in the 2008-9 fiscal year.

The target was fixed at a meeting of the EPB where knitwear and woven garments exporters, who account for some 80 per cent of the country's shipment, agreed to the government's upbeat projection, the Bureau said.

"Our garment exports have done well in the outgoing fiscal year due to a very competitive price. We think apparel exports would grow at about the same pace this fiscal," EPB vice-chairman Shahab Ullah said.

"For the current fiscal we set 13 per cent growth target banking on the continuous good performance by the ready-made garment sector. I don't think the global recession would have a major impact on apparel exports," he said.

Exports of garment items which include T-shirts, jeans pants, pullover, shirts and sweater grew more than 16 percent in the year concluded on June 30, 2009.

For the current fiscal year, all 21 major export products barring petroleum products have been projected to grow, including the top item knitwear at 13.50, woven garments 13 per cent, leather 30 per cent, medicines 15 per cent and agro-processed food a whopping 76.66 per cent.

Export of frozen food is expected to grow a modest three per cent due to a gloomy international outlook. Shrimp exports recorded the worst fall in a decade in the last fiscal year and the exporters have said they don't see any dramatic reversal of fortune.

In addition, a self-imposed ban on export of fresh water prawn till November due to the presence of harmful antibiotic and a massive destruction of thousands of farms during the Cyclone Aila have also hit production, Bangladesh Frozen Food Exporters Association said.

According to the EPB, export of footwear in the ongoing fiscal year would cross $200 million and bicycle $ 100 million for the first time in the country's history.

Outlook for traditional primary products such as jute, jute goods tobacco, tea and agricultural products, however, has been kept modest because of the falling demand in the international market.

The upbeat forecast has been made despite the country's largest export grouping has openly questioned the wisdom behind such a rosy projection.

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) president Fazlul Hoque said the association has written a letter to the EPB, expressing disagreement to the projected export income.

"We don't think we'll achieve this target. The EPB has imposed it on the exporters. There is no rationale behind such an ambitious target," Hoque, whose grouping make up more than 50 per cent of the country's exports, told the FE.

The BKMEA president said exports of knitwear posted 17 per cent growth in the last fiscal year, due to a massive 50 per cent expansion in shipment in the first three months.

"The rest of the year our growth was less than seven per cent," he said.

"Global recession is not over yet. There has hardly been any increase in orders. So we don't think knitwear exporters would achieve 13.5 per cent growth that the EPB has projected," he said.

Multilateral agencies such as the World Bank and the Asian Development Bank have also made less-than-optimistic projection to the country's export growth, as they expect Bangladesh to be hit by the second round of the global recession.

The country's exports last year grew 10.31 per cent to a record $15.56 billion, with only five out of 21 major items registering positive growth.

The growth was more than 42 percent in the first quarter but it slowed down in the next eight months.

 

[TopCat]

I thnk Bangladesh's export will surpass Pakistan within this or next year.

 

[eastwatch]

Two foreign firms to explore gas in three offshore blocks

TWO FOREIGN FIRMS TO EXPLORE GAS IN THREE OFFSHORE BLOCKS
M Azizur Rahman

The government Monday approved 'conditionally' the awarding of three offshore blocks to two foreign companies -- US ConocoPhillips and Irish Tullow - for oil and gas exploration in the untapped areas of the Bay of Bengal.

The cabinet committee on economic affairs stamped its seal of approval to lease out two deep-water offshore gas blocks - DS-08-10 and DS-08-11 to ConocoPhillips and one shallow water block SS-08-05 to Tullow.

Both the companies have pledged to invest a total of US$160.50 million in their bids for hydrocarbon explorations in the three approved offshore blocks.

"We have approved three bids of the foreign companies and asked the energy ministry to hold discussion with the companies relating to signing of the production sharing contracts (PSCs)," the chief of the cabinet committee Finance Minister AMA Muhith told newsmen after the meeting.

But both the companies must avoid exploring the sea areas that became disputed due to overlapping with blocks of the neighbouring countries, he said pointing to the condition imposed by the cabinet committee.

"We are, however, hopeful of settling the dispute over maritime boundary delimitation with neighbouring India and Myanmar through negotiations," said Foreign Minister Dr Dipu Moni.

The results of the exploration by the foreign companies might come within four years for the shallow water block and five years for the deep-water blocks, said energy secretary Mohammad Mohsin.

Responding to a question the energy secretary said the government was not in favour of awarding more than two blocks to a single company.

The state-run energy company Petrobangla had primarily selected the US oil company ConocoPhillips and Irish firm Tullow for a total of nine offshore blocks under the country's latest offshore bidding launched in February 2008.

The ConocoPhillips was selected by Petrobangla for DS-08-10; DS-08-11; DS-08-12; DS-08-15; DS-08-16; DS-08-17; DS-08-20 and DS-08-21 blocks.

Tullow Bangladesh was selected for SS-08-05.

The Petrobangla made the selections after evaluating offers from companies including China's CNOOC, Australia's Santos and the Korean National Oil Corporation.

ConocoPhillips was selected for eight blocks and Tullow for one.

The energy ministry recently recommended leasing out only three offshore blocks in total and sent its proposal to the cabinet committee on economic affairs for approval.

The offshore bidding round was launched by the army-backed caretaker government in the wake of the country's depleting gas reserves.

But the decision on awarding the gas blocks was left to the elected government.

While inviting bids by the previous caretaker government in February 2008 it had pledged to sign the contracts by October 2008.

In its bids the ConocoPhillips pledged to invest $110.66 million and offered a bank guarantee of the same amount for the two approved blocks, while Tullow committed to invest $49.85 million and offered a bank guarantee of $33.9 million.

As of now, Cairn Energy-operated Sangu gas field is the country's lone operational offshore gas field.

International oil companies have been awarded only 12 hydrocarbon blocks -- both onshore and offshore -- since gas exploration began in the country in late 1960s.

But they now hold only six blocks having given up the rest.

The leasing of the Bangladesh's onshore hydrocarbon blocks to international oil companies is now halted following a court order.

But the country urgently needs new energy sources, and unless new gas fields are discovered, the supply of gas will start diminishing from 2011.

The government forecast that the country's current gas reserves will run out by 2014-2015 at the present consumption rate.

At present, proven gas reserves are 7.3 Tcf, while the probable reserves are 5.5 Tcf.

The country's economy has been growing at an average of 6 per cent since 2003-2004, the highest rate of growth since independence in 1971.

Expanded industrial activities have raised the demand for energy and there is now a daily shortage of 250 million cubic feet per day (mmcfd).

This has forced Petrobangla to suspend gas supplies to new industries.

The government has suspended new gas connections to bulk consumers and decided to continue it until the overall gas out put reached 22,00 mmcfd.

Operation of three state-owned gas-guzzling fertiliser factories are now suspended to divert gas to other industries and power plants.

Separately, a number of power plants with a total generation capacity of around 600 megawatts (mw) are currently not operating due to gas crisis.

Currently the country produces around 1950 mmcfd of gas against the demand for over 2200 mmcfd.

 

[Patriot]

I am not sure iajidini but with power crisis in Pakistan it might become a reality.Thanks god GOP is now paying attention to power crisis and hopefully it'll be fixed in 3-4 years and then economy will be back on track .

 

[eastwatch]

I am not sure iajidini but with power crisis in Pakistan it might become a reality.Thanks god GOP is now paying attention to power crisis and hopefully it'll be fixed in 3-4 years and then economy will be back on track .

When the BD export last year increased by more than 10% and stood at $15.56 billion, the Pakistani export suffered a 5% decrease and stood at about $17.7 billion. So, if this trend continues, then it is possible that BD exports will surpass the Pakistani exports sometime in the future.

I sometimes wonder why should there be any power crisis in Pakistan when the installed capacity in that country is more than 23,000 MW. In comparison, the installed capacity in BD is about 4,500 MW and the actual production is somewhere between 3,500 to 4,000 MW only. However, many of the factories have their own generators. I just do not know the q'ty of power produced in this way.

BD is going to add another 3,000 MW within the next couple of years. The new power plants will be based on coal and imported diesel etc. It seems the GDP/power ratio in BD is much higher than Pakistan at present. Whatever it may be, an industrial revolution will require BD to produce at least 20,000 MW of electricity in the short term.

 

[eastwatch]

Plastic sector eyes global market
BD PLASTIC SECTOR EYES GLOBAL MARKET
Kazi Azizul Islam

The plastic sector, which is on the 12th position in the country's export earners' list with an annual earning of Tk 12 billion (1,200 crore) or about $173.9 million, is going to get a boost as two global superstores are eyeing Bangladesh market for importing plastic products.

Paris-based Carrefour, world's second largest supermarket chain after Wal-Mart, has started negotiations with one of Bangladesh's top plastic goods manufacturers to source plastic house wares.

This particular manufacturer, the licensee of the A&E, world's number one US brand for apparel hangers, also serves the local export-oriented garment manufacturers.

Stockholm-based IKEA, the global home furnishing leader, has, meanwhile, showed its intention to source house wares of easily shipable plastic goods from a number of Bangladeshi manufacturers.

After developing their base, some Bangladeshi companies have started manufacturing plastic furniture and plastic accessories for domestic market. Some consignments of such products have already been exported.

Eyeing the growing local market, some domestic plastic goods manufacturers have also recently started production of house wares including baskets, buckets and treys.

"Export of plastic goods, worth several billion dollars, is possible if the government supports the industry," said Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA) president, Jashim Uddin.

China's earning from the export of plastics goods, including toys and house wares, is not much less than her export earnings from textiles or garments sectors, he noted while pointing out that the Chinese manufacturers have lost their competitive edge in many ways in recent times, creating a large scope for Bangladesh to grab a significant share in global plastic goods market.

Many global superstore chains, including Wal-Mart and TESCO, import apparels from Bangladesh and they may also be interested in importing plastic goods from the country if dependable capacity on sourcing is developed here, say business sources.

The BPGMEA submitted earlier a detailed proposal to the commerce ministry to take some policy measures for promoting exports of products of their members on a sustained basis. The suggestions include allowing duty-free import of raw materials for plastic industry, establishing plastic testing laboratory, accelerating the implementation of proposed plastic industry estate and easing duty draw back procedures for small exporters. These merit priority attention of the authorities concerned.

 

[Patriot]

When the BD export last year increased by more than 10% and stood at $15.56 billion, the Pakistani export suffered a 5% decrease and stood at about $17.7 billion. So, if this trend continues, then it is possible that BD exports will surpass the Pakistani exports sometime in the future.

I sometimes wonder why should there be any power crisis in Pakistan when the installed capacity in that country is more than 23,000 MW. In comparison, the installed capacity in BD is about 4,500 MW and the actual production is somewhere between 3,500 to 4,000 MW only. However, many of the factories have their own generators. I just do not know the q'ty of power produced in this way.

BD is going to add another 3,000 MW within the next couple of years. The new power plants will be based on coal and imported diesel etc. It seems the GDP/power ratio in BD is much higher than Pakistan at present. Whatever it may be, an industrial revolution will require BD to produce at least 20,000 MW of electricity in the short term.

Well, there is shortfall of 3000-4000 MW in Pakistan.In fact there is so much eletricity usage in Pakistan.I would imagine even the millitary itself is using at least 3500-4000 MW.The decline in exports can be directly atributed to Load Shedding.There is at least 6-7 hours load shedding daily all over Pakistan...But if the new Dam Project is sucessful then we will have more then enough electircity for decades.

 

[TopCat]

When the BD export last year increased by more than 10% and stood at $15.56 billion, the Pakistani export suffered a 5% decrease and stood at about $17.7 billion. So, if this trend continues, then it is possible that BD exports will surpass the Pakistani exports sometime in the future.

I sometimes wonder why should there be any power crisis in Pakistan when the installed capacity in that country is more than 23,000 MW. In comparison, the installed capacity in BD is about 4,500 MW and the actual production is somewhere between 3,500 to 4,000 MW only. However, many of the factories have their own generators. I just do not know the q'ty of power produced in this way.

BD is going to add another 3,000 MW within the next couple of years. The new power plants will be based on coal and imported diesel etc. It seems the GDP/power ratio in BD is much higher than Pakistan at present. Whatever it may be, an industrial revolution will require BD to produce at least 20,000 MW of electricity in the short term.

Most industries dont use transmissin line electricity. The got their own. But they suffered due to shortfall of Gas.

 

[eastwatch]

CHINA OFFERS $1b FOR 5 PROJECTS
But favours hard loans; wants to pick bidders for their projects; unhappy with slow project implementation
Rejaul Karim Byron

China at a state-level meeting has primarily expressed its interest to finance five projects involving more than $1 billion as Bangladesh sought $5.14 billion assistance for 28 projects.

China also offers its assistance in a mix of buyer's credit and concessional loans, which have hard terms, against Bangladesh's request for soft loans.

Since 1975, China has given Bangladesh $1.5 billion finance, of which $978 million had been hard type loans.

The country also said in future Bangladesh should submit feasibility study reports to it for all its proposed projects, and then China would have its own feasibility study before deciding which schemes to finance.

China also expressed its unhappiness about Bangladesh's poor project implementation under Chinese fund.

The Chinese side also said the contractors for the projects to be assisted by China have to be selected from China which is an internationally accepted process.

China conveyed these suggestions earlier this month following a meeting of the Bangladesh-China Joint Economic Commission (JEC) held in Beijing on July 28.

Economic Relations Division (ERD) Secretary Mosharraf Hossain Bhuiyan headed a nine-member Bangladesh team at the meeting, while Vice-minister Chen Jian led a nine-member Chinese delegation. The last JEC meeting was held in Dhaka in May 2005.

Bangladesh team sources say China primarily expressed its interest in the projects of Seventh Bangladesh-China Friendship Bridge on the Arial Khan river in Kazirtek, Madaripur, Bangladesh-China Friendship Exhibition Centre, Shahjalal Fertiliser Factory, digital telecommunications networks at the metropolises and Pagla-Keraniganj Water Treatment Plant.

Mosharraf Hossain Bhuiyan told The Daily Star the JEC meeting has been successful, but its final success would depend on active implementation of the meeting decisions.

He said ERD in this regard has already started discussions with the ministries concerned.

Mosharraf added, "We requested the Chinese government to give soft loans instead of suppliers of buyers credit. If soft loan is available, approval and implementation of the project become easy. The approval process of suppliers or buyers credit is very complex."

The ERD secretary quoting the Chinese vice-minister said, "The Chinese government requested the Bangladesh side to prioritise the projects and inform them."

"However, the Chinese minister said the projects which were already being discussed may be considered on priority basis," he added.

The Chinese state bank the Export Import Bank of China last week also relayed the terms and conditions to Bangladesh.

Both sides signed an Agreed Minutes on Bangladesh's proposal on the projects and other issues.

Sources say the Chinese side agreed to conduct a feasibility study on the construction of Kazirtek Bridge which was confirmed by the signing of a Letter of Exchange on July 28.

The Chinese side would send an investigation team to Bangladesh for the project.

On the Bangladesh-China Friendship Exhibition Centre, the Bangladesh delegation accepted that due to the strict restriction on height, the net height for nearly 50 percent of the indoor space will be lower than 12 metres. The Chinese side also agreed to make a new design of the project.

The Import and Export Bank of China will send an expert team to re-evaluate Shahjalal Fertiliser Plant and report review conclusion to the Ministry of Commerce of China.

In September 2006 the Import and Export Bank of China and the Ministry of Finance of Bangladesh signed a general loan agreement on a preferential buyer's credit worth $211 million as part of preferential buyer's credit worth $400 million provided by the Chinese side and the agreement expired in August 2008.

The Bangladesh side proposed to provide the proposed loan to the "Introduction of 3G and Expansion of 2.5G Network" project instead of "Installation of Digital Telephone Exchanges in Metropolitan cities and Important District Headquarters and Upazila Growth Centres" and to provide soft loan for the project.

The Chinese side noticed the request of the Bangladesh side.

Sources say at the JEC meeting the Chinese side expressed dissatisfaction saying in the past changes have been made several times in selecting project and implementation in Bangladesh. Indonesia, on the other hand, started project implementation at the same time and completed implementation of all China-aided projects, but Bangladesh could make almost no progress.

The sources say at the meeting they also said Chinese grant would not meet Bangladesh's emergency needs. In this regard the Chinese government has its own limitations. In case of getting assistance of big amount Bangladesh would have to take loans from the Chinese banks.

They also told the meeting the feasibility study of the project for which Bangladesh sought assistance should first be done by Bangladesh. If the result of the study is positive then Chinese authorities may conduct their study.

They also said what kind of grant China would give to commercial projects depends mostly on the profitability of the projects.

The deficit against Bangladesh is the highest in China-Bangladesh trade. China has already given Bangladesh duty free market access for 84 commodities, but in reality there is no demand for these items in the Chinese market.

For this, at the JEC meeting Bangladesh sought duty free access for another 34 commodities in the Chinese market. China has not given any specific assurance in this regard but said it would consider the matter.

China has offered incentives like free booth to participating exhibitors from Bangladesh in the South Asian Countries Commodity Fair in Kunming by the end of this year.

The ERD high officials say they would write a fresh letter to the Chinese government requesting to inform how much assistance Chinese government is willing to give for the 28 projects and what are the terms and conditions.

After knowing how much assistance would be available the Bangladesh government would try to collect the gap in required fund from other sources.

Bangladesh was seeking Chinese assistance in introducing 3G telecom network and expansion of 2.5G network at an estimated cost of $211 million, construction of the second Padma bridge at an estimated cost of $579.21 million, Pagla/Keraniganj Water Treatment Plant at a cost of $267 million, North Dhaka (East) Sewerage Treatment Plant and associated sewerage system at a cost of $121 million and the second Meghna bridge on Dhaka-Chittagong Highway at an estimated cost of $125.36 million.

Dhaka will formally request Beijing to provide $1.4 billion to implement the Ganges Barrage Project and $88.12 million for restoration of the flow of the Buriganga river and for a project for prevention of river pollution, says the list of projects to be discussed at the talks.

Earlier, Bangladesh requested China to provide $560 million for implementing the North-West Fertiliser Company Limited project.

China however proposed a mixed credit scheme for the project, to which Bangladesh responded by urging China in June this year to provide the assistance for Shahjalal Fertiliser Company in Fenchuganj instead.

At the talks in Beijing, once again Bangladesh will request for a financial assistance of $600 million for the much-awaited Rooppur Nuclear Power Project. In February 2007, ERD sought the assistance from China, but a response is yet to come.

The national ICT infrastructure network for the Bangladesh government phase-2 at an estimated cost of $130 million, construction of a single line metre gauge railway track from Dohazari to Cox's Bazar through Ramu, and from Ramu to Gundum at an estimated cost of $210 million, a railway bridge with provision of dual gauge double track over the Jamuna river at an estimated cost of $172 million, Karnaphuli tunnel at an estimated cost of $289 million, and construction of Barapukuria 125 megawatt coal-fired thermal power station at a cost of 47.4 million are the other projects expected to be discussed.