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Friday, July 19, 2019

China funded projects: Delay would create problems

A JOINT working group has been formed to probe the slow progress of the 27 projects involving around $20 billion that China had agreed to provide during President Xi Jinping's Dhaka visit in October 2016. China has so far disbursed only $981.36 million -- less than 5 percent of the amount promised -- since the preliminary agreements were signed between the two countries more than two and a half years ago.
During Prime Minister Sheikh Hasina's visit to China earlier this month, the two sides signed an agreement to form a working committee to identify the reasons for the delay and eliminate those. The development can be viewed as one of the important take aways from the tour. Preliminary agreements for large sums of loans are invariably signed on foreign tours or when heads of State or government visit Bangladesh but most of the projects are not implemented in due time.
Bureaucratic red tape is largely at fault for the snail's pace of progress in the projects. In Bangladesh, the projects must get approval from several committees, which is a   long-drawn-out exercise. The situation is almost similar in case of China. For instance, if they do not agree to or fail to understand even a particular word in the project documents, they send the file back to Bangladesh for the process to start anew. China's Exim Bank has some limitations: only a few officials of the bank deal with foreign loans. Also, Chinese firms lobby hard in both the countries to get contracts, causing further delay. Furthermore, even after loan agreements are signed, which is the last step for projects bankrolled by China, funds are released slowly.
Since the various bottlenecks are well known it should not be a problem to figure out how to release the funds properly. Bangladesh needs to be aware of the fact that it has to pay back the USD 20 billion so it can't afford to use the funds inefficiently, or we will end up becoming like Sri Lanka and end up leasing part of our sovereign territory. We have been macro economically prudent so far --but we must continue it for the foreseeable future.