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Korea wants to develop Bangladesh's infrastructure, proposes 2-policy change
Tribune ReportPublish : 29 Aug 2023, 13:03
Bangladesh and South Korea tie is best known for Seoul's contribution to the readymade garments (RMG) sector's development in the late 70s, years after establishing diplomatic relations in 1973.
As Bangladesh is poised to graduate from the LDC and the government sets a target to be a smart country by 2041, Korean Ambassador to Dhaka Park Young-Sik said: “We want to become an important partner in Bangladesh’s infrastructure development as we have done in the past in the RMG industry.
In this regard, he said the projects of Meghna Bridge Project on the Bhulta-Araihazar-Bancharampur road (R-203) and the supplying of treated water from Meghna River to Bangabandhu Sheikh Mujib Shilpa Nagar (BSMSN), which are being discussed through the mechanism of Joint PPP Platform Meeting, can become a "litmus test" for Korean companies to consider further investment.
The ambassador was speaking at a seminar in celebration of the 50th anniversary of establishing diplomatic relations between Korea and Bangladesh on Tuesday.
He emphasized the need to change two policies to increase the productivity of the manufacturing sector.
The Embassy of the Republic of Korea, the Korea Trade-Investment Promotion Agency (Kotra), and the Korea-Bangladesh Chamber of Commerce and Industry (KBCCI) jointly organized the seminar styled “Korea-Bangladesh Economic Cooperation - Sharing Development Experience and Exploring Opportunities”.
Korea is the world’s 10th-largest economy and seventh-largest trading country. It is the first country in the world to make the transition from an ODA (official development assistance) recipient to a donor nation.
Korea is an industrial powerhouse with the world’s largest production capacity in shipbuilding, semiconductors, and mobile phones.
In this regard, the ambassador said: “Today’s Korea would not have been possible without the support and assistance of the international community.”
"With the help of our friends, Korea could have built its economy in just a few decades.
Therefore, Korea is willing to repay our debt by sharing our development experience with other developing countries," he said while offering support to Bangladesh.
Bangladesh and South Korea have maintained friendly relations since the establishment of their diplomatic relationship on December 18, 1973.
Korean entrepreneurs came to Bangladesh to set up garment factories, many of whom are still active.
A World Bank development report suggests that initial training from the Korean Daewoo Corporation in 1979 contributed to the boom of Bangladesh’s readymade garment industry, the main export item. The corporation tied up with Bangladesh’s Desh Ltd and trained up its 130 newly recruited employees who later left Desh to start their own clothing businesses for the industry to flourish.
"Since then, bilateral economic relations have flourished in many ways, benefiting both economies," the ambassador said.
Firstly, two-way trade surpassed $3 billion last year. Korea and Bangladesh are currently discussing the negotiations of the bilateral Economic Partnership Agreement. The EPA, if reached, will greatly increase bilateral trade in mutually beneficial ways, he said.
Secondly, Korea’s investment in Bangladesh is the fifth largest in terms of accumulated amount.
The most notable recent investment is the increase of manufacturing industries in automobiles, mobile phones and electronics in joint ventures with local partners.
The first country-specific private Export Processing Zone, KEPZ, established in Chittagong has been a symbol of Korea-Bangladesh business ties, said the ambassador.
Looking to the future, he said, Bangladesh is marching towards graduation from the LDC status in 2026, and Smart Bangladesh as a developed country by 2041.
"Both journeys offer great opportunities and challenges simultaneously."
The outlook for Bangladesh’s economy is very positive.
According to the latest report of World Economics, published in June 2023, Bangladesh has the fastest-growing economy in the Asia-Pacific region out of 32 countries.
"Another good news is the potential for infrastructure development," he said.
"The LDC graduation will give a positive signal to the international business community, making it easier to attract foreign capital needed for Bangladesh’s infrastructure development,” he added.
But, he said, embracing its LDC graduation requires the thorough preparations of the Bangladesh government.
Before the LDC graduation in 2026, the Bangladesh government needs to pay attention to consolidating the foundation and increasing the productivity of the manufacturing sector.
This requires a change in some policies. In this regard, he emphasized the need to change two policies.
"Firstly, as you know, more than 50% of mobile phones are currently being smuggled. This smuggling causes a massive tax loss to the Bangladesh government.
"The companies manufacturing mobile phones in Bangladesh suffer greatly from smuggling, which prevents further investment. Restricting the pin registration of smuggled mobile phones with telecom companies is one of the ways to minimize the damage caused by smuggling.
"Secondly, approximately 85% of imported cars are reconditioned, while less than 15% of new cars are imported or produced in Bangladesh.
Compared to other countries, Bangladesh imposes high tariffs on imported raw materials and auto parts.
"These two elements lead to a loss of competitiveness and discourage additional investment. Mongolia, Cambodia, and other countries are already implementing the policy of banning the importation of second-hand cars regardless of the name of used or reconditioned," said the ambassador.
"Banning the importation of second-hand cars will boost the domestic production of new cars by bringing in foreign capital. This policy will also lead to the reduction of greenhouse gas emissions."
Bangladesh has the potential to achieve sustainable economic development. We have already witnessed a tripling of Bangladesh’s per capita income over the last decade, he said.
"I am confident that Bangladesh will be able to overcome the problems of LDC graduation and achieve the goals of Smart Bangladesh as a developed country by 2041."
