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What does Bangladesh stand to gain from OBOR and BCIM?
There seems to be a lot of discussion happening around One Belt One Road, popularly known as China’s belt and road initiative: OBOR.
Lots of global corporate and financial institutions are seriously following the developments around this, and are gunning to make the best out of it. There are also discussions and rising apprehension regarding the future of the Bangladesh-China-India-Myanmar connectivity drive, known as BCIM.
While BCIM is more of a regional initiative, the Belt and Road initiative is a global connectivity program focused on infrastructure development across East and Central Asia, the sub-continent, Africa, and Europe.
It, in fact, goes beyond roads and ports, to include airports, power plants, pipelines, waste and water management facilities, and telecommunications.
These are supported by extensive ecosystems, providing opportunities for international professionals and warranting project management expertise.
OBOR, initiated in September 2013, costs approximately $1.4 trillion and comprises of approximately 68 countries. This includes the Silk Road Economic Belt (SREB) and the Maritime Silk Route.
While all nations driving BCIM are supposed to be working together, recently New Delhi opposed the China-Pakistan Economic Corridor (CPEC), which goes through an area within Kashmir held by Pakistan and claimed by India.
The 3,000km, over $50 billion CPEC corridor stretches from Kashgar in western China to Gwadar port in Pakistan. Along the route, China is building and providing funding for several mega infrastructure projects, including power plants, roads, and railways.
Though there has been much talk and many seminars, there has not been much progress on the BCIM corridor project, a 2,800km economic corridor from Kunming in southwest China to Kolkata in India’s West Bengal, via Mandalay in Myanmar, Imphal (Manipur state) and Silchar (Assam state) in India, and Dhaka and Jessore in Bangladesh.
BCIM is also a multi-modal corridor, which includes the first expressway between India and China, passing through Myanmar and Bangladesh.
Bangladesh, as an infrastructure-hungry country, will benefit from the infrastructure development. Provided we can draw a balance between India and China
He said, she said
China claims that BCIM Economic Corridor is a part of OBOR, India’s stance is that BCIM economic corridor precedes OBOR and therefore it is not part of the OBOR. Mentioned earlier, benefits associated with BCIM include the construction of new transportation networks, helping further the development of the individual countries.
This would ultimately encourage trade between these countries and also help to stimulate tourism.
It also includes cross-border energy and telecommunication networks.
Though negotiations on the stalled BCIM economic corridor were resumed in April 2017, in order to finalise the roadmap after a gap of nearly two years, some controversy surrounds the concept of linking BCIM to CPEC, especially for India.
Progress on BCIM has been slow due to differences between the two giants involved, China and India. Specifically, their differing priorities, viewpoints, and goals cause many delays in the project’s timeline.
Differences between the giants
India fears that China may be attempting to import natural resources from these countries while exporting processed goods, all of which works primarily in China’s favour.
The next Joint Study Group (JSG) meeting is scheduled to be in Myanmar in 2018. A final JSG report will be prepared based on individual country reports from the April 2017 meeting.
An inter-governmental framework agreement will be based on these reports.
Though there are growing differences between two major BCIM partners, it is perhaps known to all stake-holders, the multitude of investments required for this OBOR initiative will require new models of financing and investment, require more private capital, more cross-country financing, and greater cooperation between nations.
🔴 Managing the banking landscape, the regulatory landscape, and the legal landscape between nations will be complex.
What is there for Bangladesh, apart from some of the locally based global corporations singing their head office songs?
The answer could be with the development of the BCIM corridor and OBOR, an extensive expressway that will require major mega infrastructure investments and the development of multiple regions in Bangladesh — many local and international companies will come together to deliver; which would also require extensive professional advisory services for both the public sector and private sector.
On the other hand, Bangladesh, as an infrastructure-hungry country, will benefit from the infrastructure development. Provided we can draw a balance between India and China.
Mamun Rashid is a leading banker and economic analyst in Bangladesh