DHAKA: China is poised to become the biggest source of foreign direct investment (FDI) in Bangladesh with an imminent acquisition of US company Chevron’s local assets.
Chinese envoy in Dhaka Ma Mingqiang made this observation Wednesday, adding that China’s overflowing funds are also already pouring into Bangladesh via different other offshore sources.
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According to the figures of the Chinese ministry of commerce, a total of US$ 34.3 million was channelled from China into Bangladesh as foreign direct investment in 2016 while, according to Bangladesh government statistics, this figure amounted to US$ 61 million.
The Chinese envoy noted that even if the official figures are taken into account, the Chinese investment in Bangladesh had experienced very high annual growth in recent years.
“With a total investment of around US$ 3.3 billion, the US is still the largest source of FDI in Bangladesh. However, more than US$2.0 billion of that investment comes from Chevron alone,” Ma Mingqiang said.
“However, with Chevron selling its local assets to a Chinese company, China is poised to become the largest source of FDI in Bangladesh,” he projected.
In April, US energy giant Chevron announced that it had signed a preliminary deal with Zhenhua Oil, a subsidiary of China’s defence industry conglomerate Norinco, to sell its shares in the three gas fields in Bangladesh reportedly valued around $2.0 billion.
The deal, if completed, would mark China’s first major energy investment in the South Asian country.
The Chinese Ambassador noted that even without the Chevron takeover, China would have eventually become largest source of FDI for Bangladesh due to the large Chinese investments that are due to come in the power and infrastructure sectors.
He noted that there are two factors that can drive Chinese investment into Bangladesh.
“One factor is that the labour cost in China is getting higher and the Chinese companies are looking at overseas destinations with lower labour cost to stay competitive.
“Secondly, we see a lot of untapped opportunities of investing here in power and infrastructure, including rails, roads and bridges.”
The Chinese Ambassador, however, pointed out that there are several challenges for Chinese companies to invest in Bangladesh.
The diplomat also identified inadequate infrastructure, frequent power outage and delay in gas connection as major hurdles.
About a yawning trade gap between the two countries in favour of China, the envoy said there is scope for bringing Chinese investment in export-oriented manufacturing where Chinese companies will manufacture their products in Bangladesh for shipping back home.
Speaking on the occasion, FICCI President Rupali Chowdhury said Chinese companies can undertake joint ventures with the local companies while investing in Bangladesh as this would decrease their costs while also providing them with local knowledge.
