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The Financial Express

Economic zones and political bones

| Updated: October 25, 2017 01:45:34


Economic zones and political bones

By May 2016, three countries had signed up to open a special economic zone (SEZ) under the BEZA (Bangladesh Economic Zone Authorities) plan to build as many as 100 by 2030. Since these are expected to reap $40 billion through exports by then, they would add up to a major alternative to the ready-made garment (RMG) sector, itself targeting a $50 billion export income by 2021. Those three countries, representing the tip of a deep iceberg of anticipated foreign engagement, are all from Asia, therefore, more fluid about entering and investing in Bangladesh than western countries have thus far been. In alphabetical order, China, India, and Japan have operated within Bangladesh for a long time. Each carries both economic and political engagement interests.
Economically, China must start exporting some of its low-wage industries, like clothing, now that wages have begun climbing; India needs to make its isolated north-east provinces a greater part of the mainland, in addition to accessing Southeast Asian countries over land to boost its current economic flurry; and Japan, given its domestic demographic Damocles' sword, exacerbated further by a still stagnant economy, needs to rev up its foreign operations, which Shinzo Abe's Dhaka's September 2014 visit sought to do through massive foreign assistance, of $5.7 billion (to add to the $11 billion provided until 2014).
Politically, China's entrance augments its String of Pearls strategy within the 'One Belt, One Road' (OBOR) framework, one flank of which could come up the Bay of Bengal to supplement the Bangladesh-China-India-Myanmar (BCIM), as well as the Kolkata-Kunmin (K-K) highways through some restless, contested terrain; India's Narendra Modi vaunts the latter China-based project with India as exemplifying bilateral cooperation amid strategic rivalry, while also situating India strategically across Bangladesh in the event of any Islamic terroristic inroads; and Japan has recently sought, much like India about China, to build as much of a ring of friends around China as possible (as, arguably, China is also doing with India given its rising presence in Nepal, Pakistan, and Sri Lanka; while India has recently done by proposing to construct a port in the south of Iran with Afghanistan as another partner).
All three countries have sea port or energy-related Bangladesh projects. China is harnessing coal energy in Payra,

India is seeking to do so in Rampal while hoping to build a port in Payra, while Japan has both coal and sea port projects in Matarbari, off the Cox's Bazar coast.
Already well engaged, each is now probing into SEZ opportunities, that is, deepening extant transactional ties. China's SEZ allocation is in Chittagong, India's is in Bheramara (Mongla) and Keraniganj (Dhaka), and Mirsarai (Chittagong), while Japan's is in Gazipur with Narshingdi and Naraynganj in the pipeline.
One might note, South Korea, an Asian economic power with deep Bangladeshi experiences, and still very much in the run with these three countries, experienced a misunderstanding over an export processing zone (EPZ: they belong to a different category than the SEZ breed). It was allocated 2,492 acres by the Bangladesh government in 1999, but the Korean Export Processing Zone (KEPZ) founded on that property saw the government take back 2,000 of the land in February 2015 for multiple reasons: land-related tangles (no registration had been made); non-cooperation of local government; and, therefore, KEPZ had used only about 500 acres (Iftekhar Mahmud, Prothom Alo, June 16, 2015). YoungOne Corp., which owns the KEPZ unit, had apparently "failed to develop it in so many years," said Saiffuzzaman Chowdhury, State Minister for Land; environmental clearance, given only in 2009, was cancelled, then reissued, indicating uncertainty among the key players; and KEPZ was seen as cutting hills, while the KEPZ complaint that it was only receiving 14MW of the electricity instead of the 160 MW it was promised, alongside the zero-flow of the 80 million cubic feet of gas which was also promised; it complained of not having any telephone or fresh water, even after constructing 21 kilometers of roads, 1,000 houses, 17 lakes, planting 1.6 million trees, spending $250 million to create 7 shoe and garment factories, and generating 17,000 jobs. YoungOne, which already employs 60,000 workers elsewhere in Bangladesh, has long-term KEPZ goals of creating 35 thousand (3.5 lakh) jobs, with a school, university, 17 parks and hospitals. As development takes place, 22 industries have emerged, with 14,000 workers producing shoes and garments, and an immediate plan to have 150 small and medium-sized and 30 large industries eventually.
India's three SEZ allocations shed light on the politicking understructure. Chosen to be Bheramara (Khulna), Keraniganj (Dhaka), and Mirsarai (Chittagong), two would focus on IT products because China's were being disadvantaged, as in its RMG industry, by climbing wages. In fact, India was originally allocated two EPZs, but recurring problems (diplomatic ones with Pakistan for both Bangladesh and India) pushed the number up to three, indicating once again how this political-economic trade-off can both open and close windows, depending on how adroitly they are handled.
Whether both the India-Pakistan and China-India rivalry are original with direct implications for every locality in those regions, the China-Japan rivalry fulcrum is in another region, therefore not so localised. Their presence here (a) helps each of their own national interests and breeds a geostrategic competition; and (b) feeds into our own national interests, which are largely economic. Bangladesh carries the capacity to even bring China and India together through one project or another, rather than tilt too heavily in any one direction. Japan is our all-weather friend, but we need to maximise more out of that bilateral relationship.
Our zone allocations, then, could easily serve as (a) a balancer of political rivalry; (b) food for thickening economic rivalry; (c) a stepping stone for other South and Southeast Asian countries with a resurgent economy; (d) a catalyst for South and Southeast Asian countries with a dormant economy; and (e) a palliative for all the political and economic bottlenecks we ourselves face on the domestic front. We should play our cards accordingly, while also branching out to the Central, Far-east, and Middle-east Asian countries, if we want to reach our strategic goals (hit $50 billion of RMG exports by 2021, climb up the middle-income ladder by 2030, and become a developed country by mid-century).
Dr Imtiaz A Hussain is Professor, International Relations, formerly Universidad Iberoamericana, Mexico City.
[email protected]
 

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