The Financial Express

Bangladesh poised to reap the OBOR potential

| Updated: October 22, 2017 13:21:00

Lankabangla and Fianancial Express Lankabangla and Fianancial Express
Bangladesh poised to reap the OBOR potential

Over the last two thousand years China has   enriched human civilisation with its innovative ideas. The latest example is President Xi Jinping's introduction of the Belt and Road Initiative in 2013. It has set forth a revolutionary concept pertaining to development and inter-regional cooperation among Asian, African and European countries. The Silk Road Economic Belt and the Maritime Silk Road idea juxtaposed within its matrix the possibility of a constructive engagement in facets like infrastructure, industrial parks, ports, economic zones and port logistics networking. The idea was to create connectivity among the countries of the three continents so that there could be promotion and free flow of goods and services, capital, personnel and technology. As explained by the Chinese leadership in the subsequent years, it is believed that this would facilitate developmental momentum and strategic integration not only within China but also among other countries within the One Belt One Road (OBOR) initiative.
GENESIS OF OBOR IDEA: It may be mentioned that economists and sociologists had been discussing for quite a few years the issue of growing disparity that was emerging in terms of socio-economic development between different regions within China - particularly between eastern provinces and the west and north-western areas. This was due to the relative geographical advantages enjoyed by eastern China that was attracting greater inflow of foreign investment and resources. That was not happening in the distant western parts. Analysts noted that the government, aware of this predicament, had initiated the policy of 'Western China Development Policy' in 12 provinces, autonomous regions and municipalities in that region. This was aimed at improving infrastructure, power grids and flow of natural gas. However, the intended effect of removing unbalanced regional development was not having the desired effect. This was casting its own shadow on that country's efforts towards over-all sustainable development and associated stability. 
One may assume that it was this scenario that eventually led the Chinese leadership to think of the bigger picture. It was believed that if the OBOR initiative could be introduced successfully, then the emerging connectivity that would link China overland with Central Asia, Middle East, Russia and Europe and, by sea, through Southeast Asia and  the Indian Ocean to Africa would not only generate economic growth engines and development through coordination and cooperation but would also be mutually beneficial for China as well as for the countries connected together through this process. 
Since the birth of this idea, Chinese economists and planners have sought to identify through discussion with economists from other countries the factors related to the improvement of investment and trade conditions. They have tried to identify the least common denominators that would help to remove investment and trade barriers that would encourage the creation of a positive business environment within the region and amongst the participating countries. The financial analysts and bankers emphasised the need for putting in place a 'currency stability system, investment and financing system and credit information system' that would help to expand the 'scope and scale of bilateral currency swap and settlement' among countries, as part of the OBOR process.  
These economists also focused on another important factor - developing a common bond market and establishing new financial institutions that could strengthen the evolving process of connectivity among the stakeholders. This led to the creation of new financial institutions like the Asian Infrastructure Investment Bank (AIIB), the New Development Bank (NDB) and the Interbank Consortium of the Shanghai Cooperation Organisation (SCO).
Observers following the development of this idea welcomed the different measures that would be taken with regard to economic aspects, including trade. However, they also pointed out that the planners needed to also address themselves to the question of assimilation through greater people-to-people contact through rural and academic exchanges and deepening of networking in the area of culture. Besides, they agreed that the media - both the print and the electronic - needed to be brought closer to each other for promotion of understanding.
EXCHANGE OF VIEWS: Since 2015, a consensus gradually emerged among the interested parties that the OBOR exercise was quite complex and definitely needed in-depth discussion and exchange of views not only among the political leadership but also the bureaucratic structures within different countries. It was agreed that this exercise would be required in the context of infrastructure growth, legal alignment and acceptability in terms of uniform rules and technical standards. It was generally agreed that the construction of modern transportation networks overland would require reduction or partial elimination of existing restrictions that might be present    with regard to transportation or trade, or engineering technology exchange or investment in any participating country. A consensus gradually emerged that this was crucially required if the sought-after dynamics was to succeed.
It was also underlined in the different preparatory meetings that the evolving connectivity was bound to create financial risks among the partners and this could have an osmotic effect in the medium-term. Consequently prospective partners to the idea of OBOR stressed on the need for promoting currency stability, enhancement of the existing capability of the credit system and the need for providing encouragement towards "commercial equity investment funds" and private funds during the time of participation in the construction of key projects related to the Initiative.
REGIONAL COOPERATION NETWORK: Within this perspective, nations were urged to merge their own development efforts with the relevant bigger regional cooperation network. This, it was agreed, would help to remove limitations and at the same time create superior logistic networks. Such a step, it was identified, would obviously be particularly helpful for developing countries whose economies had not only a per capita gross domestic product (GDP) measured at less than half of the world's average but also required long-term investment support and cooperation from public funds and financial institutions. It was considered that the AIIB's role would be particularly useful in this regard.
FALLOUT FROM TRUMP'S STANCE: This interest in the OBOR initiative gained great attention from the world community after the victory of Donald Trump in the US Presidential election held in November, 2016. Contrary to Trump's insistence on protectionism and the slogan of "America first", the Chinese OBOR effort was accorded the recognition of a measure aimed at creating congenial conditions for open cooperation and common development.
All these different factors created great expectations about the OBOR initiative. The much-awaited two-day OBOR Forum was eventually convened in Beijing on May 14, 2017. It was participated by representatives from over 130 countries (including leaders from 29 countries) and from 70 international organizations. There were also several hundred representatives from the international civil society.
Chinese President Xi in his remarks pointed out that the "Belt and Road development does not shut out, nor is it directed against any Party". He acknowledged that there were myriad challenges which the world was facing right now- sluggish trade and investment, wobbling economic globalization, increasingly unbalanced development, impact from large-scale migration of refugees and immigrants, as well as wars, conflicts and acts of terrorism. At the same time he drew the attention of the audience to the principle of inter-dependence between nations. Other speakers also underlined that there was need for countries to align their policies and to integrate economic factors and resources in a global scale to help create synergy to promote world peace, stability and shared development.
China has already committed US $124 billion for the OBOR project and more will likely be coming. Under this circumstance it was correctly reiterated during the OBOR meeting in Beijing that this Chinese initiative could play an important part in future international economic development. However, it was also underlined that there was a need for undertaking required measures by the participants like (a) drawing a development blueprint through joint consultation; (b) achieving connectivity through common development and (c) by sharing development opportunities and results.
The OBOR discussions in Beijing were constructive and participants ended up by recognising that what the world needed through OBOR was a "brand of cooperation" that was open and inclusive. This would help not only to generate global public good jointly provided by all parties but would also increase the potential to translate consensus into action directed towards building of bridges between people and also help to raise less developed countries out of the poverty-trap.
However, India's boycott of the OBOR meeting drew the attention of all the participants. India's main objection was that a segment of the China-Pakistan Economic Corridor (CPEC), considered as part of the OBOR equation, passed through parts of the erstwhile Jammu and Kashmir. The other aspect that put a slight dent on the OBOR proceedings in Beijing was the refusal on the part of Germany, Estonia and Hungary, all members of the European Union, to sign the document on trade prepared by the OBOR Forum. They apparently did so because, according to them, the text of the document does not sufficiently address European concerns on transparency of public procurement, social and environmental standards.
Bangladesh has shown great interest in both sub-regional and regional connectivity in the form of Bangladesh-India-China-Myanmar-Economic Corridor (BCIM-EC) as well as through Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). Consequently, during its participation in Beijing, its delegation tried to identify areas of potential involvement within the OBOR equation. They did so knowing fully well that the near future will see China being able to move forward in this exercise. Bangladesh does not want to be left behind. China today is its biggest trading partner and a potential source of foreign direct investment.
The potential of the OBOR is immense. Bangladesh was requested to join this stream by the Chinese President when he came here in October last year. The door has been opened and we need to walk through. We need to have confidence in ourselves.
The writer, a former Ambassador and Chief Information Commissioner of the Information Commission, is an analyst specialised in foreign affairs, right to information and good governance.  
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