Last month, you submitted a proposal to the Ministry of Commerce to open branches of Chinese banks in Bangladesh. Why have you suddenly taken the initiative to bring Chinese banks to the country?
Khorshed Alam: China is our largest trading partner. Annual trade between the two countries exceeds $20 billion. Even countries like Sri Lanka have a bank in Bangladesh — the Bank of Ceylon. We import so many products from China that having a Chinese bank here would offer several advantages. It would reduce the costs of imports and exports.
Could you explain how bilateral trade would benefit once Chinese banks begin operations?
Khorshed Alam: Suppose we export goods worth around $700 million to China. If this amount is deposited in our bank accounts in China's currency, the yuan, we could use those funds to import goods from China. In that case, there would be no need to settle import and export payments in US dollars or convert dollars into yuan or taka. This would reduce intermediary bank commissions and currency conversion costs. On average, it could save us around 1 per cent of the total amount. In these difficult times, even a 1 per cent saving is significant.
Another issue is that many of our banks lack capital and are unable to provide working capital. Chinese banks, if they enter the market, will certainly bring in capital. They will not simply bring in money and leave it idle. To operate a bank, they will have to invest that money, provide loans and make profits. Some of our industrial enterprises could potentially access capital from these banks. This is precisely why we are proposing the introduction of Chinese banks.
China is now Bangladesh’s second-largest source of foreign investment. Last year, China’s net FDI reached its highest level in six years. What types of industries are Chinese investors currently interested in?
Khorshed Alam: Chinese economic zones are being developed in Anwara, Chattogram, and Mongla, Bagerhat. According to Invest Bangladesh, formerly the Bangladesh Investment Development Authority (BIDA), Chinese investment in Anwara could reach $1.3 billion. However, construction of the economic zone's infrastructure is expected to be completed in 2031.
The Chinese are primarily interested in investing in the textile and leather sectors. In textiles, they are particularly interested in fabric production. Bangladesh’s large domestic market and opportunities for garment exports are attracting them to invest more in this sector.
Another promising area is producing fibre from garment industry waste. Some Chinese companies are buying garment waste, commonly known as jhut, from Bangladesh, processing it into fibre and exporting it to Vietnam. The fibre is then used to produce yarn and sweaters. If this type of activity can be carried out in Bangladesh, value can be added locally.
Besides, they are also showing interest in manufacturing lithium batteries, solar power equipment and hospital equipment. In particular, discussions are underway about investment in lithium battery manufacturing.
Due to high tariffs, many Chinese products are facing barriers to exports to the US market. If Chinese companies bring their technology to Bangladesh and manufacture those products here as ‘Made in Bangladesh’ goods, exports could grow rapidly. This is because they already have established markets. I believe such an arrangement would be beneficial for Bangladesh.
China is far ahead in terms of technology. Can’t we attract investment from China in high-tech industries in the Anwara and Mongla economic zones?
Khorshed Alam: We should certainly make that effort. However, the problem is that there is a shortage of skilled manpower for high-tech industries in the country. To address this shortage, polytechnic institutes should be established near the economic zones. This would allow the Chinese to develop a workforce with the skills they require.
Another important issue is that workers’ residential quarters must be built near the economic zones. There are hardly any houses around Anwara, so workers would have to be brought from 30–40 miles away. This would be quite expensive. In addition, facilities such as schools, hospitals and markets must also be ensured.
Does the government have any guidelines on what types of investment we want from China?
Khorshed Alam: It is better to identify specific sectors for foreign investment. Suppose a Chinese entrepreneur says, “I want to set up a spinning mill,” we should then ask why. If the entrepreneur says they want to sell yarn in the local market, we should tell them that we do not need this investment. But if a Chinese entrepreneur says they want to export the products to Vietnam, China or South Korea, then that is fine.
Besides, if Chinese entrepreneurs want to manufacture lithium batteries, they should be welcomed. They should also be given quick approval if they want to manufacture solar panels. We need investment in these sectors. Chinese entrepreneurs should also be welcomed if they want to manufacture battery-powered motorcycles or cars.
Is there an opportunity to attract Chinese investment to Bangladesh and export the products manufactured here to China?
Khorshed Alam: Small factories are currently shutting down in China. They no longer want to manufacture simple items such as ballpoint pens. They are not interested in making ceramic cups or small products such as plastic bottles either. They want to manufacture high-tech products, such as mobile phones, which have higher prices.
As a result, it is possible to manufacture products in Bangladesh that are in demand in China and export them there. This can also be achieved through Chinese investment.
For example, China imports 30 per cent of its demand for readymade garments from around the world. Although large quantities of readymade garments are exported to China from Vietnam, Indonesia and Thailand, Bangladesh exports very little to that market. There is an opportunity to increase Bangladesh's garment exports to China.
To facilitate duty-free sales of Bangladeshi products in the Chinese market, Bangladesh is set to receive a permanent exhibition centre and a warehouse free of charge in Kunming. We can display Bangladeshi products there and increase exports.
What are the major obstacles faced by Chinese investors when investing in Bangladesh?
Khorshed Alam: The biggest complaint from Chinese investors at the moment is the energy crisis. They are asking how they can invest if they cannot get energy. Second, the shortage of technically skilled workers is also a concern for them.
Besides, they have some uncertainty over whether they will have access to banking facilities. They are also concerned about security and extortion.
One of our members recently brought a complaint to me. Someone had demanded extortion money from a battery manufacturing factory in Madhabdi, Narsingdi. However, the businessman is afraid to file a formal complaint.
Vietnam has transformed its industrial sector by attracting investment from South Korea’s Samsung. Is there an opportunity to attract similar investment from China that could bring about a major transformation in our industrial sector?
Khorshed Alam: We lack the planning needed to bring about major changes. The Mongla Economic Zone, which was recently handed over to China, was initially allocated to India.
After waiting for a decade, the foundation stone of the Chinese Economic Zone in Anwara was laid last July. So, why was the land left unused for so long? No output was generated despite leaving the land unused for so many years.
Therefore, I believe nothing significant will happen in the country's industrial sector without proper planning.
How can we develop a skilled workforce like China's?
Khorshed Alam: We have a promising young generation in our country. There is an opportunity to equip this generation with technical skills. We can then use those skills to make our industries much more competitive.
At the same time, we must develop a skilled workforce to operate high-tech industries. To achieve this, we need to learn how China has used technology to reduce production costs. We should bring in Chinese experts if necessary. I believe this is how we can accelerate the development of our national economy.