PM to discuss $276m tied loan, Rohingya repatriation with President Xi in SA

Bangladesh wants to discuss a US$276 million "tied loan," Rohingya repatriation, and  regional peace and stability issue with China during the crucial meeting between Prime Minister Sheikh Hasina and Chinese President Xi Jinping in Johannesburg, South Africa schedule to be held today (August 23).

On October 14, 2016, Chinese President Xi Jinping held talks in Dhaka with Prime Minister Sheikh Hasina and agreed to establish China-Bangladesh strategic partnership of cooperation to continuously move forward bilateral relationship to higher levels.

That time, both sides spoke positively of China-Bangladesh traditional friendship and progress achieved from bilateral cooperation in all fronts, exchanged in-depth views and reached broad consensus on bilateral relations as well as international and regional issues of common concern, Foreign Ministry sources said.

"However, $276 million loan will be used for the Rajshahi Water Supply and Sewerage Authority (WASA) Surface Water Treatment Plant. China committed around $20 billion in project loans to Bangladesh when President Xi Jinping visited Dhaka in 2016," an official said.

The Foreign Minister, who is accompanying the Prime Minister, said on August 21, 2023 that China is the development partner of Bangladesh and the two countries signed a number of projects and MoUs worth a total of $23 billion project with the government in addition to $13 billion from the private sector.  

"But we got only $4 billion in the last eight years. Expediting the projects can be a topic of discussion," he said.

Dhaka is pushing for changes to conditions it deems to be against its interests.

According to the draft contract, the interest rate on the project will be 2 per cent, with a one-time management fee of 0.25 per cent and a 0.25 per cent commitment fee per year on any unspent funds. But some observers say that tied loans have disadvantages, including higher costs than are first apparent.

Local experts said that when the total costs are added up, the effective interest rate on such loans can balloon to as much as 10 per cent to 15 per cent. It happened in the past when the former sought to re-evaluate high costs for rail projects, Foreign Ministry sources said.

Momen said Bangladesh wants loans at a lower interest rate which is likely to be discussed.

Sources at the Foreign Ministry said that Chinese Special Envoy on Myanmar Deng Xijun visited Dhaka on April 6, Chinese Vice Minister for Foreign Affairs Sun Weidong's visit later and discussed Rohingya repatriation issue.

Later, Bangladesh Foreign Secretary Masud Bin Momen's went to Kunming on April 18, 2023 and met officials from China and Myanmar.

However, during the Bangladesh-China foreign office consultation (FOC) in May 2023, Bangladesh Foreign Secretary Masud Bin Momen emphasized the need for engaging the friendly countries, regional and international organisations in the Rohingya repatriation efforts.

"Bangladesh told them that at involvement of the ASEAN and UN in the repatriation efforts which would boost Rohingya's confidence in Myanmar authorities, this time our Prime Minister will discuss the issue with China," a senior official said.

The Sino-Bangladesh relations starts in 1976, the bilateral relations have experienced two different phases before and after the initiation of the BRI. The relations turned into strategic partnership after 2010, when the countries signed a number of trade, transit and defence procurement agreements, Foreign Ministry felt.

"Now China is trying to prove itself as Bangladesh's time-tested friend by entwining diplomatic, defence and economic ties we have many items to discuss beyond the agenda," official said.