China and India are stepping forward to invest in the same Bangladeshi port, raising eyebrows as the regional rivals compete for influence in the South Asian country.
The two have zeroed in on the development of Mongla, Bangladesh’s second-largest port, in the southwest of the country. China and India have been eyeing the facility for years, promising to provide hundreds of millions of dollars, but holding off on following through.
That appeared to change in December, when India and China in quick succession signaled that they were moving forward. Port officials insist the projects are separate and deny that the shipping hub has become a focus of geopolitical jostling around the Indian Ocean. Some experts, though, see a competition for influence as inevitable.
“It’s very surprising,” Delwar Hossain, director of the East Asia Center at the University of Dhaka, said of the often bitter rivals agreeing to fund the same port.
China already has a significant presence in Bangladesh’s ports and shipping industry, while India has transshipment facilities at two Bangladeshi ports — Chittagong and Mongla — to carry goods to its landlocked northeastern states.
In 2015, the governments of Bangladesh and India decided to upgrade Mongla under a line of credit from New Delhi. Bangladesh’s Executive Committee of the National Economic Council (ECNEC) approved the project in 2018. But for the next four years, India did not choose a contractor to carry the roughly $600 million endeavor forward. Finally, after repeated urging from the Bangladeshi side, India selected Egis India Consulting Engineers. The Mongla Port Authority signed a deal with the company in late December.
China, meanwhile, signed an umbrella deal in 2016, when President Xi Jinping visited Dhaka, under which it pledged to fund 27 development projects including an expansion and modernization of Mongla’s facilities. Yet, although a feasibility study found the project “crucial” for Bangladesh, Beijing was slow to pony up the planned $400 million.
On Dec. 14, after reports broke on New Delhi’s selection of Egis, Beijing confirmed to the Bangladeshi Finance Ministry that it was willing to fund the project.
“We have the honor to inform your good office that the Chinese side has finished the evaluation of the above project and come to the conclusion that this project is in line with the development plan and the direction of Chinese GCL (government concessional loan) policy support,” said a letter from China. It went on to say: “The Chinese side agrees in principle to include the project into the GCL projects reserve.”
Rear Adm. Mohammad Musa, chairman of the Mongla Port Authority, told Nikkei Asia: “Both the investments are important for us, because Mongla Port is now getting more exports and imports, while the capacity is not sufficient to house all the future requirements. Thus, we need to expand, we need to build the infrastructure.”
The Padma Multipurpose Bridge, which opened last year, has added to the port’s appeal, reducing the road distance to Dhaka to just 170 kilometers from about 280 km. Chittagong, meanwhile, is a 260 km drive from the capital.
India, Nepal and Bhutan are all keen to use Mongla to facilitate their trade. In addition, modernization is considered necessary for the proposed Bangladesh, China, India and Myanmar (BCIM) Economic Corridor.
Musa said that under the Chinese investment, two container terminals and delivery yards will be built. On the other hand, the Indian funding will allow construction of jetties, roads, parking lots, offices and even a residential complex.
Musa explained that the two projects will be in different areas of the port. “The two contexts are different, the funding system is different, and the works are also different,” the chairman said. “So they are not going to collide with each other.”
Musa denied that the rivals are competing over the port or seeking to gain clout. “They won’t be able to [gain] any influence, not at all,” he said, “because they are funding [according to] our requirements. The Bangladesh government has dictated the terms, not China or India.”
Some say it may not be quite that simple. Md. Touhid Hossain, a former Bangladeshi foreign secretary, acknowledged the rivalry between India and China but stressed Dhaka has sought to maintain close relations with both. “Due to political and strategic aspects, one country always remains tense about how much influence and investment the other country [has in] Bangladesh,” he said.
Those tensions have cropped up before. India is thought to have opposed China funding a deep-sea port at Sonadia. Hossain said Bangladesh was about to sign the deal but canceled the project under pressure from India, irking Beijing.
“Now China and India want to invest in the same port and how it will work — I am confused,” he said. “Definitely, there is competition among them. Both want to enhance [their] influence here.”
Bangladesh is not the only South Asian country where China and India have opposed each other over ports. Last year, when an advanced Chinese survey vessel sought to dock at the Chinese-built port of Hambantota in bankrupt Sri Lanka, Indian objections reportedly prompted Colombo to ask Beijing to defer the visit. Ultimately, however, Sri Lanka allowed it to proceed.
In Bangladesh’s case, Hossain noted that the country has signed the Mongla deal with India but has yet to do so with China. “We have to observe whether India tries to influence Bangladesh not to sign the pact with China for the Mongla port expansion project,” he said, adding, “Since a deal is already signed with India, now Delhi’s reaction will matter.”
The University of Dhaka’s Hossain painted a larger picture of various powerful nations courting Bangladesh. “They want to be engaged in Bangladesh’s development work, and they closely monitor the activities of their rivals to foil their efforts to enhance [their] influence,” he observed.
For Bangladesh, which is struggling with low foreign reserves and other economic headwinds that have swept South Asia in the wake of the Ukraine war, support from big powers is vital. But observers note that it will need to watch out for potential pitfalls.
Munshi Foyez Ahmed, a former Bangladeshi ambassador to China, said funding from China and India for same port is a “good development indeed.” At the same time, he stressed that “the government will have to manage it carefully.”
“It’s an indication of competition,” that China responded positively just after India’s Egis emerged as the project leader, Ahmed said. “There is no harm in competition. If we can manage it carefully, it’s a good sign for the country to get increased foreign investments.”