Utilizing the KSA-Bangladesh’s full potential
Sumaiya Jannat <sumaiyajannat.re@gmail.com>
The Kingdom of Saudi Arabia (KSA) occupies a vital position in the foreign policy of Bangladesh for political and economic reasons. Ever since the establishment of diplomatic relations in 1975, KSA has been crucial for the much-needed economic aid, generally as grants, trade and investment, energy supplies, employment and remittances. Bangladesh and Saudi Arabia relations started in 1975 Since then, these two countries have maintained cordial and close friendship. Muslim-majority Bangladesh attaches a special priority to its relations with Saudi Arabia as the birthplace of Islam and OIC.
Trends of KSA-Bangladesh relations
The bilateral trade between the two countries in 2022 stood at US$1.98 billion. In the last five years, Saudi Arabia has become the top destination for 2.8 million Bangladeshi migrant workforces. Bangladesh is the first country among five Muslim-majority countries with whom Saudi Arabia signed Route to “Makkah service deal” to ease the pilgrims’ journey. Saudi Arabia funded partly to the Bangladesh government’s billion-dollar campaign to build 560 model mosques
Utilizing KSA’s recent investment offer
Saudi Arabia has recently offered large-scale investment in various sectors in Bangladesh due to its ‘stable’ government and ‘good’ economic growth. Besides, Prime Minister Sheikh Hasina offered Saudi Arabia the use of Matarbari and Payra sea ports and investment in economic zones for mutual benefit.
These proposals were discussed in the meeting of Prime Minister Sheikh Hasina, Saudi Minister of Investment Khalid Al-Faliyah and Minister of Economy and Planning Faisal Alibrahim in Doha, Qatar on Tuesday. Foreign Minister AK Abdul Momen later briefed reporters on the details of the talks.
He said, “They (Saudi Arabia) prioritize the stability of the country they want to invest in, the stability of the traders and the future of investment.
“Considering that, Investment Minister Al-Faliyah and Economy and Planning Minister Alibrahim said that the present and future of Bangladesh is very good. So, Saudi has decided to strengthen relations with Bangladesh.”
Momen said that two ministers of Saudi Arabia praised Bangladesh as a ‘brotherly’ country. Appreciating the garment sector of Bangladesh, they said that day by day this country is becoming the ‘capital’ of textile and garment products of the world.
“In their (Saudi) view, the leadership of Bangladesh is very good, vision and commitment are good. The country has a stable government and the economic growth of Bangladesh is also very good,” said Momen.
Saudi Arabia offers big investments in Bangladesh. Momen said that Saudi Arabia wants to see Bangladesh as a regional center considering its geographical location, “Bangladesh is located between South and Southeast Asia. If this country can be developed as a regional hub, then Saudi Arabia can create connections between Indonesia, Malaysia and many other countries.”
Al-Faliyah and Alibrahim said that Saudi Arabia wants to do some work in Bangladesh’s Chittagong port. Besides, they are interested in working in the petrochemical, diesel, jet fuel, fertilizer sector; Willing to establish a main distribution center as well as a shipping line. In response, Sheikh Hasina told them that Saudi Arabia has already been allowed to launch these.
Sheikh Hasina also proposed Saudi Arabia to use Matarbari and Payra sea ports and invest in economic zones for mutual benefit.
He also assured that if there is any obstacle in facilitating Saudi investment in Bangladesh, necessary measures will be taken to remove it.
The foreign minister said that Saudi Arabia wants to build a partnership with Bangladesh through cooperation in various sectors like agriculture for mutual benefit. And the ministers of the country have assured to provide necessary financial and technical support to Bangladesh in this work.
In the meeting, the Saudi ministers also discussed the Hajj with the Prime Minister of Bangladesh. Besides, Al-Faliyah and Alibrahim requested Bangladesh to invest in medicine, beverage, housing industry and hospital construction in Saudi Arabia. They want the cooperation of Bangladesh to achieve the goals of Saudi Arabia’s Vision 2030. Sheikh Hasina is in Doha to attend the opening session of the third Qatar Economic Forum.
Piloting the business prospects and schemes
Bangladesh remains one of the fastest-growing economies in the developing world. It offers one of the most investor-friendly regulatory regimes in South Asia including low-cost labour, generous tax holidays, duty-free import of machineries, respite from double taxation, 100 per cent foreign ownership, full repatriation of capital and dividends etc. To sum up, the firm commitments made by the largest ever Saudi Arabia business delegation clearly indicate that Dhaka-Riyadh relations are moving towards greater heights. The more intensely Saudi Arabia is censured by the Western countries for its violation of fundamental rights, the more likely is its alliance to grow with the Asian countries, including Bangladesh.
Saudi’s role in Bangladesh development journey
Saudi Arabia has become one of Bangladesh’s valued foreign development partners, and their diplomatic patterns have shifted from simple cooperation one of a deeper level. However, Saudi is the biggest foreign labor market for Bangladesh, with an estimated 2.6 million Bangladeshis working there.
MBS’ upcoming Bangladesh visit
Saudi Crown Prince and PM Mohammed bin Salman bin Abdul Aziz has accepted the Bangladesh PM’s invitation to visit Bangladesh at a convenient time in 2023.This would be a landmark event in the history of bilateral relations leading to the consolidation of ties, especially in trade and commerce, investment and economic cooperation.
Fostering bilateral trade
By 2030, Bangladesh government aims to have established a total of 100 economic zones, with the goal of providing employment to ten million and generating substantial foreign currency. This offers numerous opportunities for Saudi to invest in Bangladesh, namely in infrastructure, agribusiness, processed foods, manufacturing, energy and circular economy.
Cooperation in Rohingya fund
Saudi Arabia has been lending political and humanitarian support to Bangladesh from the inception of the Rohingya crisis. The Kingdom provided Bangladesh with over $25 million through the “King Salman Humanitarian Aid and Relief Centre” and the Saudi Fund for Development” to Bangladesh. Saudi Arabia has sent almost 1.5 million coronavirus vaccine doses for the Rohingya refugees in Bangladesh.
In 2020, Saudi constructed 300 houses to house three thousand Rohingya in Cox’s Bazar camp. And again in 2022, KS relief launches Project to Build 500 Shelter Homes. The Kingdom promised to provide financial support for the case in the ICJ backed by the OIC6) Funding for Rohingyas in the Joint Response Plan (JRP) is declining dramatically to worsen the Rohingya crisis. KSA should Actively play role in resolving the Rohingya crisis. Being influential members of the UNO and OIC, the KSA may support BD through diplomatic maneuvers in international forums. Funding for Rohingyas has been proposed to be cut by 30%, which will create an overburden for Bangladesh. KSA should continue its humanitarian support for the Rohingyas. Less engagement of donors in Bhasan Char; funding for Bhasan Char should be increased.
Migration and Remittances
Around 2.8 million Bangladeshi workers, mostly SME businessmen, blue-collar jobholders, and semi-skilled laborers, are employed in Saudi Arabia, making it the top labor export destination for Bangladesh. Saudi Arabia also wants to recruit high-level engineers, medical staff and skilled manpower from Bangladesh. Even though recruitment to other countries has been reduced or halted as a result of the pandemic, Saudi Arabia continues to hire manpower from Bangladesh. Bangladesh sees robust rise (612,418 Bangladeshi secured jobs in 2022) in overseas employment, mostly in Saudi Arabia in 2022. Bangladesh is preparing to send 1000 skilled workers to Saudi Arabia for the first time under the newly launched Skill Verification Program as a pilot program and the number will be increased gradually.
Energy cooperation
Yearly, the Bangladesh Petroleum Corporation imports about 700,000 tons of light crude oil from Saudi Arabian state company Aramco. Despite the recent disruption of the oil market caused by the war in Ukraine, Saudi Arabia is committed to ensuring stable oil prices and its smooth supply of oil to Bangladesh. Following a request from Bangladesh, Saudi Arabia assured to invest in the commercial supply of LNG on an urgent basis as part of a tentative $3 billion deal signed in October. Saudi firm signs deal with BPDB to set up 1000 MW solar power plant. KSA can consider the decisions on LNG. Bangladesh should seek extended credit on oil supplies at a relatively cheaper price.
Trade and investment:
The bilateral trade between the two countries in 2022 stood at US$1.98 billion. Bangladesh’s exports to Saudi stood at $290.64 million against imports of $1,693.26 million in fiscal 2021-22. Bangladeshi RMG, plastics, bakery items, vegetables, juice, and jute-made goods are being exported to Saudi Arabia against the import of petroleum oil, petroleum gas, fertilizer, dates and other products. Several Saudi companies invest in some of the sectors including infrastructure, shipbuilding, power plant, gas exploration, renewable energy, pharmaceuticals, petrochemicals and light engineering. Prime Minister Sheikh Hasina sought bigger Saudi investment, particularly in the special economic zones of Bangladesh. Bangladesh sought duty- and quota-free access to the Saudi market. Bangladesh and KSA should work on signing an FTA and reducing the trade barriers to close the trade gap. Saudi investors would be benefited if they invest in the 100 special economic zones, high-tech parks, ICT and ITES (IT Enabled Services), and the tourism sector.
