Bangladesh gets a $20 billion Saudi windfall

This significant increase in Saudi-Bangladesh economic relations did not come out of the blue. When Bangladesh’s Prime Minister Sheikh Hasina paid a four-day visit to Saudi Arabia at the invitation of Saudi King Salman Bin Abdulaziz Al Saud last October, the oil-rich kingdom was still facing a global storm of criticism over the murder of journalist Jamal Khashoggi.

Saudi Arabia was on the diplomatic back foot due to the shocking brutality of Khashoggi’s murder, allegedly by the country’s security forces at the start of that month. The incident left the kingdom open to a deluge of criticism from major democratic forces across the world, including its biggest ally the United States.

At the time, a visit from Bangladesh Prime Minister Sheikh Hasina, not a key player in global geopolitics but nonetheless the leader of a democratic country, was welcomed by the Saudi royals.

Saudi King Salman termed Bangladesh and his country as “brotherly countries,” saying besides religion, they were “tied up in many things” and said there was scope to further strengthen collaboration in the fields of economy, culture, defense and security.

The middle-eastern kingdom remembered Bangladeshi help in a time of need. On March 7, Saudi Arabia sent a 52-strong delegation led by two important ministers to invest in a wide range of sectors from energy to health to aviation in the South-Asian nation.

This was the first visit by a Saudi delegation to Bangladesh for the sole purpose of economic cooperation and investment opportunities. Saudi Commerce and Investment Minister Majed Bin Abdullah Al-Qasabi and Economy and Planning Minister Mohammed bin Mezyed Altwaijri led the delegation that met all the political and business leaders of Bangladesh, crammed into an eventful one-day visit.

‘New chapter’

Al Qosaibi, while addressing a signing ceremony at a Dhaka hotel on March 7, said they had arrived in Bangladesh with the aim of starting “a new chapter” between the two countries.

“Fact on the ground is that there is a new Saudi Arabia. Fact on the ground is that there is a new Bangladesh. Fact on the ground that dialogue is a two-way street and we have started seriously to build and enhance this relationship because if you look at our trade volume, it is still low although it has increased significantly in recent years,” said Qosaibi.

Referring to the $1.4 billion in trade between the two countries, the Saudi minister said it represented a very moderate figure and does not reflect the “true relations and aspirations of these two nations.” Of the $1.4 billion, Bangladesh’s export to Saudi Arabia were $205 million last year.

The two countries signed two agreements and four memorandums of understanding (MoUs) on March 7.

An agreement on the construction of a 100-megawatt Solar IPP was signed by the Alfanar Company of Saudi Arabia and the Electric Generation Company Bangladesh Limited. The other agreement was signed between the General Electric Manufacturing Company of Bangladesh and the Engineering Dimension of Saudi Arabia on the manufacture of transformers and electrical devices.

An MoU on manpower export was signed by Bangladesh’s Bureau of Manpower Employment and Training and Al Maml Trading Estate of Saudi Arabia. Bangladesh Chemical Industries Corporation and Yusuf Al Raji Construction signed an MoU on setting up a urea formaldehyde-85 plant in Bangladesh.

Another MoU on establishing Saudi-Bangladesh Biomedical Engineering and Technology was signed by the Bangladesh Sugar and Food Industries Corporation (BSFIC) and Al Afaliq Group of Saudi Arabia. The final MoU, signed between Bangladesh Steel and Engineering Corporation and Riyadh Cable Group of Saudi Arabia, was on cable production.

Bangladesh, in discussions with the Saudi delegation, also proposed the establishment of a special economic zone at Mirersarai near the Bangladeshi port city of Chattagram, setting up an aircraft repair and maintenance facility in northern Bangladesh district of Lalmonirhat and outlays of $500 million from the Saudi investment support fund and $500 million from the portfolio investment fund, Asia Times learned.

Bangladesh-Saudi relation

More than two million Bangladeshi workers are employed in Saudi. Bangladesh received $2.6 billion in remittances last year from the 2.8 million Bangladeshis working in the kingdom, accounting for 18% of total inward remittance.

Kazi M Aminul Islam, the executive chairman of Bangladesh Investment Development Authority (BIDA), told Asia Times that in the last few years, under the leadership of Prime Minister Hasina, the “relationship between Bangladesh and Saudi Bangladesh gets a new dimension.”

Hasina has made four officials visits to Saudi Arabia in the last three years. The visits improved relations and paved the way for “direct Saudi investment in some of the large projects” in Bangladesh, said Islam.

“We are expecting $15-$20 billion in investment from the Saudi government in different projects,” he said, adding that the funds would come from Saudi Arabia’s Public Investment Fund (PIF) – a $250 billion fund headed by Saudi Crown Prince Mohammed Bin Salman.

The Saudi government is keen to invest in Bangladesh as part of its “Look East” policy due to economic growth in the region, Islam added.

Imtiaz Ahmed, a professor of International Relations of Dhaka University, said the conservative diplomatic outlook of Saudi Arabia seemed to have changed in the last couple of years, especially under the influence of the Saudi crown prince, popularly known as MBS.

“MBS has started to adopt a more moderate version of Islam and rather focused on diversifying the economy of his country to save it from the over dependency on oil,” said Ahmed, adding that South Asia, especially Bangladesh, was ripe for making investments.

“Under the leadership of Hasina, the political landscape of Bangladesh also seems a steady place for return on investments. So I think this has motivated Saudi Arabia in thinking of making a large investment in Bangladesh.”