S Korea to increase soft loan to $3b for Bangladesh: Envoy

South Korea will increase the amount of its Economic Development Cooperation Fund (EDCF) loan for Bangladesh from $700 million to $3 billion, said South Korean Ambassador to Bangladesh Lee Jang-Keun.

"The amount we agreed to provide was $700 million between 2021 and 2025. We made an agreement. But very recently we decided to increase this amount to $3 billion for 2022-26," Ambassador Lee Jang-Keun said at the Diplomatic Correspondent Association of Bangladesh's talk at the National Press Club on Wednesday.

"That means we can cooperate with the Bangladesh government for larger or meaningful progress towards its development," he added.

"The decision has been made. We are working with the government to implement this decision. For this, we need to conclude the framework agreement," he said, adding that the process is now underway. "We expect that it will be concluded within this year."

The EDCF is South Korea's development financing programme for assisting the socio-economic development of developing countries.

The interest rate of this soft loan is between 0.01% to 0.04%. So far, South Korea has provided $1.34 billion of EDCF concessional loans to Bangladesh for 27 projects.

"Already there has been discussion between Korean agencies and the Economic Relations Division of Bangladesh about the projects they could implement through this agreement," the ambassador said while answering a question.

"Infrastructure might be a very important priority. ICT, education, transportation, energy, environment – these areas might be some priorities," he said, adding, "I believe that this will help Bangladesh for the smooth graduation from LDC in 2026."

Earlier, during the Covid-19 pandemic, South Korea provided Bangladesh with a $150 million concessional EDCF loan to help the economic recovery.

The simple interest rate of the concessional loan was 0.5% per annum. The maturity period will be 40 years, which includes a grace period of 15 years.

Ambassador Lee said even though Korea's Official Development Assistance (ODA) to Bangladesh is relatively smaller than those of Japan, the USA and Europe, Dhaka is the third major recipient of Korea's ODA. "We expect that Bangladesh will be the second largest recipient this year," he said.

He said Korea remains one of the major foreign investors in Bangladesh. According to the Bangladesh Bank, the accumulated stock of Korean FDI increased to $1.4 billion in 2021-22 from $1.1 billion in 2019-20.

"Korea is the fifth major foreign investor," he said, adding that this all shows how the relations between the two countries are growing.

Keen to cooperate on nuclear power plant

The ambassador also mentioned that S Korea is keen to cooperate on nuclear power plant projects in Bangladesh.

"It might be early to think about collaboration. If there is interest and if the condition is met, why won't Korean companies be interested in working with Bangladesh? We have proven technology and knowledge," he said.

Repatriation of Rohingyas to Myanmar only solution

Ambassador Lee said the repatriation of the Rohingyas to their homeland with safety and dignity is the only solution to the crisis and this repatriation should take place as soon as possible.

"It's a regional and international issue," he said, adding that South Korea has been working very closely with the international community to help resolve the Rohingya crisis.

He said it is not just a humanitarian issue but also a human rights issue.

He laid emphasis on diversifying the RMG-centred cooperation and taking the relations into a new height – 50 years of diplomatic anniversary next year – focusing on the talented, ambitious youth.

Bilateral trade

According to the Korean statistics, Korea's export to Bangladesh recorded $1.63 billion in 2021, 58% increase from 2020, while Bangladesh's export to Korea reached $552 million, 40% year-to-year increase.

"It is a very meaningful development because the bilateral trade volume has been stagnant for more than 10 years since it reached the peak of $1.8 billion in 2011," said the envoy, adding that this increasing trend of bilateral trade is continuing this year as well.

For the first seven months of this year, Korea's exports to Bangladesh recorded a 46% year-to-year increase of$1.4 billion, while Bangladesh's exports saw a 35% increase with $392 million.

He expects that the number of Korea-bound Bangladeshi workers will reach a record 4,000 this year.

Diplomatic Correspondent Association President Rezaul Karim Lotus and General Secretary AKM Moinuddin also spoke at the event.