Japan needs Bangladesh as recipient of more dev loans: Economists

A fast-growing economy with a large population and good bilateral relations make Bangladesh better-positioned to receive increased official development assistance (ODA) and investment from Japan, which is looking for such recipients, said experts and economists.

Some of the trusted recipients of Japan's ODA are being graduated from the position as recipient of such support when Japan is trying to raise its ODA outflow to 0.7% of its gross national income (GNI) from the currently below-0.3%, aiming to meet commitment as a member of the Organisation for Economic Co-operation and Development (OECD), they said.

They were speaking at a session of the annual development conference of the Bangladesh Institute of Development Studies (BIDS) on Friday.

Tatsufumi Yamagata, professor of Ritsumeikan Asia Pacific University, in his keynote speech, themed "Transition in Japan's view of Bangladesh: How should two middle powers behave along with hegemons?", said relations between Bangladesh and Japan are changing from donor-recipient to investor-business partner following a robust development in Bangladesh in over decades.

Japan also changed in the past decade and became more inward-oriented than before. The country began exposing national interests incorporated in international cooperation as the country has adopted an "own country first" policy, he added.

The economist said Japan needs Bangladesh as a recipient of ODA loans as the country faced challenges to raise the ODA-to-GNI ratio.

Only a few Scandinavian countries achieved the target to ensure ODA outflow to 0.7% of their GNIs, he said, adding that Japan could double its ODA outflow, he added.

The government of Japan is looking for some borrowers as some of the stable borrowers including the Philippines, India, Indonesia, and Vietnam are graduating from the position to receive Japanese loans.

Bangladesh is considered as a good alternative in this regard, Tatsufumi Yamagata said.

Japan has a handsome portfolio worth about Tk2 lakh crore in Bangladesh to implement ongoing 36 investment projects under the annual development programme (ADP). 

The country is contributing the highest 45% share of bilateral aid to Bangladesh including loans, grants, and technical assistance. 

He also anticipated that the cost for borrowing from Japan would increase in the future and the country would reduce grant and technical assistance to meet the cost of the fund.

He said the savings tendency of Japanese is higher than other nations and the government operates ODA activities mobilising savings from the people. The proportion of taxation remained 25% of the total ODA outflow from the country as the people dislike an increase in tax. The burden of government debt is rising as the loan portion of the ODA operation consists of about 75%.

Tatsufumi Yamagata found the significant ability of Bangladesh to behave as a global actor as a member of the middle power. 

"India manufactured a Covid-19 vaccine, Turkey mediates between Russia and Ukraine for food export through the Black Sea, and Egypt hosted COP27. Why not Bangladesh?" he said.

He continued that, as a middle power Bangladesh will be able to represent global benefits, not only national interest. Bangladesh should behave and act not only for the nationals of their own, but also the globe and eight billion people.

In international relations, a middle power is a sovereign state that is not a great power nor a superpower, but still has large or moderate influence and international recognition. 

At the event, Akhtar Mahmoud, former lead economist of the World Bank, said Japan is an important source of FDIs all over the world, but the outflow of FDI from the country to Bangladesh is much lower. 

Some sort of FDIs are motivated by the natural resources of the country and there is not enough flow in Bangladesh except for some American investment, he added.

"We need investors who see Bangladesh as an efficient production base to manufacture products in Bangladesh and export abroad, and in the process help Bangladesh establish a foothold in the global value chain," he maintained.

Use Covid lessons to deal with future pandemics

Although there is more interest among people in poor countries than in the developed world, many low- and middle-income countries are lagging behind in vaccination, said Ahmed Mushfiq Mobarak, professor of economics at Yale University.

While presenting a keynote, titled "Pandemic Research and Policy Support for Low and Middle-Income Countries", on the second day of the development summit, he stressed that policymakers identify the reasons behind the lower vaccination rate in the LMICs and urged them to use the lesson of the Covid-19 crisis to get the ability to quickly formulate action plans to deal with any further pandemic.

He said although Bangladesh achieved significant progress, most of the African countries remained unvaccinated even after two years of vaccines coming into the market. He termed the issue as a collective moral failure of the global system.

He said that some of the low- and middle-income countries failed to accelerate vaccination due to international supply chain failures. The high global demand for vaccines and limited supply have benefited countries with payment capacity and geopolitical importance, he added.

He found the last-mile delivery challenges and higher prices as major reasons behind lower vaccination. 

He also said it takes three hours to get to a vaccination centre each way in Sierra Leone, and it costs $6.5. It is very difficult to pay wages for 10-12 days to avail of a vaccine in a poor country.

Covid-19 vaccine acceptance is substantially higher in most low and middle-income countries compared to the USA or Russia and other high-income countries, while childhood vaccine acceptance is very high in most low and middle-income countries, he mentioned.