Bangladesh a priority country for South Korea: Ambassador Lee

Bangladesh is a priority for South Korea in its international development partnership efforts and the strengthening of bilateral ties reflects it, according to LEE Jang-keun, the South Korean Ambassador to Dhaka.

In an interview with TBS Executive Editor Sharier Khan on Tuesday he said South Korea, which is the fourth largest cumulative foreign investor, has emerged as the top source of new foreign investments in Bangladesh in 2022. 

The bilateral trade crossed a new milestone of $3 billion after a decade of stagnancy, its soft loans for megaprojects here significantly jumped up, while the human development collaboration is reaching new heights.

Thanks to his less than three years of service tenure in Dhaka that expedited the pace of bilateral economic relations.

"From the start of our independence in 1945, we fought the war with our North Korean brothers, and had to start from the ashes," he said adding, Korean People worked very hard and sacrificed for the future, invested in children's education while the right political leadership and the support from the international community helped rebuild the nation and become a developed one.

"We are paying back to the international community through helping nations develop," he said, adding that Bangladesh is a priority to Korea.

"Bangladesh and Korea historically have a significant tie and I am very happy to see and observe that many important things have happened during my less than three years tenure here."

"Before my coming here, actually our development funding here kept the size of $500 million for a three-year period. After I came, we signed another agreement to fund $700 million for a five-year period. Last year we decided to significantly increase the size to $3 billion."

The funds will be disbursed for the agreed, meaningful megaprojects Bangladesh is building and also here emerges an increasing scope for Korean companies engaging with the project works.

Bangladesh has been one of our priority countries in our development collaboration, but the size of the so-called soft loan funding was not that big, especially compared to other donors, Japan, the US, the EU, the ADB and the AIIB.

There was a limitation for us to support through big or bigger meaningful projects. Bangladesh is making a lot of infrastructure programs due to this rapid economic growth, and there was a big necessity for funding more meaningful megaprojects.

"So, from  $500 million to $3 billion is a big jump, and the reason why we decided it was firstly continuous requests from the Bangladesh Government, and secondly Korea's willingness to contribute to more meaningful programmes."

Last week, during the ERD secretary's visit to South Korea on the occasion of the ADB conference, the two countries signed the $3 billion Economic Development Cooperation Fund (EDCF) loan. 

This is one of the best condition loans, rate is very low at 0.01% from 0.04%, very concessional loan, repayment period 40 years with 15 year grace period, he said.

"The best loan for infrastructure projects."

South Korea not only supports the projects financially but also participates in construction projects, there will be other megaprojects that Bangladesh might want Korea to participate in, said the Ambassador.

Also from the Korean side, there is increasing interest and willingness, especially by the companies, to increase activities in Bangladesh.

"Additionally in March this year, we agreed to utilise another financial facility, EDPF which is of little higher conditions or interest rates, but still very low compared to other development partners," he said.

This $6-7 billion loan facility is not development funding actually, it is commercial but still has very low conditions and rates.

If the EDCF funding cannot satisfy a project, the EDPF facility can be utilised there in addition. There is flexibility that Bangladeshi companies can use the EDPF. It will take time to materialise the use of the additional funding, an agreement has been done, but it depends on the questions and negotiations.

Record bilateral trade

The trade between Bangladesh and South Korea crossed the $3 billion mark for the first time, which was $1.8 billion in 2011 and $2.3 billion in 2021.

Trade jumped after a decade of stagnancy, mostly in the imports from South Korea as Bangladesh's export to the country grew to $700 million in 2022, from $110 million in 2011.

"My goal is to maintain this increasing trend."  

Diversifying is a challenge for Bangladesh as 75% of its export to South Korea is garments, while Bangladesh is still stuck at around 4% share of Korea's over $10 billion apparel market. China's market share is 33% there, and 4% is very small for the world's second largest apparel exporter.

"The Bangladesh government should look into it as Korea has been providing duty-free, quota-free access to 95% Bangladeshi products for more than 10 years."

Why not export more to Korea where you don't have any duty? Korean products face a very high tariff here in Bangladesh, while Bangladeshi products are duty-free in Korea."

Price competitiveness is an important area, Bangladesh is making lots of household products and Korean buyers need good products at reasonable prices, he said.

Fisheries and agricultural products are a potential export to Korea and the figures are inching up nowadays.

Korean companies were the pioneer to partner in the RMG export sector development here from 1979-80.

South Korea, a land of equal rights for local and foreign workers, is a popular destination for Bangladeshi workers as the minimum legal wage is $2000 a month there, while hard working ones even earn up to $6,000.

Prior to the pandemic, Korea used to take a thousand workers under EPS (employment permit system) and it was 6,000 in 2022 and set to be at least 10,000 this year, said the ambassador.   

"One mainly needs to learn to communicate in Korean to be on the list," he added.

Not only the EPS workers, Korea started to take other types of skilled workers from Bangladesh in the shipbuilding area in its welding and painting tasks. Korea already has taken 104 Bangladeshi workers, who receive a much higher salary, if they show capacity the number would grow.

Government agency is sending them if they can communicate in the Korean language.

"We have to offer the language test opportunity in Bangladesh almost every week," the ambassador said.