Dhaka expects South Korean loans for nearly two dozen proposed development projects initially involving Tk 816.70 billion as the Asian country aspires to be a new financier of megaprojects in Bangladesh.
High officials of the lender-country evinced initial consent to loans worth over US$ 6.0 billion during a recent visit to Bangladesh, said officials at the Economic Relations Division (ERD).
“South Korea is considering increasing its investment in Bangladesh’s development projects. However, the country is currently showing a stronger inclination towards financing megaprojects,” officials told The Financial Express.
Earlier on July 22, a four-member delegation from South Korea’s Ministry of Land, Infrastructure and Transport and the Export-Import Bank of Korea met with officials at the ERD exploring investment prospects.
Ahead of the meeting, the ERD had sought project proposals from around three dozen implementing agencies to present a pipeline of potential development initiatives, as the incumbent interim government moves to inject fresh impetus in development works after recent slowdown.
The ERD officials have identified the political turmoil in both countries as a major obstacle to realizing the proposed investments. “South Korea is also facing political instability, much like the current situation in Bangladesh,” notes one official.
The interest rate on the credits from the Korean Exim Bank would be determined commercially, but the rate of Economic Development Cooperation Fund (EDCF) would remain within 1.0 per cent, unchanged as in the framework agreement signed with Korea in 2022, says the officer.
“Even if the projects are approved at this stage, ensuring fund disbursement will still be a challenge. Some projects are under consideration for Korean financing, while feasibility studies are being conducted under Korean methodology for others,” says another official.
Projects nearing completion of feasibility assessments are now at a mature stage, and agreements on those are likely to be signed soon. Discussions during the recent engagement also covered the investment currently in the pipeline.
“We discussed the pipeline projects, including areas where they have inconsistencies and where we fall short,” the official told the FE.
There were also talks on issues related to project clearance — where the Bangladesh side is holding back and where they are yet to give the green light.
A high official who attended the meeting said that while South Korea previously invested in small-scale projects, it is now showing interest in large initiatives such as Metro Rail Line-4, Metro Rail Line-5, rolling-stock supply for the railway, and construction of power-transmission lines.
Since 1993, the South Korean government has invested in various development projects in Bangladesh through the Korea Exim Bank. Most of Korea’s assistance has come in the form of concessional loans.
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