COVID-19 dents trade, strategic projects in the Indian subcontinent

New Delhi: The novel coronavirus (COVID-19) pandemic is not simply a global health disaster, it is making an impact beyond death and human sufferings.

For developing nations the virus itself and the sickness it causes are only half of the danger. Societal issues such as widespread poverty, economic deprivation, and lack of access to water, food, sanitation, and healthcare present huge challenges for the population in the subcontinent.

For a country like Bangladesh, the infection threatens the already fragile economy and has the potential to negatively impact human rights, education, basic resource allocation, and food security. The country’s under-resourced healthcare systems, hospitals, disaster management have been overwhelmed in the first wave of the virus attack itself.

The United Nations Organisation (UN) stated that the pandemic is unlike anything seen in the past 75 years and apart from the human tragedy ‘a global recession is a near certainty’. This has almost made certain, that Bangladesh – whose economy is pillared on two sources, the international labor market and Ready Made Garment (RMG) sector – will be one of the worst-affected countries.

Double Jeopardy of Partnership with China

For a long time now, China has looked upon its ties with Bangladesh as an essential barometer for a check on India’s influence in the Indian Ocean Region (IOR). Greater control over the Bay of Bengal would allow China more easily project its power into strategically important South Asia and contiguous maritime spaces. Thus, through economic, energy and transport deals, Beijing continued to bolster its ties with Bangladesh.

Beijing is Dhaka’s largest business partner. In 2019, according to the figures released by Prime Minister Sheikh Hasina-led government, Bangladesh imported a huge amount of products worth around $13.41 billion from China which is 26 percent of the country’s total import.

In China – Dhaka found a pocket and a market. However, since January 2020, the effects of the infection started to take a toll on Bangladesh’s garment industry as the supply of raw material from various provinces of China had been suspended.

Depicting the real picture of the RMG sector, Kazi Iftekhar Hossain, President, Bangladesh Garments Buying Association said that his country’s heavy dependency on China will bear a heavy cost in the coming days. “Bangladesh is badly dependent on China. From strings to fibers and other products everything we work with comes (imported) from various provinces of China. Secondly, Bangladesh’s export (to China) will be heavily affected, if the virus is not eradicated by April-end,” Hossain told the News21.

In the wake of the outbreak as China continues to suspend trade activities, employment for millions of helpless workers in Bangladesh has also being suspended.

Last week, in an official statement Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said that buyers have so far canceled orders worth US$ 2.87 billion following the outbreak. Around 1,041 factories reported export order for 906.68 million pieces worth US$ 2.87 billion have either been canceled or held up, which has affected over 2.08 million Bangladeshi workers.

“Bangladesh is facing a dire situation. All the buyers from different places, countries, and continents are temporarily suspending the orders,” Dr. Rubana Huq, President of BGMEA said.

Implications on External Support

The impact of the pandemic on the economy of Bangladesh is diverse – from export outflows getting disrupted to import inflows facing delays. Outmigration getting grounded, and tourism suspended, Dhaka’s business contacts getting delinked, and investment flows facing growing uncertainties are just witnessed as Bangladesh contracts the first wave of infection.

The government has instructed all its envoys in Europe, the Americas and the Middle East to strengthen relationship with the development partners, major buyers, and investors so as to keep the oil burning in the trade lamp.

According to an official release, Foreign Minister Dr. AK Abdul Momen has asked Bangladeshi diplomatic missions to start talks with major business partners as soon as possible to fight against the aftershock period of novel coronavirus (COVID-19).

“The foreign minister has asked them (ambassadors and senior diplomats) to give foreign partners and buyers an understanding of Bangladesh’s situation. They have been asked to convince the foreign partners to stay with Dhaka in this crisis,” a government official told.

Bangladesh’s growth of export earnings over the first eight months of Financial Year (FY) 2020 has been negative (-4.8 percent in comparison to FY 2019). Bangladesh’s RMG sector also flagged negative growth over the first eight months of FY 2020 (-5.5 percent). In the current situation, it has become quite evident that COVID-19 will have long-lasting effects on Bangladesh’s external sector performance over the coming months of FY 2020, and most likely beyond even.

Dhaka’s major export destinations are some of the countries hardest hit by the pandemic – Americas (accounting for 16.9 percent of Bangladesh’s total exports), Germany (15.2 percent), UK (10.2 percent), Spain (6.3 percent).

Major Projects Affected

The lockdown ordered by the Bangladeshi government since 25 March has had a compounded effect on all sectors.

This unprecedented measure has suspended the construction works of all major infrastructure projects, worth more than $30 billion, including the Padma Bridge, Payra thermal power plant, Matarbari power plant, Karnaphuli river tunnel, and the Dhaka metro rail.

Construction work on the country’s most prized project – the Rooppur Nuclear Power Plant (RNPP) – is reported to continue almost as usual despite the country-wide shut-down. According to reports, the construction site is still hosting 11,000-12,000 workers daily, including day laborers, office staff, local and Russian engineers.

However, the number of day laborers has been dropping ever since a foreign worker was rushed off from the plant for tests on suspicion of coronavirus infection last night.

Government sources claimed that a 37-year-old Belarus national, who was suffering from sore throat, cough, and fever for the last few days was sent to Dhaka for COVID-19 tests. The residential complex, in which he was staying with 22 other foreigners, has been quarantined.

Authorities are now testing all 2,000-plus foreigners – from Russia, Belarus, and other countries – who are working at the RNPP. “Most of them have a travel history, thus we are testing them all. Among them, 177 workers are in-home quarantine,” a government source said.

The RNPP – Bangladesh’s first nuclear plant, is likely to produce electricity by 2023 and is being constructed through financial and technical support from Russia.