Bangladesh’s super-fast rise on Japan’s ODA landscape is a significant development in South Asia. Japan’s ODA to Bangladesh began to rise from 2012 onwards, from a mere $78 million in 2011 to $305 million in 2012, and this trend has continued since then, with one analyst suggesting Japan provided $16.19 billion in foreign aid to Bangladesh up to 2021.
Japan’s ODA increases have happened in tandem with Bangladesh’s economic growth, rise in bilateral trade and recognition of its strategic importance for maritime security. Sheikh Hasina’s return to power in 2009 and her unbroken rule until July 2024 gave economic and political stability to Bangladesh. Hasina was one of the most ardent admirers of Japan, who acknowledged Japan’s contribution to Bangladesh’s development and travelled to Tokyo frequently seeking partnerships.
Prime Minister Abe visited Bangladesh in September 2014 and proposed the Bay of Bengal Industrial Growth Belt (BIG-B), promoting infrastructural development and connectivity. Japan is funding the Matarbari deep seaport project that will significantly transform the shipping and movement of goods within and outside Bangladesh. Once operational, it is expected to emerge as a crucial commercial hub for Bangladesh and the Bay of Bengal region, enabling the linkage of industrial value chains with Northeast India.
JICA reports (JICA 2022; JICA 2023) inform that from 2017 to 2022, about half of its total ODA loans globally were for projects in the South Asian region, mainly India and Bangladesh. About 70 per cent of the loans were for transportation, and the rest for electric power and gas, social services, mining and manufacturing, agriculture and fisheries, irrigation and food control. This upward trend and emphasis on India and Bangladesh continued in fiscal 2023 and is likely to continue, given commitments for large projects.
Three key factors have influenced Japan’s aid to South Asia. First, there is a genuine desire in Japan’s aid community for South Asia’s social and economic development, as this region is still poor and underdeveloped. Second is Japan’s commercial interest, given the expanding markets of Bangladesh, as their economies have performed better than many others in Asia and future potential is immense. JETRO reports suggest that the business environment and their capacity to absorb investment have improved in both countries. Finally, and notably, the importance of the two nations has also risen in Japan’s broader strategic objectives in the age of ‘free and open Indo-Pacific’ and maritime security in the Indian Ocean.
With the change in Bangladesh’s political landscape from the Hasina government to the student-led interim government in Dhaka, followed by a tense and deteriorating relationship with India and Bangladesh, the emerging triangle of infrastructure developments involving Japan, India, and Bangladesh has come undone. This triangle is unlikely to revive soon. However, Japan’s bilateral relationships with India and Bangladesh, including Japan’s ODA-supported large-scale infrastructure projects, will progress as before.
