Politics & Security

Why Matarbari Port in Bangladesh is Important for Both Japan and India

For Bangladesh, Japan has been one of its closest development partners since its independence. Now as its economy grows, a new infrastructure push is needed.

Published

1 year ago

February 22, 2023

Rupakjyoti Borah

Chittagong Port in Bangladesh is the country's busiest port facility. (Creative Commons/TAZMEEM/Wikimedia)

Bangladesh is an important country in the Indo-Pacific region. It is also a country in which Japan is investing in a big way. Tokyo is involved in many projects in the country, including the Matarbari Port.

Japan and Bangladesh have had close ties ever since Tokyo recognized the People's Republic of Bangladesh on February 10, 1972. It was soon after the new country had declared its independence.

In neighboring areas, Japan has made significant investments in Northeast India. In fact, because of the region's strategic location, Japan is the only country which has been allowed to invest in Northeast India in a big way. Northeast India shares borders with Bhutan, China, Myanmar and Bangladesh.

All of these factors played a role in designing one of the signature initiatives of Japanese foreign policy, the "free and open Indo-Pacific" vision. While this was conceived by Shinzo Abe, the former Japanese prime minister, it has been continued by successive administrations since then. As part of the same, Japan has been working to ensure that a rules-based order is maintained in the Indo-Pacific region.

Japan's Investment

Although Japan has been one of the closest development partners of Bangladesh since its birth, it has been outsmarted by China in recent times. Especially after the launch of Beijing's Belt and Road Initiative (BRI), which Bangladesh has signed on to.

It was in June 2018 that the Japan International Cooperation Agency (JICA) signed loan agreements in the amount of ￥2.65 billion JPY ($19.65 million USD) with the Government of the People's Republic of Bangladesh. Their purpose was to provide for the development of the Matarbari Port in Bangladesh.

Tokyo is also involved in the Dhaka mass rapid transport network as part of its development assistance to the country.

Bangladesh's Economic Advance

Bangladesh has moved fast in terms of its economic development. It attained lower middle income status in 2015. And as of 2022, it is scheduled to exit the United Nations list of least developed countries by 2026.

The Matarbari port project in Bangladesh could also be helpful for the landlocked Himalayan countries of Nepal and Bhutan, apart from India's Northeast states. These regions became landlocked at the time of India's independence in 1947, and the creation of first East Pakistan and now Bangladesh in 1971.

The Matarbari Port is also close to the Sittwe Port in Myanmar. And India has significant investments in the natural energy sector in Myanmar.

Why the Matarbari Port is Important for Bangladesh

The Matarbari port is important for Bangladesh in a host of ways. The country is one of the fastest growing nations in the Indo-Pacific. Currently, however, it has only two major ports, the Chittagong port and the Mongla port. At this point, the two are not enough to handle the cargo traffic.

In addition, as Bangladesh is bordered by India on all sides, its seaports are crucial for the health of the country. For example, they currently carry 90% of the country's external trade. In addition, with the military coup in neighboring Myanmar, many countries are flocking towards Bangladesh for investment opportunities.

Is it Possible to Link Japanese Investments in Bangladesh and Northeast India?

Now, the moot question is whether it is possible to link up Japan's investments in Bangladesh and Northeast India?

Options available for consideration should be reviewed before the question of whether Japanese investments in the two areas are compatible.

First, what is the nature of goods that are going to be transported from Bangladesh to India? These could include textiles, fish products and produce from outside Bangladesh that would be offloaded in Matarbari.

Second, what if there is a change of government in Bangladesh? The present government led by Prime Minister Sheikh Hasina is friendly towards India and Japan. But in the past, the Bangladesh Nationalist Party (BNP) government led by Begum Khaleda Zia was not so friendly towards India. In addition, there is an issue of social stability. Seven Japanese consultants were killed in a terrorist attack at the Holey Artisan café in a posh area of the capital city, Dhaka back in 2016.

Third, the infrastructure would have to be built out. It would be challenging to link Bangladesh and Northeast India with existing roadways. Besides, the railway connectivity is poor due to a host of factors. On the other hand, India can also join hands with Japan to develop railway connectivity between the two, both in Bangladesh and on the Northeast India side of the border.

Prospects

Japan and India have already been cooperating in the field of infrastructure development in countries like Sri Lanka. Moreover, Tokyo is working with Washington, in addition to the other G7 countries, to provide an alternative to the China-led Belt and Road Initiative (BRI). Their plan is the so-called Build Back Better World initiative,"led by major democracies to help narrow the $40+ trillion USD infrastructure needed in the developing world."

At the same time, India is now the fifth largest economy in the world. Meanwhile, Japan is the world's third largest economy. Any cooperation in the development of the Matarbari Port and link Bangladesh with Northeast India could provide a test case for Japan-India cooperation in the field of infrastructure in other parts of the world.

The two countries have already joined hands in Africa with the signature initiative known as the Asia-Africa Growth Corridor. That initiative aims to bring together India's traditional influence in Africa and Japanese economic muscle and technological prowess.

In Bangladesh, however, there are still some different hurdles. It will take some time before the fruits of the efforts made by Japan in the Matarbari Port in Bangladesh are realized. As they say, the proof of the pudding is in the eating.

Author: Dr Rupakjyoti Borah

Dr Borah is a Senior Research Fellow at the Japan Forum for Strategic Studies. The views expressed here are personal. Find more of his essays on JAPAN Forward.