The Kingdom of Saudi Arabia (KSA) occupies a vital position in the foreign policy of Bangladesh for political and economic reasons. Ever since the establishment of diplomatic relations in 1975, KSA has been crucial for the much needed economic aid, generally as grants, trade and investment, energy supplies, employment and remittances.
With approximately 20 per cent of world's oil reserves and gross domestic product (GDP) of $ 683.8 billion in 2017, Saudi Arabia is the largest economy in the Middle East. It has been making concerted efforts to reducing its dependence on export of oil by diversifying its economy under the Saudi Vision 2030. The goal is to transform Saudi Arabia as one of the hubs of global business and investment.
In recent times, Riyadh has been developing and expanding its international relationships more intensely in order to protect its economic and geopolitical interests. Analysts believe Saudi Arabia's necessity to expand its alliances has become more critical after the hostile response of the West over the murder of Saudi dissident and journalist Jamal Khashoggi in the Saudi Consulate, Istanbul in October 2018.
In this backdrop, Saudi commerce and investment minister Majid bin Abdullah Al Qasabi, and economy and planning minister Mohammad bin Mazyad AlTuwaijiri led a high profile 34-member delegation to Dhaka on March 06-07, mainly to explore foreign direct investment (FDI) opportunities and strengthen strategic partnership between the two countries.
Notably, Saudi King Salman bin Abdulaziz Al Saud and Crown Prince Mohammed bin Salman were the first few world leaders who congratulated Bangladesh's PM Sheikh Hasina for winning the December 30 parliamentary elections. Now, Saudi Arabia is also the first country to send a high-powered business delegation to boost economic relationships.
While speaking at the plenary session of the joint ministerial level meeting with Bangladesh, Saudi commerce and investment minister, Majid Bin Abdullah Al Qasabi observed that they were determined to open "a new chapter" between the two countries. The finance minister of Bangladesh, AHM Mustafa Kamal and Salman F Rahman, prime minister's private industry and investment adviser too addressed the session.
The Saudi leader of the delegation, Qasabi apprised, "We are here to explore all possibilities to expand business and investment, and I can assure you that we want to become the true partner of Bangladesh in developing trade and investment."
Dhaka put forward roughly $35 billion worth of investment proposal to Riyadh which would be reviewed by a joint working committee headed by a senior minister of Saudi Arabia. Qasabi proposed the formation of a "Bangladesh-Saudi Business Council" to jointly explore and enhance trade and investment ties.
Bangladesh and Saudi Arabia signed as many as six deals, including two agreements for the establishment of a solar power project and manufacturing transformers and electricity devises.
The four Memorandums of Understanding (MoUs) included, manpower export, setting up of a urea formaldehyde-85 plant, establishing biomedical engineering and technology institute and producing high-voltage cable.
The volume of investment by the two Saudi companies under the agreements stands at $135 million, while the estimated amount of investment under the four MoUs is worth $98 million. Economists believe quality investments from Saudi Arabia and others are likely to contribute to sustainable economic growth, creation of jobs, and reduction of poverty in Bangladesh.
Saudi Arabia also remains the leading trading partner of Bangladesh in the Middle East. However, bilateral trade at present is merely $1.4 billion a year. Currently, over 2.8 million Bangladeshi workers are employed in Saudi Arabia. Thus, Bangladesh received remittances of about $2.6 billion in 2018.
Investment from Saudi Arabia in Bangladesh hit about $5.0 billion in 2018. But this seems to be insignificant compared to its investment in Pakistan and India. The economic imperatives of Bangladesh have prompted Prime Minister Sheikh Hasina to officially visit Saudi Arabia four times during 2016-18.
To advance security cooperation, Bangladesh signed a defence agreement with Saudi Arabia on February 14, 2019. Under the agreement, around 1,800 Bangladeshi troops would be sent to Saudi Arabia to defuse mines along the war-torn Saudi-Yemen borders.
Bangladesh remains one of the fastest-growing economies in the developing world. It offers one of the most investor-friendly regulatory regimes in South Asia including low-cost labour, generous tax holidays, duty-free import of machineries, respite from double taxation, 100 per cent foreign ownership, full repatriation of capital and dividends etc.
To sum up, the firm commitments made by the largest ever Saudi Arabia business delegation clearly indicate that Dhaka-Riyadh relations are moving towards greater heights. The more intensely Saudi Arabia is censured by the Western countries for its violation of fundamental rights, the more likely is its alliance to grow with the Asian countries, including Bangladesh.
Dr. Kamal Uddin Ahmed is a former Professor and Chairman, Department of Political Science, University of Dhaka.
