New Delhi, India (BBN)– Japan is beating out China in a race to build Bangladesh’s first deep-water port as the region’s powers jostle for a foothold in the Indian Ocean.
Construction of the 18-meter-deep port at Matarbari on Bangladesh’s southeast coast is set to start by January, the Japan International Cooperation Agency said in an emailed response to questions from Bloomberg News.
That’s bad news for a stalled China plan to build a port about 25 km (15 miles) away, reports The Japan Times.
“I’d imagine there’s only room for one port,” said Krispen Atkinson, a maritime analyst at IHS Inc, citing the cost to build railway lines and approach channels.
“There are probably political reasons behind it as well. If you’re looking to build a port and want Western support as well, would a port financed by China be the favoured option?”
The deal would mark a setback for China in South Asia, where it’s seeking to establish economic and military ties in a region that carries about 80 percent of its oil imports.
The Bay of Bengal, a body of water bigger than Mexico, lies at the heart of an area where China, Japan and India are investing billions of dollars to secure economic gains for decades to come.
“There’s a remarkable scramble going on,” said David Brewster, a visiting fellow at Australian National University in Canberra, who called the bay a “twin” to the South China Sea.
“The Japanese clearly see themselves in competition with China, and control over ports is seen as important. I expect the Japanese are very happy about this.”
Bangladesh’s government confirmed that work on the Matarbari port is scheduled to start early in 2016, while saying talks on the China-backed port at Sonadia island are still underway.
Bangladesh hasn’t built a new seaport since independence in 1971.
It’s wanted a deep-water one for over a decade as it turned into the world’s second-biggest exporter of garments, which account for 15 percent of gross national product.
Waters surrounding Bangladesh’s two main ports — Chittagong and Mongla — are so shallow that vessels have to wait for an incoming tide to berth and an outgoing one to leave.
Bigger ships currently need to transfer their loads to smaller vessels.
The longer turnaround can cost an extra $15,000 per day, making Chittagong several times pricier than ports in neighboring countries.
The Matarbari port, at 18 meters (59 feet), would be deep enough to host the largest container vessels, according to IHS’s Atkinson.
To pay for a bigger port, Bangladesh needs help. That’s where the region’s major powers come in.
While a Japanese company in 2009 completed studies for the Bangladesh government for a port at Sonadia, Bangladeshi Prime Minister Sheikh Hasina initially sought help to build it from China, which she once called the “most dependable and consistent friend of Bangladesh.” Since at least 2012, China has publicly backed the Sonadia project.
Newspapers speculated that the deal would be clinched when Hasina visited Beijing last year. Yet it never happened.
“Although the Sonadia deepwater port project failed to get signed, both sides expressed willingness to have further negotiations,” Chinese state media reported at the time.
Months later, a member of her Cabinet revealed a key reason for the delay.
“Some countries, including India and the United States, are against the Chinese involvement,” Planning Minister A.H.M. Mustafa Kamal told reporters in January, according to the Dhaka Tribune. The government is rethinking Sonadia since Matarbari is only 25 km away, he said.
M.A. Mannan, state minister for finance and planning, said there’s room for both ports. Matarbari would be used mostly for handling coal imports to supply power plants, while Sonadia would be a “full-fledged deep-sea port,” he said.
But the Japanese have more ambitious plans. Matarbari port can be “an important trade gateway to the rest of Asia and beyond,” JICA President Akihiko Tanaka said in a speech at the University of Dhaka last year.
Even state-run Coal Power Generation Company Bangladesh Ltd., which is executing the project with JICA, said the port will contribute to “large-scale commercial development.”
Shinzo Abe in September became the first Japanese prime minister in 14 years to visit Bangladesh. Earlier he offered Hasina ¥600 billion ($4.8 billion) in loans for the project.
JICA envisions building electricity transmission lines, highways and rail links to build an industrial corridor on par with Thailand’s Eastern Seaboard, which now accounts for more than half of the country’s trade.
The total cost of Matarbari, which includes a 1,200-megawatt coal power plant, would be about ¥450 billion. JICA said it has begun disbursing a ¥41.5 billion loan for preparatory work, and a group led by Sumitomo Corp.
will complete the project survey by November. Sumitomo didn’t respond to an email seeking comment.
Matarbari is a small island of shrimp farms and salt pans. Sonadia — home to mangroves, migratory birds and marine turtles — has been designated an environmentally critical area, another obstacle to building a deep-sea port.
Sites along the Bay of Bengal are particularly strategic to China. In January, China National Petroleum Corp. began pumping oil from a new deep-water port in Myanmar. China Harbour Engineering Co. is helping upgrade Chittagong port.
While China has close ties to Pakistan and has sought to improve relations with Indian Ocean countries, it suffered a setback when Sri Lanka elected a new president who shifted toward India. Less than a year ago, a Chinese sub had docked in a Colombo port developed in part with China’s help.
If Sonadia fails to materialize, news reports suggest China may help develop another port at Payra. When Hasina officially kicked off construction in 2013, the plan was for the port to handle vessels that draw as much as 10 meters.
For China and Japan, Indian Ocean ports are valuable. Besides carrying most of the world’s oil trade, the seas provide access to some of the world’s most populous and fastest-growing markets. Bangladesh has about 166 million people, the fifth-most in Asia.
“The Bay of Bengal is centrally located within this tectonic change,” JICA’s Tanaka said in last year’s speech. “Bangladesh, in other words, is the linchpin.”
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