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In Bangladesh, it’s the age of rail.
After decades of neglect and decline, the nation’s railway network, much of it dating back to British colonial times, is being updated under a $30 billion plan to renovate stations and workshops, buy new trains and lay thousands of kilometers of new track.
The renewed enthusiasm for rail in one of Asia’s poorest nations is largely thanks to China, and its ambitious agenda to extend trade tentacles across Asia.
China’s efforts to turn its Silk Road investments into workable projects have been slow-going in more developed countries like Thailand because of a reluctance to become too dependent on Asia’s largest economy. But for Bangladesh, the combination of technology and cheap finance is irresistible.
Beijing is offering $9 billion in loans at 2 percent interest, repayable over 15 years with a five-year grace period, according to a document seen by Bloomberg. The funding plan was discussed at two meetings last year, say officials who were briefed on the talks and asked not to be named because the negotiations are private.
Dhaka wants the cash to build at least six rail projects connecting the capital with key industrial areas and the Indian border. Together with a program of updating existing lines and building bridges, the policy could raise the nation’s economic growth to among the fastest in the region.
“In contrast with trade agreements, which are top down and take time to negotiate, the Silk Road project is a bottom-up project that creates jobs for Bangladesh right away,” Tan Khee Giap, an associate professor at Singapore’s Lee Kuan Yew School of Public Policy, said by phone. “China has the surplus capital and the ability to facilitate this kind of approach.”
Bangladesh’s government on May 3 approved a 172-kilometer (107 miles) rail project that will cost 350 billion taka ($4.5 billion) and will connect Dhaka and Jessore, a district on the border with India, linking the capital to the country’s southwest for the first time by rail.
This article first appeared on www.bloomberg.com
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