Japan Beating China in Race for Indian Ocean Deep-Sea Port

By Natalie Obiko Pearson

(Bloomberg) — Japan is thrashing out China in a race to construct Bangladesh’s first deep-sea port because the area’s powers jostle for a foothold within the Indian Ocean.

Construction of the 18-meter-deep port at Matarbari on Bangladesh’s southeast coast is ready to begin by January, Japan International Cooperation Agency mentioned in an e-mailed response to questions from Bloomberg News. That’s unhealthy information for a stalled China plan to construct a port about 25 kilometers (15 miles) away.

“I’d imagine there’s only room for one port,” mentioned Krispen Atkinson, a maritime analyst at IHS Inc., citing the price to construct railway traces and method 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 favored option?”

The deal would mark a setback for China in South Asia, the place it’s looking for to determine financial and navy ties in a area that carries about 80 p.c of its oil imports. The Bay of Bengal, a physique of water larger than Mexico, lies on the coronary heart of an space the place China, Japan and India are investing billions of {dollars} to safe financial positive factors for many years to come back.

“There’s a remarkable scramble going on,” mentioned David Brewster, a visiting fellow on the Australian National University in Canberra, who referred to as 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.”

Shallow Ports

Bangladesh’s authorities confirmed that work on the Matarbari port is scheduled to begin early in 2016, whereas saying talks on the China-backed port at Sonadia island are nonetheless underway.

Bangladesh hasn’t constructed a brand new seaport since independence in 1971. It’s needed a deepwater one for greater than a decade because the nation changed into the world’s second-biggest exporter of clothes, which account for 15 p.c of gross nationwide product.

Waters surrounding Bangladesh’s two foremost ports — Chittagong and Mongla — are so shallow that vessels have to attend for an incoming tide to berth and an outgoing one to go away. Bigger ships presently must switch their masses to smaller vessels. The longer turnaround can value an additional $15,000 per day, making Chittagong a number of occasions pricier than ports in neighboring international locations.

The Matarbari port, at 18 meters (59 toes), can be deep sufficient to host the most important container vessels, in line with IHS’s Atkinson.

China Stutters

To pay for a much bigger port, Bangladesh wants assist. That’s the place the area’s main powers are available.

While a Japanese firm in 2009 accomplished research for the Bangladesh authorities for a port at Sonadia, Bangladesh Prime Minister Sheikh Hasina initially sought assist to construct it from China, which she as soon as referred to as the “most dependable and consistent friend of Bangladesh.” Since at the least 2012, China has publicly backed the Sonadia undertaking.

Newspapers speculated that the deal can be clinched when Hasina visited Beijing final 12 months. Yet it by no means occurred.

“Although the Sonadia deepwater port project failed to get signed, both sides expressed willingness to have further negotiations,” Chinese state media reported on the time.

Months later, a member of her cupboard revealed a key purpose for the delay.

Asia Gateway

“Some countries, including India and the United States, are against the Chinese involvement,” Planning Minister A.H.M. Mustafa Kamal instructed reporters in January, in line with the Dhaka Tribune. The authorities is rethinking Sonadia since Matarbari is simply 25 kilometers away, he mentioned.

M.A. Mannan, state minister for finance and planning, mentioned there’s room for each ports. Matarbari can be used largely for dealing with coal imports to produce energy vegetation, whereas Sonadia can be a “full-fledged deep-sea port,” he mentioned.

But the Japanese have extra bold plans. Matarbari port may be “an important trade gateway to the rest of Asia and beyond,” JICA President Akihiko Tanaka mentioned in a speech on the University of Dhaka final 12 months.

Even state-run Coal Power Generation Company Bangladesh Ltd., which is executing the undertaking with JICA, says the port will contribute to “large-scale commercial development.”

Shinzo Abe in September grew to become the primary Japanese prime minister in 14 years to go to Bangladesh. Earlier he supplied Hasina 600 billion yen ($4.8 billion) in loans for the undertaking.

Marine Turtles

JICA envisions constructing electrical energy transmission traces, highways and rail hyperlinks to construct an industrial hall on par with Thailand’s Eastern Seaboard, which now accounts for greater than half of the nation’s commerce.

The complete value of Matarbari, which features a 1,200 megawatt coal energy plant, can be about 450 billion yen. JICA mentioned it has begun disbursing a 41.5 billion yen mortgage for preparatory work, and a gaggle led by Sumitomo Corp. will full the undertaking survey by November. Sumitomo didn’t reply to an e-mail looking for remark.

Matarbari is a small island of shrimp farms and salt pans. Sonadia — residence to mangroves, migratory birds and marine turtles — has been designated an environmentally vital space, one other impediment to constructing a deep-sea port.

Sites alongside the Bay of Bengal are significantly strategic to China. In January, China National Petroleum Corp. started pumping oil from a brand new deep-water port in Myanmar. China Harbour Engineering Co. helps improve Chittagong port.

‘Tectonic Change’

While China has shut ties to Pakistan and has sought to enhance relations with Indian Ocean international locations, it suffered a setback when Sri Lanka elected a brand new president who shifted towards India. Less than a 12 months in the past, a Chinese submarine had docked a port in Colombo developed partially with China’s assist.

If Sonadia fails to materialize, information studies recommend China might assist develop one other port at Payra. When Hasina formally kicked off building in 2013, the plan was for the port to deal with vessels as deep as 10 meters.

For China and Japan, Indian Ocean ports are useful. Besides carrying many of the world’s oil commerce, the seas present entry to a number of the world’s most populous and quickest rising markets. Bangladesh has about 166 million individuals, the fifth most in Asia.

“The Bay of Bengal is centrally located within this tectonic change,” JICA’s Tanaka mentioned in final 12 months’s speech. “Bangladesh, in other words, is the linchpin.”

–With help from Arun Devnath in Dhaka.