Written by The Banking Post
South Korea has expressed preliminary interest in investing over $6.0 billion in a set of development projects in Bangladesh, with Dhaka proposing nearly Tk 816.70 billion worth of ventures across sectors such as infrastructure, transportation, and energy.
According to officials at the Economic Relations Division (ERD), high-level representatives from South Korea’s Ministry of Land, Infrastructure and Transport and the Export-Import Bank of Korea (KEXIM) conveyed their intent to deepen development cooperation during a visit to Dhaka earlier this month.
“South Korea is considering increasing its footprint in Bangladesh’s development initiatives, with a clear preference for large-scale infrastructure projects,” said a senior ERD official involved in the negotiations.
Project Pipeline and Strategic Focus
On July 22, a four-member Korean delegation met with ERD officials to explore investment opportunities. In preparation for the meeting, the ERD had solicited proposals from nearly three dozen implementing agencies to curate a robust pipeline of priority projects, especially as the interim government seeks to revive development momentum following a period of economic and political uncertainty.
South Korea, traditionally a partner in smaller-scale ventures, is now eyeing megaprojects such as:
- Metro Rail Line-4 and Line-5
- Rolling stock supply for Bangladesh Railway
- Electric power transmission line construction
Challenges in Implementation
Despite positive signs, both sides acknowledged the political headwinds that could impede progress.
“Political instability in both countries poses a key obstacle,” noted one ERD official, citing parallel uncertainty in South Korea’s domestic politics.
Moreover, officials said fund disbursement remains a challenge, even for projects that are already in advanced stages of feasibility. A number of proposed ventures are still undergoing feasibility studies conducted under Korean methodologies, while others are nearing the agreement-signing phase.
“We’ve made progress in addressing inconsistencies in the pipeline, but project clearance delays—on both sides—continue to slow down implementation,” an official added.
Financing Terms and Conditions
The Korean assistance is expected to be delivered through two key channels:
- Commercial Loans — with interest rates to be set based on prevailing market conditions.
- Economic Development Cooperation Fund (EDCF) — offering concessional financing at interest rates of 1.0% or lower, as per the 2022 framework agreement signed between the two nations.
A Longstanding Development Partner
South Korea has been involved in development financing in Bangladesh since 1993, primarily through concessional loans provided by the Korea Exim Bank. While past engagements focused on smaller-scale technical projects, this recent shift signals Seoul’s growing appetite for high-impact, large-scale infrastructure investments.
As both nations navigate political uncertainties, officials stress the need for administrative efficiency and timely decision-making to ensure that these prospective investments translate into concrete development outcomes.
