South Korean Ambassador to Bangladesh Lee Jang-keun on Wednesday said his country will significantly increase the size of soft loans to Bangladesh to $3 billion from the current $700 million. 

“This amount will be implemented during the next five years, between 2022 and 2026,” he said while speaking at “DCAB Talk” held at the National Press Club in Dhaka.

Diplomatic Correspondents Association, Bangladesh (DCAB) organized the event. DCAB President Rezaul Karim Lotus and its General Secretary AKM Moinuddin also spoke.

Previously, the size of the soft loans agreed between the two governments was $700 million during the five-year period of 2021 and 2025.

Soft loans from South Korea are known as the Economic Development Cooperation Fund (EDCF) and the interest rate is between 0.01% to 0.04%.

So far South Korea has provided $1.34 billion of EDCF concessional loans to Bangladesh for 27 projects.

The ambassador said with this increase Korea can now assist bigger development projects of Bangladesh. “I believe that this will help Bangladesh for smooth graduation from LDC in 2026.”

Ambassador Lee said even though Korea’s Official Development Assistance (ODA) to Bangladesh is relatively smaller than those of Japan, US and Europe, Dhaka is the third major recipient of Korea’s ODA. “We expect that Bangladesh will be the second largest recipient this year,” he said.

In the area of foreign direct investment (FDI), he said, there has been a continuous inflow of Korean investment to Bangladesh.

He said Korea remains one of the major foreign investors in Bangladesh. According to BB, the accumulated stock of Korean FDI increased to $1.4 billion in 2021/22 from $1.1 billion in 2019/20.

“Korea is the fifth major foreign investor,” he said, adding that this all shows how the relations between the two countries are growing.

Lee said his mandate is to strengthen bilateral relations between Bangladesh and Korea.

In this regard, in the beginning of his mandate in Bangladesh, the ambassador presented three major objectives of his work during his term - diversification, elevation and generation.

He laid emphasis on diversifying the RMG-centred cooperation and taking the relations to a new height - 50 years of diplomatic anniversary - focusing on the young generation - talented, ambitious youth.

Bangladesh and South Korea will celebrate 50 years of diplomatic ties next year. “I am making various plans and efforts to make next year a meaningful year for the future of our relationship.”

He said making a documentary on the two countries’ 50 years of friendship was one of his preparations.

Bilateral trade

Highlighting the progress in bilateral trade, the ambassador said the trade volume between Bangladesh and South Korea reached a record high in 2021, crossing $2 billion.

According to Korean statistics, South Korea’s export to Bangladesh recorded $1.63 billion in 2021, 58% increase from 2020, while Bangladesh’s export to South Korea reached $552, a 40% year-to-year increase.

“It is a very meaningful development because the bilateral trade volume has been stagnant for more than 10 years since it reached the peak of $1.8 billion in 2011,” said Ambassador Lee, adding that this increasing trend of bilateral trade is continuing this year as well.

For the first seven months of this year, Korea’s export to Bangladesh recorded a 46% year-to-year increase of $1.4 billion, while Bangladesh’s export to Korea saw a 35% increase with $392 million.

“It is encouraging that our bilateral trade is expanding in spite of the global economic crisis. We have to make efforts to maintain this upward trend of bilateral trade,” he said.

Employment permit system

Before the pandemic, annually fewer than 2,000 Bangladeshi expatriate workers were sent to South Korea.

After the suspension of admitting new expatriate workers for almost two years, South Korea resumed it in December last year.

And this year, between January and August, more than 3,000 Bangladeshi expatriate workers went to South Korea which is a record-high number, said Ambassador Lee. “By the end of this year we expect the number will reach almost 4,000.”

He said there are more than 10,000 Bangladesh expatriate workers working in South Korea now. This year’s quota increased to 3,441 from 1,941.

The remittances sent by the Bangladeshi workers were more than $209 million in the 2020/21 fiscal year which made Korea the 12th major remittance sending country, said the ambassador.