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Bangladesh should accelerate development in infrastructure and logistics sectors as part of its vision to achieve upper-middle income country status by the year 2031, says a recent study published by the Business Initiative Leading Development – also known as BUILD.
Analysts further urged the government to declare “Bangladesh Infrastructure Decade 2021-2031” to aid this acceleration, form a comprehensive national logistics development policy, and mark these sectors as high-priority to attract more foreign direct investment.
They pointed out that the infrastructure decade – if implemented by the government – will become a brand for Bangladesh, indicating heavy investment in the infrastructure sector keeping pace with the country’s growth trajectory.
Big investment opportunities ahead
The BUILD research “Transport and Logistics: The Right Move” says Bangladesh has the potential to become a gateway between South Asia and Southeast Asia, and also function as a transportation hub for those regions.
But Bangladesh’s investment in infrastructure sector is only 3.6 per cent of the GDP. So, investors have a big scope for investing in this sector.
The study estimates that Bangladesh will inject about $300 billion for infrastructure development until the year 2031, reaching 6 per cent – 7 per cent of its GDP, but the country needs such level of investment as soon as possible.
It should be noted that Taiwan, South Korea, China and Vietnam had heavily invested in infrastructure during their own periods of rapid industrialisation.
For this purpose, Taiwan invested 9.5 per cent of its GDP from 1970 to 1990, South Korea invested 8.7 per cent from 1960 to 1990, China on average invested 8 per cent of its GDP in their infrastructure during rapid industrialisation.
Besides, Vietnam’s investment reached 10 per cent of its GDP, while India, Sri Lanka and Philippines invested 5 per cent of their GDPs.
Speaking to The Business Post, a number of economists pointed out the need for private industrial investment playing an active role to accelerate the investment in Bangladesh’s infrastructure and logistics sectors.
Private investment a must
State Minister for Shipping Khalid Mahmud Chowdhury recently said private sector investment is a must for ensuring dynamic logistics, which in turn will help boost diversification of exports.
He continued, “We have to work towards building world-class infrastructure and transportation systems for the sake of sustainability. Around $285 billion in investments will be needed to further develop our transport infrastructure in the next two decades.
Speaking to The Business Post, Executive Director of Policy Research Institute of Bangladesh Dr Ahsan H Mansur said, “The investment in infrastructure and logistics sectors is still very poor. We need a positive initiative or a big vision to achieve the upper middle income country status.
“Our investment in the infrastructure sector is very low compared to many countries, such as South Korea and Taiwan. So, our investment should increase three times in this segment to achieve Bangladesh’s vision. The investment should be over 7 per cent of our GDP.”
Overcoming infrastructural, logistical challenges
Speaking on the issue, BUILD Chairperson Abul Kasem Khan said, “Bangladesh is overburdened with infrastructural challenges, which in turn is causing the country to underperform. Our low logistics performance is damaging business competitiveness and driving up transaction costs.
“Compared to other countries, our logistics costs are much higher due to unpredictable supply chains and inefficient infrastructure. We spend an additional 20 per cent – 30 per cent cost for producing a product in Bangladesh, while other countries spend 10 per cent – 12 per cent.”
A former president of Dhaka Chamber of Commerce & Industry (DCCI), Kasem continued, “The government is setting up mega projects that will be game changers for the economy. I am now requesting the government to form a national logistic policy as soon as possible.
“Many nations have such as policy, but we are yet to get one. Even Saudi Arabia has a ministry named Transport and Logistics Services.”
Kasem recommended setting up a “National Maritime and Port Authority” to facilitate coordination among various maritime sectors.
“This agency will also act as the sole government body responsible for the entire maritime sector, driving its overall planning and development activities, including the Blue Economy. Such an authority will create confidence in this sector.”
Kasem, also the co-chair of Logistics Infrastructure Development Working Committee, then said, “We should now focus on getting private investments and reducing policy constraints to create more opportunities.
“We also need a world-class and efficient infrastructure and logistic eco-system to improve the overall competitiveness of Bangladesh.” Kasem underscored the need for four strategies – port development under PPP, improved connectivity, port-led industrialisation and coastal community development.
