communication networks. The situation is further complicated by the fact that the Bangladeshi government has acutely limited resources not only for building new infrastructure but also for maintaining the existing ones. From the colonial era Bangladesh inherited underdeveloped and unevenly distributed infrastructure and transportation networks. Poor and inefficient infrastructure undermined the economic development in the country, and only recently has the government been able to address the problem systematically and channel investments towards improving its infrastructure. In June 1998 the huge US $1 billion Jamuna Multipurpose Bridge was completed, becoming the 12th-longest bridge in the world. The bridge connected for the first time the eastern and north-western parts of Bangladesh. The completion of this project made an important contribution to the country’s development of major infrastructure.Problems of infrastructure development in Bangladesh
Bangladeshs
steady economic growth has not gone unnoticed in international circles, at least when judging the developments by the numbers
Prof. Sarwar Md. Saifullah Khaled
Infrastructure development is sine qua non for the economic development of a country. But there are some inherent problems relating to the infrastructure development in Bangladesh. The South Asian low lying country Bangladesh is with thousands of large and small rivers and most of its territory is frequently flooded during the monsoon season. This fact makes it extremely difficult and expensive to build modern transportation and communication networks. The situation is further complicated by the fact that the Bangladeshi government has acutely limited resources not only for building new infrastructure but also for maintaining the existing ones. From the colonial era Bangladesh inherited underdeveloped and unevenly distributed infrastructure and transportation networks. Poor and inefficient infrastructure undermined the economic development in the country, and only recently has the government been able to address the problem systematically and channel investments towards improving its infrastructure. In June 1998 the huge US $1 billion Jamuna Multipurpose Bridge was completed, becoming the 12th-longest bridge in the world. The bridge connected for the first time the eastern and north-western parts of Bangladesh. The completion of this project made an important contribution to the countrys development of major infrastructure.
With challenges of land scarcity and population density, decentralisation of Bangladeshs infrastructure development projects is necessary for smooth economic activities. Apart from Bangladeshs main challenge of decentralising infrastructure development other is ensuring environmental friendly industrialisation and urbanisation. It is also necessary to develop the countrys port infrastructures as the economic development is taking place widely day by day. For meeting the demand for cost-effective infrastructure, although the big picture of mega-projects looks good, there is a need to look at the finer details, such as the project designs, their qualities, the priorities and social goals. There are some good-looking flyovers, but if the roads below those are neglected, the flyovers may not contribute to our economy. We need to allocate more funds for the maintenance of the infrastructural projects to make them cost-effective.
Bangladesh can gain maximum in Asia-Pacific region by reducing infrastructure gaps. Bangladesh needs to further strengthen tax collection to overcome infrastructure and energy shortages to sustain medium-term economic development. It is observed that despite ongoing efforts to streamline tax administration and encourage compliance, the tax-GDP ratio still remains below 10 percent. To improve the efficiency of public expenditure of Bangladesh is necessary. Bangladesh scored 0.277 positioning 28th in the Access to Physical Infrastructure Index (APII) in 2015. There are major inadequacies in transport infrastructure and energy in Bangladesh and as such it should prioritise investment in transport infrastructure in order to reduce trade costs.
Improvements in these infrastructure sectors will bring Bangladesh at par with other developing Asian countries and increase their combined national income by up to 6 percent by 2030. Bangladesh has long been considered a country approaching middle-income status. Economically, it has been slowly improving poverty levels throughout the nation. However, one major issue stands in the way of further progress: infrastructure in Bangladesh.
So far as obstacles to improving infrastructure in Bangladesh are concerned, under the Sixth Five Year Plan, which was in operation between 2010 and 2015, the government hoped to achieve 8.0 percent Gross Domestic Growth (GDP) growth by the end of the plan. However, the poor infrastructure development was a major obstacle. Such infrastructure includes physical and organisational structures, like access to efficient water, sanitation and transportation systems, both of which greatly contribute to reducing poverty and improving the economy. Bangladesh in 2008 took US $20 billion in investments to develop a high-quality infrastructure system in the country. Most of this money came from organisations like the Asian Development Bank (ADB).
The ADB has other projects setup in Bangladesh, such as the Urban Governance and Infrastructure Improvement Project, which takes a community-driven app roach to improving infrastructure. Though organisations like this contribute to the growth of infrastructure in Bangladesh, it is ultimately up to the government to implement concrete goals and achieve tangible results. The funds committed are vital to the success of such projects; however, there must also be an organised and transparent method of spending these funds
Recently, the government of Bangladesh took steps towards improving the infrastructure of its own country. In March 2017, US $2 billion of Bangladeshs foreign reserves were poured into an infrastructure fund. Further, a legal framework was drafted in order to make this monetary contribution an annual occurrence. While this is a positive improvement, it is not nearly enough to create a completely effective infrastructure system. In order to successfully improve infrastructure in Bangladesh, there must be an increased commitment from the government, in addition to foreign investments to this end. This will ensure large-scale projects be funded continuously and in a transparent manner. These changes will result in further improvements in the future and help the development of Bangladesh economy.
Building infrastructure in Bangladesh is costliest in the world. Bangladeshs spending for each kilometre of track is higher than in China and India. Bangladesh spent US $6.6 million on each kilometre as it expanded the Rangpur-Hatikumrul highway to four lanes. Each kilometre of expansion work on the Dhaka-Sylhet highway cost US $7 million. For Dhaka-Mawa, it was US $11.9 million per kilometre and US $2.5 million for the Dhaka-Chattagram highway. The expansion work of Dhaka-Mymensingh highway cost US $2.5 million per kilometre. But in India, constructing one kilometre of a four-lane road cost US $1.1 million to US $1.3 million, including land acquisition and in China, the figure was US $1.3 million to US $1.6 million. For Europe, the cost for each kilometre of four-lane road was US $3.5 million, while the conversion of a two-lane road to four was US $2.5 million. The figures are a bit old, from 2013. But the picture is still the same. Moreover, the absence of competition in the bidding process for these works lead to corruption. The cost becomes higher when there is no competition in the tender process. This is part of corruption. Moreover, acquiring high and low lands also increases cost.
Bangladeshs steady economic growth has not gone unnoticed in international circles, at least when judging the developments by the numbers. Many countries including China, Japan, Korea and India have shown keen interest to invest in Bangladesh. Yet the countrys infrastructure remains one of the lowest in quality in the world. Exporters and importers have to spend 15-20 days at the Chattagram port, which facilitates 80 percent of the countrys external trade. The Bangladesh Garment Manufacturers and Exporters Association expressed concerns about the poor facility at the premier port. Exporters also questioned how the port would advance the countrys US $50 billion RMG production target when it could not handle the export of US $28 billion of readymade garment items at present. The Federation of Bangladesh Chambers of Commerce and Industry, the apex trade body, also raised the issue many times.
Chronic traffic congestion in Dhaka and Chattagram and frequent clogging of highways often reflect the countrys poor infrastructure. Bangladesh ranked 114th out of 138 countries in the World Economic Forums Infrastructure Competitiveness Report 2016-2017. The World Banks Doing Business Report 2018, released showed that Bangladesh ranked 177th among 190 economies. However, the government in power for three consecutive terms for the past ten years has taken up many projects to improve the countrys ailing infrastructure. The mega projects include the Padma Multipurpose Bridge (PMB), Rooppur Nuclear Power Plant, Payra sea port, coal-fired Matarbari and Rampal power plant, metro rail and liquefied natural gas terminal. Two more big projects, one for a Padma bridge rail link and another of the Karnaphuli river tunnel, have been undertaken for fast implementation.
Though the PMBs 2018 construction deadline has missed, work is running in full swing. A recent report on the projects progress revealed that Tk 60. 66 billion had been spent on the main project as of September 30, 2017. More than half of the centering the main bridges construction has been completed. Analysts say once complete, the bridge would reap a lot of benefits for Bangladesh. Experts say that the benefit-cost ratio of PMB was very high. We will be greatly benefited from reduced travel time. And the increased connectivity will help link the backward region with the rest of the country. It will be a great boost for the development of our agriculture and industry in the area. It will also connect the countrys second most important port at Mongla and industrial zone in Khulna, the Asian Highway and Trans-Asian Railway.
Bangladesh has increased infrastructure investment over the years. The amount reached US $6 billion in 2016-2017 from US $2 billion in 2011-2012. This additional spending on infrastructure has been helping allied industries, such as cement and steel, to grow and create employment. According to auto re-rolling steel millers, Bangladesh has the capacity to produce about 7.0 million tonnes of steel a year but all of the mills managed to churn out 5.0-5.5 million tonnes of steel in 2017. It was 4.0-4.5 million tonnes a year back in 2016. Steel millers said the governments construction activities were the main driver of the growth. Like steel, the cement industry also witnessed growth in their business in recent years. Currently, the countrys annual demand for cement is nearly 25 million tonnes against a combined effective production capacity of 43 million tonnes. In spite of the excess capability, several manufacturers have increased their capacity by approximately 6.0 million tonnes in 2017.
All these activities show that increased spending on infrastructure is driving the growth in other sectors. Still businesses believe that the spending is not enough to take the country to a higher and sustainable growth path. Yet, the amount of spending is inadequate compared to the investment made by peer countries. Infrastructure spending in Bangladesh stands at only 2.85 percent of the GDP whereas it is 10 percent in Vietnam, 9.0 percent in China and 5.0 percent each in India, the Philippines and Sri Lanka. If Bangladesh wants to attract foreign direct investment and remain competitive, it would have to raise investment in infrastructure.
The writer is a retired Professor of Economics, BCS General Education Cadre
