Invest heavily in transport, logistics

Bangladesh's transport and logistics sectors offer immense opportunities for investors, as the country is found most wanting in the area.

 

Given the country's growth forecasts, there is huge scope for investments in infrastructure, said Salahuddin Kasem Khan, managing director of AK Khan and Company Ltd.

 

Khan's comments came at a discussion on the opportunities for investing in the country's transport, infrastructure and trade logistics at the Bangladesh Investment and Policy Summit.

 

The Board of Investment, the Prime Minister's Office and the Business Initiative Leading Development jointly organised the two-day event at the capital's Radisson Blu Hotel.

 

Khan gave an overview of the transport and logistics challenges facing Bangladesh and laid out a number of opportunities for investment.

 

He said a modern multimodal transport system is a must to improve Bangladesh's competitiveness in the global economy and to increase the access to goods at reasonable prices.

 

The upgrading of logistics workforce and technology systems is also needed for ensuring that the transport system is scalable and sustainable.Joint ventures with experienced companies could be an option, he said.

 

In particular, the road and rail freight transportation companies can set up partnerships with internal shipping lines or logistics providers in order to increase trade with multinational companies.

 

New modes of transport such as barge services for transporting containers between Chittagong and Dhaka instead of trucking by road can also help improve logistics.

 

“Improvements in ports, road, rail, and air services are all essential for a country that is in the midst of historic growth.”

 

Streamlining of government procedures is also needed.

 

“We, the private sector, are ready to invest, in Bangladesh's transport infrastructure and trade logistics, towards Bangladesh's growth as the next Asian Tiger.”

 

Bangladesh specifically needs improvement in customs, infrastructure, competence of logistics service providers, and tracking and tracing, Khan added. 

 

Rebecca Konrad, head of the transport and logistics department of the International Finance Corporation's Asia Pacific region, said Bangladesh was the 45th largest economy in the world in 2015.

 

But when it came to logistics and transport, it stood at the bottom third globally.

 

She said public-private partnership would be the key to raising investment for improving the country's transport infrastructure.

 

PPPs for airports and river ports do not require any outlay from the governments other than providing the land for the project and connecting infrastructure.

 

This is in contrast to PPP for the power sector, where the government usually has to buy the power from the project, Konrad said.  The private sector can also be involved in air transport, which would spur positive competition among the public and private carriers.

 

Allowing private operators to operate alongside the state-owned enterprises (SoEs) on a level playing field is another way of getting the benefits of private sector investment and innovation.

 

It will also provide incentives to the SoEs to improve their services.

 

About the Chittagong port, Konrad said the growth in container traffic will be much higher than the country's economic growth. It may grow at 15 percent annually.

 

“How is the Chittagong port dealing with this growth?”

 

In the last 10 years, there has not been any significant improvement in the container handling capacity relative to the growth in twenty-foot equivalent units.

 

To attract private investors to PPP projects, Bangladesh will have to provide commercially viable tariff level, operating autonomy and termination compensation.

 

“We at the IFC are looking forward to supporting numerous private sector investments in Bangladesh's transport sector in the years ahead,” she added. 

 

Kazuhiko Higuchi, country director of the Asian Development Bank, said the role of the private sector is becoming greater as Bangladesh moves towards the higher middle-income country bracket.

 

To become a higher middle-income country, the ADB recognises the need for transport and infrastructure development.

 

The Manila-based bank is already financing roads and railway projects in Bangladesh, and is planning to work on linking Bangladesh with Nepal and Bhutan through India.

 

It is also looking at the potential of a transport link between Bangladesh and India through Dhaka-Sylhet-Northeast India and a corridor between Dhaka and Kolkata through Benapole, Higuchi added.

 

ASM Mainuddin Monem, deputy managing director of Abdul Monem Ltd, said highly efficient connectivity is needed for the growth of regional trade.  

 

Mahbubul Alam, president of the Chittagong Chamber of Commerce and Industry, said connectivity is very important for businesses to survive. “Trade-friendly infrastructure must be developed,” he said.

 

At present, a direct shipping line is missing in the country and the Chittagong port management is not up to the mark.

 

Despite modernisation and upgradation in facilities, time taken for customs clearance is still beyond the acceptable limit at Chittagong port.

 

“So, the main focus should be on an integrated supply chain for smooth movement of goods and people,” he added.

 

Earlier in the plenary session, Investment Opportunities Unbounded, speakers also identified infrastructural bottlenecks as the major obstacle to attracting investment.

 

Millions of working hours are being wasted on roads because of traffic congestion, and nobody knows when the construction of Dhaka-Chittagong four-lane will be completed, they said.

 

While moderating the session, AK Azad, principal secretary of the PMO, said the government is aware of the infrastructural bottlenecks; a number of projects have been taken on a priority basis to solve them.

 

“Invest in the country. The government will provide the policy support and security,” he said while addressing the local and foreign investors. 

 

Abdul Matlub Ahmad, president of the Federation of Bangladesh Chambers of Commerce and Industry, said almost all the sectors are open for investment.

 

Abrar A Anwar, chief executive officer of Standard Chartered Bangladesh, said there is no human resource dearth in the country.

 

Only four out of the 2,000 people employed by the British bank in Bangladesh are foreigners.

 

Kamran Bakr, chairman of Unilever Bangladesh, said his company did not face any problem since its establishment in the country. It did not face any trouble in repatriating profit either.

 

While chairing the session, SA Samad, executive chairman of BoI, said: “We are learning. Things are happening. Things are not falling on deaf ears.”

 

The summit was organised to showcase the private sector investment opportunities in Bangladesh, said Asif Ibrahim, chairman of BUILD.