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Professor Mustafizur Rahman on South Asian connectivity

Published in Dhaka Tribune on Monday, 29 June 2015.

Bangladesh in talks with WB for BBIN-MVA project funds

Kayes Sohel

Bangladesh is in talks with the World Bank to finance the country’s multi-modal connectivity projects, which is being considered would be key to facilitating trade and investment at low cost in the South Asia region.

The country that has entered motor vehicle agreement (MVA) with Bhutan, India and Nepal on June 15 wants to develop infrastructure within its territory for movement of vehicles, goods and people for unlocking economic potentials in the region.

“The government is now in talks with the World Bank to finalise the conditions for this low-cost loan,” said an official of the Economic Relations Division.

The country would require huge amount of money to improve road, rail and waterways infrastructures, but primarily around $45m is estimated to be needed for building economic corridor between capital Dhaka and port city of Chittagong, enhancing capacity of Chittagong seaport and other land ports, he said.

“The talks are so far positive and the final deal is likely to be made soon.”

The joint statement on the meeting of transport ministers of four countries – Bangladesh, Bhutan, Indian and Nepal (BBIN) – on the MVA stated: “We are pleased with the progress of improving physical road connectivity between our countries.”

“We take note that 30 priority transport connectivity projects with an estimated total cost of over $8 billion have been identified, which will rehabilitate and upgrade remaining sections of trade and transportation corridors in the four countries.”

The statement also took note that transforming transport corridors into economic corridors could potentially increase regional trade within South Asia by almost 60% and with the rest of the world by over 30%.

According to the statement, the investment cost in Bangladesh in view of establishing closer connectivity with India was estimated to be about $8bn for infrastructure development for roads, rail, waterways and ports.

The cost per kilometer for upgradation of roads to international standard in view of BBIN-MVA in the Bangladesh context is estimated to be between Tk25 crore and Tk30crore (or about $3.7m), said Centre for Policy Dialogue (CPD) in an analysis.

It said to deepen South Asian integration, four connectivities – trade, transport, investment, people to people – are critically important, and transport connectivity is key to all of them.

CPD Executive Director Prof Mustafizur Rahman said South Asia has till now continued to remain the most disconnected region in the world with the high cost of doing business and missed opportunities.

He said earlier studies have identified significantly the high cost of business originating from lack of transport connectivity in South Asia while the competitive advantage of Bangladesh’s exporters is being undermined.

The duty free and quota free offers of India for Bangladesh also largely remained unrealised due to lack of connectivity, added Mustafizur.

The CPD study on Bangladesh’s export potentials in the Indian market, particularly North-East region, said the country is losing $2bn in export opportunities.

Utilising the Indian second line of credit (LOC) worth $2bn, the infrastructure within the Bangladesh territory will also be developed, particularly in the area of public transport, roads, railways, inland waterways, ports, ICT, education, health, etc.

Under the LOC a minimum of 75% of goods and services need to be of Indian origin and must be procured from India.


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