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Infrastructure and Logistics sectors of Bangladesh: Neglected issues (Part 2)

Continued from Part 1

Infrastructure, climate resilience and circular economy

Apart from these fundamental concerns of the infrastructure sector, building a climate-resilient infrastructure is also among the major concerns of the country. ‘Circular Economy’ is the future and only survival way-out for humans, of which, climate-resilient and sustainable infrastructure is a key component. Besides, due to growing awareness among world leaders, climate funds are gradually becoming accessible.

The World Bank Group has announced that over the next five years, 35% of the Bank Group’s financing, on average, will go to supporting climate action for their clients. The World Bank- International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA) will also seek to ensure that 50% of this financing will support adaptation and resilience.

Infrastructure-Logistics-sectors-Bangladesh
Figure 1: ‘Circular Economy’ is the future and only survival way-out for humans, of which, climate-resilient and sustainable infrastructure is a key component.

It is, however, important to remember that the leaders of some of the largest carbon emitters are always trying to strategically avoid or, intentionally delay in either committing to or, fulfilling their promises causing frustration among the people of the world, especially the citizens of the developing and the least developed countries who are heavily affected by the adverse effects of the climate change. Bangladesh is also among them.

Even the ministers of the Government are accusing leaders of the developed world saying that the “Delay and deceptions of the developed countries in climate financing are pushing the whole world, including Bangladesh, towards disaster risks” (Information and Broadcasting Minister Dr. Hasan Mahmud at a discussion at the Bangladesh pavilion of the COP 26).

Move of Bangladesh government and global climate fund

The Honorable Prime Minister Sheikh Hasina also expressed her disappointment and said, “It’s sad and disappointing that till now the major greenhouse gas-emitting countries have failed to deliver their promised annual amount of US$100 billion dollars”.

She further presented the demands of the Climate Vulnerable Forum (CVF) members while presiding over CVF leaders’ dialogue at the COP 26 and said, “Faced with the existential threat of climate change, we, the CVF members, at this COP, demand that developed countries provide a Delivery Plan of the total 500 billion dollars for each of the entire 5-year period from 2020 to 2024, with a 50:50 ratio between the adaptation and mitigation”. Once the collective voices of the leaders of the affected nations become large enough to force the deceptive leaders of the rich and emitting countries to release the necessary climate funds, Bangladesh’s bottlenecks for building climate-resilient infrastructure will be greatly reduced, if not eliminated.

The World Bank and Bangladesh

The World Bank has so far helped Bangladesh to take projects such as- Coastal Embankment Improvement Project (CEIP)- Phase I (US$400 million), Multipurpose Disaster Shelter Project (US$375 million), Urban Resilience Project (US$173 million), Climate Adaptation and Resilience for South Asia (CARE) Project (US$39.5 million), Bangladesh Water Platform (BWP), South Asia Water Initiative (SAWI), etc., to rehabilitate and upgrade of the polders- reclaimed, low-lying land areas protected by embankments- to guard the coastal areas against tidal flooding and storm surges; to support the enhancement of agricultural production by reducing saltwater intrusion in selected polders, using climate data and projections; to strengthen the government’s capacity to deliver reliable weather, water, and climate information services and improve priority sectors’ and communities’ access to those services; to reduce the vulnerability of the coastal population to climate change and natural disasters across nine coastal districts of cyclone-prone areas by constructing 550 new cyclone shelters, improving 450 existing shelters, construction or rehabilitation of 182 kilometers of roads with bridges/culverts and protective works to connect cyclone shelters; to strengthen the capacity of government agencies to respond to emergency events and reduce the vulnerability of new buildings to disasters in Dhaka and Sylhet; to enable climate resilience policies and investments in water, transport, agriculture, finance, and planning sectors; to improve inland water transport (IWT) efficiency and the safety of passengers and cargo along the Chittagong-Dhaka-Ashuganj regional corridor as well as enhance the sector’s sustainability; providing policy advice to the government, coordinating the activities of stakeholders to improve WRM, and developing and advancing pipeline projects; promoting the dialogue on transboundary water collaboration among riparian states (Bangladesh, Bhutan, India, and Nepal), etc.

Climate vulnerability and investment requirement

However, these efforts are still inadequate. Climate vulnerability requires significant investments in building research infrastructure to ensure innovating climate-resilient agricultural mechanisms, climate-resilient seeds, rehabilitation of farmers and farms, improving crop yields, and many other cross-cutting areas concerning agriculture and rehabilitation.

Apart from these, sustainable river dredging, transforming power generation techniques, research on the construction of self-sufficient and energy-efficient green factories and offices, altering curricula to include and promote climate awareness, and research also fall under broader aspects of climate-related infrastructural and Climate-Resilient ecosystems issues needing immediate attention of the government of the country.

Bangladesh-FDI-inflow-2021
Figure 2: Trend of FDI inflow with projections until 2023 (Source: Bangladesh Bank and author’s calculation).

Bangladesh’s performance in the world ranking

Logistics is another key area of concern for the country. Bangladesh has moved down to the 100th position in the World Bank’s Logistics Performance Index (LPI) in 2018 from an earlier 82nd position in 2016. A closer look into the index indicates that the country fared well in terms of tracking and tracing and timing when compared with Pakistan.

If compared against Sri Lanka, Bangladesh beats Sri Lanka in terms of International Shipments, tracking and tracing, and timing. However, when compared against India and Vietnam, we are nowhere. The performance of the customs of Bangladesh is the lowest among other regional economies such as India, Sri Lanka, Pakistan, and Vietnam.

Moreover, RMG factories, the largest exporters of the country, often report inefficient logistics as a significant share of their logistics costs. The same is true for other sectors as well. Road transport rates of the country range from US$0.06 for a 16-ton truck to US$0.12 for a trailer (in per ton, per kilometer terms). It is higher than most countries causing a significant constraint to export.

Studies show that the inventory carrying costs of the country is US$21 (in per ton, per kilometer terms), which is also higher than most countries of the world. Traffic congestion on the roads is another significant concern. Removal of congestion alone can lower the logistics cost by 7 to 35% depending on the sector. Congestion also causes around 60% of the annual carbon dioxide (CO2) emissions, social costs of which are estimated to be 1.2% of GDP.

High dwell times (the amount of time that cargo or ships spend within a port) increase the logistics costs even further. Average dwell times at the Chittagong Port are 4 days for an export container and 11 days for an import container. Sectoral policies, such as the Customs policies that limit inland containerization and allow only 37 commodities to be cleared outside the port, cause further logistical inefficiencies in terms of both time and money (The World Bank). Companies are not allowed to open container freight stations at locations far from the Chittagong Port, and empty containers are treated as bonded goods.

These policies have led to an increase in the number of vehicles on the roads and have also increased congestion inside the Chittagong Port, leading to further inefficient port operation. However, most of these challenges also open doors for foreign investments in the country’s logistics sector. However, the need for policy reforms cannot be overlooked either.

What is next?

To address the needs of identifying and implementing solutions to the aforesaid issues, we should must have a pool of talented, efficient, skilled, and entrepreneurial employees and researchers. The country’s education system has the most important role to play in this regard.

Unfortunately, the lack of quality education in academia led by the scarcity of skilled and experienced teachers, lack of appropriate training and ineffective education policy along with the social stigma of sending kids to technical education and inadequate policy supports to promote and integrate Technical and Vocational Education and Training in the mainstream has caused potential employees to remain semiskilled and in many cases unskilled and unprepared for taking up the challenges of real life.

We, therefore, suggest that the Government of Bangladesh looks deeper into the aforementioned issues to take integrated policy measures for ensuring complete elimination of all infrastructural, logistics, and their supporting sectors’ developmental impediments in order to help accelerate balanced economic growth of the country for turning us into a developed nation by 2041.

The authors:

Md-Kamrul-Bari-MIPA-AFA Enamul-Hafiz-Latifee
Md. Kamrul Bari MIPA AFA is a qualified accountant and also a doctoral researcher at the IBA, University of Dhaka and Deputy Editor-in-Chief at the International Journal of Management and Accounting (IJMA). He can be reached at bari.sarkar@gmail.com. Enamul Hafiz Latifee is a Policy & Trade Economist, Joint Secretary (Research Fellow), Bangladesh Association of Software and Information Services (BASIS). He can be reached at ehlatifee@gmail.com and viewed at www.ehlatifee.com.

 

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