Boost logistics for business competitiveness, exports: Economists

Bangladesh needs to strengthen its frail logistic sector through immense public-private investments to increase trade facilitation, business competitiveness and export earnings, said eminent economists and trade leaders.

Goods transportation by truck in Bangladesh costs four times higher than in India. If gridlocks can be eliminated, the transportation cost will come down by 35.5% and logistics costs by 35%, which will increase the business competitiveness, said Masrur Reaz, chairman of the Policy Exchange of Bangladesh, while presenting the keynote at a session of the Bangladesh Business Summit 2023 on Sunday.

"The average speed of cargo trucks on the Dhaka-Chattogram route is 19 km/h. If this speed can be raised to 40 km/h, the country's export earnings will shoot up by about 8%," Masrur said.

Abul Kasem Khan, director of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), moderated the discussion session titled "Building Connectivity Infrastructure for The Next Phase of Growth: Investing in Logistics" on the second day of the summit.

The three-day summit, which kicked off on Saturday at the Bangabandhu International Conference Centre (BICC) in Dhaka, is being hosted by the FBCCI – the country's apex trade association.

Speakers at this session emphasised speeding up trade and reducing transport costs for the next phase of development in Bangladesh. The logistics sector requires so much investment that it is not possible for the government alone and thus private sector participation through the Public Private Partnership (PPP) model is crucial.

Addressing the session, World Bank Country Director to Bangladesh Abdoulaye Seck said exports will increase by 20% if the logistics cost can be reduced by 25%.

"Reform initiatives should be taken to facilitate trade and increase the competitiveness of Bangladesh. For this, investment in ports, warehouses, and inland container depots (ICD) is required," Abdoulaye Seck said, laying emphasis on public-private coordination for bolstering the logistics sector.

The keynote presenter of the session Masrur Reaz said there is at least a $15 billion investment demand at this moment in Bangladesh's logistics sector.

Chairing the session, Secretary to the Prime Minister's Office Mohammad Salahuddin said Bangladesh would have to compete harder with other countries in the future. There are also some external challenges. In this situation, communication should be improved within the country and at the regional level. For this, a lot of investments will be needed in ports, inland waterways, and railways.

"The government has taken the initiative of making a national policy for logistics service development. Hopefully, a long-term development framework will emerge through this policy," Secretary Salahuddin added.

Presenting the keynote article, Masrur Reaz also said Bangladesh is on the way to transition to a developed economy in 2041 and achieving this goal requires diversification and better competitiveness. Trade facilitation should be increased by at least 15%.

The guest of honour of the session Ha-meem Group Managing Director AK Azad said Bangladesh will not be able to progress if the capacity of road, sea, railway and port is not increased.

"A lot of investment is required in these sectors, which cannot be done by the government alone. That is why the private sector should be given the opportunity to invest," AK Azad said.

Managing Director of Summit Port Alliance Ali Jowher Rizvi said the main problem of Chattogram Port is poor railway connectivity, which should be increased through the participation of the private sector.

Shamimul Haque, the country director of Dubai Port World, said Bangladeshi businesses spend 18-20% on logistics, which is around 8% in developed countries. Lower cost of logistics leads to lower cost of imports. The export income will also increase and diversification becomes easier. Bangladesh needs an integrated logistics platform.

DHL Express Bangladesh Managing Director Mearul Huq said the logistics sector has not received any special attention yet but now is the time to focus on this sector. Otherwise, Bangladesh will not survive the global competition.

'Local resources should be explored for energy and power security'

Harnessing local resources with more exploration in the mining of Bangladesh's own coal and gas was recommended by investors and energy experts in order to ensure energy security and the steady growth of the economy.

Speakers also sought tax incentives to encourage private entrepreneurs in the infrastructure development of the energy and power sector at a parallel session titled "Strategic Approach for Energy Security to Attain Sustainable Growth" on the second day of the summit.  

Former FBCCI president Mahmudur Rahman said the country has made huge progress in power generation capacity, but unfortunately, we could not use around 10,000 MW of electricity due to a weak transmission and distribution system.

Criticising the expensive LNG import, Engineer Golam Mohammad Alamgir, chairman of Max Group, said, "By keeping our own resources unexplored, we are importing LNG at an expensive rate amid the dollar crisis. Instead, we should provide a big budget to the Bangladesh Petroleum Exploration and Production Company Limited to explore gas in the local fields which would ensure affordable gas to us."

Highlighting the power sector's progress in the last 14 years, Muhammed Aziz Khan, chairman of Summit Group, demanded the extension of the Power and Energy sector's indemnity act.

"The central bank should offer lower interest in long-term loans and tax incentives for capital incentive projects to reduce the extreme volatility in this market," he added.

Nasrual Hamid, state minister of power energy and mineral resources, said, "Instead of subsidising poor supply lines, the government has taken the strategy to provide quality and uninterrupted energy to the industry for the continuation of economic growth."

"Earlier, our main strategy was to reach electricity to all the people. Now our strategy is to see how faster we can ensure quality and uninterrupted electricity," he added.

At the discussion, Abul Kalam Azad, ex-principal secretary to PMO, also emphasised the use of local coal and gas for energy security.

Among others, Power Division Secretary Md Habibur Rahman also spoke at the session moderated by Dr Ijaj Hossain, panel adviser of the FBCCI. 

Framework signed with RSGT for PCT concession

The Ministry of Shipping and the Red Sea Gateway Terminal (RSGT) of Saudi Arabia signed a framework of mutual cooperation for Patenga Container Terminal (PCT) on the sidelines of the Bangladesh Business Summit on Saturday.

The agreement entails that the RSGT has been granted the rights to operate and manage the PCT for a certain period of time, likely through a formal bidding process. 

The framework agreement would outline the terms and conditions of the concession, such as the agreement duration, the obligations of both parties and the fees or revenue-sharing arrangements.