Businesses suffer on logistics shortcomings

Businesses have demanded full automation of port formalities and payment processes, resolving tariff issues and modernising customs, and faster implementation of infrastructure projects so that doing business gets easier.

At a webinar on Tuesday, business leaders also emphasised the need for upgrading railways, and improving river connectivity and shipping on priority basis.

They demanded a single authority be formed to monitor all these necessary logistic supports to get competitive edge in the export markets.

This will also help improve Bangladesh's position in the Logistic Performance Index and lead to a rise in foreign investment in the country, they said at a webinar, organised by the Dhaka Chamber of Commerce & Industry (DCCI).

The kind of support that businesses get in Bangladesh is poorer than in competitor countries, they said.

The business leaders suggested formulating a comprehensive policy under which the single authority will operate.

DCCI President Shams Mahmud moderated the webinar, while Dr Selim Raihan, executive director at South Asian Network on Economic Modelling (Sanem), presented a keynote paper on Bangladesh's progress in Logistic Performance Index (LPI) between 2007 and 2018.

"Our progress in the index is not up to the mark compared to significant gains of China, Vietnam and Thailand. This lower position will hurt our competitiveness in the global market. So, the improvement in the Logistic support Index is crucial for our export boost," Dr Selim Raihan said.

Bangladesh scored 168 out of 190 in the 2020 Ease of Doing Business report and remained just ahead of war-torn Afghanistan in South Asia despite the improvement. Higher ranking (a low numerical value) indicates a better business environment.

Addressing the logistic performance situation, DCCI President Shams Mahmud said, "Bangladesh ranked 100th in the LPI 2018 and 105th in the Global Competitiveness Index. Logistic costs in Bangladesh are high in most sectors while road transport costs in Bangladesh are higher than in many developing and developed countries". 

Development of adequate, diverse logistic infrastructure, including ports, multimodal sub-regional transport connectivity is important for improving our trade competitiveness and securing low-cost trade potentials in South and South East Asian markets, observed Shams Mahmud.

He also recommended an automated customs clearance process, integrated port infrastructure with larger storage facility and cargo handling facility at terminals.

He urged for a quicker implementation of the World Trade Organisation's trade facilitation agreements.

Dr Rubana Huq, president at Bangladesh Garment Manufacturers and Exporters Association, said, "The World Bank's doing business index mostly depends on assumption, but we need to have an internal index of competitiveness which needs to be monitored regularly."

"We need to ensure best utilisation of full capacity of ports. In terms of improvement in logistics performance, inward foreign direct investment and intra-regional trade are also important."

Regarding better coordination in the logistic sector, she urged for the private sector's participation as all efforts are for the wellbeing of the country.

Another business leader of Bangladesh, Abul Kasem Khan, chairperson of Business Initiative Leading Development (BUILD), said there is no single authority to look after logistics. "So, it is essential to formulate a comprehensive logistic policy under a single authority or a ministry to supervise those."

Mahbubul Alam, president at Chittagong Chamber of Commerce & Industry, said inter-ministerial coordination for logistic improvement is necessary. Chittagong Port has improved a lot but the logistic support for it is still lagging behind.

There needs to be a railway cargo connectivity with the Chittagong Port. Moreover, bay terminals and a cross-border link need to be developed, according to him.

Dr Zaidi Sattar, chairman at Policy Research Institute, (PRI) urged for customs modernisation.

"The customs administration should play a role of trade facilitator rather than being tax collector. If we can develop port and customs infrastructure, our position in the logistic performance index will improve resulting in a cut in trade costs. With the improvement in the index, the non-apparel sector will get its real benefits. Moreover, incentives should be given to exports and domestic sales," he added.

Zaidi Sattar claimed every year 100 new products are added to the export basket but 80% percent of those could not survive due to a lack of incentives.

Dr M Masrur Reaz, chairman at Policy Exchange, said, "There are third-party logistic service providers in different countries. But what we need is a logistic specific policy and a master plan, including land zoning.

Md Zafar Alam, member at Chittagong Port Authority, said the port cannot do everything for business logistical support. Customs clearance and road connectivity are two most important things for cargo delivery.

Next year, Bangladesh will see a notable improvement in the ease of doing business index, he said, adding that the government will build a bay terminal outside the city where an 18-meter draft vessel will be able to anchor. With the road connectivity, it will be in full function by 2025.

The Bangladesh Inland Water Transport Authority can establish small inland riverine barge ports across the country to lessen load on roads, he also said.

Mohammad Akbar Hossain, first secretary (Customs & VAT) at the National Board of Revenue (NBR), said Bangladesh Customs started its automation in 1994 but still there are bottlenecks and we have to eliminate these.

He also requested the trade bodies to create pressure on the NBR to implement all the measures of trade facilitation agreements. Soon an e-payment facility for the importers will be implemented, he informed. He underscored the importance of coordinated border management.