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Bangladesh urged to smarten up logistics to attract trade

By Georges Corbineau 19 Sep 2018

The Bangladesh government is being urged to improve the country's logistical efficiency – in particular connectivity to ports and roads – if it hopes to capitalise on new domestic and international trade opportunities.

Bangladesh urged to smarten up logistics to attract trade

The Bangladesh government is being urged to improve the country’s logistical efficiency – in particular connectivity to ports and roads – if it hopes to capitalise on new domestic and international trade opportunities.

Speaking at a seminar titled Logistical Challenges and Opportunities of Business organised by the International Business Forum of Bangladesh (IBFB) in Dhaka this week, Forrest Cookson, economist at Development in Democracy USA, explains: “The future of the Bangladesh economy rests on its ability to export manufactured goods competitively to world markets. There is no alternative to make export-led growth if Bangladesh wishes to achieve protracted rapid GDP growth.”

Shipping minister Shajahan Khan commented on the “tremendous development” of the Chittagong port in the last four decades.

Previously there were facilities for six berths only, while a scope for 13 berths has been created, five jetties have already been built and more are being developed at the port, he added. 

Dredging of Poshur channel has already been done. Customs operation will start at Mongla shortly. The government has built Pyara port and a total of 17 ships have already unloaded goods and agreement was signed with a Belgian company to maintain navigability of the channel. A jetty would be built there too.  

The government will build another port at Moheshkhali, he adds. 

Besides seaports, the government is increasing operation of land ports, he said, adding, ten land ports have already been developed and 11 more would be set also. Land ports would be developed at Chittagong Hill Tract (CHT) areas like Khagrachari, two in Banderbans, and one in Rangamati. The government has made BDT30m (US$357,546) from the newly opened Tamabil land port.

“If the land connectivity is not smooth, then land ports fail to bring benefit for the traders,” asserts Khan.

Cookson says in the next five-to-ten years, traffic on the Dhaka-Chittagong highway will rise by 60%. Trade through land ports will be more than double and air cargo will grow by at least three times in seven years.

He says the simplest way to speed up customs is a decentralisation of customs operations. He highlighted previous governmental opposition to this but said without it, it is unlikely customs can clear containers rapidly enough to avoid delays of incoming raw materials for export industries.

The second point he made was to use sampling of containers for inspection by linking the probability of a container being inspected to the risk associated with the record of the importer and the type of goods being imported. Risk-directed sampling will reduce the number of inspections and hence accelerate average clearance time. But, he warns of high-risk importers attempting to use facilitation payments to avoid inspection.   

He called for the selection of an international Port Management Organization that will provide “modern non-political management of the port”.

“If the port is to meet the demands of a rapidly growing economy, the politicisation of the port management will have to be stopped, and a professional organization engaged. Ideally, compensation of the port management organization should be linked to achieving agreed goals of the flow of containers. This must involve customs and clear agreement with customs to maintain mutually acceptable clearance rates.”

Humayun Rashid, IBFB President, noted Bangladesh has been awarded developing country status from the UN Committee for Development Policy; a qualification that will be rewarded in 2021.

“To continue we have to maintain our economic growth. Now our yearly export earnings reached around US$35bn and import expenditure stood at US$47bn. For this huge import and export activities, logistics and its efficiency are very important. So, we need to review our position and plan accordingly.”

Annual exports of Bangladeshi apparel products grew 2% to US$29.33bn in 2017 from $28.22bn in 2016.

On Monday (17 September) the Bangladesh Parliament announced it had passed a new textiles bill that aims to promote investment in the country’s readymade garments sector.