We welcome this week’s launch of the New Development Bank in Shanghai.
This new $50bn body established by the five BRICS nations -- Brazil, Russia, India, China and South Africa -- has a mandate to help developing countries finance infrastructure projects.
It will be a valuable addition to the new Asian Infrastructure Investment Bank and complement existing lenders like the ADB and IMF.
For Bangladesh, the new institutions not only offer extra options for funding vitally needed infrastructure programs, but provide a platform for developing relations with and increasing exports to the BRICS economies.
Economic growth in Bangladesh is acutely constrained by bottlenecks created by aging and overstretched infrastructure. Only about 3% of our GDP is currently spent on infrastructure, compared to up to 15% in China.
According to the World Bank, Bangladesh needs to invest $74bn in infrastructure to bring its power grids, ports, roads, and water supplies up to global standards. This level of investment amounts to 7.38% of the country’s GDP, and is at least three to five times the levels which the country has managed in the last decade.
The government needs to follow up all possible avenues to plug the nation’s infrastructure gap.
While it is encouraging that multilateral institutions are planning to increase infrastructure funding across Asia, Bangladesh also needs to nurture a more attractive climate for investors in order to take advantage of new funding possibilities.
Bringing political stability and guaranteeing rule of law to encourage investors are imperative to attracting more FDI and building the virtuous cycle of increased investment and trade which Bangladesh needs to boost economic growth rates. The government must do more to listen to businesses and increase incentives for investment in infrastructure if the economy is to live up to its potential.
