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Developing Bangladesh’s economic corridors

  • Published at 11:05 pm September 17th, 2018
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Connectivity and economic growth are closely related BIGSTOCK

Better connectivity is an integral part of Bangladesh’s future growth

The fourth edition of Bay of Bengal initiatives for multi-sectoral, technical, and economic co-operation (Bimstec) was held in Kathmandu, Nepal in August 2018. The main focus of the summit was to increase connectivity between Bimstec nations, including roads, airways, and transmission lines.

Bimstec is the sub-regional group of seven countries in South Asia and Southeast Asia lying in the littoral and adjacent areas of Bay of Bengal. South Asian Association for Regional Cooperation (Saarc) has become ineffective, largely due to non-agreement among member countries on issues like connectivity and counter-terrorism, and everyone has been giving more importance to Bimstec in recent times.

Connectivity and economic activity are closely related. Asian Development Bank first used the term “economic corridors” in 1998, as a concept for planned development across a geographical space. According to ADB’s theory, an economic corridor has three components -- first is the trade and transport corridor itself, where roads and ports are an integral component, especially in the context of logistics performance, second are the industrial production clusters that produce goods and services, and third are the urban centres that function as major markets and as a source of labour, technology, knowledge, and innovation.

To maximize business enthusiasm and strengthen infrastructure, ADB also provides support for institutional reforms to boost economic corridor management and regulatory reforms to improve the ease of doing business, and attract foreign investors, logistics, and other related services.

For instance, India is currently developing five economic corridors, including the ADB-supported east coast economic corridor that runs from Kolkalta to Kanyakumari along the eastern coastline of the country. Other proposed corridors are the Colombo-Trincomalee economic corridor in Sri Lanka, and the southwest economic corridor in Bangladesh.

Bangladesh’s geographic location is its major advantage; though Sri Lanka is in the central position in the Indian Ocean, it is an island state. In the meantime, Bangladesh enjoys the luxury of having both land and sea routes -- the country can take advantage of land transports with India, Nepal, Bhutan, and Myanmar.

 The Bay of Bengal, on the other hand, gives Bangladesh the opportunity to connect with the rest of the world. Only a few nations on earth enjoy such connectivity with thriving nations of Asia that include two emerging economic giants of the world: China and India. This geographic advantage creates significant opportunities to make notable differences for Bangladesh, especially positioning it well in regional and global value chains. 

The implementation of the proposed southwest Bangladesh economic corridor (SWBEC) will enable the region’s economic output to hit $148 billion by 2050, opined by ADB. The proposed economic corridor aims to develop the country’s lagging southeast regions, and integrate them with the vibrant growth centres in Dhaka and Chittagong. There are some potential sectors that can drive industrialization in this economic corridor, which include food processing, pharmaceuticals, leather, and leather-based products, footwear, textile and garments, bicycles, automobiles, and finally, ship-building. 

Dhaka-Chittagong economic corridor (DCEC) comprises the two largest cities in Bangladesh, Dhaka, the administrative capital, and Chittagong, the commercial capital. The transport and energy infrastructure linking the cities of Dhaka and Chittagong is the mostly used in the country. The proposed corridor includes a multi-lane extended Dhaka-Chittagong highway coupled with the Dhaka-Chittagong expressway.

The proposed economic corridors will not only create better connectivity within the country, but also with neighbouring countries like Nepal, Bhutan, and the northeast regions of India. We have good diplomatic relationships with all these nations. Our task, therefore, is to develop our infrastructural facilities -- deep sea port, national highways, and participating in the Asian highway system, and eventually offer a competitive policy to attract investors into this particular process. 

Bangladesh is also able to utilize the Port of Mongla, can provide economic transport facilities to the land-locked countries of Nepal and Bhutan. Bangladesh can use Indian north-eastern provinces for international trade, while India can use Bangladeshi ports. Bangladesh could also offer one-stop service facilities for both local and foreign investors to invest here, manufacture products, and enter the market into Saarc, Asean nations, or even export to Western countries.

Bangladesh is on its way to becoming a lower-middle income country. It has long standing economic visions to be a higher middle income country in the near-future and a developed economy of $2.5 trillion GDP by the year 2041. Regional and sub-regional economic connectivity through building economic corridors will be an integral component in transforming that vision into reality.

Rahnuma Sultana is a freelance contributor