Download key infrastructure development

Priority Areas









Highways/ Toll roads, Expressways
Improved focus on Rail network
Increasing water transport network
Dhaka Chittagong Economic Corridor development
Dhaka city transportation (Metro system, elevated
expressway)
SEZs, Ports, Deep Sea Port
Coal energy
LNG Terminals
GAS Exploration, LPG
Background
 Private sector outpaced public sector - Policy planners failed to
provide the adequate infrastructure investments and also the right mix
of infrastructure
 Limited resources – allocation to infrastructure only 2% GDP whereas
requirement was minimum 6% - 8% GDP
 Unplanned Infrastructure development – resulted in poor quality &
inadequate infrastructure, currently outdated.
 GDP Growth remains trapped at 5%-6% levels primarily due to lack of
modern and efficient infrastructure
 Slow pace of implementation, land issues and zoning laws are
considered as bottlenecks
 Education, health, and Skills development did not also get desired
levels of importance.
FINDINGS under 2030 Strategy
China plus 1
The rapid economic development of China has created “new opportunities”
known as the China Effect - as China’s competitiveness in low-cost production
base is eroding and it is creating opportunities elsewhere. Investors are
looking for others destination with low cost production base, which puts
Bangladesh in an ideal position as the
“Next Investment Destination”.
Infrastructure Deficit
Low-cost production base alone will not give Bangladesh the edge over others
- reliable and efficient transportation, with modern infrastructure will become
the most crucial elements for becoming competitive in global inventors map.
Therefore, “key infrastructure development” needed.
Energy Security
Energy issues are also becoming serious entry barriers to accelerated growth
and investments. COAL based energy security has to be considered as a long
term strategy for the economic development of Bangladesh.
Key Targets
 Government has set “Vision 2021” to move Bangladesh to a Middle Income
Country (MIC) by 2021. DCCI’s Strategy 2030 targets Bangladesh to become
the 30th largest economy. BGMEA set a target of reaching USD50b exports
 GDP growth needs to reach 8% - an increase in Investment at 40% of GDP.
Increase in infrastructure from 2% to 10% of GDP
 Investments from Private Sector under FDI needs to fill the gaps
Current Status
 Bangladesh’s infrastructure is one of the most underdeveloped in the world, a
factor which has stopping accelerated economic growth in the country
 In the World Economic Forum's Global Competitiveness Report 2014-2015, the
country's Overall Infrastructure competitiveness improved from 132 in 2013-14
to 127 in 2014-15 out of 144 countries, however it remains the lowest ranking
among its South Asian neighbors, India (87), Sri Lanka (75) and Pakistan (119)
2011-12
2012-13
2013-14
2014-15
Overall Country Competitiveness
108
118
110
109
Overall Infrastructure
Competitiveness
Infrastructure Quality
134
134
132
127
129
131
134
130
Roads
111
113
118
117
Ports
113
121
104
93
Airports
Rail
Electricity supply quality
117
73
135
120
73
136
125
78
133
127
75
124
Other Asian Nations
Taiwan and South Korea heavily invested in infrastructure during the period of rapid
industrialization
 9.5% of GDP for Taiwan from 1970 – 1990
 8.7% for South Korea during 1960-1990
 China on average invested 8% of GDP in infrastructure during 2003-04
All the three countries were able to build modern systems of essential infrastructure
facilities
 Infrastructure has also been an important component of Vietnam’s development
strategy. Over the last 12 years, the government of Vietnam was able to sustain
infrastructure investment at 10% of GDP
Source – “Vietnam’s Infrastructure Constraints”
paper prepared by Mr. Xuan Thanh and Mr. David Dapice, Harvard Kennedy School, ASH Institute
What is Important….
 The World Bank in 2013 estimated that Bangladesh needs to invest USD74 – 100 billion
in infrastructure until 2020. We can estimate that another USD175b - 200b from 2020 to
2030 will be needed
 Which is 7% - 10% of GDP per year
 Current investment to GDP around 2%. A significant share of the infrastructure
investment in the near and medium term will have to come from the private sector in
the form of FDIs
 Y2Y requirement stands at USD20 billion
 Energy and telecom have drawn interest from the private sector. But in other areas
particularly transport (Roads, toll-roads/highways/bridges etc)
 Private sector needs to be engaged under PPP, BOO, BOT and other internationally practiced
investment models
Government Action
To reduce the “Infrastructure Deficit” -
 Public Private Partnership (PPP) Office under PMO &
 BIFFL –Bangladesh Infrastructure Finance Fund Limited
To facilitate and finance infrastructure projects in the
country. PPP models will mainly attract private investments
in power generation, elevated expressways, Tollroads/highways, tourism, hotels, medical services etc
BIFFL, was incorporated by the Ministry of Finance in 2011
to provide long-term financing in local currency to
infrastructure projects that meet the required investment
criteria
A PPP Unit under Ministry of Finance is there for overseeing
three key areas, the PPP Technical Assistance Fund, Viability
Gap Fund and Bangladesh Infrastructure Finance Fund
Government Action
 Bangladesh Economic Zones Authority (BEZA) was formed
in 2010
BEZA aims to establish economic zones in all potential
areas in Bangladesh including backward and
underdeveloped regions with a view to encouraging
rapid economic development through increase and
diversification of industry, employment, production and
export
Government has already given four (4)
prequalification license for setting up of Private Economic
Zones (PEZ) under the private sector which will trigger
the development new industries in these zones. BEZA
will promote FDI for Private EZs, facilate electricity
connectivity and other utility services
Conclusion
We are confident that Bangladesh can achieve high growth rates of 8% - 10% on
average in the coming years but the “pre-conditions” of such growth targets need
be to addressed, which are mainly related to our Infrastructure Development