AKM Asaduzzaman Patwary,
Research Fellow, Head of R&D, DCCI.
Infrastructure is widely believed as the critical for economic development transformation process of a country. Infrastructure can be predominantly referred to be multimodal physical transport communication, digital tele-communication, energy and power security as well as water supply, sanitation infrastructure.
In our macroeconomic context, the importance of the infrastructure development has been widespread and relentless in order to ensuring economic growth led paradigm economic shift. In the growing and integrated geo economic connectivity, Bangladesh is required to build strong in country, regional and sub-regional communication and connectivity to remain well tuned with global economic network hub. However, the inclusive infrastructure ranging from electricity, energy to road, rail and river communication network, port facility have not grown as expected and substantially in past decade. The lackluster, indifferent attitude to infrastructural development have held back the unrivalled economic competitiveness and expected economic acceleration path and limited the economic dividend generation for local and foreign investors. In the wake of low Investment to Infrastructure development of Bangladesh, we are required to urge for strategic impetus for critical infrastructure development and find alternative financing and resource mobilization opportunities.
Due to long held economic odds and obstructions, Policy leaders have realised the need of enormous infrastructure development trend underpinned by massive and integrated resource engagement and investment. Now-a-days, irrespective of all people and investors feel the urgency Infrastructural improvement and escalation of financial resource mobilization in it. Infrastructure and economic development nexus is widely recognized. The current status of Bangladesh in WB ease of doing business index, Global Competitiveness Index and WB Logistics Performance Index is relatively low ranked and frail as a direct and indirect result of low trend of infrastructure investment concentration which portrayed Bangladesh economically challenged and uncompetitive globally undermining the interest with promising investors putting Bangladesh in the bottom of investment portfolio preference. The logistic performance index shows that Bangladesh is far behind in terms of quality of infrastructure India, Vietnam, Indonesia, Thailand and China. The score of Bangladesh in quality of infrastructure is only 2.48 whereas China scores 3.66, India 3.42 and Thailand 3.26. The recent UNESCAP APII(Access to Physical Infrastructure Index) report ranked Bangladesh 28 out of 41 Asia pacific nations and Japan Number 1.
Global perspective of Infrastructure:
Global infrastructure systems are straining to meet demand, and the spending trajectory will lead to worsening gaps. But there are solutions to unlock financing and make the sector more productive. The world today invests some $2.5 trillion a year on transportation, power, water, and telecommunications systems. Yet it’s not enough—and needs are only growing steeper. In a follow-up to its comprehensive 2013 report Infrastructure productivity: How to save $1 trillion a year, the McKinsey Global Institute finds that the world needs to invest an average of $3.3 trillion annually just to support currently expected rates of growth. Emerging economies will account for 60 percent of that need.
The gap is also widening across Bangladesh as inevitability of the infrastructure growth is soaring.
With a view to ensuring stable, durable and sustainable physical infrastructure and energy development towards economic vision 2021 and 2041, Bangladesh has got no other choice to follow and replicate the Infrastructure investment spree likewise other South East Asian emerging economies in no time to cater and tap all economic potential and open up the local and foreign investment window. Developed Countries scenario, despite having excellent and strong infrastructure base, UK spends $55 billion in Infra budget and USA $60 Billion for new road, rail expansion as well as maintenance in recent fiscal budget.
Asian Perspective of Infrastructure development:
Historically many developed and developing economies like South Korea, China and Japan have invested plenty of internal and external resources for almost a decade during their economic transformation facilitating infrastructure led macroeconomic surge. Over the last decade, Vietnam invested 10 percent of GDP, Taiwan 9.5% of GDP from Year 1970 – 1990 and South Asian economies India and Sri Lanka keep investing minimum 5 percent of GDP in diverse form like PPP, public and private to ease their targeted economic achievement and escalation over last half of the decade. India panned to invest around $500 Billion in expanding infrastructure between Year 2007 to 2012. The recent report of ADB in 2017 projects $26 trillion of infrastructure investment by the year 2030 in Asia.
Bangladesh Perspective of Infrastructure Investment and development:
In Bangladesh, Investment in physical transport Infrastructure hovers around 2 to 3 percent in recent past years which seem apparently much lower than required slipping the economy backseat and undermines much of the economic potential avenues. The economy looks segmented and soaring disparity, gap of rural and urban development becomes visible leading to unsustainable economic development. Our research backed elicitation defines it is the high time to jump into minimum 5 percent investment of GDP to steer our economy towards to graduate into 30th largest economy by the year 2030 and facilitate translating SDGs. It is estimated that Bangladesh needs on average $22 Billion per year total amounting around $310 Billion Investment in cumulative infrastructure work within the timeline of given vision. UNESCAF underscored and projected that Bangladesh likewise other Infrastructure CSN (Country of Special needs) requires to invest 10.2 percent of GDP in sustainable Infrastructure to create 1.19 percent GDP and resource generation with significant .32 percent HDI impact.
Rationale of impactful Infrastructure
This proposed year will engender new vibration and deep feeling of exigency of Infrastructure development needed across the Bangladesh for easing inclusive socioeconomic advancement and manifold leverage for all people including traders, business and new investors accelerating our economy towards gaining our cherished visions. The cross form of infrastructure initiatives and course of actions will pave the way since economy will be engaging and broader with larger and diverse activities. Alongside, inefficient project implementation and administration causing time and cost over run can be ended. Planned initiatives of Government and forthcoming initiatives taken earlier can be show cased and disseminated and adopt new thoughts, viewpoints and observations on new and long-term infrastructure plan and development agenda in the Infrastructure year to commemorate the Year and make this year historic to add new dimension in the economic history of Bangladesh resulting into huge and impactful GDP growth. Thus, we can create a nationwide upsurge and vibration to engage and inject new investment and continue Infrastructure investment spree for greater macro-economic prosperity in future. To get rid of local and foreign investment stagnation, Bangladesh intensively needs to improve our infrastructure, industrial energy security.
The recent UNESCAP assessment identified that CSN(Countries with special need) requires 10.5% investment of GDP in Infrastructure of which 2.2 percent is to adopt climate change implication.
In line with the global swelling pace of infrastructure needs, we are required to develop a comprehensive infrastructure growth strategy raising infrastructure-GDP ratio to 5% as well as creating viable innovative infrastructure financing mechanisms.
To create an integrated awareness among all concerned stakeholders and feel the urgency, we may nationally acknowledge and undertake following development endeavours for impactful outcomes:
- Nationally commemorate and uphold the vitality of it throughout the year observing and holding series of focused programmes, events by various stakeholders from private and public sectors in 2018.
- Integrated roadmap of national infrastructure planning encompassing Power, energy and multimodal transport communication and physical infrastructure perspective plan.
- National infrastructure roadmap needs to be framed.
- Shortlist and formally approve key large and mega scale physical infrastructure projects.
- Diplomatic missions working in Bangladesh and Bangladesh missions in overseas can be involved in the promotional campaigns to bring in new investment in infrastructure work.
- Wide-range of feasible local and global financing options and modalities to finance the upcoming Infrastructure projects.
- Soothing and sustained infrastructure development can meet the SDG goal 9 and help to realize other SDG goals which have got huge macroeconomic impetus and positive rippled impacts undoubtedly. This Infrastructure Year can be aligned to relevant UN SDG goals.
The recent nation budget of GoB in FY 2017-18 has allocated 3.61 of GDP in infrastructure which is positive stepping stone in infrastructure investment stagnation however to address the implementation inefficiency against the persistently underperforming and expensive infrastructure project implementation crisis, a new, independent and powerful authority headed by Prime Minister of GoB, can be implemented to expedite implementation of large and mega ADP, infrastructure and other development projects undertaken anywhere in the country with the endorsement of special act in parliament. Taking into account the inclusive and sustainable socio-economic development challenge of Bangladesh ahead, we must concentrate and seek cooperation from all concerned to justify the Infrastructural needs over the years to come.
Truly our economy remains largely unharnessed as of today against its irresistible trade and investment potential since infrastructure investment has not enriched significantly over past years. Bangladesh sets the target and sail the ambitious journey of economic momentum based on durable and broad-based cross sectional infrastructural growth creating a strong basis of private sector business mobility and aggregate economic mobilization towards dynamic macroeconomic shift as planned for Year 2021 and 2041.