IBFB seminar on "Logistical Challenges and Opportunities of Business"
Dr. Forrest E Cookson, Economist, Development in Democracy, USA presented the key note paper. Dr. Khondaker Golam Moazzem, Research Director, The Centre for Policy Dialogue (CPD) & Dr. Nazneen Ahmed, Senior Research Fellow, Bangladesh Institute of Development Studies (BIDS) were present as the distinguished discussants.
Ctg port made magnificent development
Shipping Minister Shajahan Khan said the government is sincerely working to ease the cost of doing business for the entrepreneurs through improving connectivity to ports from different parts of the country.
During the last ten years, the government has made tremendous development of the Chittagong port that the country had witnessed in the previous 4 decades, he added.
The minister was speaking at a seminar on “Logistical Challenges & Opportunities of Business”, organized by the International Business Forum of Bangladesh (IBFB) at BRAC Centre Inn at Mohakhali in Dhaka on Sunday 16 September, 2018.
The government has already updated the Chittagong port incorporating necessary infrastructure. Three gantry crane have already been installed, while three more are going to be added as the authority has a target to raise the number to ten by this year, said the shipping minister.
Mentioning that the remarkable development of the port in Chittagong was possible as a very peaceful environment prevailed among the labors during last nine year because the government ensured due facilities like high wages for the workers at the port.
Previously, there were facilities for six berths only while a scope for 13 berths have been created at the port, and a number of jetties have been built, five have already been built and more are being developed at the port, he added.
Besides, the government is increasing infrastructure facilities at Mongla port, that was earlier a losing concern. Dredging of Poshur channel has already been done and outer channel will be dredged soon, he mentioned. Besides, full-fledged customs operation will start at Mongla soon for the benefit of the Port users, he said.
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 and jetty would be built there also.
The government will build another port at Moheshkhali, he added.
Besides sea ports, 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.
Tamabil land port was opened and the government so far made Tk 3 crore profit there, said the minister adding, “If the land connectivity is not smooth, then land ports fail to bring benefit for the traders.”
Dr. Forrest E Cookson, Economist, Development in Democracy, USA presented a keynote paper at the seminar. In his paper, Forrest Cookson said, “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.”
Export led growth in manufacturing is characterized by exports growing more rapidly than GDP, by significant Foreign Direct Investments to bring technology and market knowledge, and by logistic systems to enable efficient and timely management of exports and imports. In the past four years the growth rate of exports has declined below the GDP growth rate, FDI continues to stagnate at about $1.5 billion. The major logistical links are all reporting full capacity use.
In Bangladesh it has become increasingly evident that operational matters are best vested in private enterprise. Rules and objectives are best set by government that has a holistic view of the issues, but has poor capacity to manage logistical operations. Private companies, on the other hand, will never see beyond their balance sheet but are efficient and oriented towards making things work smoothly. This does not remove the direction and control from the hands of the government, rather it allows the Government to concentrate on what it is supposed to do, he added.
The simplest way to speed up Customs is to shift more and more of the inspection to the off-docks and allow containers to be moved out of the port to the off-dock for customs clearance. This decentralization of customs operations should be feasible. There has always been opposition to this but the increase in clearance of containers will match the growth that we have used for the port requirements. Without decentralization it is unlikely that the Customs can clear containers rapidly enough to avoid delays of incoming raw materials for export industries, he added.
The second point that will improve customs clearance is 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. The difficulty here is clear; high risk importers are precisely those that will attempt to use facilitation payments to avoid inspection.
This is the problem of the Chittagong end of the Dhaka-Chittagong highway and the delivery of export cargo and collection of import cargos. Road planning is connected with the locations of the 19 operating off-dock facilities and the rules Customs establishes for the management of imports through the off-docks. This is a very complicated analysis but the growing volume of trucks that will be moving around make this a high priority for the authorities.
The third problem is management. There is a compelling case 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 politicalization 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.
The flow of container traffic along the Chittagong-Dhaka Highway will increase at more or less the same rate as the flow of containers through the port. We estimate total traffic flow will grow by 60% in 5 years and by 155% in 10 years. This is in each direction on the highway. We have assumed no alternatives. Shifts to the railway or to waterways will be small and not effect the magnitude of the projection.
To maintain a higher flow the average speed of the traffic has to increase. At present the average speed is 20 km/hr for a 15 hour trip or 25km/hour for a 12 hour trip. This is absurdly low for the most important highway in the country. A reasonable target is 50 km/hour for the average speed.
Dr. Khondaker Golam Moazzem, Research Director, the Centre for Policy Dialogue (CPD) and Dr. Nazneen Ahmed, Senior Research Fellow, Bangladesh Institute of Development Studies (BIDS) spoke as the distinguished discussants.
IBFB President Humayun Rashid presided over the seminar. Immediate Past President Hafizur Rahman Khan, Founding President Mahmudul Islam Chowdhury, M.S. Siddiqui
Vice President, IBFB, Lutfunnisa Saudia Khan, Vice President Finance, IBFB, S.M. Abu Tayyab, President, IBFB Chittagong Chapter and other distinguished Directors & Members of IBFB were present.
IBFB President of IBFB Mr. Humayun Rashid said in the seminar and told that “We all know that Bangladesh has qualified and graduated to a developing country from an LDC. UN Committee for Development Policy (CDP) officially communicated this on March 17, 2018. CDP will review Bangladesh’s progress in 2021, to see the country’s sustainability of graduation, a transition period of three years. The graduation is assessed on the basis of performance in 3 areas which are GNI Per Capita, Human Asset Index and economic vulnerability– which is a great achievement for the nation, its citizens, business and the government. Here, the people of Bangladesh and the business community are also partners of this success of the nation. Now we have to continue it up to the next UN review on 2021. To continue we have to maintain our economic growth. Now our yearly export earnings reached around 35 Billion US Dollar and Import expenditure stood at 47 Billion US Dollar. For this huge Import and Export activities Logistics and its efficiency is very important. So, we need to review our position and plan accordingly”.