Bangladesh needs port development to stay competitve in global business
Sunday, 24 October 2010
Tyron Devotta
I was on a trip to Dhaka recently with a team of prospective investors and something I learnt there, was that Bangladesh was a country with a great deal of potential for growth and investment, but with one major setback. When it came to infrastructure to support business, I found their stance to be uncertain, blowing hot and cold.
Initially the situation in the country's ports poses a frightening picture for any investor. Port congestion is not something one wants when it comes to today's commodity delivery schedules.
Bangladesh stood at a great advantage at the time the global recession hit. When western clothing retailers were looking for cheaper options than China to source their apparels, the countries that benefitted were Vietnam and Bangladesh.
Although Bangladesh's good fortune in the apparel export sector was somewhat similar to that of Vietnam, the same cannot be said for the dynamics govering the 2 countries shipping and transportation sectors.
According to recent shipping news reports, Vietnam has embarked on large scale port-building projects, mainly to develop their southern port of Vung Tao as a gateway to the country's commercial capital as well as to develop their long coastline at Danang and further north at Haiphong, which serves Hanoi.
It is a different story with Bangladesh whose main ports -- Chittagong and Mongla -- have seen a complete lack of development, in terms of container handling capacity and cargo handling services.
However, despite these setbacks, Bangladesh's garment exports continue to thrive. According to news reports, it was estimated to rise by 30% more in July and August than that of last year while the conjestion and operating efficiency at the Chittagong port continued to turn from bad to worse, causing huge losses and backlogs.
When I say Bangaladesh has potential, it is due to a combination of reasons. As in the garments sector, for an example, the country's low production costs and the various concessions it enjoys from first world countries, in terms of goods and services, are one, but beyond that the very nature of its needs presents tremendous potential for direct foreign investment, manufacturing and trade.
When looking for true potential in investing in Bangladesh, one has to look beyond the country's facade, such as its traffic congestion within the city, high rate of natural disasters and even poverty levels.
I was told by one investor in the garment sector, that with all these infrastructure setbacks, Bangaladesh still presents a very good proposition as a place to do business.
Businesses do not really have any national boarder. Many Sri Lankan businesses, especially in the garment sector, have already set up in Bangladesh or are planning to start operations there; the reason for this is that these companies have lost their competieve edge due to lack of concessions to move into European markets, out of Sri Lanka.
The fact that Bangladesh can give this competitive edge to regional business is all the more reason why it has to become aggressive in developing its ports and transportation sector.
A recent news report said that the Bangladesh Minister of Shipping, Shajahn Khan has told an assembly of Bangladeshi businessmen that he was serious about increasing productivity in the country's mainport at Chittagong.
It is also heartening to note that a decision is to be made soon over new operators to manage the 12 general cargo berths at Chittagong.
Plans to develop the port's New Mooring Terminal, opened to include international terminal operators, which had been stalled since last February, appears to be back on track, according to reports.
At this juncture, Bangaladesh can learn are important lesson also from the Sri Lankan experience. When Sri Lanka invited international port operators to participate in a tender for their Colombo Port's South harbour terminal project for the second time, they found a huge lack of interest from the main port operators of the world.
Even though close to 15 parties purchased tender documents, they found to their surprise that only one tendered an offer for the new terminal. Despite this drawback, the Sri Lanka Government and its ports authority decided to go with them as there was a race to build more capacity and efficiency in the port of Colombo, with the growing transshipment volumes from the south of India.
My business contact informed me that the government of Bangaladesh made several attempts to bring in international operators for the port of Chittagong, but tenders had been issued and canceled since 2004. The Bangladeshis and foreigners alike do not know what to expect.
As an 'outsider' onlooker, I believe that Bangladesh is poised to become one south Asian country better poised than others to reaping the full benefits of becoming a more attractive option for the businesses in the western world now going through recession. But Bangladesh must be making serious efforts to fast-track its infrastructure development.
The danger for Bangladesh is that if the country drags its feet in this area, another country can take its place and I believe Vietnam is one of the countries who will pose as competitor.
The writer is a Sri Lankan national and a public relations consultant for
international business
I was on a trip to Dhaka recently with a team of prospective investors and something I learnt there, was that Bangladesh was a country with a great deal of potential for growth and investment, but with one major setback. When it came to infrastructure to support business, I found their stance to be uncertain, blowing hot and cold.
Initially the situation in the country's ports poses a frightening picture for any investor. Port congestion is not something one wants when it comes to today's commodity delivery schedules.
Bangladesh stood at a great advantage at the time the global recession hit. When western clothing retailers were looking for cheaper options than China to source their apparels, the countries that benefitted were Vietnam and Bangladesh.
Although Bangladesh's good fortune in the apparel export sector was somewhat similar to that of Vietnam, the same cannot be said for the dynamics govering the 2 countries shipping and transportation sectors.
According to recent shipping news reports, Vietnam has embarked on large scale port-building projects, mainly to develop their southern port of Vung Tao as a gateway to the country's commercial capital as well as to develop their long coastline at Danang and further north at Haiphong, which serves Hanoi.
It is a different story with Bangladesh whose main ports -- Chittagong and Mongla -- have seen a complete lack of development, in terms of container handling capacity and cargo handling services.
However, despite these setbacks, Bangladesh's garment exports continue to thrive. According to news reports, it was estimated to rise by 30% more in July and August than that of last year while the conjestion and operating efficiency at the Chittagong port continued to turn from bad to worse, causing huge losses and backlogs.
When I say Bangaladesh has potential, it is due to a combination of reasons. As in the garments sector, for an example, the country's low production costs and the various concessions it enjoys from first world countries, in terms of goods and services, are one, but beyond that the very nature of its needs presents tremendous potential for direct foreign investment, manufacturing and trade.
When looking for true potential in investing in Bangladesh, one has to look beyond the country's facade, such as its traffic congestion within the city, high rate of natural disasters and even poverty levels.
I was told by one investor in the garment sector, that with all these infrastructure setbacks, Bangaladesh still presents a very good proposition as a place to do business.
Businesses do not really have any national boarder. Many Sri Lankan businesses, especially in the garment sector, have already set up in Bangladesh or are planning to start operations there; the reason for this is that these companies have lost their competieve edge due to lack of concessions to move into European markets, out of Sri Lanka.
The fact that Bangladesh can give this competitive edge to regional business is all the more reason why it has to become aggressive in developing its ports and transportation sector.
A recent news report said that the Bangladesh Minister of Shipping, Shajahn Khan has told an assembly of Bangladeshi businessmen that he was serious about increasing productivity in the country's mainport at Chittagong.
It is also heartening to note that a decision is to be made soon over new operators to manage the 12 general cargo berths at Chittagong.
Plans to develop the port's New Mooring Terminal, opened to include international terminal operators, which had been stalled since last February, appears to be back on track, according to reports.
At this juncture, Bangaladesh can learn are important lesson also from the Sri Lankan experience. When Sri Lanka invited international port operators to participate in a tender for their Colombo Port's South harbour terminal project for the second time, they found a huge lack of interest from the main port operators of the world.
Even though close to 15 parties purchased tender documents, they found to their surprise that only one tendered an offer for the new terminal. Despite this drawback, the Sri Lanka Government and its ports authority decided to go with them as there was a race to build more capacity and efficiency in the port of Colombo, with the growing transshipment volumes from the south of India.
My business contact informed me that the government of Bangaladesh made several attempts to bring in international operators for the port of Chittagong, but tenders had been issued and canceled since 2004. The Bangladeshis and foreigners alike do not know what to expect.
As an 'outsider' onlooker, I believe that Bangladesh is poised to become one south Asian country better poised than others to reaping the full benefits of becoming a more attractive option for the businesses in the western world now going through recession. But Bangladesh must be making serious efforts to fast-track its infrastructure development.
The danger for Bangladesh is that if the country drags its feet in this area, another country can take its place and I believe Vietnam is one of the countries who will pose as competitor.
The writer is a Sri Lankan national and a public relations consultant for
international business