Geography can propel economy
Thursday, 4 October 2007
Enayet Rasul
There was a time early in the last century when the international limelight shone on Egypt in relation to the construction of the Suez Canal. The North African country, a proud holder of the legacy of the Pharonic civilisation, was then in pitiable conditions because of its backwardness in all areas. Its swelling population had little else other than some agriculture in the Nile valley for a subsistence living. It was at that time that the offer came from a consortium of European companies to build the Suez Canal. This engineering marvel -- supervised by a brilliant French engineer -- revolutionised the world's shipping by cutting short drastically the transportation time between European ports and the rest of the world. Goods freighted to and from European ports had to use the long detour by going round the southern tip of the African continent. But the Suez Canal cut this distance by less than a third as ships from European ports in the Mediterranean could go through the canal and the Red Sea to the world's oceanic highways much faster than in the time before the operationalisation of the canal.
While world trade got a big boost from the coming into operation of the Suez Canal, Egypt itself also profited enormously from the project. First of all, it earned good amounts by only agreeing to the building of this canal on its territory. Ultra Egyptian nationalists protested that their country would have to cede sovereignty over its territories by allowing the canal to be built. They feared foreign intervention and the consequences thereof from building the canal. But the concern of the nationalists died down as the canal started contributing to Egypt's backward and stagnant economy. Millions in precious foreign currencies flowed into the hands of the Egyptian government as foreign ships passing through Egypt paid for their rights of passage. Presently, the Suez Canal brings to Egypt billions of dollars in revenues from ships transiting through it ; this is a major source of that country's sustenance.
Why the case of the Suez Canal is mentioned ? It is mentioned to draw attention to the fact that Bangladesh also has similar opportunities to exploit. The geographical location of Bangladesh is such that it can earn huge amounts of foreign currency on a sustainable basis by allowing transit of goods through its territories, approving the use of its ports by foreign users, expanding its capacities to serve the purpose of entrepot for the region, etc.
There are some countries in the world that make a living mainly by providing services. At a time, when Bangladesh's export products are limited to a few items, its comparative advantage in these few products also facing a threat and the resources and know-how to develop and market new export products found to be difficult by its entrepreneurs, the new ways to earn foreign currency should be seriously and promptly considered by the government and the policy planners. Foreign investments in Bangladesh are far less compared to need. But these investments could increase substantially in a short period of time --perhaps -- if successive government did not just sit on the above possibilities but had been proactive in exploring them. The foreign companies that started knocking at our door to make the investments in these service industries probably became discouraged from the indecision and lack of vision and expertise on the part of Bangladesh authorities in these matters.
The seven north eastern Indian states and neighbouring Nepal and Bhutan are landlocked entities. They are presently using the far away Calcutta port for their external trade. But not only Calcutta port is distant from them but it also suffers from inadequate handling capacities. This port is also found rather unserviceable on a large scale because of the falling level of the Hooghly channel and other natural disadvantages. Chittagong port, by comparison, is much better situated to handle the trade of the seven Indian states, Nepal and Bhutan. It can be accessed relatively faster and cheaper by them. In fact, by allowing external users to use the Chittagong port, the regional economy can experience an uplift and Bangladesh can gain by obtaining good amounts from the users as service fees on a regular basis for the use of its port facilities. Again, the wider use of Chittagong port will require expansion of its present capacities. Again, this expansion can be achieved free of costs from foreign investments but these investments will have spin-offs in the from of creation of jobs and economic activities locally.
Not only Chittagong port, Bangladesh can set up more ports in the vicinity of Chittagong to service the entire region comprising the seven Indian states, Nepal and Bhutan. It can set up even a deep sea port in the Bay of Bengal. All of these port facilities will make Bangladesh a sort of entreport for the entire region comprising the Indian states, Nepal and Bhutan. In that case, the pressure will ease on Bangladesh's limited port facilities to service the region while it would earn huge amounts of foreign currencies from the regional users by playing the role of the regional entreport. Foreign investments will play a vital role in the establishment of these new port facilities and spare Bangladesh the need to make its own investments. Investments to create the new ports will generate jobs and income locally. The maintenance and operation of the infrastructures will create regular jobs for a large number of Bangladeshis. Besides, along with the establishment of new ports or increase in port capacities and the resultant expansion in regional trade and economic activities, services such as shipping, insurance, banking, etc., will need to expand. The expansions will have to occur in the territories of Bangladesh. Thus, the Bangladesh economy should benefit also from these multiplier effects.
There is apprehension in some quarters in Bangladesh that implementation of the above plans could threaten Bangladesh's sovereignty. This is really outdated thinking because stepped up transnational activities to facilitate trade and industry is the feature of the times, worldwide. Countries that can grasp quickly the merit of proposals for transnational activities quickly and act on them swiftly can expect to survive and prosper in the economic sense.
There was a time early in the last century when the international limelight shone on Egypt in relation to the construction of the Suez Canal. The North African country, a proud holder of the legacy of the Pharonic civilisation, was then in pitiable conditions because of its backwardness in all areas. Its swelling population had little else other than some agriculture in the Nile valley for a subsistence living. It was at that time that the offer came from a consortium of European companies to build the Suez Canal. This engineering marvel -- supervised by a brilliant French engineer -- revolutionised the world's shipping by cutting short drastically the transportation time between European ports and the rest of the world. Goods freighted to and from European ports had to use the long detour by going round the southern tip of the African continent. But the Suez Canal cut this distance by less than a third as ships from European ports in the Mediterranean could go through the canal and the Red Sea to the world's oceanic highways much faster than in the time before the operationalisation of the canal.
While world trade got a big boost from the coming into operation of the Suez Canal, Egypt itself also profited enormously from the project. First of all, it earned good amounts by only agreeing to the building of this canal on its territory. Ultra Egyptian nationalists protested that their country would have to cede sovereignty over its territories by allowing the canal to be built. They feared foreign intervention and the consequences thereof from building the canal. But the concern of the nationalists died down as the canal started contributing to Egypt's backward and stagnant economy. Millions in precious foreign currencies flowed into the hands of the Egyptian government as foreign ships passing through Egypt paid for their rights of passage. Presently, the Suez Canal brings to Egypt billions of dollars in revenues from ships transiting through it ; this is a major source of that country's sustenance.
Why the case of the Suez Canal is mentioned ? It is mentioned to draw attention to the fact that Bangladesh also has similar opportunities to exploit. The geographical location of Bangladesh is such that it can earn huge amounts of foreign currency on a sustainable basis by allowing transit of goods through its territories, approving the use of its ports by foreign users, expanding its capacities to serve the purpose of entrepot for the region, etc.
There are some countries in the world that make a living mainly by providing services. At a time, when Bangladesh's export products are limited to a few items, its comparative advantage in these few products also facing a threat and the resources and know-how to develop and market new export products found to be difficult by its entrepreneurs, the new ways to earn foreign currency should be seriously and promptly considered by the government and the policy planners. Foreign investments in Bangladesh are far less compared to need. But these investments could increase substantially in a short period of time --perhaps -- if successive government did not just sit on the above possibilities but had been proactive in exploring them. The foreign companies that started knocking at our door to make the investments in these service industries probably became discouraged from the indecision and lack of vision and expertise on the part of Bangladesh authorities in these matters.
The seven north eastern Indian states and neighbouring Nepal and Bhutan are landlocked entities. They are presently using the far away Calcutta port for their external trade. But not only Calcutta port is distant from them but it also suffers from inadequate handling capacities. This port is also found rather unserviceable on a large scale because of the falling level of the Hooghly channel and other natural disadvantages. Chittagong port, by comparison, is much better situated to handle the trade of the seven Indian states, Nepal and Bhutan. It can be accessed relatively faster and cheaper by them. In fact, by allowing external users to use the Chittagong port, the regional economy can experience an uplift and Bangladesh can gain by obtaining good amounts from the users as service fees on a regular basis for the use of its port facilities. Again, the wider use of Chittagong port will require expansion of its present capacities. Again, this expansion can be achieved free of costs from foreign investments but these investments will have spin-offs in the from of creation of jobs and economic activities locally.
Not only Chittagong port, Bangladesh can set up more ports in the vicinity of Chittagong to service the entire region comprising the seven Indian states, Nepal and Bhutan. It can set up even a deep sea port in the Bay of Bengal. All of these port facilities will make Bangladesh a sort of entreport for the entire region comprising the Indian states, Nepal and Bhutan. In that case, the pressure will ease on Bangladesh's limited port facilities to service the region while it would earn huge amounts of foreign currencies from the regional users by playing the role of the regional entreport. Foreign investments will play a vital role in the establishment of these new port facilities and spare Bangladesh the need to make its own investments. Investments to create the new ports will generate jobs and income locally. The maintenance and operation of the infrastructures will create regular jobs for a large number of Bangladeshis. Besides, along with the establishment of new ports or increase in port capacities and the resultant expansion in regional trade and economic activities, services such as shipping, insurance, banking, etc., will need to expand. The expansions will have to occur in the territories of Bangladesh. Thus, the Bangladesh economy should benefit also from these multiplier effects.
There is apprehension in some quarters in Bangladesh that implementation of the above plans could threaten Bangladesh's sovereignty. This is really outdated thinking because stepped up transnational activities to facilitate trade and industry is the feature of the times, worldwide. Countries that can grasp quickly the merit of proposals for transnational activities quickly and act on them swiftly can expect to survive and prosper in the economic sense.