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National logistics policy for Bangladesh

Ferdous Ara Begum | October 29, 2022 00:00:00

An article published in the Financial Express titled 'Prioritisation of Local Private Sector in Logistics policy' on October 25 drew this scribe's attention. We fully agree that private sector can be engaged in raising efficiency of the Chottogram port.

In the Industrial Policy announced on September 25, 2022 by the Ministry of Industries, logistics has been included for the first time as one of the export diversification sectors and it has also been considered a thrust sector. 21 logistics sub-sectors have been included in the policy. It is clearly evident that the government is willing to give more importance to logistics development in the coming years.

A number of studies have been conducted so far comparing Bangladesh's logistics performance with other countries which show the country needs further preparation in terms of improving its logistics infrastructure to be a developing country by 2026 and a developed country by 2041.

A draft framework policy has been prepared and presented to the Prime Minister's Office (PMO). Sharing global experiences and going through the case studies of other countries is important towards finalising the policy. In this respect, we can see that India has recently published its national Logistics Policy-2022 by its department for promotion of industry & internal trade under the ministry of Commerce & Industry. The department has been authorised to take decisions in respect of any modification and changes.

The PM Gati Shakti National Master Plan (NMP) for multimodal connectivity infrastructure to various Economic Zones has been launched. In order to reduce logistics cost they have taken some strategies to improve transportation (roadmap for assessment of logistics), warehousing (by using Gati Shakti and AI), inventory management (reliability in supply chain and resilient infrastructure), and efficiency in regulatory management (innovative digital solutions).

The policy has also taken a plan for logistics performance index by reducing time for last line connectivity, development of data driven system for monitoring various components of the logistics eco-systems to enable higher logistics efficiencies. The policy has a comprehensive action plan in key eight areas such as-- integrated digital logistics system, standardisation of physical assets and benchmarking of service quality standards, logistics HR development and capacity building, state engagement, EXIM logistics, service improvement framework, sectoral plans for efficient logistics and facilitation of development of logistics parks.

Vietnam also prepared a national logistics action plan for integration of all services through a holistic approach. They have identified that lack of connectivity between all modes of transport is one of the problems which is similar to ours. They have given importance on interagency coordination through WTO-TF (Trade Facilitation) agreement, national single window. Vietnam has also given emphasis on unproductive use of assets so that efficiency in resource utilisation can be increased. They are looking for non-asset based logistics support service providers such as-- truck brokers, freight forwarders, 3rd party logistics etc to be on board so that more discipline can be ensured.

Vietnam also identified sourced logistics which is sometimes named as 3PL or third party logistics in order to improve performance of local support service providers so that manufacturing and trading firms can get improved traditional logistics services in the field of transportation, warehousing, custom clearance and freight forwarding-- some of which are still outsourced. They have assessed the required manpower for improving the sector and introduced, like India, implementation and monitoring architecture for providing multimodal transport connectivity, limiting redundancies and using resource efficiently, providing incentives to the private sector to avoid overlapping and better inter-agency management.

For monitoring purpose, Vietnam will also use Logistics Statistics System (VLSS). Four core areas of Logistics of Vietnam is transport and communication infrastructure, public and private sector logistics support service providers, provincial and national institutional framework policies and rules, shipping/trading consignments etc.

In Vietnam, so far, there is no official authority for overall responsibility of logistics. The Ministry of Industry and Trade (MOIT) has been assigned to develop the action plan.

In Bangladesh there are about ten ministries, twenty four government agencies looking after the logistics sector. As in other countries, there is a need for a focal point ministry so that discipline can be brought in this sector and logistics cost can be reduced. Most important is to ensure smooth coordination so that with a single document whole logistics support services can be ensured.

It is seen from the statistics that global economy will be about $ 9 trillion bigger by 2030 by improving trade facilitation activities which can lower average trade costs by 14 per cent. In Bangladesh, permission from 33 licensing agencies are required for export, about 15 licences are required for a formal business to start. Export-import cost is higher in Bangladesh ($ 633, $ 1270) than other countries such as-- Vietnam ($ 429, $ 556), India ($ 270, $ 366). The country needs attention for improved trade facilitation and automated services for reducing cost of doing business.

Like other countries, for Bangladesh, it is the prime time to frame a national logistics policy which will help attain national targets. As per UNCTAD LDC report, Bangladesh needs $119 billion yearly from 2021 through 2030 to sustain 7 per cent GDP growth.

Logistics infrastructure development has been treated as one of the key factors in ensuring industrialisation in the today's competitive and complex business age. We need to achieve our targets of export diversification, employment generation, increased investment and FDI for further socio-economic development. Our focus would need to be concentrated on advanced logistics infrastructure development.

Ferdous Ara Begum is CEO Build.

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