Thursday, 18 August, 2022
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Commentary

Padma Bridge–a milestone in economic freedom

Finally, our dream project the Padma Bridge will be inaugurated on 25th June 2022. Undoubtedly, this is not merely a still structure. It embodies our unfathomable emotions and aspirations. It also reflects the national pride of charting our own course of development. Indeed, this is going to be one of our brightest milestones towards economic freedom for which millions shed their blood in 1971 and subsequently.

That this bridge has touched the core of our national aspirations was clearly indicated from a piece of news that a father took his terminally ill son to the site of the bridge as his last wish hiring a special ambulance at a cost of Taka sixteen thousand.

Though dampened to some extent by the Sitakunda tragedy, similar emotions must still be touching the hearts of about thirty million people of 21 districts in southern part of Bangladesh who have been cut off the mainstream Bangladesh due to the lack of a bridge over the mighty Padma.

Certainly, there have been some unavoidable delays in implementation of this mega project due to first unsubstantiated allegations by a multilateral development agency and later by sudden outbreak of COVID-19 and thus putting the construction on hold for many months. In addition, the technical challenges of construction of the bridge over a river which is second only to Amazon in terms of speed of its waterflow and complicated ecological reality requiring deepest pilling (128 meter) was overwhelming. Special equipment like heavy hammer had to be tailor-made from Germany to complete such pilling, that too fighting against mood of the river.

Among many other challenges, the financing of the project became a source of unnecessary controversy when the World Bank decided to withdraw its support of 1.2 billion USD on flimsy ground of ‘corruption’. Other development partners, including ADB and JICA, were pained to follow the global leader financing institution despite their uneasiness with the controversy which was evolving fast.

The government of Bangladesh under the strong leadership of Premier Sheikh Hasina kept its cool and decided to start construction of the bridge with domestic resources, even though the Finance Division was quite reluctant to take up this huge task. Around that time, I saw from a very close quarter how the Premier unbundled the conspiracy and kept on moving forward without much hesitation. The Bangladesh Bank stood by her and gave the comfort by promising necessary foreign exchange support from the banking sector. The country by then had already come out of the global financial crisis and was experiencing current account surplus with surging foreign exchange reserve. Both exports and inward remittance growths were exceptionally buoyant around that time. And we also knew that the foreign exchange requirement by the project would not be in bulk, and the banking sector was strong enough to respond to its demand. I still remember that we had a meeting of the Project Director of the Padma Multipurpose Bridge Project and representatives from Bangladesh Bank and Agrani Bank in the office of the Governor of Bangladesh Bank immediately after the decision of the government to implement the bridge with its own resources. We designed the modalities for this foreign exchange support while the Ministry of Finance was by then prepared to put in place the local resources under Annual Development Program. We reassured the Agrani Bank to provide all the regulatory support including additional foreign exchange from the bulging reserve. We are now happy to report that Agrani Bank has already put in 1.4 billion US dollars into the project while Bangladesh Bank always stood by the bank. The financing mechanism has been gradual and smooth, and the banking sector was ready to walk extra miles for this pride project. I am sure that the remaining bills will be similarly cleared by the bank with support, if needed, from the central bank. Indeed, this has been a rewarding experience for the banking sector under the prudent guidance of the central bank.

All this has been possible due to the fighting spirit which was instilled in the psyche of the nation by the Father of the Nation. He literally started from the ashes and took the country to the highway of prosperity with his farsighted policy of self-reliance and home-grown solutions of inclusive development. That fighting spirit has been aptly inherited by his daughter and Bangladesh is now getting the benefits of the legacy of that courageous leadership. I still remember how so many of our struggling remitters from the source countries were asking our banks for ways to send money for the construction of the Padma Bridge. Although they were not finally required to direct contributions for the construction of the bridge, none can, however, ignore their indirect contributions by the consistent inflow of the remittance and as well as their patriotic zeal for the country. No doubt, they are our national heroes who have been working so hard in adverse conditions of the Middle East and other regions. The formal inauguration of the Padma Bridge will surely be keenly watched by these heroes wherever they are and be a part of the euphoria that has already been set in among the people from all strata in Bangladesh.

Apart from this euphoria, the Padma Bridge deserves a deeper look in terms of the huge impact it is likely to make on the regional and national economies. Of course, this bridge will connect the 21 districts of the southern Bangladesh with the other parts of the country, particularly the capital Dhaka. The people from these districts will cross the bridge in minutes and participate in all the national activities like others without any physical barriers. No more, the freight trucks will have to wait for days in the ferry ghats to cross the mighty Padma. The international trade, particularly with the neighboring countries, will get a boost due to seamless transport connectivity which will be facilitated by the bridge. We have already seen how such connectivity helps raise the productivity and size of the economy after the Bangabandhu Bridge was constructed over the Jamuna River. The economic rate of return of the Bangabandhu Bridge as projected by the development partners was proved wrong and the entire northern part of Bangladesh has been deriving unprecedented socio-economic benefits from the connectivity facilitated by this bridge. This poverty-stricken part of the country witnessed spurt in regional economic growth and Monga (the case of seasonal extreme poverty) has literally been wiped out of the region. The country is now eagerly awaiting the repeat play of this economic resurgence in the southern part of the Bangladesh as well after the inauguration of the Padma Bridge.

Let us now focus more light on the socio-economic benefits of the Padma Bridge. Thanks to a succinct report titled ‘Padma Bridge Gives Rise to Abundant Possibilities’ by the LightCastle Partners (April 23, 2021). Economic impacts of the project can be summarized as follows:

- The economic benefits will flow not only in the southern part but also throughout the country due to multiple effects. Estimated national GDP may lift by 2% (some say 1.26%). The regional GDP may rise by 3.5%.

- The economic Rate of Return of the project will be 18-21 percent. The entire cost of the project may be realized by 31 years or even earlier.

- The bridge will significantly improve the efficiency of the road transport development that has already taken place in the southern region by bridging it to the mainstream Bangladesh, particularly its capital Dhaka and its adjoining industrial townships like Gazipur, Narayanganj and Narsingdi. This part of the country was deprived of efficient connectivity due to huge ferry queue arising out of the disrupted navigability of the Padma and extreme weather condition. The huge man-hour and economic loss due to above constraints will disappear with the opening of the bridge. This will certainly add value to our GDP.

- With the operationalization of the railway, the connectivity will further improve adding at least one percentage more to the country’s GDP.

- The connectivity of roads, railways and energy transportation will further ease international trade with India, Nepal and Bhutan by linking Bangladesh to Trans-Asian Highway and Trans-Asian Railway. The BBIN sub-regional economic cooperation will certainly get a boost.

- The possibility of improved network and connectivity has already boosted the initiation of economic zones, high-tech parks, and private industrial enterprises in the region.

- With the launch of the bridge, there will be better coordination between all the seaports of the country reducing the overburdening pressure on the Chittagong port and creating higher efficiency in port management.

- There is a real possibility in the growth of eco parks, exclusive economic zones, marine drives in the coastal belt, sea aquariums, international stadiums and convention halls, hotels, resorts, shopping-malls in southern Bangladesh particularly in and around Payra and Mongla ports following the opening of the bridge.

- There will be spurt in both ship-breaking and ship-building industries in Khulna and Barishal where the land prices have already started soaring up.

- With better transport connectivity, agriculture, SMEs and tourism industry will be boosted in the region. The tourists from Dhaka and abroad will flock to Kuakata, Bagerhat, the Sundarbans and Tungipara as they can reach these places in three to four hours. The time to reach Benapole will also be reduced by about half accelerating greater movements of tourists across the borders.

- The southern Bangladesh with five percent higher level of poverty will experience 1.01 percent reduction in regional poverty leading to 0.84% fall in national poverty.

- There will be faster diversification of businesses in the southwestern region maximizing farm and non-farm growth possibilities along with increased saline resistant maize and wheat, dairy and fish processing, shrimp production and related businesses, jute, and textiles. The improved supply chains along with better storage facilities will further boost the pace of industrialization benefitting from the lower cost of labour and transportation.

- With the facilities of electricity, gas, and internet pipelines in place over the bridge, the southwestern districts will see the spurt of growth of small and medium enterprises including the freelancers who will now get stable internet and other digital services.

- All this will help create employment opportunities for about 1.2% of total labor force providing at least 200,000 people with new employment. This will ease pressure on Dhaka and other large cities creating opportunities for growth of smaller and smarter cities (say like Bhanga) in addition to uplift of older cities.

- More universities and hospitals will be built in this part of the country creating more opportunities for decentralized growth in skilled human resources. The government will be well advised to provide additional incentives and regulatory supports (say through prioritized startup programs of Bangladesh Bank and ICT Division) to the aspiring small and digital entrepreneurs of this region who will be ready to contribute better towards Fourth Industrial Revolution.

I can go on talking about the plethora of opportunities that this bridge is likely to unleash for Bangladesh. To quote (from a personal conversation with me) late National Professor Jamilur Reza Chowdhury who was the chief of the Technical Committee of the Padma Bridge project, this state-of-the-art infrastructure will pave the way for further growth in our national capability for undertaking even larger mega projects with our own resources, both human and finance. He was also confident that smart cities like Shanghai may come up around this bridge in not so distant a time. I only hope his dream come true. If the land price is an indication, there is a real possibility of such a pace of urbanization around the Padma Bridge. Bangladesh is now in the similar growth trajectory of Singapore, Malaysia and Thailand were in the 1980s and 1990s. With the boom in domestic consumption (contributing about two-thirds of its buoyant growth) which has been at the root of Bangladesh’s defiance of Global Financial Crisis of 2008-09 and the Covid-19 pandemic, relatively younger population, higher intake in tertiary education, robust growth in RMGs and SMEs (rising share of manufacturing in GDP leading to about 38% now), improved female workforce participation, Bangladesh is well poised to even overcome the current economic challenges created by fallouts of the Ukraine war. And the commission of the Padma Bridge with all the potentials of making positive effects on the regional and national economy by enhancing the above gains will go a long way in spurring the amazing transformation of Bangladesh’s micro and macro economies as aspired by our Father of the Nation. Indeed, leadership matters. Indeed, this has been aptly demonstrated by the Bangladesh Premier in guiding the nation through her drive for transformational mega infrastructures, including the Padma Bridge, without jeopardizing the existing macroeconomic stability that her government has built up so skillfully.

 

The writer is a noted economist and former Governor of Bangladesh Bank. Email: [email protected]