Role of Infrastructure in Economic Development of Bangladesh

Introduction:
Infrastructure is generally considering structural elements that suggest the framework supporting an entire structure. It is widely used in different area, but is possibly most widely understood to refer to roads, airports, bridges, and utilities. These various elements may collectively be termed civil infrastructure, municipal infrastructure, or simply public works, although they may be developed and operated as private sector or government enterprises. In addition, infrastructure may refer to information technology, informal and formal channels of communication, software development tools, political and social networks, or beliefs held by members of particular groups. The role of infrastructure and growth in Economic development in Bangladesh are complementary each other. Economically, infrastructure could be seen to be the structural elements of an economy that allow for production of goods and services without themselves being part of the production process, e.g. roads allow the transport of raw materials and finished products. Therefore, it is very much obvious that without good infrastructures in the country it is impossible to raise the economic development in a country and is very promptly necessary for developing countries like Bangladesh. For countries welfare & prosperous the well managed good infrastructure is very necessary for economic development in Bangladesh.

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Role of Infrastructure in Economic Development of Bangladesh

Profile of Infrastructure in Bangladesh Economy

Major investment in real estate by domestic and foreign-resident Bangladeshis has led to an enormous building boom in Dhaka and Chittagong, which is positively affect the countrys economic development. Recent (2011) trends for investing in Bangladesh as Saudi Arabia trying to secure public and private investment in oil and gas, power and transportation projects. United Arab Emirates (UAE) is keen to invest in growing shipbuilding industry in Bangladesh encouraged by comparative cost advantage. Tata, an India-based leading industrial multinational to invest Taka 1500 core to set up an automobile industry in Bangladesh and World Bank to invest in rural roads improving quality of live, the Rwandan entrepreneurs are keen to invest in Bangladesh's pharmaceuticals sector considering its potentiality in international market. Samsung sought to lease 500 industrial plots from the export zones authority to set up an electronics hub in Bangladesh with an investment of US$1.25 billion, National Board of Revenue (NBR) is set to withdraw tax rebate facilities on investment in the capital market by individual taxpayers from the fiscal 2011-12. Recently, by the help of international support the government has also started to modernize its telecommunications infrastructure and introduce the 3G Internet.

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Role of Infrastructure in Economic Development of Bangladesh

Infrastructure Development in different sectors:

Infrastructure development is one of the major concerns for Bangladesh government to boost economic development, for that reason government has taken some initiative to improve this condition. Railway: The government began the privatization of some railway services, including ticket reservation and in-service catering. Despite all shortcomings, the railway remained an important mode of transportation, operating 3.7 billion passenger-kilometers and carrying 3.76 million metric tons of goods in the 1998-99 financial year. This ultimately helps to enhance up economic development as much as possible, which is vital for such a developing country like Bangladesh. Waterways: The waterways are vital mode of transportation, especially to some remote areas of the country, as no other mode of transportation is available during monsoon season. Bangladesh has three major seaports, at Chittagong, Dhaka, and Mongla, and several smaller ports. The largest and most important port is Chittagong, situated around 200 kilometers (124 miles) southeast of Dhaka. According to the EIU Country Report, in 2000 the Chittagong seaport handled around 80 percent of country's imports and 75 percent of exports, or 14.6 million metric tons of cargo and 420,850 containers. There have been several plans backed by private investors to set up two modern container terminals (in Chittagong and in Dhaka), but these plans have met opposition from the labor unions. According to the U.S. Department of State, in 1998 the U.S.based company Stevedoring Services of America (SSA) signed a US$440 million contract to develop a private container project, which includes the construction of two container terminals. Telecom Industry Expansion: In 2000, the country had a mere 490,000 telephone lines and 52,000 mobile phones serving 129 million people. The government is aiming to provide
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Role of Infrastructure in Economic Development of Bangladesh telephone coverage of remote towns and villages that until now have had no telephone connections. With international assistance and increasing private investments, Bangladesh is upgrading its telecommunication system, replacing analogue technology with digital, introducing the Internet and e-mail services, and expanding cellular mobile services, recently Taeletalk introduced fastest 3G internet service for covering more people to engage it with fastest communication network.

Benefits from good rural infrastructure:

Employment and job creation: Here, figures can be quoted for the RIIP, based on experience on labor inputs collected through detailed surveys in the Tangail project (on the basis of 11,000 person-days per km of road and 15,000 person-days per growth centre). Through its construction activities, the RIIP is expected to create the following numbers of person-days of short-term employment: Roads: 12.2 Million Growth Centres: 1.0 Million Others: 2.6 Million Total: 15.8 Million (equivalent to 53,000 person-years) In the medium and long term, a significant number of permanent jobs will be created through maintenance of the infrastructure created, mostly for rural women: Off-pavement: 1,110 perm. jobs On-pavement: 300 perm. jobs Others: 600 perm. jobs Total: > 2,000 perm. Jobs

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Role of Infrastructure in Economic Development of Bangladesh The benefit through the following ways: Employment opportunities Development of land values Increased income Income generating activities Market attendance Improved access: Availability of transportation means Access to education Access to health Access to markets Access to social interaction Access to water supply and sanitation Aggregate Project Road benefits Annual Net Benefits-after Financial Results financing BDT 000 WOP WP full Increme IRR NPV develop ntal BDT ment 20 59 39 13.5% 128,757 3 2 13.3% 127,139 Annual kms by Net project benefits end BDT '0000 320 12524 150 237

Model

Community road (4km) Union road 0.95 Vehicle operating cost (5km) Average 10

31

20

13%

127948

235

6380

Source: Bangladesh: Haor Infrastructure and Livelihood Project Design Report Formulation Annexes

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Role of Infrastructure in Economic Development of Bangladesh

Overview of the Urban Governance and Infrastructure Improvement Project by ADB:

ADB has had a long history of involvement in urban sector development in Bangladesh. Before the UGIIP, ADB supported the two Secondary Towns Infrastructure Development Projects, which were implemented to upgrade municipal infrastructure facilities in 32 of the countrys 64 district towns over the period 1993 to 2000. UGIIP-1, which began in 2003 and was implemented over a 7-year period until 2010, covered 2230 pourashavas at a total cost of $87 million. ADB contributed $60 million of this amount (69% of the total cost), and the rest was provided by the Bangladesh government ($22.8 million, 26.1%), pourashavas ($3.9 million, 4.5%) and community beneficiaries ($0.3 million, 0.4%). UGIIP-2, which is being implemented over a 6-year period that started in 2009, will be completed in 2014 at an estimated cost of $167.5 million, double the investment in UGIIP-1. As UGIIP-2s lead donor, ADB is contributing $87 million (51.9% of the total cost), while two German donorsKFW and GIZ are providing $36.1 million (21.6%) and $4.7 million (2.8%), respectively. The Government of Bangladesh has invested $31.7 million (18.9%) in UGIIP, and the pourashava local governments are contributing $7.3 million (4.4%) and community beneficiaries $0.7 million (0.4%). Thirtyfive pourashavas in seven divisions of the country were included in phase 1 and successfully qualified for phase 2 of UGIIP-2.

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Role of Infrastructure in Economic Development of Bangladesh

The classifications of road network system are given as follows: Category 1. National Highway 2539 (2.5%) 2. Regional Highway 2670 (2.6%) Length (km) Definition Connecting national capital with divisional headquarters, port cities and international highways Connecting different regions with each other, which are not connected by the national highways Connecting Thana headquarters to the arterial network Connecting growth centers to the RHD network or to the Thana headquarters Institution Responsible Roads & highways Department, Ministry of communication

RHD

3. Feeder Road Type-A (FRA) 4.

1,008 (9.9%)

RHD Local Government Engineering Department(LGED), Ministry of local government, Rural development & cooperative

Feeder Road Type-B (FRB)

8,403 (8.3%)

5.

Connecting union headquarters/local 32,674 Rural road class 1 (R1) market with the Thana LGED (32.3%) headquarters or road system 6. Connecting villages & 44,861 farms to local LGED Rural road Class 2 (R2) (44.3%) markets/union headquarters and 7. Rural Road Class 2 (R3) 29,450 Roads within villages. LGED Table: Classification & composition of the road network in Bangladesh

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Role of Infrastructure in Economic Development of Bangladesh

Major types of Infrastructures:

Infrastructure is a term used by governments to describe assets that are essential for the functioning of a society and economy. Most commonly associated with the term are as follows: Electricity generation, transmission and distribution; Gas production, transport and distribution; Oil and oil products production, transport and distribution; Telecommunication; Water supply (drinking water, waste water/sewage, stemming of surface water (e.g. dikes and sluices) ; Agriculture, food production and distribution; Heating (e.g. natural gas, fuel oil, district heating); Public health (hospitals, ambulances); Transportation systems (fuel supply, railway network, airports, harbors, inland shipping); Financial services (banking, clearing); Security services (police, military).

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Role of Infrastructure in Economic Development of Bangladesh

Challenges of good infrastructure in Bangladesh

Due to lack of proper corporate governance, Bangladesh has suffering a lot of opportunity in countrys infrastructure and communication system. There are enormous numbers of reasons that country will suffer more, which are as follows: Power shortages Gas shortage Corruption Bureaucracy Political unrest Lack of skill manpower Recent debacles with World Bank for Padma Bridge, Dhaka-Chittagong four-lane high way expansion slow pace work are getting more complex situation for growth of economy. In addition, in Chittagong Baddrhhat Flyover crash have proofed that the country is unable to do this job and in near future it facing slow economic growth due to extreme corruption. In a country like Bangladesh, where there is an acute shortage of power and other infrastructural facilities, ensuring transparency, execution support capability and corporate governance can significantly improve the chances of successful implementation of projects.

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Role of Infrastructure in Economic Development of Bangladesh

Ways to improve infrastructures for better Economic Growth:

Several bi-lateral and multi-lateral development agencies have been focusing on infrastructure development finance in Bangladesh. For example, Asian Development Bank (ADB) and the Infrastructure Development Company Limited (IDCOL) supported the successful Independent Power Plant financing of Meghnaghat Power. Similarly, International Finance Corporation of the World Bank (IFC) financed Khulna Power Company Limited. Additionally, IFC, ADB, NORFUND, DEG and EIB have played key roles in financing telecom and large manufacturing setups in Bangladesh. There has also seen interest among export credit agencies like ECGD of UK, Coface of France and Hermes of Germany for implementing projects in Bangladesh. Bangladesh can also look to Middle East and Asia to tap the Islamic liquidity pool for financing infrastructure projects. Private equity firms also invest in infrastructure development. However, equity investors are generally motivated by the GDP growth prospects, government stability, transparency of pricing regime, and credit quality of major off-taker.

Roads and Bridges: It is urgently needed for countrys roads communication improvement and specially the Dhaka- Chittagong four lane high should take care seriously for nation economic prosperous. Moreover, Padma Bridge needs a priority to do this project by any cost. Integrated Transport Policy: Integrated Multimodal Transport Policy (IMTP), 2012 has been framed. Dhaka Transport Coordination Authority Act, 2012 has also been approved. Under this Act, Dhaka Transport Coordination Authority (DTCA) has already been formed. This Authority will have a strong role in the Capitals transport coordination.

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Role of Infrastructure in Economic Development of Bangladesh Strategic Transport Plan: A 20-year Strategic Transport Plan (STP) has been approved by the Government to establish discipline in the road transport sector, reduce accidents and ease traffic congestion. Under this plan, steps have been taken to implement the MRT- 6 (Mass Rapid Transit, Line-6).

The Importance of Infrastructure for nations Economic Development:

Dr. Jeffrey Delmon, senior infrastructure specialist of The World Bank, begins his book indicating that, Poor infrastructure impedes a nations economic growth and international competitiveness (The World Bank 2006). Insufficient infrastructure also represents a major cause of loss of quality of life, illness and death (Willoughby 2004). This raises infrastructure services from good investment to a moral and economic imperative. In order to encourage growth and reduce poverty, it is essential to improve the supply, quality and affordability of infrastructure services. The unmet demands are huge, and investments have not matched demand (The World Bank 2008).

The Relevance of Infrastructure

The Global Competitiveness Report 2010-2011 of the 2010 World Economic Forum values the competitiveness of 133 economies and thus provides the most complete economic evaluation of its kind. The Forum uses 12 determinants, which the report calls pillars, to measure competitiveness. The second basic pillar is infrastructure (World Economic Forum 2010).

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Role of Infrastructure in Economic Development of Bangladesh Effective modes of transport, including quality roads, railroads, ports, and air transport, enable entrepreneurs to get their goods and services to market in a secure and timely manner and facilitate the movement of workers to the most suitable jobs. Economies also depend on electricity supplies that are free of interruptions and shortages so that businesses and factories can work unimpeded. At last, a solid and extensive communications network allows for a rapid and free flow of information, which increases overall economic efficiency by helping to ensure that businesses can communicate and decisions are made by economic actors taking into account all available relevant information.

Impact on economic development:

Economic development and Public capital: Investment in infrastructure is part of the capital buildup required for economic development and may have an impact on socioeconomic measures of welfare. The causality of infrastructure and economic growth has always been in debate. In developing nations, expansions in electric grids, roadways, and railways show marked growth in economic development. However, the relationship does not remain in advanced nations who witness more and more low rates of return on such infrastructure investments. On the other hand, infrastructure brings indirect benefits through the supply chain, land values, small business growth, consumer sales, and social benefits of community development and access to opportunity. All these efforts are testimony to the infrastructure and economic development correlation. Therefore, in our country it necessary nurtures the infrastructure development and maintain with care as much as possible for achieving higher economic growth. Infrastructure investments have a remarkably positive effect on economic development.
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Role of Infrastructure in Economic Development of Bangladesh

Policy Recommendation:
Infrastructure industries and services are crucial for generating economic growth, alleviating poverty and increasing international competitiveness. Recognizing infrastructure's importance, many countries have started implementing far-reaching reforms over the last few years restructuring, encouraging private participation and establishing new approaches to regulation. This new policy redirection identifies the challenges involving massive regulatory reforms within the historical, economic and institutional context of developing and transition economies. Few Reforms should be taken care of, which are given below:

Reforms have significantly improved performance, leading to higher investment, productivity and service coverage and quality. Prices have become better adjusted with underlying costs. Prices have also become more responsive to consumer and business needs and to opportunities for innovation. Effective regulation- including the setting of adequate tariff levels- is the most critical enabling condition for infrastructure reform. Protecting the interests of both investors and consumers is crucial to attracting the long-term private capital needed to secure adequate, reliable infrastructure services and to getting social support for reforms.

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Role of Infrastructure in Economic Development of Bangladesh

In addition, government should be taken care of some steps for sustaining economic growths, which are as follows:

Improve rural road infrastructure; Improve rural infrastructure including growth centre markets, boat landings, ferries, and union- council office complexes; Improve infrastructure maintenance; Strengthen LGED capacity and improve local governance; Support project management.

In summary, infrastructure restructuring and regulatory reforms offer substantial potential benefits for governments, operators and consumers as well. Without a good infrastructure, it is almost impossible to country enjoining a healthy economic condition. Therefore, the government should much take care of it seriously to do the new project a high priority basis like Dhaka Chittagong four-lane expansion, Metro rail service, as Dhaka city and the most urgently needed Padma Bridge.

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Role of Infrastructure in Economic Development of Bangladesh

Conclusion:
Bangladesh is continuously tried develop the economic growth through different good initiative measures. Consequently, infrastructure development is one of the major concerns to the government for nations high economic development. Few measures have already taken by government through the different internationalization organization like World Bank, ADB, JICA, IDB etc. However, these may not adequate for this countrys high economic growth. Because, Bangladesh is overpopulated country, rural sector still deprived from well development, high unemployment rate. For these reasons, it is great concern for government to take very good initiate to implement new project and try complete under construction project as early as possible for countrys economic happiness. Another, major obstacle for government is corruption in every sector, which is negatively influencing our overall economic development as well countrys goodwill. For example, recent debacle of Padma Bridge with World Bank, this is not a good sign for a country in near future. Finally, good infrastructure is directly motivated the economic development, which actually reflects the countrys growth rate and GDP. There is no doubt that if country will go further ao attract more foreign investment it must be improved their infrastructure by any cost for countrys welfare.

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Role of Infrastructure in Economic Development of Bangladesh

References:
1. http://en.wikipedia.org/wiki/Infrastruct 2. World Bank. World Development Indicators 2000. 3. http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/Bangladesh 4. Ministry of Communication. (2005). National Land Transport Policy, Government of the Peoples Republic of Bangladesh 5. World Bank. (2009). Bangladesh Transport Policy Note, Draft Final, Transport Unit, Sustainable Development Department, South Asia Region. 6. LCG. (2010). Development Strategies, Governance and Human Development, Bangladesh Development Forum Meeting 2010, Local Consultative Group. 7. Transport and Communications Bulletin for Asia and the Pacific No. 72, 2003 8. Winston, Clifford. 1993. Economic Deregulation: days of Reckoning for Micro economists Journal of Economic Literature, Volume 31, Issue 3, 12631289 9. Human Settlement Development-Vol-3 Infrastructure investment as Sustainable Development : A Bangladesh Case Study Karen Coelho 10. Arnold, J. 2004. Bangladesh Logistics and Trade Facilitation. Mimeo. World Bank: Washington DC. 11. 2005. Cooperation in Infrastructure Sector: A South Asian Perspective. Contemporary South Asia. Vol. 14(3): 428 12. The Financial Express News paper 13. The Daily Star Business News paper

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