Mega projects of Bangladesh and prospective impacts in transforming the economy

March 25, 2019

IN a developing country context like Bangladesh where GDP has hit 7% growth rate per annum, it is often said that infrastructure-megaprojects are crucial drivers for accelerating economic growth. For these developing economies, the benchmark of 7% economic growth is usually required both for capital accumulation to fund the mega projects and to reap the benefits of these projects for boosting the growth rate to the magical two digit number. The Asian story of grand success has shown the economists and practitioners alike that sustaining a two-digit growth rate for at least 10-15 years is the key in pulling a miracle for economic transformation.

In the early days of development in the so called East Asian Tiger economies, the mega-infrastructure projects evidently played a crucial role in accelerating economic growth. Even under the Sustainable Development Goals framework, it is estimated that the world economies need to spend about $57 trillion on infrastructure by 2030 to enable the anticipated levels of GDP growth globally. Of that, about two-thirds will be required in developing countries like Bangladesh.

Even before the ‘Agenda 2030’was adopted, the present government in Bangladesh under the leadership of Sheikh Hasina envisaged implementing a few mega projects in Bangladesh to deliver the economic and social goods for millions of people in different parts of Bangladesh and to create the economic growth that will benefit the population. It is expected that these large infrastructural undertakings and mega projects would transform the country's communications, transportation, ports and energy scenario by 2030 and help the country to achieve high mid-income country status by 2041.

Padma Multipurpose Bridge

With 63% work accomplished, the dream for the largest and the longest infrastructure undertaking in Bangladesh — Padma Multipurpose Bridge on the biggest river of the country — appears to be a distinct reality now. A self-funded project of Bangladesh government worth $3.65 billion, the 6.1 km double-deck bridge is expected to be open for traffic by 2020 connecting southern part of Bangladesh with the capital city as well as eastern part of the country. The bridge will have road and rail linkages in two separate decks. It is expected that the construction of the bridge will comprehensively transform the pace of economy in the region improving lives of millions people on the both sides of the river.

Paira Sea Port

Initiating its operational activities in 2016, Paira Sea port is another mega project comprising 19 components. Out of these, 13 components will be implemented under FDI and the remaining six under the government-to-government (G2G) deals. To implement the project, the government has signed an agreement with Belgian company for an estimated $2 billion capital dredging and maintenance dredging. Large-scale investment opportunities are open to implement the project components. The port will be fully operational by 2023.

Dhaka Metrorail Project

The Dhaka Mass Rapid Transit Development Project — worth $2.5 billion — is expected to see half of the 20-km metro line in Dhaka go open by the end of 2019. The rest of the project is expected to be completed by 2024. With an aim to provide a safe, fast, affordable and modern means of transportation for the city dwellers, this urban public transport service promises to significantly reduce congestion in the capital and prevent environmental pollution.

Rooppur Nuclear Power Plant

A $11.38 billion financing agreement had been signed with Russia for the construction of 2,400 megawatt Rooppur nuclear power project. The first and second agreements of the project between Bangladesh and Russia as well as 4 independent agreements between the implementing agencies of these two countries covering feasibility evaluation, environmental impact assessment, engineering survey, technical documentation and working documentation had been fully completed leading to the inauguration of the construction work of the Power Unit 1 in November 2017 and Unit 2 in July 2018. The commissioning of unit 1 is planned in 2022 while the commissioning of Unit 2 is planned in 2023.

Karnaphuli Underwater Tunnel

Chinese President Xi Jinping and Bangladesh Prime Minister Sheikh Hasina laid the foundation of Karnaphuli Underwater Tunnel worth $2.49 billion in 2016. The boring work beneath the tunnel has been inaugurated by the Prime Minister Sheikh Hasina in February 2019. The construction of the proposed tunnel would improve the connectivity between Chittagong and Cox’s Bazar and impact positively on the operation of Chittagong port. The 3.5km-long four-lane tunnel, the first of its kind in Bangladesh and region, will be built to make the port city of Chittagong "One City Two Towns," based on a model of East and West Shanghai in China.

The total length of the tunnel will be around 9.1 km, including 3.4km under the Karnaphuli River, with a 4.89 km approach road alongside 740 m of bridges, linking the main port city and western side of the Karnaphuli to the industrial zones on the eastern side of the river. The construction of the Karnaphuli Tunnel is expected to bolster industrial development, enhance tourism, and expand trade and commerce near the project area, creating employment for thousands of people and boosting exports. The overall socioeconomic development and lifestyle of the people of this area will improve and there will be a very positive impact on the total economy of the country.

Dhaka Elevated Expressway

The work for the first tranche of the $1.5 billion worth of 47.6 km Dhaka Elevated Expressway is undergoing. The 20 km length of the first tranche is projected to be opened for public by 2019 reducing the congestion in Dhaka city greatly. This will impact positively to the economic productivity of Dhaka city.

Other prospective Mega

Projects where investment

opportunities exist

Dhaka-Chittagong Express Way (rail or road), Circular Road around Dhaka City, Construction of an International Airport in the centre of Bangladesh, Dhaka Underground Train/Tube Rail and Construction of second bridge on river Padma are a few of the other prospective mega projects that are in the offing in Bangladesh, and for which opportunities exist for direct foreign investment.

Bangladesh’s development story, especially implementation of the ongoing and future mega projects, has earned it the reputation in the region as a hot spot for global investment. The role of these mega infrastructure projects is expected to be fundamental in the overall national development process as they will contribute positively in employment generation, connectivity, regional trade, economic integration as well as energy security of the country. Therefore, the present government is putting special emphasis in implementing the planned projects at the earliest. With the completion of the mega-projects the government envisages the economy to grow at a faster pace, which in turn will foster long-term sustainable development. Interested companies and investor can find it exceptionally rewarding in terms of financial gains economic profits in investing in the future mega projects in Bangladesh.

March 25, 2019
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