Key Infrastructure

1. Key Infrastructure

2. Priority Areas • Highways/ Toll roads, Expressways • Improved focus on Rail network • Increasing water transport network • Dhaka Chittagong Economic Corridor development • Dhaka city transportation (Metro system, elevated expressway) • SEZs, Ports, Deep Sea Port • Coal energy • LNG Terminals • GAS Exploration, LPG

3. Background • Private sector outpaced public sector - Policy planners failed to provide the adequate infrastructure investments and also the right mix of infrastructure • Limited resources – allocation to infrastructure only 2% GDP whereas requirement was minimum 6% - 8% GDP • Unplanned Infrastructure development – resulted in poor quality & inadequate infrastructure, currently outdated. • GDP Growth remains trapped at 5%-6% levels primarily due to lack of modern and efficient infrastructure • Slow pace of implementation, land issues and zoning laws are considered as bottlenecks • Education, health, and Skills development did not also get desired levels of importance.

4. FINDINGS under 2030 Strategy China plus 1 The rapid economic development of China has created “new opportunities” known as the China Effect - as China’s competitiveness in low-cost production base is eroding and it is creating opportunities elsewhere. Investors are looking for others destination with low cost production base, which puts Bangladesh in an ideal position as the “Next Investment Destination”. Infrastructure Deficit Low-cost production base alone will not give Bangladesh the edge over others - reliable and efficient transportation, with modern infrastructure will become the most crucial elements for becoming competitive in global inventors map. Therefore, “key infrastructure development” needed. Energy Security Energy issues are also becoming serious entry barriers to accelerated growth and investments. COAL based energy security has to be considered as a long term strategy for the economic development of Bangladesh.

5. Key Targets • Government has set “Vision 2021” to move Bangladesh to a Middle Income Country (MIC) by 2021. DCCI’s Strategy 2030 targets Bangladesh to become the 30th largest economy. BGMEA set a target of reaching USD50b exports • GDP growth needs to reach 8% - an increase in Investment at 40% of GDP.Increase in infrastructure from 2% to 10% of GDP • Investments from Private Sector under FDI needs to fill the gaps

6. Current Status • Bangladesh’s infrastructure is one of the most underdeveloped in the world, a factor which has stopping accelerated economic growth in the country • In the World Economic Forum's Global Competitiveness Report 2014-2015, the country's Overall Infrastructure competitiveness improved from 132 in 2013-14 to 127 in 2014-15 out of 144 countries, however it remains the lowest ranking among its South Asian neighbors, India (87), Sri Lanka (75) and Pakistan (119)

7. Other Asian Nations • Taiwan and South Korea heavily invested in infrastructure during the period of rapid industrialization • 9.5% of GDP for Taiwan from 1970 – 1990 • 8.7% for South Korea during 1960-1990 • China on average invested 8% of GDP ininfrastructure during 2003-04 • All the three countries were able to build modern systems of essential infrastructure facilities • Infrastructure has also been an important component of Vietnam’s development strategy. Over the last 12 years, the government of Vietnam was able to sustain infrastructure investment at 10% of GDP • Source – “Vietnam’s Infrastructure Constraints” • paper prepared by Mr. Xuan Thanh and Mr. David Dapice, Harvard Kennedy School, ASH Institute

8. What is Important…. • The World Bank in 2013 estimated that Bangladesh needs to invest USD74 – 100 billion in infrastructure until 2020.We can estimate that another USD175b - 200b from 2020 to 2030 will be needed • Which is 7% - 10% of GDP per year • Current investment to GDP around 2%. A significant share of the infrastructure investment in the near and medium term will have to come from the private sector in the form of FDIs • Y2Y requirement stands at USD20 billion • Energy and telecom have drawn interest from the private sector. But in other areas particularly transport (Roads, toll-roads/highways/bridges etc) • Private sector needs to be engaged under PPP, BOO, BOT and other internationally practiced investment models

9. Government Action • To reduce the “Infrastructure Deficit” - • Public Private Partnership (PPP) Office under PMO & • BIFFL –Bangladesh Infrastructure Finance Fund Limited • To facilitate and finance infrastructure projects in the country. PPP models will mainly attract private investments in power generation, elevated expressways, Toll-roads/highways, tourism, hotels, medical services etc • BIFFL, was incorporated by the Ministry of Finance in 2011 to provide long-term financing in local currency to infrastructure projects that meet the required investment criteria • A PPP Unit under Ministry of Finance is there for overseeing three key areas, the PPP Technical Assistance Fund, Viability Gap Fund and Bangladesh Infrastructure Finance Fund

10. Government Action • Bangladesh Economic Zones Authority (BEZA) was formed in 2010 • BEZA aims to establish economic zones in all potential areas in Bangladesh including backward and underdeveloped regions with a view to encouraging rapid economic development through increase and diversification of industry, employment, production and export • Government has already given four (4) pre-qualification license for setting up of Private Economic Zones (PEZ) under the private sector which will trigger the development new industries in these zones. BEZA will promote FDI for Private EZs, facilate electricity connectivity and other utility services

11. Conclusion We are confident that Bangladesh can achieve high growth rates of 8% - 10% on average in the coming years but the “pre-conditions” of such growth targets need be to addressed, which are mainly related to our Infrastructure Development