The Asian Infrastructure Investment Bank (AIIB) has approved a $404 million loan to improve Bangladesh's intercity travel and cross-border connectivity.

The upgrade of the country's national highway between Sylhet and the Tamabil border crossing will improve overall commuter safety and reduce travel times for road users, including freight vehicles and buses.

The Sylhet-Tamabil road (about 56.16 kilometres) is part of the Dhaka-Narsingdi-Sylhet-Tamabil National Highway corridor with a total length of 286 kilometres.

The corridor is strategically important for subregional connectivity with the seven northeastern states of India, as well as Bhutan, Myanmar and China.

Project funds will go toward the construction, operation and maintenance of roads, in addition to institutional and project management support, according to a press release.

"As the first stand-alone transport project supported by AIIB in Bangladesh, the project will allow the Bank to gain experience in cross-border connectivity in South Asia," said AIIB Vice President, Investment Operations, DJ Pandian.

"At the same time, the project will allow the country to improve sustainability and potentially attract private sector participation and community involvement in road maintenance."

In 2018, Bangladesh received a $813,000 non-reimbursable grant from AIIB's Special Fund to assist with the project's preparation. Established in 2016, the Fund is a multi-donor facility with the primary purpose of supporting eligible AIIB members, especially low-income members, prepare bankable infrastructure projects.

The latest investment brings AIIB's total commitment in Bangladesh to $898 million.