Time for Padma Bridge Plus

Selim Raihan, a professor of economics at the University of Dhaka, co-authored a study on the economic impact of the Padma Bridge in 2010 when the government had been at the final stage of beginning its construction works. 

As the nation is set to celebrate the opening of the long-cherished bridge, Raihan, also executive director of research organisation Sanem, shares his views with The Daily Star's Sohel Parvez.

TDS: It is a great moment for the nation that Bangladesh is going to open the long-cherished Padma Bridge. As an economist, what is your reaction?

Raihan: The Padma Bridge connects southern districts to the economic lifeline of Bangladesh, the Dhaka-Chattogram economic corridor. For a long time, these southern districts had been cut off from this economic corridor. Until today, communication and transportation over the river Padma had been solely reliant on ferries. This mode of transportation is not only inconvenient but is also filled with uncertainty, and it is far from seamless.

The Padma Bridge will open up opportunities for plenty of benefits to the southern region. The economic activities, that were previously impossible to carry out in the southern districts due to poor connectivity, will now be possible. The southern districts in Bangladesh have not experienced any industrialisation. As a result, the lack of overall economic development and poverty are major issues in that region.

Climate change is also having a significant impact on this region. Increasing water salinity is causing agricultural production to suffer, and this region is particularly prone to flooding.

As a result of the Padma Bridge connecting the southern region and making communication easier, many investors who were apprehensive before will now be prepared to invest there. This will lead to economic growth, the creation of jobs, and the development of the entire economy, not just the southern region.

TDS: We know that you have found in your 2010 study that the Padma Bridge project would be economically viable. What were the major findings that led to this conclusion?

Raihan: Yes, I, together with my co-author Dr Bazlul H Khondker, did the first background work in 2010 on "Estimating the economic impacts of the Padma Bridge in Bangladesh" for the Bangladesh Bridge Authority. In the 2010 study, we showed that this bridge would generate economic activities, contribute to the GDP, and create employment opportunities in the southern part of Bangladesh. It will also contribute to the reduction in poverty. Many of the critical findings of this paper have been cited and mentioned in important policy documents.

TDS: Twelve years have passed since the study, which concluded that, under certain conditions, Bangladesh's GDP would grow by 0.33 per cent to 1.26 per cent annually and southwest region's GDP by 1.66 per cent to 2.3 per cent. Do you see any change in the ground reality that is likely to affect projections of benefits/impact of the bridge after 12 years?

Raihan: In the 2010 study, we highlighted that high transaction costs, high transportation costs, delays and associated uncertainties are all challenges created by the lack of a bridge over the river Padma. There had been little investment in agriculture, industry and services sectors in the southern districts. Foreign investors were also unenthusiastic about investing in that region. As a result, the contribution of the southern region to the overall economy has remained modest. The country's most prominent industry, readymade garments, as well as other major industries, have remained absent from investing in the southern districts. They face numerous challenges in terms of connectivity, availability of land, investment facilities, funding, and availability of skilled labour. We argued in our 2010 study that the Padma Bridge will help ease many of these constraints and will lead to significant economic and social gains.

I would argue that the expected gains from Padma Bridge should be higher than what we initially envisaged in 2010. The economy has progressed since 2010. There have been improvements in the structural change in the economy, export growth, development of physical infrastructure, significant improvement of electricity generation, some special economic zones in the pipeline, and development of seaports. If these favourable factors are effectively utilised, we can expect much larger gains from the Padma Bridge.

TDS: When can we expect to recover the full investment made so far in Padma Bridge?

Raihan: Padma Bridge alone will not be enough to transform the current status of the southern districts. I would argue for Padma-plus. What exactly is Padma-plus? In the future, the Padma Bridge will serve as a stimulant for the growth of the southern districts, as well as of the overall economy and connectivity, which would not be able to take place on their own. We need other supporting policies and programmes, which I'm calling Padma-plus.

What are these enabling policies and programmes likely to be? These southern districts are particularly vulnerable to flooding, and the road infrastructure is regularly damaged. As a result, flood-resistant infrastructure must be built in this area. The southern districts will be better connected to one another as a result of this.

Access to capital is a problem for investors who want to invest there. As a result, banks must step up and provide funding to investors in those sectors. Investing in businesses ranging from garment manufacturing to agro-processing can be done in a variety of ways. When it comes to agriculture, whether it is crop diversification or agriculturally diverse products, banks are required to fund these endeavours.

We also recognise that land availability is a significant problem when it comes to investment. Another issue we face is that industrialisation reduces cropland. We must identify economic zones in the southern districts in order to encourage and promote investment within them. As a result, agricultural land will not be wasted unnecessarily. If we can designate industrial plots, investors will be able to invest in a planned manner. If there is no oversight, numerous types of resorts and restaurants will spring up on the spur of the moment, wasting valuable agricultural land. Along highways, residential and industrial plots are growing up, and this needs to be monitored and checked.

A key concern is the availability of skilled labour. We have some significant goals ahead of us if we look into the future. We hope to achieve the 2030 Sustainable Development Goals and to be promoted to upper-middle-income country status by 2031. In 2026, we will no longer be classified as a least developed country (LDC). To achieve these ambitious objectives, we will need strong economic growth and more productive investments. To do so, we will need a skilled workforce. The new investments in these southern districts will necessitate a large number of skilled workers. We need to prioritise this issue.

It will be necessary to ensure that electricity, gas, and water facilities are available. The utilisation of these resources must be done in a way that is sustainable. When it comes to electricity, using renewable energy is a good example. Establishing effluent treatment plants near the factories to ensure that they do not pollute the surrounding water. There is potential for planned industrialisation in the south because it is still a virgin land when it comes to industrialisation. We must also ensure that these districts have good connectivity to our ports, such as Mongla, Payra or any that might be developed in the future. Padma-plus is required to fully use the region's connectivity with India, Nepal, and Bhutan.

TDS: We have seen recently the case of Sri Lanka and the Hambantota port. You mentioned earlier that our case cannot be compared to Sri Lanka. But the question is whether we have been able to prepare ourselves to reap maximum benefit from this mega investment.

Raihan: Although I do not think Bangladesh's foreign debt is a major concern at this time, policymakers should proceed with caution. We need to reevaluate how much of the foreign debt is invested in productive sectors and how much of it is yet to produce results.

In Bangladesh, there is little link between a megaproject's feasibility study and the reality on the ground during implementation. Failure to meet deadlines has resulted in an increase in costs, which has been a major source of concern. We need to assess the current state of foreign debt-financed megaprojects. It's time to analyse the projects' current status and reassess the implementation strategy.

Infrastructure development is undoubtedly vital, but it must be linked to the overall development of the economy, that is, by lowering the cost of doing business, enhancing competitiveness, industrialisation, and increasing exports.

TDS: Finally, what would be your suggestions to realise benefits the most from the Padma Bridge. What would be your suggestions for other mega projects in this regard?

Raihan: The government can't be complacent while dealing with foreign debts for financing mega projects. There has been some complacency through cost and time overruns.

How to address the challenges related to cost and time overruns? Ensuring transparency and accountability from the very beginning is important. There are complaints of improper or inadequate feasibility studies for many projects. A stock-taking of the mega projects, rechecking their feasibility studies, overhauling the implementation plans, and ensuring monitoring and evaluation of the implementation will help reduce the problems of cost and time overruns.