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Connecting Bangladesh: Economic Corridor Network

Economic corridors are anchored on transport corridors, and international experience suggests that the higher the level of connectivity within and across countries, the higher the level of economic growth. In this paper, a new set of corridors is being proposed for Bangladesh—a nine-corridor comprehensive integrated multimodal economic corridor network resembling the London Tube map. This paper presents the initial results of the research undertaken as an early step of that development effort. It recommends an integrated approach to developing economic corridors in Bangladesh that would provide a strong economic foundation for the construction of world-class infrastructure that, in turn, could support the growth of local enterprises and attract foreign investment.

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CoNNECtiNg BANglADEsh: ECoNomiC CorriDor NEtworkMohuiddin Alamgir

adb SOUTH aSia wOrking paper SerieS

No. 49

december 2016

ADB South Asia Working Paper Series

Upgrading in the Indian Garment Industry: A Study of Three Clusters

Saon Ray

Prithvijit Mukherjee

Mishita Mehra

No. 43 April 2016

Saon Ray ([email protected]) is Senior Fellow, Indian Council for Research on International Economic Relations (ICRIER).

Prithvijit Mukherjee is PhD Candidate, Department of Economics, Andrew Young School of Policy Studies, Georgia State University.

Mishita Mehra is Graduate Student, Department of Economics, University of Washington, Seattle.


WP_Upgrading in the Indian Garment.indd 1 4/25/2016 12:33:25 AM

ASIAN DEVELOPMENT BANKASIAN DEVELOPMENT BANK

ADB South Asia Working Paper Series


Mohuiddin Alamgir

No. 49 | December 2016

Mohuiddin Alamgir is a former Director of the United Nations agency, International Fund for Agricultural Development.

Printed on recycled paper

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Asian Development Bank. Connecting Bangladesh: Economic corridor network.Mandaluyong City, Philippines: Asian Development Bank, 2016.

1. Bangladesh. 2. economic corridor. 3. transport corridor. I. Asian Development Bank.

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CONTENTS

ABBREvIATIONS vi

ABSTRACT vii

BACkGROUND 1

I. RECENT ECONOMIC DEVELOPMENTS IN BANGLADESH AND FUTURE PROSPECTS 1A. Sustained Growth 1B. A Brighter Future 3C. Regional Disparities 4D. Poverty 4E. Climate Change 6

II. TRANSPORT INFRASTRUCTURE DEVELOPMENT IN BANGLADESH 7A. Background 7B. Road Transport 8C. Railroads 8D. Inland Waterways 9E. Air Transport 9F. Current Transport Policy and Planning 9G. Regional Connectivity 10H. Transport Planning for the Future 10

III. METHODOLOGy FOR THE DEVELOPMENT, MANAGEMENT, AND MAINTENANCE OF INTEGRATED ECONOMIC CORRIDORS 11A. Framework for Economic Corridor Development 11B. Framework for Corridor Management and Operation and Maintenance 16C. Identifying Corridors for a Comprehensive Integrated Multimodal Economic Corridor Network 21D. key Challenges 33E. Impact Analysis 34

IV. PRIORITIZATION OF INVESTMENTS: IDENTIFyING PRIORITy CORRIDORS AND SECTIONS 36A. Economic Analyses of Projects 36B. Priority Corridors 37

V. REPORT FINDINGS AND CONCLUSIONS 41

VI. RECOMMENDATIONS 47A. Core Priority Actions 47B. Complementary Priority Actions 47C. Implementation Strategies 52

REFERENCES 54

TABLES, FIGURES, BOX, AND MAPS

TABLES1 Indicators of Regional Economic Disparity in Bangladesh, 2010 42 Average Investment and Maintenance Expenditures, Developing Countries, 2005–2015 83 Road and Railway Networks of Bangladesh, 2011 84 Elements of Corridor Development Planning 195 Profiles of Nine Economic Corridors 246 Functional Connections in the National Highway System of Bangladesh 327 Border Link Roads in Bangladesh 328 Forecasted Average Annual vehicle Growth Rates, 2015–2025 339 Projected Motor-Traffic Growth, 2015–2030 3410 The Cost of Bangladesh’s Economic Corridors as Transport Corridors 3711 The Cost of Bangladesh’s Economic Corridors 3812 Bangladesh’s Economic Corridors Ranked by Priority 39

FIGURES1 Average Annual Gross Domestic Product Growth Rate of Bangladesh 22 Bangladesh’s Sustained Growth, 1997–2014 33 Headcount Poverty Rates, FY1974–FY2010 54 Projected Growth in Population, Per Capita Income, and Gross Domestic Product, 2010–2050 75 The Growth Dynamics of Economic Corridors 126 An Overview of the Integrated Economic Corridor Approach 137 The Components of the Integrated Economic Approach 158 Technology, Skills, and Human Development for an Integrated Economic Corridor Approach 179 Climate Change Mitigation and Proofing for an Integrated Economic Corridor Approach 1810 Corridor Management and Decision-Making Framework 2011 A Methodology for Estimating the Impact of an Integrated Economic Corridor Network in Bangladesh 35

BOX1 Selection Criteria for National and Regional Economic Corridors 23

MAPS1 The Network of 16 Transport Corridors in Bangladesh 222 The Network of Nine Economic Corridors in Bangladesh 283 CIMECON Depicted in a London Tube-Style Format 294 Selected Proposed Infrastructure Interventions on Economic Corridors 1 and 2 485 Space Planning for Economic Corridors 1 and 2 50

ABBREVIATIONS

ADB Asian Development BankAH Asian HighwayASEAN Association of Southeast Asian NationsBCP border-crossing pointBCMA Bangladesh Corridor Management Authority CIMECON comprehensive integrated multimodal economic corridor networkEC economic corridorEIRR economic internal rate of returnEPZ export processing zoneGDP gross domestic productGMS Greater Mekong Subregionkm kilometerNPv net present valueO&M operation and maintenancePPP public–private partnershipSASEC South Asia Subregional Economic Cooperation (Program)SEZ special economic zoneSIC Special Implementation CellSMEs small and medium-sized enterprises

In this report, “$” refers to US dollars.

ABSTRACT

The development of a comprehensive integrated multimodal economic corridor network (CIMECON) is a precondition for sustaining robust economic growth over the long term, hence the continuous efforts to identify the optimal set of economic corridors. Economic corridors are anchored in transport corridors, and international experience suggests that the higher the level of connectivity within and across countries, the higher the level of economic growth.

Bangladesh has many options for developing transport-anchored economic corridors. The Government of Bangladesh, the South Asia Subregional Economic Cooperation Program, and the Asian Highway planners have produced a list of 16-corridor network, which might be useful, but is rather complex and could not be very functional without any sort of prioritization.

In this paper, a new set of corridors for Bangladesh is being proposed: a nine-corridor CIMECON resembling the London Tube map. The nine corridors of CIMECON would satisfy market-integration and linkage criteria, and their development is expected to improve regional connectivity, transit, and integration, as facilitation measures are designed and put in place. The CIMECON is about improving connectivity within Bangladesh and enhancing Bangladesh’s role as the land bridge between South Asia and Southeast Asia (via Myanmar) and between South Asia and northern Asia (via the People’s Republic of China). For this goal to be realized, the optimal timing of investments in the components of CIMECON will be critical.

BACKGROUND

1. Strategy 2020 identifies regional cooperation and integration as one of the core areas of Asian Development Bank (ADB) operations. The Midterm Review of Strategy 2020 noted that ADB operations would continue to focus on infrastructure, including investments to promote cross-border connectivity, in order to strengthen regional integration (as well as inclusive and environmentally sustainable economic growth).1 ADB assumed the role of facilitator of regional cooperation and integration initiatives in South Asia through its support for the South Asia Subregional Economic Cooperation (SASEC) Program, launched in 2003; the South Asian Association for Regional Cooperation; and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation. Conceptually, regional cooperation, like technological progress, can shift the production possibility frontier outward (or the production function upward), thus making it possible to achieve a higher level of national social welfare. This implies a natural convergence of national and regional priorities, leading to optimal welfare gain.

2. National and regional connectivity in South Asia helps drive socioeconomic growth by creating economic opportunities for poorer areas. Improved connectivity within countries between lagging and prosperous regions could help promote the transformation of the lagging regions. This objective could be fulfilled by developing integrated economic corridors connecting regions with different natural endowments, human resources, and physical and social infrastructures.

3. In August 2013, ADB began working on the development of a comprehensive economic corridor network within Bangladesh in line with the country’s overall development objectives. This paper presents the initial results of the research undertaken as an early step of that development effort. It recommends an integrated approach to developing economic corridors in Bangladesh that would provide a strong economic foundation for the construction of world-class infrastructure that, in turn, could support the growth of local enterprises and attract foreign investment. National connectivity through quality infrastructure, along with the provision of quality services and the development of the requisite human capital, would generate employment, and ensure sustainable and inclusive growth. This proposal is based on the concept of the comprehensive integrated multimodal economic corridor network (CIMECON).

I. RECENT ECONOMIC DEVELOPMENTS IN BANGLADESH AND FUTURE PROSPECTS

A. Sustained Growth4. Bangladesh seems to have escaped the low-growth below-poverty-level equilibrium trap in which it was mired during the 1970s and 1980s. It has since embarked on a high-growth trajectory (Figure 1) that, according to the Sixth Five-Year Plan FY2011–FY20152 and the Perspective Plan of Bangladesh 2010–2021, will lead the country to middle-income status by 2021 (vision 2021).3 The annual growth figures would have shown a clear exponential trend had it not been for the dips induced by certain internal factors (natural calamities, political uncertainties, and tension) and external factors (Asian financial crisis, 9/11, the global oil and food price crisis, global financial crisis, and the oil price increase). According to the Government of Bangladesh’s vision 2021, the country would reach the

1 ADB. 2014. Midterm Review of Strategy 2020: Meeting the Challenges of a Transforming Asia and Pacific. Manila. p. 29.2 “FY” refers to “fiscal year,” which in Bangladesh runs from 1 July to 30 June of the following year. 3 Government of Bangladesh, Ministry of Planning, Planning Commission, General Economics Division. 2011. Sixth Five-

Year Plan FY2011–FY2015: Accelerating Growth and Reducing Poverty. Dhaka; 2010. Outline Perspective Plan of Bangladesh 2010–2021: Making Vision 2021 a Reality. Dhaka.

2 ADB South Asia Working Paper Series No. 49

Figure 1: Average Annual Gross Domestic Product Growth Rate of Bangladesh (Varying Periods)

(%)

est = estimated, FY = fiscal year, proj = projected, rev = revised.Source: Government of Bangladesh, Planning Commission, General Economics Division. 2011. Sixth Five-Year Plan FY2011–FY2015. Dhaka; 2010. Outline Perspective Plan of Bangladesh 2010–2021: Making vision 2021 a Reality. Dhaka; Government of Bangladesh, Ministry of Finance. Budget Documents 2013–2014. http://www.mof.gov.bd/en/index.php?option =com _content&view =article&id=183&Itemid=1.

4.0 3.5 3.8 3.8 4.25.1

6.3 6.7 6.3 6.07.2

8.0

10.0

0

2

4

6

(%)

8

10

1219

77–1978

1978–1980

1980–1985

1985–1990

1997–2002

2002–2006

2006–2010

FY2011 (rev)

FY2012 (prov)

FY2013 (est)

FY2014 (proj)

2014–2017 (proj)

2017–2020 (proj)

middle-income status by securing and sustaining an annual gross domestic product (GDP) growth rate of 8% by 2013, which would rise to 10% from 2017.4 However, some observers feel that Bangladesh has actually moved from the low-growth (4% and under) below-poverty level equilibrium trap to a 5%–6% growth above-poverty-level equilibrium trap.5

5. In 2013, the governor of Bangladesh Bank (the country’s central bank) asserted that Bangladesh was experiencing a trend of resilient growth despite the natural and human-made crises that had affected its economy, thus contesting the view that the country was trapped within a GDP growth range of 5%–6% (Figure 2).

6. The issues now are (i) how to sustain the momentum of growth beyond the period covered by vision 2021, and (ii) how to then accelerate that growth so that Bangladesh could continue increasing its per capita income while avoiding the middle-income trap and jobless growth.6 The latter has been the fate of the Philippines, where the first quarter of 2013 saw economic growth at an annualized rate of 7.8%, but with a persistently high unemployment rate of 7.5%.7 vision 2021 could be the launching pad for Bangladesh’s takeoff into self-sustained growth, and for its transformation into a developed country by the middle of this century.

4 Government of Bangladesh, Outline Perspective Plan of Bangladesh 2010–2021, p. 5 (Box 1).5 R. Islam. 2014. Responding to development challenges. The Daily Star. 15 March. http://www.thedailystar.net

/responding-to-development-challenges-15390. This article defines the “growth trap” in Bangladesh as the economy’s being stuck at an annual GDP growth rate of 6%, which is not enough to reduce poverty or to close the gap with other countries in terms of average income or level of development.

6 Noteworthy examples of countries which have experienced middle-income trap include Brazil, Indonesia, Malaysia, South Africa, and Thailand.

7 M.v. de Leon. 2013. “Jobless Growth” Puzzle Haunts PH. Business Mirror. 18 March. http://www.abs-cbnnews.com/busi-ness/03/17/13/jobless-growth-puzzle-haunts-ph; Manila Bulletin. 2013. Jobless Up Despite Record Growth. 12 June. http://ph.news.yahoo.com/jobless-despite-record-growth-000500070.html

Connecting Bangladesh: Economic Corridor Network 3

GDP = gross domestic product, MFA = Multi Fiber Agreement, p = provisional.Note: The linear depiction of the real GDP growth is a trend extrapolated from the reported or projected growth rates from 1997 to 2014. Sources: International Monetary Fund (IMF). 2013. World Economic Outlook: Transitions and Tensions. Washington, DC:Bangladesh Bank 2013. Annual Report 2012–2013. Dhaka; A. Rahman. 2014. Financial Inclusion and Sustainable Development: The Bangladesh Case. A presentation at the Asian Development Bank (ADB). 26 November.

Figure 2: Bangladesh’s Sustained Growth, 1997–2014 (%)

Asian financial crisis (1997–1998)

Cyclonic storm (1999 )

Slower growth post 9/11 (2001 )

MFA Phase out (2004)

Domestic Political Crisis (2006-2008)

Oil Price Hike USD 100/b

(November 2010)

Frequent nationwide pre-election

shutdowns (2014)

Most severe flooding in modern history, a�ecting 66% of the country (1998)

Severe floods, a�ecting 36% of the country (2002)

Cyclone Sidr and major floods, a�ecting 30% of the country (2007)

Global financial crisis (2007–2009)

A few tropical cyclones (2014)

5.35.0

5.4 5.6

%

5.6 4.8 4.9

5.86.1 6.3 6.5 6.3

6.0 5.96.4 6.5

6.1 5.8 6.0

0

1

2

3

4

5

6

7

Real GDP growth rate (%)

External shocks Natural disasters Political crises

Linear (Real GDP growth rate (%))

B. A Brighter Future7. From a longer-term perspective, taking into account both the favorable factors and the constraints, there is a good case for optimism regarding Bangladesh’s economic prospects. Bangladesh could reach the status of a middle-income country with a per capita income of $3,000 by 2025 (in 2010 dollars), and then move on to a higher plateau, to the level of a present-day developed country, by 2050.8 However, both the annual investment and savings rates would have to increase substantially for this vision to be realized.9 And there would have to be infrastructure development and industrial-support services to improve connectivity within Bangladesh (especially between the developed and underdeveloped areas) and between Bangladesh and the neighboring countries. These improvements would reduce the costs of transport, a critical move if Bangladesh is to achieve its growth potential in the 2030s, 2040s, and thereafter, and if economic disparities and poverty are to be reduced throughout South Asia. This study examines this thesis that, unless Bangladesh embarks on a higher-growth trajectory, it will not be able to develop or sustain the proposed integrated economic corridors. However, there are major challenges, including population density, which necessitates large infrastructure investments.

8 The average annual GDP growth rates envisaged are 9.28% (2010–2015), 11.28% (2015–2020), 11.22% (2020–2030), 9.66% (2030–2040), and 7.90% (2040–2050).

9 The rate of investment will have to increase from 24% in 2010 to 35% by 2015, 34% by 2020, 34% by 2030, 32% by 2040, and 30% by 2050. Domestic savings will have to be raised from 18% in 2010 to 27% by 2015, 27% by 2020, 29% by 2030, 30% by 2040, and 27% by 2050.


C. Regional Disparities8. Bangladesh is characterized by significant regional disparities in levels of income and economic development.10 The southern “divisions” (i.e., regions) of khulna, Rajshahi, and Barisal (especially the coastal areas) are lagging behind the divisions of Chittagong, Dhaka, and Sylhet in terms of several economic and human development indicators, though the gap has narrowed since 2005. Educational outcomes have been varied, with the economic laggards outperforming the more advanced regions (Table 1). The policies and strategies in the government’s Sixth Five-Year Plan concerning regional disparities focus on inclusive growth, poverty reduction, and human development.11 The creation of integrated economic corridors will target the lagging divisions, to promote investment and to link these divisions with the advanced regions and with local development partners. A special program has been designed for the coastal areas, e.g., Barisal, to help meet climate change-related challenges. The elimination of regional disparities makes good economic sense. Investments in the depressed regions would stimulate economic activity there, including trade. This greater economic activity would, in turn, generate greater demand for products from other areas of the country, thereby creating multiplier and linkage impacts that would boost district, divisional, and regional GDPs. This would translate into increased interregional trade and cooperation within Bangladesh.

D. Poverty9. Trends in poverty between 1974 and 2010 (Figure 3) suggest that Bangladesh will exceed its targets associated with the Millennium Development Goals by 2015. Rice self-sufficiency has been secured. Wheat imports will continue for structural reasons. Extreme food insecurity, famine, and monga12 are all now history. Institutional innovations have had a lot to do with this progress, as have the country’s

10 Sixth Five-Year Plan, Part 1, Chapter 7, pp. 170–186.11 “Human development” refers to general well-being, including health, opportunities, access to education, a decent material

standard of living, etc.12 Monga is a yearly phenomenon, lasting at least a month, during which there is widespread death from hunger.

Table 1: Indicators of Regional Disparities in Bangladesh, 2010

Region

Head Count Poverty Rate

(2010)(%)

Net Primary Enrollment,

2009 (%)

Infant Mortality

Rate, 2008 (number

per 1000 live births)

Under-5 Mortality

Rate, 2008 (number per

1,000 live births)

Maternal Mortality

Ratio, 2008 (number per 100,000 live

births)

Per Capita Deposit,

30 June 2010 (Taka)

Per Capita Advance, 30

June 2010 (Taka)

Expatriate Workers as % of Total

Population

National 31.50 66.80 ... 64 3.48 23,438 17,854 3.57Barisal 39.40 76.00 35 60 3.77 5,807 2,831 2.06Chittagong 26.20 63.20 34 57 3.57 23,036 18,240 7.70Dhaka 30.50 68.20 44 67 3.30 48,286 3,817 4.04khulna 32.10 73.60 35 57 3.39 8,239 6,618 1.41Rajshahi 29.70 66.30a 51a 67a 3.49a 6,863 4,985 0.91Rangpur 42.30 ... ... ... 3,803 3,614 4.28Sylhet 28.10 55.90 39 74 3.81 17,187 4,461 3.57... = data not available.aThese figures include the statistics for Rangpur as well as for Rajshahi.Source: Government of Bangladesh, Planning Commission. 2011. 6th Five-Year Plan FY2011-FY2015, Accelerating Growth and Reducing Poverty. Part 1. Dhaka. Tables 7.1 through 7.6, 7.9, and 7.10.


economic growth; investments in infrastructure and connectivity; provision of microfinance (Grameen Bank and others); nongovernment organization-led antipoverty programs (e.g., Bangladesh Relief Assistance Committee); the pro-poor stance of the Bangladesh Bank; gains in agricultural productivity; industrialization, especially in the garment industry; overseas employment; and the government’s social safety net programs. By around 2035, Bangladesh could be deemed close to achieving a “poverty-free” society, except for frictional poverty. Since the creation of economic opportunities seems to lead the way out of poverty, the development of comprehensive economic corridors will have an impact on poverty as well. This paper explores this cause-and-effect relationship.

10. The challenge is to sustain the progress achieved in poverty reduction, preventing any reversals when the economy undergoes internal or external shocks. Many attribute poverty reduction in Bangladesh since the 1970s partly to the expansion of the road network, especially in the rural areas, by the Local Government Engineering Department. Case studies of the People’s Republic China, India, and Thailand conducted by the ADB found that infrastructure investments served the poor as well as the nonpoor. 13 The poor benefit from increased productivity and time savings, although these positive impacts depended on the quality of the infrastructure services and the ability of the poor to take advantage of the opportunities created. An analysis of Indonesian data showed that the poverty rate was

13 C. Cook and T. Duncan. 2005. Joining the Mainstream: Impact of Transport Investment on Poverty Reduction; RETA 5947. A PowerPoint presentation at the Asian Development Bank Institute (ADBI) Transport Infrastructure and Pov-erty Reduction Workshop. Manila. 18–22 July. All workshop papers are available through this link: http:// www.adbi.org/event/851.transport.infrastructure.poverty.reduction/events.resources.php?TypeID=21

Figure 3: Headcount Poverty Rates, Fy1974–Fy2010 (%)

FY = fiscal year.Source: Government of Bangladesh, Ministry of Planning, Planning Commission, General Economics Division. 2011. Sixth Five-Year Plan FY2011–FY2015: Accelerating Growth and Reducing Poverty. Dhaka. p. 13.

82.9

73.8

58.7

50.1 52.3

43.8

35.2

81.4

66.0

42.7

27.835.2

28.421.3

56.6

48.9

40.0

31.5

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

FY1974 FY1982 FY1992 FY1996 FY2000 FY2005 FY2010

Pove

rty R

ate

(%)

Rural Urban National


most sensitive to investments in roads.14 Bangladesh data from Tangail showed that the development of rural infrastructure contributed to poverty reduction.15

11. ADB’s support for three economic corridors in the Greater Mekong Subregion (GMS) has had a positive impact on economic development there. Cambodia, Thailand, and viet Nam have all benefited from the three GMS economic corridors (i.e., North–South Economic Corridor, East–West Economic Corridor, and Southern Economic Corridor), given that the development of these corridors included a package of diverse investments aimed at the agriculture, manufacturing, tourism, and other sectors. Thailand has upgraded portions of the North–South Economic Corridor (kunming–Bangkok Road), the East–West Economic Corridor, and the Southern Economic Corridor, promoting investments along the corridor within its territory and across borders that spurred economic growth. The North–South and East–West economic corridors are transforming the Lao People’s Democratic Republic from a landlocked into a land-linked country. And viet Nam’s “fast growing economy has been a strong contributor to the development of GMS economic corridors that have benefited its own people as well as those of its neighbors,” based on a 2012 ADB report.16

E. Climate Change12. Since Bangladesh is not a major source of greenhouse gases, mitigation measures, while relevant, are not critical. Instead, adaptation measures are key to addressing the impacts of climate change. This study makes allowance for the investments needed for adaptation, which would primarily involve climate proofing, comprising climate change risk identification and risk reduction. This study argues that Bangladesh has to mainstream climate change adaptation into its planning for integrated economic corridors. Bangladesh needs a comprehensive risk-based framework for assessing climate change impacts, determining adaptation measures, and carrying out economic analyses to establish investment-worthiness.

13. Bangladesh has good reasons to be concerned about the impact of climate change. The average temperature, which is projected to increase by 2.4˚C by 2100, will make the country susceptible to a variety of climate events, including sea-level rise. This will cause serious direct damage to assets, particularly transport assets, located along economic corridors. Some analysts have zeroed in on the impacts of climate change on agriculture and food security, given that crop yields may decline by 30%. The projected number of climate change refugees in Bangladesh’s neighbors and the surviving areas within the country is also overwhelming. It has been speculated that, by 2065, a 1-foot rise in the sea level could cause 15% of the total landmass of Bangladesh to be submerged into the Bay of Bengal, creating 30 million environmental refugees. The bottom-line concern here is how to make investments in economic corridors viable in the context of climate change. In fact, it would have to be determined whether investments in the corridors would be economically justified once the adaptation costs are factored in.

14 E. kwon. 2005. Infrastructure, Growth, and Poverty Reduction in Indonesia: A Cross-Sectional Analysis. Paper presented at the ADBI Transport Infrastructure and Poverty Reduction Workshop. Manila. 18–22 July.

15 R. kuhnle. 2005. Rural Infrastructure Development and Poverty Reduction: Example of Bangladesh. Paper presented at the ADBI Transport Infrastructure and Poverty Reduction Workshop. Manila. 18–22 July.

16 ADB. 2012. Greater Mekong Subregion: Twenty Years of Partnership. Manila. p. 121.


Figure 4: Projected Growth in Population, Per Capita Income, and Gross Domestic Product, 2010–2050

(%)

GDP = gross domestic product.Source: Author’s estimates.

6.71

9.6010.40 10.50 10.50 10.41

1.30 1.28 1.26 1.26 1.21 1.16

5.34

8.219.02 9.13 9.18 9.14

0

2

4

6

8

10

12

2010–2015 2015–2020 2020–2025 2025–2030 2030–2040 2040–2050

Ann

ual g

row

th ra

te (%

)

GDP Population Per capita income

II. TRANSPORT INFRASTRUCTURE DEVELOPMENT IN BANGLADESH

A. Background14. Once the challenges outlined have been overcome, presumably by the middle of this century, Bangladesh is projected to have a per capita income 20 times the present amount, as a result of accelerated economic growth fueled by a demographic dividend and by rising saving and investment rates (Figure 4).17 A much higher share of investment will be devoted to climate change adaptation, given the country’s increasing economic and environmental vulnerability in the coming years. By 2050, Bangladesh is predicted to have a population of 230 million with a large pool of skilled labor. The current high rate of urbanization will continue, turning Bangladesh into a mostly urbanized society. The economy will be highly industrialized, with increased openness that will result in a very high share of exports in the total GDP. Urbanization, industrialization, and increased openness will together result in reduced regional disparities. And core poverty will largely be eliminated, with only frictional poverty possibly remaining. For this economic scenario to occur, however, there would have to be significant infrastructure development, including a comprehensive integrated multimodal economic corridor network (CIMECON) as an important component. This study examines how much investment in transport infrastructure would be desirable for Bangladesh, and how it could be financed. The first question can be answered by establishing the relationship between infrastructure demand and income growth (Table 2).

17 A demographic dividend occurs when lower fertility rates lead to a population structure in which the labor force grows in comparison with the proportion of the population dependent on it.


B. Road Transport15. The current transportation network of national highways, regional (i.e., divisional) highways, zila (district) roads, and rural roads is impressive (Table 3), though there are issues related to quality and operational efficiency, maintenance, and the lack of intermodal interface and connectivity. The road network accounts for the bulk of passenger and cargo traffic, while the lower-cost rail and inland water alternatives lag far behind. Road transport accounts for over 70% of passenger and freight transport.18 The length of the paved non-rural road network increased from 600 kilometers (km) in 1947 to 18,209 km in 2009.19 In terms of total road density (km of road per thousand square km of land area), Bangladesh compares favorably with selected Asian countries, but not when it comes to the density of paved roads.20

C. Railroads16. The 2,416 km rail network includes broad gauge, meter gauge, and dual gauge tracks, and encompasses international, intercity, and suburban rail routes. In 2010−2011, 64 million passengers traveled through the Bangladesh rail network.21 There are existing and proposed rail links between

18 Government of Bangladesh, Sixth Five-Year Plan, Part 2, p. 161 (Table 4.1).19 Government of Bangladesh, Sixth Five-Year Plan, Part 2, p. 160 (Table 4.2). 20 Asian Development Bank. 2012. Key Indicators for Asia and the Pacific. Manila.21 Statistical Yearbook of Bangladesh-2011. Table 7.22, p. 220.

Table 3: Road and Railway Networks of Bangladesh, 2011 (kilometers)

Roads and Highways Total Paved Paved as % of totalNational highways 3,492 3,445 99Regional highways 4,268 4,105 96Zila (District) roads 13,280 10,659 80Rural roads 289,334 71,501 25Railways Broad Gauge Meter Gauge TotalThe entire network 659 1,757 2,416Sources: Government of Bangladesh, Planning Commission, 2011 Sixth Five-Year Plan FY2011–FY2015 Accelerating Growth and Reducing Poverty Part 2: Sectoral Strategies. Programmes and Policies. Dhaka. pp. 164 (Table 4.3) and 180 (Table 4.6). Government of Bangladesh, Ministry of Planning, Statistics and Informatics Division, Bangladesh Bureau of Statistics. 2012 Statistical Yearbook for Bangladesh-2011. Dhaka.

Table 2: Average Investment and Maintenance Expenditures, Developing Countries, 2005–2015 (% of GDP)

Country group Investment Maintenance TotalLow income 4.2 3.3 7.5Lower-middle income 3.8 2.5 6.3Upper-middle income 1.7 1.4 3.1Total developing 3.2 2.3 5.5GDP = gross domestic product.Source: M. Fay and T. Yepes. 2003 Investing in Infratructure: What is Needed from 2000 to 2010? Policy Research Working Paper No. 3102. Washington, DC: World Bank. Quoted in A. Estache and M. Fay. 2009. Current Debates on Infrastructure Policy. Policy Research Working Paper No. 4410. Washington, DC: World Bank.


Bangladesh and India. There are no rail links to Myanmar, but one from India to Myanmar via Bangladesh has been proposed. It should be noted that the government’s 20-year, $15 billion railway master plan, introduced in 2013, includes 235 ambitious projects designed to fundamentally transform railway travel in Bangladesh.

D. Inland Waterways17. Bangladesh has 24,000 km of inland waterways, 5,968 km of which are navigable, carrying 87.9 million passengers and 0.58 million tons of cargo annually.22 A large portion of the waterways (40%) has a minimum depth of less than 1.52 meters, and only 11% exceeds 3 meters. Goods can be transported through the waters of Bangladesh from one port to another in India under a protocol between the two countries designating three routes and eight ports of call. The amount of cargo carried is far below the potential: less than a million tons in fiscal year (FY) 2010. Bangladesh has a total of 22 river ports and 24 pilot stations.

E. Air Transport18. Air transport in Bangladesh is limited, with Dhaka and Chittagong as the two main hubs. Important airports to be developed are those in Barisal, Chittagong, Comilla, Dhaka, Ishwardi, Jessore, khulna, Rajshahi, Rangpur, Saidpur, Sirajganj, Sylhet, and Thakurgaon. Air transport will expand, but its share of total transport in Bangladesh will remain small.

19. Road, railway, inland-water, and sea routes are linked to neighboring countries, though commercial use has been far below potential due to policy, institutional, and physical barriers to trade, transit, and transport. Lack of planning, inadequate investment, and poor private sector participation, combined with the slow pace of policy and institutional reform, have held back progress toward connectivity within Bangladesh and internationally. The current state of the transport network suggests that much could be gained by streamlining the domestic network of intermodal links and implementing measures to facilitate international connections. The latter would mean a lot to Bangladesh, as the country is an important bridge linking South Asia, Southeast Asia, and northern Asia. Well-developed interregional connections through Bangladesh would provide valuable opportunities, but unless Bangladesh acts fast, it will run the risk of being bypassed by other regional cooperation and development initiatives that would exclude it.

F. Current Transport Policy and Planning20. Long-term planning has been missing from road development. Strategy and policy guidance comes from the National Land Transport Policy 2004, Integrated Multi-Modal Transport Study 2004, the 20-year Road Master Plan, National Integrated Multimodal Transport Policy, 2013, the government’s Rural Road Master Plan, and the 20-year Railway Master Plan (2010–2030). The targets of the Bangladesh Roads and Highways Department under the Sixth Five-Year Plan include the construction of 4,672 km of new roads and the rehabilitation of 8,433 km of existing roads. The key issues are lack of periodic and routine maintenance leading to the deterioration of roads; vehicle overloading which caused damage to roads; lack of road safety; poor traffic management; and inadequate high-capacity bridges in many rivers.

22 Government of Bangladesh, Ministry of Shipping, Bangladesh Inland Water Transport Authority. About Us. http://www .biwta.gov.bd/website/?page_id=2


G. Regional Connectivity21. Regional connectivity is high on the agenda, and Bangladesh acceded to the United Nations Economic and Social Commission for Asia and the Pacific-sponsored Intergovernmental Agreement on the Asian Highway network in 2009 where three Asian Highway routes traversing Bangladesh were identified.

22. The South Asia Subregional Economic Cooperation (SASEC) Program proposed six transport corridors connecting Bangladesh, India, Nepal, and Bhutan. Four of these corridors go through Bangladesh territory. When completed, these corridors will increase trade and transport among SASEC members and with nonmember countries. Mongla and Chittagong were designated as important regional gateways into Bhutan, India, and Nepal. These corridors will lift the economic status of depressed regions, especially those along the corridor sections passing through Bangladesh. This study looks into the Bangladesh sections of the SASEC corridors to assess their relevance to socioeconomic development, poverty reduction, and to the CIMECON.

H. Transport Planning for the Future23. This study examines the implications of integrated economic corridor development for investment and for necessary policy and institutional reforms, to help optimize the gains from the dynamic impacts of infrastructure investments for the rural and urban economies, and for poverty reduction and regional development. Important considerations for the 2030s and beyond are the emerging role of the private sector and public–private partnerships, and the appropriate responses to climate change. Bangladesh also needs to carefully assess climate change mitigation options and adaptation measures, including climate proofing for transport and economic corridors.

24. The study highlights the need in Bangladesh for a single nationwide integrated framework for multimodal transport corridor and economic corridor network development. The Sixth Five-Year Plan should be reviewed to better align it with the current state of the country’s transport infrastructure. SASEC corridors are works in progress, within Bangladesh and beyond its borders. Cross-border infrastructure and trade facilitation measures are long overdue. Trade, transit, and transport facilitation policies; a regulatory framework; and associated institutions should evolve around this integrated concept of transport–economic corridor network.

25. This study recommends that Bangladesh move beyond transport corridors to pursue the development of economic corridors. Transport corridor development addresses the hardware (infrastructure) and the software (organization, technology, human resources, management, and policies and institutions) as a means of facilitating the domestic and cross-border movement of people and freight.23 Economic corridors link strategic nodes within a country or in two or more countries, covering a defined geographical space along a central transport artery such as road, rail line, or river. Their development would be accompanied by transport corridor investments in the same geographical spaces, as this complementarity would generate the greatest benefits for local communities through such impacts as a growth in production, economic activity, urban and rural settlements, and in border towns, thereby contributing to real economic and social development and to regional economic integration.

23 Douma, F., and k. A. kriz. 2003. Transportation Corridor Planning: A Model and Case Studies. Minneapolis, MN: State and Local Policy Program, Humphrey School of Public Affairs, University of Minnesota. p. 2. The authors wrote, “We define a transportation corridor as a geographic area between two points, linking multiple centres, and moving people and freight. This definition includes both the transportation infrastructure (e.g., the roadbed, rails and stations) and the new and exist-ing development that surrounds that infrastructure.”


26. There would be a hierarchy of corridors that would include, in an ascending order of complexity: (i) unimodal transport corridors (with a road, railway, sea, river, or air link between geographic areas); (ii) multimodal transport corridors (linking geographic areas through the integration of various modes of transport); (iii) logistics corridors (with a harmonized corridor institutional framework coordinating transport links to facilitate a more efficient movement of people, freight, and related information); and (iv) economic corridors (to attract investment and generate economic activity in the surrounding areas, including the less-developed regions, based on the transport and logistics corridors already in place). There would be an eventual transformation of transport and logistics corridors into economic corridors.

III. METHODOLOGy FOR THE DEVELOPMENT, MANAGEMENT, AND MAINTENANCE OF INTEGRATED ECONOMIC CORRIDORS

A. Framework for Economic Corridor Development 27. The thesis of this study states that Bangladesh has to go beyond unimodal transport corridors to construct multimodal corridors and logistics corridors, and then to graduate to economic corridors. It is the economic corridors that will make the maximum contribution to economic growth and poverty reduction, and that will lay the foundation for close cooperation between neighboring countries. To reach this stage, an integrated approach needs to be adopted to achieve better synergy and cohesion. The process should eventually lead to higher levels of cooperation in achieving greater growth (Figure 5).

28. Long-term robust economic growth will be required for the development and maintenance of multimodal economic corridors. In fact, economic growth is the primary source of demand for economic corridors. On the other hand, the uninterrupted supplies of goods and services from economic corridors are themselves important inputs into economic growth. A CIMECON is a precondition for sustained robust economic growth over the longer run. International connectivity runs at various levels: from bilateral links to broader networks in the region and beyond, all supporting economic integration. Cross-country experiences suggest that, the higher the level of connectivity, the higher the level of growth (Figure 5). And connectivity is the foundation for integration and cooperation.

29. The growth dynamics of economic corridors (Figure 5) suggests a sequence in which primary factors supported by technology, policies, institutions, and climate change adaptation trigger a growth in production and trade, resulting in higher consumption, investment, and income (from exports and remittances). The size and quality of this growth would depend on the level of integration. The synchronization and connectivity of national and regional corridors would create value, with a multiplier effect driven by market forces that would ensure high rates of return on investments in national and regional corridors. The introduction of multimodal national economic corridors would reduce the cost of doing business and of transporting people and goods, and would increase the value added from rational land use. The integration of national economic corridors into regional economic corridors would widen market opportunities and increase trade and income. And this impact would be reflected in an inclusive and poverty-reducing economic growth. As integration and cooperation are deepened due to improved connectivity, the disparities among Bangladesh’s regions would be reduced, with welfare gains for all.

30. The integrated economic corridor approach (Figure 6) is central to unleashing the growth potential of economic and market integration. Economic integration refers to production processes, while market integration refers to transit and trade. The driving forces behind comprehensive integrated economic corridors are population, resources, and technology. Population growth drives skills development through educational, vocational, and informal systems (such as on-the-job training)—a


Figure 5. The Growth Dynamics of Economic Corridor

EU = European Union, GMS = Greater Mekong Subregion, NAFTA = North American Free Trade Agreement. Source: Asian Development Bank.

The higher the levels of connectivity and integration, the higher the level of growth.

Socioeconomic growth process

Growth levels (inclusive growth with poverty reduction)

Connectivity for integration and cooperation

International economic corridor (EU)

International modal

integration

International modal

integration

Trade

Production

+

Regional modal

integration

National modal

integration

International corridor

connectivity

International corridor

connectivity

Regional corridor

connectivity

National corridor

connectivity

Intraregional economic corridor (NAFTA)

Regional economic corridor (GMS)

Domestic economic corridor (Bangladesh)

Connectivity, integration, and cooperation

Primary factors, technology, institutions and climate change adaptation

Consumption growth

Investment growth

Export growth

Remittances and service-industry income growth


Figure 6: An Overview of the Integrated Economic Corridor Approach

Economic growth and poverty

reduction

Intraregional balance and

equity

Regional cooperation

Skill development

Use of appropriate

technologiesClimate change

mitigation and

adaptation

PopulationResource

mobilizationTechnology

development

Integrated economic corridor approach

Logistics corridors

Multimodal transport corridors

Unimodal transport corridors

Source: Asian Development Bank.


necessity for economic corridor development. Resources are needed to finance investment in corridors, technology, and climate change mitigation and adaptation. They are also necessary for facilitating the transformation of selected transport corridors into economic corridors, as well as the development of new corridors with multimodal options and logistics. The availability of appropriate technologies will be critical for corridor development and climate change mitigation and adaptation. Climate change-related technologies will be crucial because Bangladesh is especially vulnerable to climatic phenomena, and all economic corridor infrastructures will be exposed to various levels of climate-related risks. Growth, poverty reduction, regional cooperation, and intraregional balance and equity will likely follow from the development of a totally integrated economic corridor network.

31. The identification of, and planning for, integrated economic corridors will require a rigorous examination of the elements highlighted in Figure 6: population, resource mobilization, technology development, skills development, climate change mitigation and adaptation, the use of appropriate technologies, transport, multimodal and logistics corridors, and regional cooperation and disparities, as well as recent growth and poverty reduction. Each element has to be optimized in order to establish the ideal hierarchy of corridors that need to be supported and managed by appropriate policies and institutions.

32. The framework for operationalizing the integrated economic corridor approach is presented in Figure 6. The drivers of the framework are investments and resource mobilization. Investments would have to be made in corridors, skills building, and climate proofing. During the initial stage, corridor investments would include unimodal transport corridors, multimodal transport corridors, and logistics corridors. The choices of corridors would have to be based on the locations of urban-industrial nodes, population growth, existing links to ports, vehicle and passenger movements, trade volumes (domestic and cross-border), natural resources, the locations of border-crossing points, transport costs, center–periphery links, and transport facilitation needs. These aspects should be evaluated and new possibilities explored. Bangladesh is only at the early stage of defining an approach to economic corridor development. Indeed, the Bangladesh economy has already benefited from growing transport connectivity. Still, there are bottlenecks: lost opportunities; poor management; and lost productivity and income due to congestion, delays, disruptions, and gaps. It is difficult to provide a precise estimate of the positive impacts if these problems were to be solved, but one can safely assume that national output would increase significantly. Transport planning in Bangladesh should therefore take them into account. This study will highlight the “positives” and “negatives” of the development of unimodal transport, multimodal transport, and logistics corridors.

33. The inadequacies in education, skills, technology, and human development in Bangladesh are even more serious than those in transport corridor development. No progress in transport infrastructure development can be made without addressing these other areas. Economic corridor development is a progression from unimodal transport, multimodal transport, and logistics corridors that involves further investment in corridor structures and the development of economic spaces, facilities, and activities. The choice of economic corridors and the strategies for their operationalization will be based on such factors as physical planning; population distribution; regional disparities; trade volumes (domestic and cross-border); vehicle and passenger movements; economic activities; and the locations of urban areas, rural settlements, and border towns (Figure 7).

34. In terms of the development of CIMECON, this study emphasizes the need for a risk-based analysis of climate change damage, including the impacts on infrastructure, to determine what must be done to achieve climate change mitigation and climate proofing. This study assesses the investment needs of gateways, transport corridors, and related facilities, and the investments required for climate change adaptation measures. The methodology proposed here is actually designed to estimate all costs related to the development of economic corridors, and to assess impacts of economic corridors


Figure 7: The Components of the Integrated Economic Approach

Policy making, establishment of institutions and agreements

Progress monitoring and

impact evaluation

Internal gateway (multimodal

interchanges, land ports and river ports)

Economic corridor

developmenta

Climate change impact

Investments in climate mitigation

and climate proofing

Construction of corridor structures and development of

economic spaces, facilities, and activities

Development of unimodal transport, multimodal transport,

and logistics corridorsb

Investments in corridors, skills development, and climate proofing

Domestic and external resource mobilization (domestic savings, ODA, Public–private, and foreign direct investment)c

Education, skills, technology, and

human development

External gateway (land ports and sea

ports)

Economic growth and poverty reduction

Intraregional balance and equity

Regional cooperation and trade

ODA = official development assistance.a The development of economic corridors would be based on such factors as physical planning; population distribution;

regional disparities; trade volumes (domestic and cross-border); vehicle and passenger movements; economic actvities; and the locations of urban areas, rural settlements, and border towns.

b The development of unimodal transport, mutimodal transport, and logistics corridors would be based on the locations of urban-industrial nodes, population growth, existing links to ports, vehicle and passenger movements, trade volumes (domestic and cross-border), available natural resources, the locations of border-crossing points, transport costs, center-periphery links, and transport facilitation needs.

c ‘Foreign direct investment’ refers to the net inflows of investment from abroad to acquire lasting management interests (at least 10% of voting stock) in enterprises operating in a country of which the investors are not citizens.



on GDP, poverty reduction, regional cooperation and trade, and on intraregional balance and equity. Infrastructure investments in economic corridors will receive financing from domestic and foreign sources. Since large funds will be required, domestic resource mobilization must be stepped up to substantially increase public, private, and corporate savings, and to channel these toward infrastructure investments, as required. Competing demands will have to be considered. Public–private partnerships could play an important role in infrastructure development, but the remaining gap will have to be filled from external sources such as official development assistance, loans, and foreign direct investment.24

35. This study will outline key policy and institutional reforms for economic corridor development, and will suggest that quantitative and qualitative indicators be developed and that participatory techniques be designed for monitoring progress (Figure 7).

36. This study will take into account the financial implications of skills development in support of CIMECON; it will also review the skills development process and make recommendations for creating a robust talent pool for economic corridor development. Local and imported talent pools could be drawn to meet the technological needs of economic corridors. Resources will have to be provided for technology development, importation, adaptation, and upgrading, and for the application of new or improved technologies to the development of economic corridors (Figure 8). Skills development and the application of technologies both contribute to human development, together with other social investments such as those in health and nutrition. Skills development, the application of technologies, and human development comprise the foundation for the optimal utilization of the labor force—a prerequisite for the development of unimodal transport, multimodal transport, logistics, and economic corridors. This foundation is also essential for meeting climate change challenges, as it will enable the implementation of measures for climate change mitigation and proofing (Figure 8).

37. Figure 9 shows the implications of climate change mitigation and proofing for economic growth and poverty reduction. A “business-as-usual” scenario, in which there are no measures to address climate change, is shown on the left-hand side of the diagram. A scenario in which climate change is fully taken into account is on the right-hand side. Risk-based analysis of climate change impacts on economic corridors suggests that resources will be required for implementing climate change mitigation and proofing measures, including an appropriate mix of personnel, skills, and technology. As a result of these measures, the economic corridors would be climate-proofed and would contribute to positive outcomes (regional cooperation and trade, intraregional balance and equity) and impacts (intraregional balance and equity). Figure 8 shows the extent to which the outcomes regarding economic growth and poverty reduction would be better with climate change mitigation and proofing than without. This study will test this hypothesis in its discussion of the selection of economic corridors.

B. Framework for Corridor Management and Operation and Maintenance38. Once an integrated corridor network is developed, its management and operation and maintenance (O&M) would require a systematic approach, with a well-defined decision-making structure built on a strong foundation provided a “Bangladesh Corridor Management Authority” (BCMA), and supported by an act of Parliament and by a set of operational procedures (Figure 10). This would be comparable to the approach taken by the government with Bangladesh’s export processing zones (EPZs).

39. The primary business of the BCMA would be to plan the hierarchy of corridors: the unimodal transport corridor, multimodal transport corridor, logistics corridor, and economic corridor. The elements of corridor planning are presented in Table 4.

24 Foreign direct investment refers to the net inflows of investment from abroad to acquire lasting management interests (at least 10% of voting stock) in enterprises operating in a country of which the investors are not citizens.


Figure 8: Technology, Skills, and Human Development for an Integrated Economic Corridor Approach


40. The primacy of logistics facilities needs to be highlighted, as the availability of such facilities will be vital for the smooth operation of the economic corridors, especially for attracting domestic and foreign investment. The provision of logistics facilities would qualify as good cost management, enhancing Bangladesh’s comparative advantage through improved productivity, distribution effi ciency, interest rates, energy availability, and energy costs.


Figure 9: Climate Change Mitigation and Proofi ng for an Integrated Economic Corridor Approach



Table 4: Elements of Corridor Development Planning

Road Transport Corridor Development

Multimodal Transport Corridor Development

Logistics Corridor Development

Economic Corridor Development

•Economic growth projection (GDP and per capita income)

•Population growth projections

•Changes in the economic structure

•Projected growth in the number of vehicles

•vehicle operating costs •Accident and related

costs •Projected urbanization

growth and patterns•External trade

projections (cross-border and beyond: growth and patterns)

•Domestic trade projections (growth and patterns)

•Projections regarding tourism development

•Projected transit demand for roads transport corridors

•Regional disparities•Climate change

projections•Governance of road

transport corridor development (strategic planning regarding efficiency, effectiveness, transparency, accountability, and corruption; project development; financing, including PPPs; and contract awards for implementation, supervision, and monitoring and evaluation)

•Economic growth projections (GDP and per capita income)



•Projected demand for multimodal transport

•Changes in the economic structure, including regional disparities

•Projected urbanization growth and patterns

•External trade projections (cross-border and beyond: growth and patterns)



•Projected transit demand for road transport corridors

•Climate change projections

•Governance of multimodal transport corridor development (same considerations as for road transport corridors)

•Coordination, synchronization, and cost minimization

•Planning and development of multimodal interchanges

•Projected patterns of passenger and cargo transport, including cross-border passenger travel and cargo movement

•Economic growth projections (GDP and per capita income)



•Changes in economic structure and regional disparities

•Projected urbanization growth and patterns

•External trade projections (cross-border and beyond: growth and patterns)



•Projected transit demand for road transport corridors

•Climate change projections

•Governance of logistics corridor development (same considerations as for road transport corridors)

•Coordination, synchronization, and cost minimization

•Projected patterns of passenger and cargo transport, including cross-border passenger travel and cargo movement

•Planning of physical links and facilities (e.g., warehousing), combined with a harmonized corridor institutional framework to facilitate the efficient movement of people, freight, and related information

•Planning for receiving inputs and materials and distributing output

•Development and application of ICT

•Economic growth projection (GDP and per capita income)

•Population growth projections•Projected growth in the number of vehicles •Projected demand for multimodal transport•Changes in the economic structure,

including regional disparities•Projected urbanization growth and patterns•External trade projection (cross-border and

beyond: growth and patterns) •Domestic trade projections (growth and

patterns)•Projections regarding tourism development•Projected transit demand for road transport

corridors•Climate change projections•Coordination, synchronization, and cost

minimization •Projected patterns of passenger and cargo

transport, including cross-border passenger travel and cargo movement

•Planning of physical links and facilities (e.g., warehousing) combined with a harmonized corridor institutional framework to facilitate the efficient movement of people, freight, and related information

•Planning for receiving inputs and materials and distributing output

•Coordination, synchronization, and cost minimization, especially in the development and application of ICT

•Attracting investment to, and generating economic activities in, the geographic areas surrounding the corridors (including the less-developed areas or regions) by means of logistics facilitation, and of physical linkages with ports, border-crossing points, tourism sites, mineral deposits, markets, towns, and administrative headquarters

•Projections regarding skill requirements and development

•Governance of road transport corridor development (strategic planning regarding efficiency, effectiveness, transparency, accountability, and corruption; project development; financing, including PPPs; and contract awards for implementation, supervision, and monitoring and evaluation), with particular reference to the management of EPZs, SEZs, EZs, HiTPs, land ports, and urban areas by the BEPZA, BEZA, BHTPA, the Bangladesh Land Port Development Authority, and local government bodies.

BEPZA = Bangladesh Export Processing Zones Authority, BEZA = Bangladesh Economic Zones Authority, BHTPA = Bangladesh Hi-Tech Park Authority, EPZ = export processing zone, EZ = economic zone, GDP = gross domestic product, HiTP = Hi-Tech Park, ICT = information and communication technology, PPP = public–private partnership, SEZ = special economic zone. Source: Asian Development Bank.


Figure 10: Corridor Management and Decision-Making Framework


41. Poor logistics has been a hindrance to attracting foreign investment to Bangladesh. The improvement of logistics is thus a high priority, all the more so as Bangladesh is increasingly integrated into the world economy. A study in 1997 found fi ve challenges constraining the development of logistics in Bangladesh: infrastructure-related problems; issues arising from the economic system, including the eff ects of frequent changes in government policy; management system problems; managerial problems;


and general problems such as political instability.25 These challenges call for action on the part of the government, the private sector, and academics and researchers; they also require regional cooperation.

42. Discussions with stakeholders and personal observations revealed that the situation has improved since the late 1990s, but gaps remain between intention and action. For example, the government is formulating policies and cultivating private sector participation in infrastructure development, but both efforts have fallen short of expectations.

43. The next set of decisions with regard to corridor management would entail strategies for skills development, climate change adaptation and mitigation, the adoption or development of technologies, and human development. There would also have to be a thorough economic analysis (described in detail later in this report). The resource requirements for corridor development would then have to be estimated, and a resource mobilization strategy would have to be formulated to finance investments according to a well-articulated, sector-wide investment road map for corridor development that would be phased according to a time scale covering the short, medium, and longer term. The BCMA would be responsible for implementing corridor development and for monitoring its progress. Feedback from the monitoring would be the basis for adjustments in the implementation and postimplementation O&M. The BCMA would have the overall responsibility for corridor development policies and strategies. Feedback from external and internal impact evaluation would be reflected in reviews and revisions of corridor development policies and strategies. The BCMA would work closely with the Bangladesh Export Processing Zone Authority; the Bangladesh Economic Zone Authority; relevant government ministries and agencies; and other stakeholders.

44. It is recommended that the BCMA establish a Special Implementation Cell (SIC) to fast-track important corridor projects since delay at any of the various stages of implementation has been a major problem with corridor development (causing further delays in the successive stages).The SIC would be responsible for project implementation and for monitoring its progress. While the government made earlier initiative to prioritize six mega projects totaling $16 billion under the Fast Track Project Monitoring Committee, the results have so far been reportedly mixed.26 Obviously, ad hoc arrangements for program implementation have their limitations, so there should be a more structured approach of the kind recommended here (i.e., BCMA and SIC).

C. Identifying Corridors for a Comprehensive Integrated Multimodal Economic Corridor Network

1. The 16-Corridor Option for an Economic Corridor Network 45. A 16-corridor network can be compiled drawing on the Asian Highway network, SASEC-proposed corridors, and the corridors proposed by the Sixth Five-Year Plan of Bangladesh (Map 1). According to the Sixth Five-Year Plan, transport corridors are to be selected on the basis of regional connectivity, market integration, and poles-of-development criteria. Physical connectivity and trade promotion were the critical considerations in the designation of the Asian Highway and SASEC corridors.

46. Map 1 shows the network of the 16 recommended economic corridors, all of which are anchored in existing or proposed transport corridors. The complexity of this network, with its multiple corridor overlaps, makes the identification of the corridors very difficult; hence the need for a simpler network, one whose economic impact would be easier to analyze. But these transport corridors will not fill the bill. Each of the 16 transport corridors has individual merit, but the network encompassing all of them does not comprise a comprehensive framework for investment, as these corridors are supply-driven rather

25 M. A. Razzaque. 1997. Challenges to Logistics Development: The Case of a Third World Country—Bangladesh. International Journal of Physical Distribution & Logistics Management. 27 (1). pp.18–38.

26 The Daily Star. 2015. Fast Tract Projects See Mixed Progress. 8 January.


Map 1: The Network of 16 Transport Corridors in Bangladesh



than demand-driven. Besides, as unimodal transport corridors, these are not based on optimal use of surrounding geographic spaces.

2. The Criteria for the Selection of the Nine Economic Corridors 47. National economic corridors are to focus on rational land-use planning and on the integrated development of geographic space for optimal socioeconomic impact, whereas regional economic corridors are to focus on facilitating market development and integration to enhance the socioeconomic impact. Two sets of selection criteria are presented here—one for national economic corridors and the other for regional economic corridors. Both sets of criteria are used for selecting national economic corridors that also have a regional dimension (Box 1).

48. Regional economic corridors are selected on the basis of their potential contribution to trade,

transport, transit, and, as a result, to increases in the GDP, household income, and in employment, among other indicators. These impacts would be optimized by regional connectivity and economic integration. The selection of regional economic corridors would also depend on investment linkages as measured by the growth of complementary investments and improvements in comparative and competitive advantage.

49. The selection of regional economic corridors would also be based on their potential damage to the environment and to the resource base, and their potential for improved resilience to climate change. Regional economic corridors that show a greater potential for facilitating cross-border cooperation and integrated activities on environmental and climate change issues would be given preference. Similarly, corridors that might diminish regional disparities (as measured by income gaps) and contribute more to peace and harmony in the region would also be given preference. Corridor attractiveness would be determined as well by the potential to increase tourism; cross-border vehicular movements; and

Box 1: Selection Criteria for National and Regional Economic Corridors

National economic corridors are to focus on rational land-use planning and on the integrated development of geo-graphic areas, whereas regional economic corridors are to focus on facilitating market development and integration.

Selection Criteria for National Economic Corridor

•Socioeconomic impact•Rate of return on investment•Transport cost saving•Optimal land space planning•Traffic capacity to meet vehicular growth•Reducing regional disparity•Creating employment•Conforming to Asian Highway standard•Facilitating market development and integration by

strengthening links with seaport, land port, airports, railway stations, bridges, tourist spots, industrial belts, mineral belts, growth poles, export processing zones, administrative headquarters, and border link roads

Selection Criteria for Regional Economic Corridor

•Regional connectivity•Regional economic integration•Regional complementary investment•Optimizing competitive and comparative advantage•Establishing production value chain•Promoting environmental sustainability and resilience

to climate change•Promoting logistic, multimodal, technological, and

financial connectivity•Promoting peace and harmony•Reducing regional disparity•Enhancing intraregional trade and reducing trade gap•Promoting tourism, transport, and transit•Enhancing regional food and energy security



Tabl

e 5:

Pro

files

of N

ine

Econ

omic

Cor

ridor

s

No

Corr

idor

Rout

eLe

ngth

(km

)

Nat

iona

l and

Re

gion

al H

ighw

ay

Iden

tifica

tion

Econ

omic

Pro

spec

tM

ajor

Roa

d In

terc

hang

esM

ajor

Roa

d–Ra

il In

terc

hang

esEC

1N

orth

wes

t–So

uthe

ast

(NW

–SE)

Bang

laba

ndha

–Pa

ncha

garh

–Ra

ngpu

r–Bo

gra–

Hat

ikam

rul–

Jam

una

Brid

ge–E

leng

a–Ta

ngai

l–Jo

ydeb

pur–

Dha

ka N

orth

– D

haka

Sou

th–k

atch

pur–

Mad

anpu

r –Co

milla

–Ch

ittag

ong–

Cox’s

Baz

ar–

Tekn

af–M

yanm

ar B

orde

r

982

N5 (

Bang

laba

ndha

–H

atik

amru

l), N

405

(Hat

ikam

rul–

Elen

ga),

N4

(Ele

nga–

Joyd

ebpu

r),

N3 (

Joyd

ebpu

r–D

haka

N

orth

), ur

ban

road

(D

haka

Nor

th–D

haka

So

uth)

, N1 (

Dha

ka S

outh

–ka

tchp

ur–T

ekna

f)

very

hig

hBa

ngla

band

ha, R

angp

ur,

Bogr

a, H

atik

amru

l, Tan

gail,

Joyd

ebpu

r, D

haka

Nor

th,

Dha

ka S

outh

, kat

chpu

r, Co

milla

, Fen

i, Chi

ttago

ng,

Cox’s

Baz

ar, M

yanm

ar

Bord

er

Said

pur,

Parb

atip

ur,

Rang

pur,

Bogr

a,

Joyd

ebpu

r, To

ngi, D

haka

, Co

milla

, Fen

i, Chi

ttago

ng

EC2

Sout

hwes

t–N

orth

east

(S

W–N

E)

Bena

pole

–Jes

sore

–Nar

ail–

Bhat

iapa

ra–B

hang

a–M

awa–

Dha

ka–k

atch

pur–

Sara

il–Sy

lhet

–Tam

abil

504

N70

6 (B

enap

ole–

Jess

ore)

, R75

0 (J

esso

re–N

arai

l), Z

7503

(N

arai

l–ka

lna

Ferry

ghat

), N

806

(kal

na F

erry

ghat

to

Bha

tiapa

ra),

N80

5 (B

hatia

para

–Bha

nga)

, N8

(Bha

nga–

Maw

a–D

haka

So

uth)

, N1 (

Dha

ka S

outh

–ka

tchp

ur),

N2

(kat

chpu

r–Ta

mab

il)

very

hig

hBe

napo

le, J

esso

re,

Bhat

iapa

ra, B

hang

a,

Dha

ka S

outh

, kat

chpu

r, Bh

ulta

, Nar

singd

i, Bha

irab

Baza

r/Ash

ugan

j, Sar

ail,

Shai

stag

anj, S

ylhe

t, Ta

mab

il

Bena

pole

, Jes

sore

, Dha

ka,

Nar

singd

i, Bha

irab

Baza

r/A

shug

anj, S

ylhe

t

EC3

Nor

th–S

outh

(W

est)

(N

S–W

)

Bang

laba

ndha

–Pa

ncha

garh

–Tha

kurg

aon–

Rang

pur–

Bogr

a–H

atik

amru

l–Bo

npar

a–ku

shtia

–Jhe

naid

ah–

Jess

ore–

khul

na–M

ongl

a Po

rt

661

N5 (

Bang

laba

ndha

–H

atik

amru

l), N

507

(Hat

ikam

rul–

Bonp

ara)

, N

6 (B

onpa

ra–D

asur

ia),

N

704

(Das

uria

–Jh

enai

dah)

, N7

(Jhe

naid

ah–M

ongl

a Po

rt)

Med

ium

Bang

laba

ndha

, Ran

gpur

, Bo

gra,

Hat

ikam

rul,

Bonp

ara,

Das

uria

, kus

htia

, Jh

enai

dah,

Jess

ore,

kh

ulna

, Mon

gla

Said

pur,

Parb

atip

ur,

Rang

pur,

Bogr

a, Is

hwar

di,

kush

tia, C

huad

anga

, Je

ssor

e, k

huln

a

EC4

Nor

th–S

outh

(C

entra

l) (N

S–C

)

Mym

ensin

gh–J

oyde

bpur

–D

haka

Nor

th–D

haka

So

uth–

Maw

a–Bh

anga

–Ba

risal

and

to P

atua

khal

i

338

N3 (

Mym

ensin

gh–D

haka

N

orth

), U

rban

Roa

d (D

haka

Nor

th–D

haka

So

uth)

, N8

(Dha

ka

Sout

h–M

awa–

Bhan

ga–

Baris

al–P

atua

khal

i)

very

hig

hM

ymen

singh

, Joy

debp

ur,

Dha

ka N

orth

–Dha

ka

Sout

h–Bh

anga

–Bar

isal

Mym

ensin

gh, J

oyde

bpur

, To

ngi, D

haka

cont

inue

d on

nex

t pag

e


No

Corr

idor

Rout

eLe

ngth

(km

)

Nat

iona

l and

Re

gion

al H

ighw

ay

Iden

tifica

tion

Econ

omic

Pro

spec

tM

ajor

Roa

d In

terc

hang

esM

ajor

Roa

d–Ra

il In

terc

hang

esEC

5N

orth

–Sou

th

(Eas

t) (N

S–E)

Tam

abilr

–Syl

het–

Sara

il–Br

ahm

anba

ria–C

omilla

–Fe

ni–C

hitta

gong

–Cox

’s Ba

zar–

Tekn

af–M

yanm

ar

Bord

er

668

N2

(Tam

abil–

Sara

il), N

102

(Sar

ail–

Brah

man

baria

–M

aina

mat

i), N

1 (M

aina

mut

i–M

yanm

ar

Bord

er)

Hig

hTa

mab

il, S

ylhe

t, Sh

aist

agan

j, Sar

ail,

Brah

man

baria

–Com

illa–

Feni

–Chi

ttago

ng–

Mya

nmar

Bor

der

Sylh

et, B

rahm

anba

ria,

Com

illa, F

eni, C

hitta

gong

EC6

Nor

thw

est–

Nor

thea

st

(NW

–NE)

Bang

laba

ndha

–Pa

ncha

garh

–Ra

ngpu

r–Bo

gra–

Hat

ikam

rul–

Jam

una

Brid

ge–E

leng

a–Ta

ngai

l–D

haka

–kat

chpu

r–Sa

rail–

Sylh

et–T

amab

il

805

N5 (

Bang

laba

ndha

–H

atik

amru

l), N

405

(Hat

ikam

rul–

Elen

ga),

N4

(Ele

nga–

Joyd

ebpu

r),

N3 (

Joyd

ebpu

r–D

haka

N

orth

), U

rban

Roa

d (D

haka

Nor

th–D

haka

So

uth)

, N1(

Dha

ka S

outh

–ka

tchp

ur),

N2

(kat

chpu

r–Ta

mab

il)

very

hig

hBa

ngla

band

ha, R

angp

ur,

Bogr

a, H

atik

amru

l, Tan

gail,

Joyd

ebpu

r, D

haka

Nor

th,

Dha

ka S

outh

, kat

chpu

r, Bh

ulta

, Nar

singd

i, Bha

irab

Baza

r/Ash

ugan

j, Sar

ail,

Shai

stag

anj, S

ylhe

t, Ta

mab

il

Said

pur,

Parb

atip

ur,

Rang

pur,

Bogr

a,

Joyd

ebpu

r, To

ngi, D

haka

, N

arsin

gdi, B

haira

b Ba

zar/

Ash

ugan

j, Syl

het

EC7

Sout

hwes

t–So

uthe

ast

(SW

–SE)

Dar

sana

–Por

adah

a–Is

hwar

di–J

amto

il–Ja

mun

a Br

idge

–Joy

devp

ur–

Dha

ka–N

arsin

gdi–

Bhai

rab

Baza

r–A

shug

anj–

Brah

man

baria

–Akh

aura

–Co

milla

–Mai

nam

ati–

Laks

ham

–Fen

i–Ch

ittag

ong–

Mya

nmar

Bo

rder

not a

vaila

ble

Rail (

Dar

sana

–Ch

ittag

ong)

, N1

(Chi

ttago

ng–M

yanm

ar

Bord

er)

Med

ium

Ishw

ardi

,Joyd

ebpu

r, D

haka

, Nar

singd

i, Bh

aira

b Ba

zar/A

shug

anj,

Com

illa, F

eni, C

hitta

gong

, M

yanm

ar B

orde

r

Ishw

ardi

,Joyd

ebpu

r, D

haka

, Nar

singd

i, Bha

irab

Baza

r/Ash

ugan

j, Com

illa,

Feni

, Chi

ttago

ng,

EC8

East

–Wes

t (E

W)

Bena

pole

–Jes

sore

–Jh

enai

daha

– M

agur

a–G

oala

nda

G

hat–

Pat

uria

Gha

t–M

anik

ganj

–Dha

ka–

katc

hpur

–Mad

anpu

r –

Mai

nam

ati–

Com

illa–

Chitt

agon

g–M

yanm

ar

Bord

er

746

N70

6 (B

enap

ole–

Jess

ore)

, N7

(Jes

sore

–Jh

enai

dah–

Mag

ura–

Dau

latd

ia),

N5 (

Patu

ria

Gha

t–M

anik

ganj

–Dha

ka

Nor

th),

Urb

an R

oad

(Dha

ka N

orth

–Dha

ka

Sout

h), N

1 (D

haka

Sou

th–

Mya

nmar

Bor

der)

Med

ium

Bena

pole

, Jes

sore

, Jh

enai

dah,

Mag

ura,

D

haka

, kat

chpu

r, Co

milla

, Ch

ittag

ong

Bena

pole

, Jes

sore

, G

oala

nda

Gha

t, D

haka

, Co

milla

, Fen

i, Chi

ttago

ng

EC9

Inla

nd W

ater

Ro

ute

(IW

R)A

ngtih

ara–

khu

lna–

Baris

al–U

p M

eghn

a–A

ssam

670

Inla

nd W

ater

Rou

teM

ediu

mk h

ulna

, Bar

isal

k hul

na

Tabl

e 6:

con

tinue

d

cont

inue

d on

nex

t pag

e


Tabl

e 6:

con

tinue

d

cont

inue

d on

nex

t pag

e

No

Maj

or R

oad–

Rive

r/Se

a Po

rt

Inte

rcha

nges

Maj

or R

oad/

Rail–

Rive

r/Se

a Po

rt

Inte

rcha

nges

Maj

or In

dust

ry/

Busin

ess C

ente

rs

Maj

or M

iner

al

Site

s (G

as a

nd

Coal

)M

ajor

Tou

rism

Si

tes

Maj

or B

orde

r Po

ints

Expo

rt P

roce

ssin

g Zo

nes (

EPZ)

Asia

n H

ighw

ay/

SASE

C Co

rrid

or

Link

EC1

Sira

jgon

j, Bag

haba

ri,

Dha

ka, N

aray

anga

nj,

Tong

i, kaz

ipur

, Cox

’s Ba

zar,

Chitt

agon

g

Sira

jgon

j, Ton

gi,

Dha

ka, N

aray

anga

nj,

Chitt

agon

g

Bogr

a, C

hitta

gong

, Co

milla

, Dha

ka,

Gaz

ipur

, N

aray

anga

nj,

Rang

pur,

Sira

jgan

j, an

d To

ngi

Bakh

raba

d,

Bega

mga

nj, F

eni,

kam

ta, S

alda

, Ti

tas,

Bara

puku

ria,

Jam

alga

nj, a

nd

khal

aspu

r

Chitt

agon

g, Co

x’s

Baza

r, D

haka

, D

inaj

pur,

Mah

asta

n G

orh,

Mai

nam

ati

Ruin

s, Ra

mu,

Ra

ngpu

r, Te

knaf

, and

Te

ntul

ia

Bang

laba

ndha

, Bib

ir Ba

zar,

and

Mya

nmar

Bo

rder

Chitt

agon

g, Co

milla

, D

haka

, Ada

mje

e,

Utta

ra a

nd k

arna

fuli

Asia

n H

ighw

ay 2

(A

H -

2) a

nd A

sian

Hig

hway

41 (

AH

- 41

)

EC2

Mon

gla,

khu

lna,

Ch

arja

njat

, Dha

ka,

Tong

i, Nar

ayan

ganj

, M

awya

, Meg

hnag

hat,

Mun

shig

anj,

Nar

singd

i, N

awya

para

, A

shug

anj–

Bhai

rab

Baza

r, L

ipsa

, M

adar

ipur

, Mao

wa,

Ch

atak

khul

na, T

ongi

, D

haka

, Nar

ayan

ganj

, N

arsin

gdi, A

shug

anj-

Bhai

rab

Baza

r, Ch

atak

Ash

ugan

j, Bag

erha

t, D

haka

, Gaz

ipur

, G

hora

sal, H

abig

anj,

Jess

ore,

khu

lna,

M

eghn

agha

t, N

aray

anga

nj,

Nar

singd

i, Syl

het,

Tang

ail T

ongi

Chat

ak, B

eani

baza

r, Bi

biya

na, F

ench

ugan

, H

abig

anj, H

arip

ur,

Jala

laba

d, k

aila

shtil

a,

kam

ta, M

aulv

i Baz

ar,

Rash

idpu

r, Sa

lda

Dha

ka, J

aflon

g, kh

ulna

, Mon

gla,

Su

ndar

ban

Nat

iona

l Pa

rk, T

ekna

f

Bena

pole

, Tam

abil

and

Akh

aura

Dha

ka a

nd U

ttara

Asia

n H

ighw

ay 1

(AH

- 1)

EC3

Ishw

ardi

, Sira

jgan

j, Ba

ghab

ari, k

azip

ur,

khul

na

Ishw

ardi

, khu

lna

Din

ajpu

r, Bo

gra,

Je

ssor

e, Jh

enai

dah,

kh

ulna

, kus

htia

, Pa

bna,

Raj

shah

i, Ra

ngpu

r, Si

rajg

anj,

Thak

urga

on

Bara

puku

ria,

Jam

alga

nj, k

hala

spur

Bage

rhat

, D

inaj

pur,

khul

na,

Mah

asta

ngar

h,

Mon

gla,

Put

hia,

Ra

hsha

hi

Bang

laba

ndha

, H

ili, D

arsa

na, a

nd

Bena

pole

Ishw

ardi

and

Mon

gla

Asia

n H

ighw

ay 2

(A

H -

2) a

nd S

ASE

C Co

rrido

r 5

EC4

Patu

akha

li, Ba

risal

, Ch

arja

njat

, M

unsh

igan

j, N

arya

ngan

j, Dha

ka,

Tong

i, Maw

a,

Naw

yapa

ra

Nar

yang

anj, D

haka

, To

ngi

Baris

al, D

haka

, G

azip

ur, H

abig

anj,

Mym

ensin

gh,

Nar

ayan

ganj

, Ton

gi

kam

taD

haka

, Gre

ater

M

ymen

singh

and

G

aro

Hills

. kua

kata

Hal

uagh

atD

haka

, Utta

ra a

nd

Ada

mje

e

EC5

Meg

hnag

hat,

Ash

ugan

j-Bha

irab

Baza

r, Ch

atak

, Ch

ittag

ong,

Cox’s

Ba

zar,

Lips

a,

Ash

ugan

j-Bha

irab

Baza

r, Ch

atak

, Ch

ittag

ong

Ash

ugan

j, Ch

ittag

ong,

Com

illa, G

hora

sal,

Meg

hnag

hat,

Nar

singd

i, Syl

het,

Tang

ail, T

haku

rgao

n

Chat

ak, B

akhr

abad

, Be

anib

azar

, Be

gam

ganj

, Bib

iyana

, Fe

nchu

ganj

, Fen

i, H

abig

anj, H

arip

ur,

Jala

laba

d, k

alas

htila

, M

aulv

ibaz

ar,

Rash

idpu

r, Sa

lda,

Ti

tas

Chitt

agon

g, Co

x’s

Baza

r, Ja

flong

, M

aina

mat

i Rui

ns,

Ram

u, S

ri M

anga

l, Te

knaf

Tam

abil,

Mya

nmar

Bo

rder

, Akh

aura

, and

Bi

bir B

azar

Chitt

agon

g, Co

milla

, an

d ka

rnaf

uli

Asia

n H

ighw

ay 2

(A

H -

2) a

nd A

sian

Hig

hway

41 (

AH

- 41

)


No

Maj

or R

oad–

Rive

r/Se

a Po

rt

Inte

rcha

nges

Maj

or R

oad/

Rail–

Rive

r/Se

a Po

rt

Inte

rcha

nges

Maj

or In

dust

ry/

Busin

ess C

ente

rs

Maj

or M

iner

al

Site

s (G

as a

nd

Coal

)M

ajor

Tou

rism

Si

tes

Maj

or B

orde

r Po

ints

Expo

rt P

roce

ssin

g Zo

nes (

EPZ)

Asia

n H

ighw

ay/

SASE

C Co

rrid

or

Link

EC6

kazip

ur, S

irajg

anj,

Bagh

abar

i, Dha

ka,

Nar

ayan

ganj

, M

eghn

a G

hat,

Tong

i, A

shug

anj–

Bhai

rab

Baza

r

Sira

jgan

j, Ton

gi,

Dha

ka, N

aray

anga

nj,

Ash

ugan

j–Bh

aira

b Ba

zar

Ash

ugan

j, Bog

ra,

Dha

ka, D

inaj

pur,

Gaz

ipur

, Gop

alga

nj,

Hab

igan

j, M

eghn

agha

t, N

aray

anga

nj,

Nar

singd

i, Ran

gpur

, Si

rajg

anj, S

ylhe

t, Ta

ngai

l, Tha

kurg

aon,

To

ngi

Chat

ak, B

eani

baza

r, Bi

biya

na, F

ench

ugan

j, H

abig

anj, H

arip

ur,

Jala

laba

d, k

alas

htila

, M

aulv

ibaz

ar,

Rash

idpu

r, Ba

rapu

kuria

, Ja

mal

ganj

, kha

lasp

ur

Dha

ka, D

inaj

pur,

Jaflo

ng,

Mah

asta

ngor

h, S

ri M

anga

l, Ten

tulia

Bang

laba

ndha

, Ta

mab

il, an

d A

khau

raD

haka

and

Utta

raA

sian

Hig

hway

2

(AH

- 2)

EC7

Bagh

abar

i, Dha

ka,

Nar

ayan

ganj

, Ton

gi,

Chitt

agon

g, ka

zipur

Dha

ka, N

aray

anga

nj,

Tong

i, Chi

ttago

ngCh

ittag

ong,

Com

illa,

Dha

ka, D

arsa

na,

Gaz

ipur

, Meh

erpu

r, N

aray

anga

nj, P

abna

, Si

rajg

anj, S

ylhe

t, Ta

ngai

l, Tha

kurg

aon,

To

ngi

Bakh

raba

d,

Bega

mga

nj, F

eni,

kam

ta, S

alda

, Tita

s,

Chitt

agon

g, D

haka

an

d M

aina

mot

i Rui

nsD

arsa

na, M

yanm

ar

Bord

er, A

khau

ra, a

nd

Bibi

r Baz

ar

Mon

gla,

Dha

ka,

Utta

ra, C

hitta

gong

, an

d ka

rnaf

uli

SASE

C Co

rrido

r 4

EC8

Aric

ha, D

aula

tdia

, To

ngi, D

haka

, N

agar

bari,

N

aray

anga

nj,

Chitt

agon

g

Dha

ka, N

aray

anga

nj,

Tong

i, Chi

ttago

ngCo

milla

, Dha

ka,

Farid

pur,

Gaz

ipur

, Je

ssor

e, N

aray

anga

nj,

Tong

i

Bakh

raba

d,

Bega

mga

nj, k

amta

, Sa

lda,

Tita

s

Dha

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Map 2: The Network of Nine Economic Corridors in Bangladesh



passenger, cargo, and vehicular transit through the country. Finally, regional economic corridors could be assessed by their contribution to regional food and energy security, measured by the degree of integration of food and energy flow while avoiding supply stress. A consideration of the criteria set out earlier would point to the nine-corridor network comprising CIMECON (Table 5 and Map 2) as the preferable choice.

50. An overview of the proposed comprehensive integrated multimodal economic corridor network (CIMECON) shows the nine selected corridors as part of or connected with the Asian Highway and/or SASEC corridor networks, and are located on or near multimodal exchanges, thus enabling further multimodal connectivity, as well as links to export processing zones (EPZs) and to major border-crossing points, industrial and commercial centers, mineral resource sites (gas fields and coal fields), and tourist attractions. The corridors vary in terms of the economic prospects of their surrounding regions, from very high (EC1, EC2, EC4, and EC6), to high (EC5), to medium (EC3, EC7, EC8, and EC9). A preliminary assessment suggests that there would be significant socioeconomic impact from any configuration of economic corridors, although some corridors could be deemphasized because their contributions would be less important. Feasibility studies of ADB-financed roads in Bangladesh have indicated high economic internal rates of return (EIRRs), and the EIRRs for the nine economic corridors would be even higher, with both the roads and corridors well above the minimum acceptable level of 12%.

51. The proposed economic corridors could be designed so as to minimize transport costs. For instance, goods shipped from EPZs should reach a port through shorter and less costly routes (by road, rail, or inland waterways). The same is true of cargo movement between the production or extraction points and the consumption or utilization points.

3. The London Tube Map52. The nine proposed economic corridors that would make up CIMECON could be represented in a manner resembling the London Tube map (Map 3). This representation of CIMECON is possible for two reasons: (i) CIMECON is essentially a grid composed of north–south, east–west, northwest–southeast, and southwest–northeast corridors; and (ii) by 2050, Bangladesh is projected to be a compact, integrated economic space dominated by a single urban conglomeration, and with a transport network similar in structure to the London Tube, carrying people and goods at high speeds through multimodal transport corridors.

53. One should be able to reduce the time, distance, and cost of travel or transport by using the right corridors and the appropriate intramodal and intermodal interchanges and links (Table 5). The development of CIMECON would not hinder the upgrading of existing networks of roads, railways, and inland waterways to Asian Highway or

Map 3: CIMECON Depicted in a London Tube-Style Format

CIMECON = comprehensive integrated multimodal economic corridor network.



other international standards. This is demonstrated by the fact that there are overlaps between the nine economic corridors and the major national highway, regional highway, railway, and inland waterway routes (Table 5 and Map 2). Moreover, the surrounding areas (including important locations such as industrial, mineral, and tourist sites) would undergo enhanced economic development and activity (Table 5). Economic corridors, skills development, technology, and infrastructure upgrading are all highlighted as pillars of growth in the Perspective Plan of Bangladesh 2010–2021. Bangladesh is projected to become a middle-income country by the end of the plan’s duration.

54. The proposed economic corridors were chosen based on their optimal structural and accessibility characteristics, both of which should facilitate the planning for an ideal industrial structure, with a desired trade and export composition. These characteristics will also help deal with the complexity of exports, taking into account relative unit labor costs, regional income distribution, the extent of network and geographic cohesion, population density and dynamics, prospects for trade diversification along value chains, and intraregional vs. interregional trade, Bangladesh’s share of components trade, vertical network integration, information network integration along value chains, transport network completeness, and interconnectivity (local to global).

4. Economic Corridors to Accommodate Projected Traffic Growth55. The central transport arteries that anchor the proposed economic corridors would be designed to accommodate increased road traffic, which is projected to grow 8%–10% annually, in line with GDP growth. This would be done in part by increasing the number of lanes from two (which two-thirds of the national highways currently have) to four, six, or eight, depending on the planners’ preferences and on the analysis carried out as part of this study.

5. Economic Corridors to Improve Connections to Land Ports 56. The CIMECON corridors would include both new connections and upgraded ones to land ports. Bangladesh has 13 land ports, including 12 on the border with India (Akhaura, Banglabandh, Benapole, Bibir Bazar, Birol, Bhomra, Burimari, Darsana, Haluaghat, Hili, Sonamasjid, and Tamabil ) and 1 on the border with Myanmar (Teknaf). The Ministry of Shipping and the Bangladesh Bank are developing 12 of the land ports (excluding Benapole) in partnership with the private sector, on a build–operate–transfer basis, to enable more efficient cargo storage and handling.27 The foundations have recently been laid for the construction of facilities at Banglabandh land port and in nearby Phulbari (India), which will also facilitate links with Nepal and Bhutan. ADB is providing support for the upgrading of facilities at Burimari land port, with a view to operationalizing a corridor connecting Bhutan with Bangladesh that will give Bhutan access to the seaports of Mongla and Chittagong (Thimphu–Phuentsholing–Jaigaon–Changrabandha–Burimari–Chittagong Port or Mongla Port). Bangladesh and India are conducting talks on the possibility of building a 20-km rail link between Akhaura (in Bangladesh) and Agartala (in the Indian state of Tripura), to reduce the distance and cost of transport between the seven provinces of northeast India and the rest of the country (kolkata–Petrapole–Benapole–Dhaka–Akhaura–Agartala).28 The kolkata link will one day take cargo and passengers all the way to Lahore, via Delhi, Atari, and Wagah. Similarly, Bangladesh and Myanmar are discussing trade facilitation measures to raise exports in both

27 Infrastructure Investment Facilitation Center (IIFC). Development of Banglabandha Land Port. http://www.iifc.net/ publication/miscellaneous/Banglabandha%20Land%20Port.pdf; IIFC. Development of Bibirbazar Land Port. http://www.iifc.net/publication/miscellaneous/Bibirbazar%20Land%20Port.pdf

28 k. R. Chowdhury. 2013. Akhaura–Agartala Rail Link: Indo-Bangla Officials Meet to Devise Plan Today. Dhaka Tribune. 21 May. http://www.dhakatribune.com/development/2013/may/21/akhaura-agartala-rail-link-indobangla-officials-meet -devise-plan-today


directions through Teknaf.29 Benapole is the most important land port of Bangladesh. It is located across from Petrapole, in India, and accounts for 90% of imports from India and 60% of total overland trade with India by both road and rail. Even with some recent upgrading, however, the facilties remain below par, unable to cope with the rising volume of overland trade between India and Bangladesh. Trade through Hili, also on the Indian border, is by road and railway. Benapole, Hili, and Sonamasjid account for almost 90% of total overland border trade. Hili is second in terms of cargo handled. Tamabil is used primarily for importing coal from India, and the facilities there are minimal. Darsana, an old railway station at the Indian border, carries mostly passengers. The facilities at Bibir Bazar will be expanded under a build–operate–transfer arrangement to increase the volume of trade with the Indian state of Tripura; and the facilities in Haluaghat will be expanded to increase trade with the Indian state of Meghalaya. Against this backdrop, the proposed economic corridors are expected to facilitate connections with all the land ports of Bangladesh.

6. Economic Corridors to Promote Market Development and Integration57. Bridges. The establishment of economic corridors is not an end in itself. Market development and integration are the main objectives, as they will set the stage for higher GDP growth in Bangladesh that would also be inclusive, for individuals and the poorer regions. Market development and integration mean expanding the supply base as well as the demand base. CIMECON will facilitate market development and promote market integration, in particular through the rehabilitation of major bridges and the construction of new ones, including high-priority mega bridges along the proposed transport corridors.

58. Connecting poles of development. Market integration will require that selected economic corridors cover major roads and ferry crossings to ensure smooth operations, maintenance, rehabilitation, and reconstruction, as these will help contain rising transport costs, thereby preserving a competitive edge. In the same way, the proposed corridors will improve links with major seaports and river ports in Bangladesh, thereby providing a gateway for both Bangladeshi and foreign shipments. The proposed economic corridors are designed to connect to poles of development, as well as administrative headquarters, tourist destinations, and EPZs, to improve connectivity at reduced transport cost. CIMECON will be strong on connectivity throughout the South Asia region, both directly and through border link roads.

59. The development of the most appropriate economic corridors for CIMECON would ensure the construction and maintenance of strategic bridges, the efficient working of ferries (if any left), a greater number of visitors to tourist attractions in Bangladesh, an accelerated growth in production, and increased exports from the EPZs through expanded transport corridors and upgraded seaports and river ports. Following a similar strategy, the planning for CIMECON should be aimed at strengthening links with poles of growth, including towns and cities with administrative headquarters (Table 6), as well as major industrial locations such as Bogra, Chittagong, Dhaka, Gazipur, khulna, and Rajshahi; and mineral resource sites (including gas fields and coalfields) in the eastern and western parts of the country.

60. Market integration has to encompass domestic and foreign markets. Bangladesh’s economic corridor network must align the country’s roads, railways, inland waterways, seaports, and river ports with the requirements of connectivity, integration, and transit with the rest of South Asia and with countries outside the South Asia region. Reference has already been made to the Asian Highway and SASEC corridor links throughout Bangladesh. In addition to the economic corridor links, CIMECON planning should also pay attention to border link roads (Table 7).

29 Narinjara. 2013. Burma and Bangladesh Discusses Improvement of Border Trades (sic). 24 June. http://narinjara.com/ index.php/burma-and-bangladesh-discusses-improvement-of-border-trades


Table 6: Functional Connections in the National Highway System of BangladeshLocation Function ConnectionsDhaka Capital N1, N2, N3, N4, N5, N8Barisal Divisional headquarters N8Chittagong Divisional headquarters N1khulna Divisional headquarters N7Rajshahi Divisional headquarters N6Sylhet Divisional headquarters N2Chittagong Seaport N1Mongla Seaport N7Akhaura Land port Z1216Banglabandh Land port N5Benapole Land port N706Bhomra (near Satkhira)a Land port (LGED road onlyb)Bibir Bazar (near Comilla)a Land port (LGED road onlyb)Birol Land port Z5803Burimari Land port N509Haluaghat (near Mymensingh) Land port Z3711Hili Land port Z5503, Z5856Sonamasjid (near Chapai Nawabganj) Land port Z6801Tamabil Land port N212Teknaf Land port N1LGED = Local Government Engineering Department, N = national highway, R = regional highway, Z = zila (district) road.a Bhomra and Bibir Bazar are not connected to roads used by the public for passenger or cargo traffic. They are connected to roads

meant for government use only.b The Local Government Engineering Department is the national government agency responsible for rural roads.Source: Government of Bangladesh, Ministry of Communications, Roads and Highways Department. 2009. Road Master Plan. Dhaka.

Table 7: Border Link Roads in BangladeshStarting point End point Route DistanceRangpur Lalmonorhat N5-N506 18Lalmonorhat Burimari N509 52Beldanga Dinajpur N5 16Dinajpur Birol Z5803 12N5-R550 Junction Joypurhat N550 22Joypurhat Hili Z5503 13Banpara Rajshahi N6 35Rajshahi Nawabganj R680 45Nawabganj Sonamasjid

(Baliadighi)Z6801 16

Mymensingh Phulpur R371 15Phulpur Haluaghat Z3711 11Khulna Satkhira R760 59Satkhira 3km point R7602 33km point at R7602 Bhomra LGED Road 6

km = kilomter, LGED = Local Government Engineering Department, N = national highway, R = regional highway, Z = zila (district) road.Notes:1. The bold names indicate the original points and end points on the routes features in this table.

2. The routes are grouped according to the networks of linked roads.

3. The Local Government Engineering Department is the national government agency responsible for rural roads.



61. CIMECON is aimed at fostering connectivity in South Asia through 12 regional connectivity roads, promoting regional integration and facilitating regional transit and access to ports. One benefit of economic growth through economic corridors is the gain in employment opportunities. Investments in economic corridors should therefore emphasize labor-intensive technologies to maximize the number of jobs created. This is particularly true of the operation and maintenance (O&M) of central transport corridors, which can be outsourced to contractors specializing in labor-intensive methods. Moreover, economic corridors will connect depressed regions with affluent ones to spur economic growth, thereby helping to reduce regional disparities. With better planning of the use of economic spaces, corridors should help prevent the problems caused by the 139 hats (weekly local markets) and bazaars that congest Bangladesh’s transport network.30 The development of economic corridors will have to include the construction of bypasses and service roads, and the improvement of intersections, to create better traffic conditions.

D. Key Challenges62. The development of CIMECON has not been without its challenges. Hindrances to the realization of CIMECON have included the pressures resulting from GDP growth, urbanization, environmental stresses, climate change, traffic growth and congestion, and, last but not the least, investment demand. For instance, the Northwest–Southeast, Southwest–Northeast, and North–South (Central) corridors are encroached upon at more than 30 locations each by hats and bazaars. This encroachment means significantly increased transport costs and longer travel times, which will become even worse with the forecasted growth in traffic over the period 2015−2025 (Table 8).

Table 8: Forecasted Average Annual Vehicle Growth Rates, 2015–2025Truck Bus Car Othersa All Vehicles

Low2015–2020 7.10 3.00 6.90 5.25 5.152020–2025 1.40 3.00 5.50 2.00 2.452005–2025 5.10 3.00 7.57 5.69 4.64Medium2015–2020 6.40 4.00 7.00 5.30 5.002020–2025 2.80 4.00 5.70 2.90 3.182005–2025 5.82 4.00 8.40 6.45 5.24High2015–2020 6.00 5.00 6.80 5.20 5.502020–2025 5.22 5.00 5.45 4.20 4.902005–2025 6.87 5.00 9.90 7.32 6.50a “Others” refers to such vehicles as jeep, taxi, auto-rickshaw, tractor, motorcycle, and trawler.Source: Government of Bangladesh, Ministry of Communications, Roads and Highways Department. 2009. Road Master Plan. Dhaka.

63. Traffic volumes along the Roads and Highways Department network are moderate to high on the national highways and low on the regional highways and zila roads, but the average volumes of vehicle

30 Government of Bangladesh, Ministry of Communications, Roads and Highways Department. 2009. Road Master Plan. vol I. Dhaka. p. 23. http://www.rthd.gov.bd/assets/docs/road_master_plan.pdf


traffic overall have been growing at 5.0%–6.3% per year (Table 8). Traffic growth has proven consistent with the projections set out in the government’s 2009 Road Master Plan (Table 9). Projections, in general, are higher for busier routes, such as the Dhaka–Chittagong Highway, which may eventually have to carry more than 30,000 vehicles a day. The current projections are modest, however, if one considers the full implications of the development of CIMECON; specifically, it could create a feedback cycle in which increased transport and economic capacity generates increased demand for vehicles, which, in turn, leads to increased traffic flow. Moreover, increased economic and regional trade and transit activity would create a demand for the services of transport, logistics, and economic corridors; and this would spur capacity expansion. The London Tube model for CIMECON in particular would create demand for its services; and the increased demand—domestically and cross-border—would then create further pressure for capacity expansion. The projections in the Road Master Plan go up to 2025 only. Beyond that, traffic volumes will likely explode in response to modernization, increased mobility, and a projected GDP growth of 10% per year. CIMECON may therefore have to deal with even higher traffic growth, of the order shown in Table 9.

Table 9: Projected Motor-Traffic Growth, 2015–2030

Road TypeAverage Annual Growth Rate

(%)National highway 8–10Regional highway 10–15Zila (district) road 10Source: Government of Bangladesh Ministry of Communications, Roads and Highways Department. 2009. Road Master Plan. Dhaka.

64. The projected traffic growth will require an upgrading of the road network in the form of improved quality and greater number of lanes. Major national arteries will have to comply with international benchmarks such as those of the Asian Highway network. Given the current condition of roads in Bangladesh, quality improvement is an immediate concern. Bangladesh will also have to apply appropriate measures to improve the resilience of its road infrastructure in the face of climate change. The real challenge of CIMECON will be the large investment required (both from domestic and external sources) for corridor-related infrastructure and software, including climate change adaptation measures.

E. Impact Analysis65. Economic corridor development, along with the necessary policy and institutional reforms, would have a substantial impact. The selections of the economic corridors that will comprise the network were linked to their potential contributions to GDP growth (Figure 11). Any combination of corridors should have a positive incremental impact on GDP, compared with the scenario of no economic corridor network at all. Conceptually, an application of the production function approach will show that GDP would be higher with economic integration through transport corridor and economic corridor connectivity than it would be without. The absence of such connectivity, referred to as the “business-as-usual” scenario, shows normal GDP growth derived from the primary factors of production and from technology, driven by policies, institutions, programs, and projects. Growth would be reflected in further investment and in gradual increases in employment, trade, revenues, and private sector activity. But there would be a lack of dynamism in the growth process because there would be no trigger, no regional infrastructure or connectivity, and no development of economic corridors within or between regions.

66. Once economic integration is factored in, a number of processes are set in motion that spur an upward shift in the production function, resulting in a higher level of output for the same level of


Figure 11: A Methodology for Estimating the Impact of an Integrated Economic Corridor Network in Bangladesh

GDP = gross domestic product, km = kilometer.Notes: 1. The black boxes signify the major drivers or model for impact estimation; the light gray boxes, parameters (unit costs,

elasticity, employment coefficient, and others used to estimate impact); and the dark gray boxes, impact.2. The regions within Bangladesh are referred to as “divisions.”

a This is based on physical plans, population growth, population distribution, the proportion of urban versus rural settlements, urban industrial nodes, links to ports, links (or lack thereof) to the hinterland, economic activity, trade volume (domestic and external), natural resources, border-crossing points, border towns, the cost of center–periphery transport facilitation, and other factors.


Permanent and temporary employment in economic

corridors

Unit cost per km for roads (by type), and other transport-

and construction-related costs (including skill, technology, and human development;

climate mitigation and proofing

Total cost of investment in economic corridors (skill, technology, and human development; climate

mitigation and proofing)

Estimated share of economic corridors in total investment

Total investment (including investments in skill,

technology, and human development; and in climate


Capital-output ratio (including investments in

skill, technology, and human development; and in climate


Increase in full-time employment

Increase in revenue Tariff and transit fees

Employment coefficient

Export elasticity

Import–GDP ratio

Increase in total and sector GDPs, reduction

in poverty by region, and reductions in

interregional disparities in development

Economic model for projections of total and regional GDPs

and of poverty reduction

Sector and regional growth

and poverty- reduction elasticity

Exports: total and intraregional

Imports: total and interregional

Increase in value added for

manufacturing and service

sectors

Interregional trade, export trade, and transit

Travel cost savings = savings in transport costs + reductions in

travel time

Transport operating costs and opportunity

costs of travel timeIncrease in units of products or services, and in vehicle

flow (trucks, buses, rail, river transport, etc.)

Distance by road or by other transport mode

Value added coefficient for manufacturing and

service sectors

Annual increases in freight and

passenger traffic (road, rail, river, etc.), and in the average value of

freight and of production and

services

Average load per truck (or other transport mode),

incremental production, and service-delivery rate per

economic unit

Employment coefficients for economic corridors

Distance of roads (by road type) and other transport routes, also volume of

other construction

Travel time saving, efficiency improvement, and increase in

production and servicesHarmonization, facilitation, and

institutional-reform measures

Planning model for an integrated economic corridor network (transport,

logistics, and economic corridors)a


primary inputs. Economic integration between countries, or among regions within the same country, generates confidence, introduces harmonization, and promotes coordinated development. More infrastructure is built or expanded. Policies, institutions, programs, and projects take on new meaning as they are driven by a more dynamic environment. Higher gains are recorded, the result of infrastructure investment, including a greater share of investment for roads and other means of connectivity. And the benefits become more diversified. Travel time, travel-related costs, and production costs are all reduced, enhancing the competitive edge of the country (and its regions) in trade. The private sector emerges as the driver of the process, supported by necessary policy and institutional reforms and by structural changes.

67. These outcomes can be quantified for use in determining the desirability of a corridor network like CIMECON, as proposed in this study.

IV. PRIORITIZATION OF INVESTMENTS: IDENTIFyING PRIORITy CORRIDORS AND SECTIONS

68. Many options are available to Bangladesh for developing economic corridors, but they all come with a price tag. CIMECON’s nine corridors are only candidate corridors. The planning and development of the corridors, sections of the corridors, multimodal transport, and adjacent economic spaces would have to be prioritized on the basis of economic impact analysis. Two approaches to prioritization are suggested: (i) partial equilibrium project economic analysis, based on net present value (NPv), economic internal rate of return (EIRR), etc.; and (ii) a comprehensive macroeconomic optimization model to identify the combination of integrated economic corridors that would maximize incremental GDP, reduce poverty, diminish economic disparities among Bangladesh’s regions, include skills development and land improvement, promote trade cooperation, and make the structures within the corridors climate-resilient (through adaptation measures that include climate proofing). This report applies the first method. The macroeconomic model has been deferred to a possible future study.

A. Economic Analyses of Projects69. Due to budget considerations, there will be a need for optimal investment sequencing. Economic corridors will have to be prioritized on the basis of sound technical, financial, economic, social, and environmental criteria. Using the framework presented in this paper, potential economic corridors can be ranked according to their impact on critical variables during the target year. An alternative would be to treat each economic corridor as a single project or divide it into subprojects, in order to calculate cost–benefit ratios, NPvs, and EIRRs, which would then inform the prioritization of the corridors. Whichever way it is done, the decisions would be made on the basis of sound technical and economic analysis at the project level.

70. Economic analyses of projects can be carried out with or without factoring in climate proofing. GDP growth would be safeguarded by climate proofing, although some of that growth may be lost due to the cost of climate proofing itself. This frictional loss would, however, be lower than the loss due to damage in the absence of climate proofing. One can calculate the NPv, EIRR, and cost–benefit ratio regarding the stream of benefits of climate proofing (based on the percentage of expected losses due to climate change) and the costs of climate proofing (capital, O&M). One can do the same calculation based on the stream of total benefits (original base estimates) and total costs (the increase in the original cost stream due to the added cost of climate proofing) to see if the economic viability criteria


are satisfied or not. It should be noted though that the period covered by a climate change analysis should be longer than the usual 25–30 year project period; and a lower discount rate should be used when calculating the future net benefit stream, taking into account the pure rate of time preference, intergenerational equity, and the marginal productivity of capital.

71. Partial equilibrium project economic analysis could be used by planners and policy makers in Bangladesh to identify, evaluate, and prioritize economic corridors from among the many options under consideration. A macroeconomic optimization model could provide a comprehensive framework within which investments across time and space are determined. Policy makers could thereby decide when, where, and how much to invest.

B. Priority Corridors 72. The nine proposed economic corridors have been assessed, as have 54 nonoverlapping sections. The NPvs and EIRRs have been calculated for all of them based on the transport corridor framework, and they have all been ranked according to their EIRRs. The evaluation of each corridor based on its projected performance as a transport corridor took into account its capital and operating costs, along with the benefits accrued from savings in vehicle operating costs and travel time. The evaluation of each corridor, based on its performance as an economic corridor, took into account the capital and operating costs relating to transport (tollbooths, border- and road-related facilities, truck fleet modernization), geographic space (economic facility creation), capacity building (skills and management training), and climate change adaptation (climate proofing). The benefits of additional time savings at borders, land ports, and river crossings, as well as the incremental value added attributable to transport assets, were also considered. The definitions of costs and benefits for economic corridors are thus broader than those for transport corridors.

Table 10: The Cost of Bangladesh’s Economic Corridors as Transport Corridors($)

Corridor Name - Transport Mode Capital cost of constructiona

Annual O & Mb

Routine+ operation + special works

Periodic (every sixth or seventh year)

Northwest–Southeast (NW–SE)–road 1,308,924,056 4,048,557 75,441,857Southwest–Northeast (SW–NE)–road 2,517,581,292 1,471,730 30,857,362North−South (West) (NS−W)−road 632,466,444 2,527,330 40,469,675North–South (Central) (NS–C)–road 2,292,123,450 1,434,310 25,399,513North–South (East) (NS–E)–road 880,473,318 2,676,838 48,793,014Northwest–Northeast (NW–NE)–road 1,140,723,969 2,570,825 52,945,889Southwest–Southeast (SW–SE)–(road/rail) 1,211,727,537 4,604,970 41,808,279East–West (EW)–road 3,132,908,147 3,163,961 56,961,925Inland Water Route (IWR) 670,000,000 5,360,000 1,340,000Total cost (non-overlapping sections)c 8,598,550,119 22,947,802 184,210,751O&M = operation and maintenance.a The figures for the projected capital costs of construction are for 2015–2019.b The figures for the projected costs of O&M (both columns) are for 2015–2035.c The total costs do not count more than once those sections of road along which two or more corridors overlap.Source: ADB estimates.


73. For the purpose of analysis, it is assumed that all investments in all the corridors and corridor sections occur in parallel; this assumption refers to the projected capital costs during 2015–2019 and to the projected O&M costs during 2015–2035. The capital costs of tollbooths, border-crossing points (BCPs) and land ports, truck fleet modernization, and road-related facilities are assumed to be incurred in the third, fourth, and fifth years of project implementation. Routine operating costs are assumed to be incurred annually, beginning in the sixth year of project implementation; periodic maintenance, every sixth or seventh year after project completion; and annual special works, from the sixth year after project completion. A 12% rate is used to discount all costs and benefits.

74. The projected costs of the CIMECON corridors are shown in Table 10 (relating to their construction and operation as transport corridors) and in Table 11 (relating to their construction and operation as economic corridors). The priority ranking of the economic corridors is given in Table 12. The total transport corridor capital cost of CIMECON construction is estimated at $8.6 billion, spread over a 5-year period (2015–2019). To fully explore the implications of CIMECON decision making with regard to investments (how much, when, and where), one has to implement the multiperiod macro-optimization model proposed in this study: partial equilibrium project economic analysis. Proper routine O&M and special works would impose a significant fiscal burden, except for what could be recovered from toll roads. The substantial proposed upgrading of corridor sections from two to four lanes would elevate the cost of construction and maintenance. And the construction of access-controlled expressways would add to the base cost. Finally, the cost of periodic maintenance is also likely to be rather high, but without it, corridor efficacy could not be sustained, and many of the projected benefits in terms of vehicle operating costs and travel-time savings would not materialize.

Table 11: The Cost of Bangladesh’s Economic Corridors ($)

Corridor Name – Transport Mode

Capital cost of construction and other

capital costsa

Annual O & Mb

Routine and periodic Other

Northwest–Southeast (NW–SE) – road 5,039,893,425 79,490,415 369,241,409Southwest–Northeast (SW–NE) – road 4,887,098,435 32,329,093 233,978,970North–South (West) (NS–W) – road 2,572,551,411 42,997,006 192,182,342North–South (Central) (NS–C) – road 3,989,045,877 26,833,824 167,365,872North–South (East) (NS–E) – road 3,502,361,874 51,469,854 259,547,435Northwest–Northeast (NW–NE) – road 4,467,006,505 55,516,714 329,277,326Southwest–Southeast (SW–SE) – (road/rail)

5,039,902,175 46,413,250 380,706,281

East–West (EW) – road 6,569,400,723 60,125,888 339,193,721Inland Water Route (IWR) 2,700,435,000 6,700,000 202,541,000Total cost (non-overlapping sections)c 23,188,819,861 207,158,555 1,434,688,991O&M = operation and maintenance.a The figures for the projected capital costs of construction are for 2015–2019. Other capital costs of toll booths, border-crossing

points (BCPs) and land ports, truck fleet modernization, and road-related facilities are for 2017–2019.b The figures for the projected costs of O&M (both columns) are for 2015–2035.c The total costs do not count more than once those sections of road along which two or more corridors overlap.Source: ADB estimates.

75. The projected capital cost requirement goes up almost threefold, to $23.2 billion, for the construction of economic corridors. This is due to the inclusion of other capital expenditures, a large


part of which would comprise investments in economic-space planning and development concerned with upgrading transport corridors to logistics corridors and then to economic corridors. Adaptation to climate change would also require substantial anticipatory investments. Estimates for investments in economic corridors are somewhat speculative and may be on the low side. All or many of these investments would be market-driven and sponsored by the private sector. The real outlay would be higher once all considerations are factored in. There is also the fact that some sections of the proposed corridors are more attractive than others because of their existing and/or committed infrastructure investments in factories, export processing zones (EPZs), tourist destinations, multimodal exchanges, seaports, river ports, mineral resource sites development, and administrative headquarters.

Table 12: Bangladesh’s Economic Corridors Ranked by Priority

Corridor Corridor Name–Transport Mode

Base Casea

Economic Corridor Ranks by

EIRRd

Transport Corridorb Economic Corridorc

NPV ($)

EIRR (%)

NPV ($)

EIRR (%)

EC1 Northwest–Southeast (NW–SE) – road 3,529,993,172 31.50 6,897,631,688 29.30 1

EC2 Southwest–Northeast (SW–NE) – road 2,851,466,337 22.90 6,472,140,303 27.80 2EC4 North–South (Central) (NS–C) – road 2,410,352,239 22.30 5,255,141,930 27.50 3EC6 Northwest–Northeast (NW–NE) – road 1,977,973,050 26.50 5,070,348,054 27.50 4EC5 North–South (East) (NS–E) – road 1,670,303,391 27.20 4,011,735,917 27.40 5EC3 North–South (West) (NS–W) – road 721,203,399 22.70 2,493,814,886 26.00 6EC9 Inland Water Route (IWR) 357,773,517 18.40 2,284,690,952 25.10 7EC7 Southwest–Southeast (SW–SE) – road, rail 521,027,785 17.60 4,073,505,518 24.80 8EC8 East–West (EW) – road 2,225,259,408 19.20 6,310,907,388 24.30 9

All Corridors 14,040,092,890 24.20 36,559,009,248 27.20EC = economic corridor, EIRR = economic internal rate of return, NPv = net present value.Note: Narrow definition of costs and benefits is used to evaluate transport corridor comparing capital and operation and main-tenance (O&M) cost of roads/rail with benefit from operating cost and travel time savings. Broad definition is used for economic corridor which includes other capital costs and benefits. Other capital refers to toll booths, border facilities, land ports, truck fleet modernization, capacity building and climate change adaptation. Other benefits include time savings at border, dry ports and river crossings and incremental value added attributable to improvements.a The “base case” in this context refers to the most probable NPvs and the EIRRs. b This refers to the proposed economic corridors in their capacity as transport corridors (the functions of which they would still

perform). With regard to defining the costs and benefits in the cross-corridor comparisons, the costs include the capital costs and the costs of the O&M of roads, railways and inland waterways, and the benefits include the reductions in operating costs and travel time.

c This refers to the proposed economic corridors in their full capacity as economic corridors. The costs and benefits are defined more broadly in this case, as they also include the capital and O&M costs for toll booths, border facilities, land ports, truck fleet modernization, capacity building, and climate change adaptation; and the benefits also include time savings at border-crossing points, dry ports, and river crossings, and the incremental value added attributable to capital improvements.

d This also refers to the proposed economic corridors in their capacity as economic corridors.Source: ADB estimates.

76. Fostering domestic and cross-border transport, as well as economic corridor connectivity, will help Bangladesh: (i) improve productivity in accordance with its natural comparative advantages; and (ii) benefit from complementarity, thereby increasing output, trade, and consumer welfare. Concrete gains will accrue to Bangladesh from the development of CIMECON through investments in road construction and/or rehabilitation; the construction and/or modernization of road-related facilities such as BCPs, land ports, tollbooths, and truck fleets; mega projects like the Padma Bridge; skills development and management-capacity building; and climate change adaptation. These gains will include (i) savings


in travel time; (ii) savings in travel costs; (iii) increased road freight traffic; (iv) higher employment rates; (v) GDP growth; (vi) increases in trade, including total exports, imports, and interregional trade; (vii) higher revenues; (viii) greater subregional development, and (ix) private sector growth. In this study, the benefits derived from transport corridors will come mainly in the form of vehicle operating cost and travel-time savings. Benefits from the economic corridors will include vehicle operating cost and travel-time savings; additional time savings at BCPs, river crossings, and land ports; and incremental value added attributable to transport assets. The benefits, together with the costs, are the basis for estimating NPvs and EIRRs.

77. Economic analysis has shown that all nine of the proposed economic corridors would be viable, as they have positive estimated NPvs and EIRRs well in excess of the minimum acceptable 12% (Table 12). The nine corridors are ranked according to their EIRRs, using a broad definition based on the potential direct and indirect economic contributions of each corridor. This ranking is comparable with the ranking based on the corridors’ NPvs, which reflect the total potential economic contribution of each corridor. Economic Corridor 1 (EC1) is a clear winner in terms of both NPv and EIRR. Economic Corridor 2 (EC2), which coincides with part of the Bangladesh section of Asian Highway 1 (AH1), would have a clear advantage over the other corridors in terms of NPv (as both a transport and economic corridor). It would provide access to important border links with India and other SASEC countries via Benapole, in the southwest, and Tamabil, in the northeast. EC2 would also connect with road links to Myanmar and other Association of Southeast Asian Nations (ASEAN) countries, and to kunming in the People’s Republic of China via Myanmar.

78. Given their NPv and EIRR values, the proposed economic corridors are very promising. Economic Corridor 6 (EC6) would be an important transit route, as it overlaps with part of AH2 and with sections of EC1 and EC2, and would thus be able to provide border connections with India via Banglabandh, Tamabil, and Zakiganj. EC2 and EC6 would reduce the travel distance to India and other SASEC countries, and the distance between India’s northeastern states and the rest of that country. Equally significant is the potential contribution to greater economic integration between Bangladesh and northeastern India, to the benefit of both. Economic Corridor 8 (EC8) would improve the connectivity of the middle belt of Bangladesh, after the construction of the second bridge over the Padma River, at Goalanda Ghat and Paturia Ghat, which are now connected by ferry. Along this corridor, there would be connectivity to India and other SASEC countries via Benapole, and connectivity to Myanmar and other member countries of the ASEAN via Teknaf. The proposed Economic Corridor 4 (EC4) has the potential to evolve into an important central artery through Bangladesh, with a border link with India via Haluaghat, in the north.

79. Economic Corridors 3 (EC3), 5 (EC5), 7 (EC7), and 9 (EC9) are economically viable but lower in rank based on their potential contributions to Bangladesh’s economy. Still, each has a significance of its own. EC3 would provide neighboring India, Bhutan, and Nepal with direct access to Bangladesh’s seaport of Mongla through the land port in Banglabandh, and through other points along border link roads. Similarly, EC5 would serve as the gateway for northeast India to Chittagong Port, serving as an alternative to the lengthier route to kolkata and Haldia. The rest of India, as well as Bhutan and Nepal, would be able to access the Chittagong Port via EC1 and EC8. EC7 and EC9 are lower-cost rail-and-road and inland-waterway routes with transit potential, as well as regional linkages with India (and other SASEC countries) and Myanmar (and other member countries of ASEAN).

80. This study recommends that priority be given to developing EC1 and EC2. Much of the economic development of Bangladesh, and many of the critical points of interest, have been along these two routes, making them the natural priority economic corridors, with clearly defined regional connectivity, including the Bangladesh–China–India–Myanmar (BCIM) economic corridor, as well as rail links to Agartala, kolkata, Delhi, and Lahore. EC1 would be the route for all of Bangladesh’s major exports, especially the all-important exports of ready-made garments.


V. REPORT FINDINGS AND CONCLUSIONS

81. Unimodal transport corridors vs. multimodal economic corridors. Policy makers in Bangladesh are more focused on transport corridors than on economic corridors, resulting in a limited development impact. A vast array of roads (national, regional, zila (district), and rural), railways (broad and meter gauge), and inland waterways crisscross Bangladesh. Yet transport development, dominated by semiautonomous authorities, is still conducted on a unimodal basis. Bangladesh would benefit more from multimodal economic corridors, and that is why they should be at the core of development planning. Moreover, economic corridors could accommodate current and proposed special economic zones (SEZs), which are likely to add dynamism to Bangladesh’s economic growth.

82. Land-use planning. Rational land-use planning is a high priority in Bangladesh, as it is essential for stopping the loss of agricultural land, land grabbing, and unplanned urban expansion; and for managing the development of SEZs. Per capita agricultural land diminished from 0.170 hectares in 1961 to 0.056 hectares in 2011. The signs of land grabbing are visible all over the face of Bangladesh’s rural and peri-urban landscapes, mostly in the form of real estate developments and industrial sites.

83. Management of corridor development. Growth in industry, complemented by growth in the agriculture and service sectors, would be promoted by the Bangladesh Corridor Management Authority (BCMA), in collaboration with the already existing Bangladesh Export Processing Zones Authority, Bangladesh Hi-Tech Park Authority, and Bangladesh Economic Zones Authority, creating an incentive framework and providing support services that would appeal to private investors. The SEZs would all be located near the national highway network. The economic corridors would sustain economic growth, and accelerated economic growth would create a demand for the services offered in the economic corridors. With Bangladesh’s economy growing at a rapid pace, there is a persistent clamor from industrialists and developers for the establishment of economic zones. The linking of economic zones to economic corridors would harmonize production for domestic and foreign markets and facilitate the development and operation of high-tech industries and high-tech services. With progress in the development of economic corridors, the EPZs, which have been lagging, would be revitalized, as would the construction of high-tech parks (e.g., those in kaliakoir and Jessore). The interest shown by a company in India in developing part of the kaliakoir Hi-Tech Park is welcome news.

84. National and regional economic corridors. A synchronization and connectivity among national and regional corridors will generate a multiplier effect. Economic integration will create the market conditions for high returns on investment in national and regional economic corridors. Investment in domestic road corridors can be better justified if they are considered a component of regional connectivity, which is essential for expanded trade, transit, and transport, and thus calls for facilitation measures.

85. Logistics corridor development. very little attention has been paid to the development of logistics corridors, and this oversight has resulted in insufficient investment in the creation of a harmonized institutional framework for facilitating the movement of people and freight and the collection of relevant data. In the future, logistics corridors must be given greater priority in Bangladesh. The importance of good logistics to exports is self-evident. Field visits have confirmed that road transport must be freed of hurdles to ease the movement of exports from Bangladesh and of imports from neighboring countries. But an inadequate and inefficient transport infrastructure is currently raising costs, thereby hampering exports and undermining Bangladesh’s competitive strength. Despite these problems, exports from Bangladesh are on the rise, with total exports increasing by 11.65%, from $0.82 billion to $30.17 billion, between 1983–1984 and 2013–2014. Garment exports reached a record high of $24.50 billion in FY2014, 13.86% higher than the previous fiscal year. According to the Export Promotion Bureau and the Bangladesh Garment Manufacturers and Exporters Association, the continued prosperity of the garment


sector will hinge on political stability, the smooth transport of goods, and the efficient management of Chittagong Port—all aspects of the logistics system.

86. Planning of the spaces around the economic corridors. Bangladeshi planners and policy makers have not given enough focus on the development of economic corridors, which would contribute significantly to economic growth and poverty reduction, while laying the foundation for and promoting regional cooperation, in the process contributing to intraregional balance and equity. Economic corridor development should include planning for the economic and geographical spaces anchored in specific multimodal transport and/or logistics corridors. The corridors offer physical linkages and logistics facilitation that would help attract investment and generate economic activities in the surrounding areas, including the less-developed areas or regions.

87. A gap in planning. One important gap in planning is the lack of an integrated economic corridor network, which would serve as the cornerstone for optimal returns on investments in transport, logistic, and economic activities. Transport corridor development has been guided primarily by an adherence to Say’s Law, which holds that “supply creates its own demand.” According to this law, once road, railway, and energy corridors are in place, investments in other economic activities will automatically follow, and the full utilization of capacity will only be a matter of time. This is not always the case, however. The increased utilization of newly created transport corridors will require facilitation measures, including those to improve access to finance for complementary investments. Besides, the viability of economic corridors depends on the size and dynamism of local and regional markets. The evolution of markets is the key. This is why there should be a systematic evolutionary approach to developing comprehensive integrated economic corridors in Bangladesh.

88. Climate change. As Bangladesh is extremely vulnerable to the effects of climate change, it has been at the forefront of efforts to conceptualize, design, and implement mitigation and adaptation measures. This commendable effort has to be integrated into economic corridor planning. The integrated economic corridor approach calls for a risk-based analysis of climate change damage and impact on infrastructure to determine climate mitigation and climate-proofing needs.

89. Skills development. Bangladesh has achieved many educational milestones (e.g., in girls’ education and literacy), but the country has lagged behind in skills development overall. Investments have to be made in skills development facilities to provide vocational and skills training to a larger number of people, and thus be able to meet the demands of various sectors, especially those linked to the development of integrated economic corridors.

90. Options for corridor development. There are many options available to Bangladesh for developing economic corridors—based on existing or proposed transport corridors—that are supported by the government, the South Asia Subregional Economic Cooperation (SASEC) Program, and the Asian Highway planners. The implementation of these options would, however, result in a complicated network of 16 corridors that would be visually unclear and conceptually weak, with the functional content lost in multiple overlaps and directional confusion. And there would be no clear, rational hierarchy of the types of corridors: unimodal, multimodal, logistics, and economic. Besides, neither the individual corridors nor the integrated whole has ever been evaluated according to the relevant criteria for economic corridor selection: economic impact, connectivity, and market integration. This study proposes a restructuring of the 16-corridor network into a new nine-corridor comprehensive integrated multimodal economic corridor network (CIMECON) for Bangladesh. CIMECON can be elegantly represented in a format resembling the London Tube map. The nine corridors of CIMECON are candidate corridors, conceived to satisfy criteria relating to market integration and linkage. The development of integrated economic corridors within the country would be accompanied by facilitation measures to improve regional connectivity, transit, and integration. The map of CIMECON presents a clear visual image, as opposed


to one that is cluttered to the point of unreadability, because the concept underpinning CIMECON is clearly reflected in the London Tube-style layout. This layout, together with the economic mapping and planning of multimodal interchanges, brings out the functional content of each corridor and the interrelationship among the corridors, while clearly showing the hierarchy of corridor categories as the nine corridors evolve into economic corridors.

91. Economic impact of corridors. The final selection of the CIMECON corridors would be determined by economic impact analysis, with a two-pronged approach used for evaluating the economic impact of each corridor. A partial equilibrium project analysis based on the calculated EIRRs would determine the acceptability of each corridor at one level, supplemented by a more comprehensive macroeconomic optimization model that would assume the objective of integrated economic corridor development to be the maximization of incremental GDP, subject to certain stipulations (constraints). The macroeconomic optimization model would help identify the integrated economic corridors in Bangladesh that would (i) maximize incremental GDP; (ii) reduce poverty and regional disparities; (iii) enable skills development and land improvement; (iv) promote trade cooperation; and (v) make the structures within economic corridors climate resilient through adaptation measures, including climate proofing. The EIRR ranking established EC1 and EC2 as the two top corridors in terms of economic impact.

92. Priority corridors. The case for the proposed economic corridors, especially EC1 and EC2, is well established. CIMECON would provide a strong economic foundation for the development of a world-class infrastructure to facilitate the growth of local enterprises and attract foreign investment. Major cities, administrative centers, and market towns such as Bogra, Dhaka, Dinajpur, Elenga, Gazipur, Gobindaganj, Joypurhat, Panchagarh, Rangpur, Saidpur, Tangail, and Thakurgaon are booming along EC1 up to Banglabandh. When completed, the transport corridors would consist of modern two-, four-, and eight-lane highways that would have to be operated and maintained according to a comprehensive plan, with adequate funding for routine operation and maintenance (O&M), periodic maintenance, and special works. A flexible approach to toll-setting would ensure adequate foreign direct investment.

93. Corridor capacity. Many sections of the road, highway, and expressway network would adhere to the Asian Highway design standards and therefore would have sufficient capacity to carry domestic and regional traffic (passenger and cargo). Domestic and regional trade, transport, and transit would be facilitated by the construction of mega bridges and by the formulation and implementation of trade, transport, and transit policies fulfilling the requirements of domestic and cross-border traffic. During this process, the question of transit fees for foreign shipments would also be addressed. In the future, some sections of the economic corridors may fall short of capacity requirements because of increases in trade throughout the South Asia region.

94. The role of the private sector. The private sector would emerge as a dominant player in the construction of economic corridors, whether under exclusive or public–private partnership arrangements. In particular, the additional investments required to transform transport corridors into economic corridors would be undertaken largely by the private sector simply because the government cannot and should not do more than facilitation measures. The growth of vibrant local economies around transport corridors would be a boost for development entrepreneurs, who would champion small and medium-sized industries and new linkages between sectors. Business and household incomes would rise, government revenues would increase, and poverty and regional disparities would be reduced.

95. Transit trade. The economic corridors in Bangladesh would increase the country’s transit trade involving cargo originating in and/or traveling to other regions, including those where current movements are minimal. The economic corridors would enable neighboring countries to make greater use of port facilities in Bangladesh and also enable northeast India to transport cargo to the rest of India


cost-effectively. Bangladesh would have to foster enabling conditions that would allow northeast India to increase its trade with Bangladesh and other countries, and reduce the costs of shipping to other parts of India. In addition to improving connectivity within Bangladesh, CIMECON is about enhancing Bangladesh’s role as the land bridge between South Asia and Southeast Asia, via Myanmar, and between South Asia and northern Asia, via the People’s Republic of China. To reach that point, the economic and political obstacles to regional economic cooperation would have to be dealt with.

96. Trade and transport facilitation. The effects of trade and transport facilitation measures are clearly manifested in increased investments in roads, road-related facilities such as tollbooths and weighing stations, port facilities, and border and land-port infrastructure. Benefits accruing to CIMECON would also depend on truck fleet modernization, improved technology for baggage handling and transshipment, increased container traffic, and better-quality roads. The establishment of CIMECON would result in significant increase in vehicle operating cost savings. Travel, waiting, and processing times would be reduced, with commensurate cost savings. Truck traffic, and the quantity of freight transported, would increase; and cargo would move more smoothly from origin to destination. Consumer goods, capital goods, and construction materials would reach their destination markets sooner than before. Cross-border trade between Bangladesh and its neighbors and transit trade would increase, as would trade between these countries and the rest of the world, as warm-water ports in Pakistan and Iran become more accessible. The macroeconomic effects would be in the form of incremental GDP growth; permanent employment creation; incremental revenue generation; and improved balance of payments, as exports grow faster than imports.

97. As mentioned above, there would be a direct impact on business and household incomes and on government revenues. Household income would increase and poverty would be reduced through temporary and permanent employment in road construction projects, related construction works, and in the service industries. With the reductions in transport and transaction costs, consumers would benefit from the lower prices of essentials. These benefits would be distributed evenly across the affected regions in Bangladesh, especially along the identified road corridors. Business income would rise with increases in production, trade, commerce, and service activities. As the business environment improves—with a reduction in procedural bottlenecks and illegal extortion, simplification of taxes and tariffs, and greater security—the private sector would have more incentive to invest and participate in cross-border trade, transport, and transit activities. The increases in government revenues (and reductions in budget deficits) would be attributable to the road corridors and related developments, and to cost-recovery measures such as road tolls, transit fees, and fuel taxes.

98. The maturity of CIMECON would come with policy and institutional reforms, and with the construction of appropriate border facilities and the streamlining of border procedures. CIMECON would then reach its full potential as a network of busy multimodal transit corridors. Foreign trucks would travel through Bangladesh, and Bangladeshi trucks would travel deeper into India and on to countries beyond. Trucks from other neighboring countries would be able to use India’s corridors to reach markets and ports in Bangladesh.

99. Smooth and friction-free vehicle movement is important for cargo transport. Many impediments constrain the movement of vehicles and cargo, including formal and informal checkpoints; poor road quality; lack of service support along link roads; lack of service roads, making it harder for drivers to deal with vehicle breakdowns; and long queues at river and rail crossings, ports, and BCPs. Heavy traffic becomes worse when markets and small towns spill over onto highways, a common occurrence all over Bangladesh. Rickshaw vans are no help, as they block or slow down highway traffic. Additional constraints to the development of trade, transport, and transit include (i) distances to major markets; (ii) truck fleets that are aging or in poor condition; (iii) tariff and nontariff barriers; (iv) barriers to market entry; (v) a weak and disorganized private sector; (vi) domination by the central government of economic activity


and decision making; (vii) weak investment laws and an inadequate legal and regulatory framework; (viii) poor information and communication technology; (ix) inadequate information, along with barriers to information exchange; (x) weak institutions in terms of operational efficiency, capacity, and human resources; and (xi) the inadequate development or absence of key services such as banking and finance, insurance, bonded warehousing, marketing, standards certification, and telecommunications.

100. Customs procedures. This report does not focus on border and customs procedures, but they are relevant to CIMECON, as greater cross-border movement would account for some of the increased traffic in Bangladesh. In short, nontariff barriers are a problem. There is always scope for simplifying and streamlining customs procedures and documentation requirements. Other barriers include delays due to the lack of capacity, an overly bureaucratic approach, excessive checking arising from the control mind-set of officials, and the unnecessary checking of vehicles already cleared elsewhere. Add to that the “illegal taxes” (i.e., extortion) at customs points and informal road tolls charged by police, in connivance with thugs operating on the highways and at vehicle stops. Moreover, customs cooperation between countries is minimal. All these factors hold back the growth of both domestic and cross-border trade, and raise cost of exports.

101. Trade and transit agreements. There is little capacity for designing, implementing, and monitoring bilateral, trilateral, and regional trade and transit agreements. Bangladesh has entered into such agreements with neighboring countries, but some of them lack the details and commitment necessary for implementation. And impediments to third-country transit are sometimes an issue due to security concerns that need to be addressed. Transit problems are also compounded by the difficulty of obtaining visas, the lack of mutual recognition of drivers’ licenses, absence of TIR carnet arrangements,31 and the absence of bonding and guarantee insurance systems. Moreover, reciprocal traffic rights are not enforced; and the existing laws, rules, and procedures are not always consistent with international agreements or with the regulations of the World Trade Organization.

102. Border and land port facilities. The facilities at many border posts and land ports remain far short of the minimum requirements for supporting the movement of people and goods or for normal customs operations. The BCPs and land ports in Bangladesh are characterized by lack of space; uncertainty of property rights; inadequate buildings; lack of parking spaces for trucks; insufficient handling facilities for other vehicles and for passengers; and inadequate border policing, warehouses, cargo-handling equipment, detection equipment, telecommunications, information technology (i.e., computerization of operations, and local and wider-area networking and linkages), railway and river-port facilities, power supplies and other utilities, and, last but not the least, human resources. The government and the Bangladesh Land Port Authority have taken the initiative in modernizing facilities at 12–14 border locations on a build–operate–transfer basis. Customs operations are greatly hindered by the lack of external communication links, information technology setups, and reliable power supplies. In addition, different agencies control different operations at the BCPs, a situation that results in confusion. Before adding more long-term expenditures on existing or new facilities, it would be preferable to develop a master plan for border and inland facility development, taking into account prospective transport and economic corridor development. The Automated System for Customs Data (ASYCUDA) would help implement risk management in a consistent manner by providing automated selectivity based on preset system parameters.

103. Operation and maintenance. The levels and growth rates of traffic on some of the major road arteries suggest that the O&M of an improved road network could be self-financing by means of road tolls and fuel taxes. The capacity of the Ministry of Finance to make funds available for road maintenance has been constrained by weak revenue generation, a problem that road tolls, transit fees,

31 “TIR” stands for “Transports Internationaux Routiers” (International Road Transport).


and fuel taxes could address. There is a general view that it may be more advisable to follow the strategy of zero or low transit fees at the initial stages, in order to encourage the use of Bangladesh transit routes by foreign vehicles. However, if the amount to be collected eventually came to $100 per incoming truck, the revenues could be substantial. Private financing and regulation of toll roads seem appropriate, as there are sections with projected traffic of at least 10,000–15,000 vehicles a day, the rates that would be viable for the operation of tollbooths by private companies (considering the construction, operating, and financing costs).

104. Road safety. The roads in Bangladesh are generally hazardous due to their design, as well as due to congestion, disregard for traffic rules, road encroachment by markets and towns, slowly moving vehicles, poorly maintained or nonexistent shoulders, reckless driving, lack of roadworthy vehicles, and the absence of road stops. Human and animal casualties and vehicle damage mount every year. Some road segments, such as the one from Jamuna Bridge to Hatikamrul, are known as death traps. The effects of drinking and drug abuse on road safety are no less an issue.

105. Urbanization and economic corridors. Urbanization is intrinsically linked to economic corridor development, and vice versa. Without exaggeration, Dhaka is the most unlivable city in the world. In Bangladesh, urbanization has to be a trigger for growth, which needs to be planned in a manner that is innovative, socially sensitive, and connectivity-oriented (with connections among major cities and between cities and peri-urban areas). Cities must be well regulated and should be made more livable (via better supporting infrastructure and services), made more viable for business (by preventing real estate price bubbles, traffic congestion, and other impediments), and economically diversified and dense (high economic density as opposed to population density, as measured by GDP or value-added per square km). The economic gap between small towns and large cities should be narrowing, rather than growing, as seems to be the case now. According to Zahid Hussain, a lead economist at the World Bank, “the Dhaka metro area needs to evolve into a diversified economy with skilled human resources and an innovation capacity fueled by the cross-fertilization of ideas typical of large metropolitan areas. Dhaka metro area also needs to be better connected internally and with its peri-urban areas, and both Dhaka and Chittagong have to strengthen their connection to the global economy. Improved connectivity within Bangladesh’s system of cities is also important for productivity and export competitiveness. The development of an economically dynamic urban space, in particular in the Dhaka metro region, has occurred at the expense of livability. The livability of the urban space will become an even more binding constraint to sustained growth as Bangladesh transitions to a new business model based on higher-value industries and services, which need a highly skilled and internationally mobile workforce.”32

106. The development of the proposed economic corridors would contribute to a rational pattern of urban growth, a far cry from the current chaotic state. The population has become more mobile, which means that some redistribution of the population among various levels of urban areas will occur, as indicated by prospective development of satellite townships away from Dhaka proper. Here is the dilemma: satellite towns eat up agricultural land and alienate the poor from their land. On the other hand, they help lure people away from the overcrowded center of metropolitan Dhaka.

32 Z. Hussain. 2013. In Bangladesh, the Alternative to Urbanization is Urbanization. World Bank Group website. 13 May. http://blogs.worldbank.org/endpovertyinsouthasia/bangladesh-alternative-urbanization-urbanization


VI. RECOMMENDATIONS

107. The recommendations of this study are divided into two parts: core priority actions and complementary priority actions. The core priority actions are linked to the longer-term overall socioeconomic development of Bangladesh and to the government’s vision for transport sector development. The complementary priority actions will be required to ensure the longer-term sustainability of CIMECON.

A. Core Priority Actions108. Core priority infrastructure-related actions. Invest in transport and trade infrastructure to create alternative competitive routes for trade between Bangladesh and its neighbors and with third countries.

109. Core priority institution-related actions. Strengthen the country’s institutions that are related to domestic and international trade (the latter including cross-border trade and trade with third countries). This would entail improving multimodal interchanges, transit formalities and monitoring, port capacity and efficiency, and the customs environment—to make all of them transport- and trade-friendly.

110. Core priority policy-related actions. Harmonize transport, transit, trade, and tariff policies, standards, and regulatory frameworks; conform to international regulations, conventions, and treaties; rationalize and strengthen Bangladesh’s participation in bilateral and multilateral trade and transit agreements; and foster private sector growth to increase investment in cross-border trade and transport facilities (Map 4).

B. Complementary Priority Actions111. Complementary priority infrastructure-related actions. The recommended complementary infrastructure-related interventions include the following:

(i) These are the strategies that should underlie the interventions:

(a) In the future, physical investments should factor in multimodality into the transport hierarchy to maximize the value-added impact and transport cost savings.

(b) To maximize growth impact, transport corridors should be elevated to economic corri-dors, with additional investments in road-related facilities; border facilities, border link roads, and land ports; airports, airport link roads, and air services; multimodal inter-changes; rail links; inland waterways; tollbooths; weighing stations; truck stops; cargo handling and transshipment facilities; truck fleet modernization; and investments in climate change adaptation and proofing (given that roads in Bangladesh are highly vulnerable to climate change).

(c) Land is a key constraint and concern in Bangladesh, so early action on land acquisition and access to right-of-way is paramount.

(d) The government should gradually make all the national highways access-controlled, thereby eliminating nonmotorized transport and auto rickshaws, which compete with and slow down motorized highway traffic.

(e) Economic corridors must be based on rational land-use planning and on the integrat-ed development of geographic space to create an enabling environment for national and regional corridors. There should be a careful assessment of the suitability of areas


Map 4: Selected Proposed Infrastructure Interventions on Economic Corridors 1 and 2



along the highways for urban settlement and expansion, housing developments, farm-ing, factories, trading and business centers, locales for services (e.g., education, health, entertainment, waste management), and transport and communication facilities. This means that urban planning and road network planning have to be an inherent part of integrated countrywide economic corridor network development.

(f) Investments should be prioritized on the basis of the economic internal rate of return of each corridor and road segment.

(ii) There should be a strategic approach to urban industrial development alongside economic corridor development. The integrated planning would have to include the possibility of re-locating industries away from their current overcrowded locations. In any case, there would have to be a balance between the development of satellite towns and the growth of second-ary and tertiary cities and towns as a means of redistributing human settlements.

(iii) The upgrading of border posts and land ports around the country: In addition to those mentioned earlier, investments would have to be made in priority border posts and land ports located in Akhaura, Bhomra, Bibir Bazar, Birol, Burimari, Darsana, Haluaghat, Hili, and Sonamasjid. Burimari will be upgraded under an ADB-financed project (South Asia Subre-gional Economic Cooperation Road Connectivity Project—Bangladesh).

(iv) Border link roads: Parallel to border-post and land-port development, investments would have to be made to upgrade underdeveloped border link roads such as Mymensingh– Phulpur–Haluaghat, khulna–Satkhira–Bhomra, Nawabganj–Sonamasjid (Baliadighi), Joypurhat–Hili, and Dinajpur–Birol.

(v) Warehouses and assembly plants near border facilities: Following the example of the Tata warehouse and assembly plant under construction in Petrapole, which will be devoted to India’s exports to Bangladesh, the government should develop an incentive framework to encourage India’s private sector to invest in similar warehouses and plants in Bangladesh.

(vi) Infrastructure to ease road encroachment: The development of economic corridors would have to include the construction of bypasses to prevent small towns and marketplaces from encroaching upon the highway, slowing down traffic. The construction or improvement of bypasses and other infrastructure, such as service roads, flyovers, and junctions, would cre-ate the conditions for better traffic management. Moreover, there should be regulations preventing the access of slow-moving vehicles to national highways, as the current situation adds another 20%–50% to travel time between any two points.

(vii) Economic space planning and development: Economic corridor development has to go hand in hand with rational land-use planning and the development of economic zones. For example, the Dhaka (North)–Jamuna Bridge belt is likely to be highly urbanized, with the potential for economic zones, subject to land use and economic space planning. The same is true of the area between Dhaka and Bhairab Bazar. The Dhaka–Mawa space offers an op-portunity for structured and rational development. In fact, industrial and commercial cen-ters and special economic zones (SEZs) could be established or expanded all along EC1 and EC2. Selected proposed investments in the economic spaces along EC1 and EC2 are shown in Map 5. The targets for investment would be economic zones, cross-border economic zones, SEZs, EPZs, seaports, land ports, border link roads, industrial belts (e.g., in Dhaka, Chittagong, and khulna), and tourist destinations. Other potential investments could be in river ports, multimodal connection facilities, city flyovers, ferry services, railway stations, and rail modernization (in accordance with the government’s 20-year master plan for railway development).


Map 5: Space Planning for Economic Corridors 1 and 2



(viii) River ports: In a riverine country like Bangladesh, river ports would be essential components of multimodal integrated economic corridors. High priority should be given to the construc-tion and/or expansion of the river ports in Angtihara, Aricha, Ashuganj, Baghabari, Barisal, Bhairab Bazar, Chatak, Chittagong, Cox’s Bazar, Dhaka, kazipur, khulna, Nagarbari, Naray-anganj, Narsingdi, Patuakhali, Sirajganj, and Tongi.

(ix) Ferry services: Until the proposed bridges are built and put into operation, it would be advis-able to upgrade ferry service between Paturia and Daulatdia, Nagarbari and Aricha, Goal-anda Ghat and Paturia, and keorakandi and Mawa.

(x) Railways: Railway modernization is a necessity everywhere in Bangladesh, but, in the con-text of CIMECON, priority would have to be given to the Darsana–Chittagong connection. Along this route, an upgrading is recommended for the railway stations in Akhaura, Basail, Brahmanbaria, Chittagong, Comilla, Darsana, Dhaka, Feni, Ishwardi, Jamtoil, Joydebpur, Laksham, Mainamati, Narsingdi, and Poradaha.

(xi) Multimodal interchanges: For CIMECON, the development of multimodal (road, rail, sea-port, river port) connection facilities is of critical value. There are many options, but those directly related to EC1 and EC2 include Baghabari, Benapole, Bhairab Bazar–Ashuganj, Bogra, Charjanjat, Chittagong, Comilla, Cox’s Bazar, Dhaka, Feni, Jessore, Joydebpur, ka-zipur, khulna, Madaripur Mawa, Meghnaghat, Mongla, Narayanganj, Narsingdi, Parbatipur, Rangpur, Saidpur, Sirajganj, Sylhet, and Tongi.

(xii) Complementary priority institution-related actions. (a) Border management: Many agencies have a presence at the border-crossing points (BCPs).

There should be a clarification of their respective roles and responsibilities and of their hi-erarchical relationships. The reform and modernization of the border and customs services should continue to receive high priority in the coming years. The introduction of common facilities and joint inspections at the BCPs should also be considered.

(b) Information and communication technology: For information management, the Automated System for Customs Data (ASYCUDA) should be implemented, as it would help standard-ize customs clearance and eliminate repeat checks, while promoting transparency and ac-countability to reduce corruption, which is rampant in the customs services.

(c) The private sector: The required investment for economic corridor development would be massive, far beyond the capacity of the public sector. Enabling conditions for private sec-tor participation, including foreign direct investment, whether individually or in the form of public–private partnerships, would have to be established. Private sector participation in the development of economic corridors and related facilities (e.g., truck fleet modernization) would require giving the private sector easier access to bank credit.

(xiii) Complementary priority policy-related actions.(a) Border facilities: visits to BCPs on the proposed economic corridors brought home the point

that the economic returns from regional and national corridors could be maximized through trade; transit; and transport facilitation measures, including effective investments in appro-priate cross-border and transport infrastructure, to be financed by the national budget and foreign assistance resources.

(b) Transit: To redress transit problems, several steps may be considered by neighboring gov-ernments on a reciprocal basis. The introduction of the “bonded carrier” system should be expedited. Streamlining border-crossing formalities would facilitate road vehicle, cargo,


and crew entry. Time- and resource-intensive transshipment and changes of vehicles at the borders must be avoided at all costs. Bangladesh and its neighbors should agree to the mu-tual recognition of registration forms, licenses, and inspections. They should also enter into bilateral or multilateral agreements to grant mutual freedom of transit and to exempt transit traffic from non-cost-related charges. Sanitary and phytosanitary, and quarantine regimes should be applied uniformly and seriously. Foreign transport operators should be allowed to operate in each country, and this would mean harmonizing infrastructure design and road traffic rules. A detailed procedure should be drawn up for a modified Transports Internation-aux Routiers carnet system in which the transit of containerized cargo would be approved on the basis of the shipping line’s or steamer agent’s seal. One could consider corridor- specific approaches and a flexible guarantee ceiling for the region.

(c) Imports of stones for crushing: Stone importation and crushing in the Tamabil region pose a threat to forestry and tourism, both of which appear to be under environmental stress be-cause of the unregulated and hazardous approach to stone crushing. The situation calls for a review of the relevant environmental and development policies.

(d) Private sector policy: The policy framework for private sector development should focus on improving the investment environment and on promoting the smooth working of mar-ket forces. Policy reforms should aim to direct private investment to priority areas and to strengthen the private sector’s capacity to participate effectively and extensively in cross-border trade and transport-related activities.

(e) Private participation: Both the public and private sectors, separately or jointly, could invest in technical and maintenance workshops, highway rest areas, and transport terminals at stra-tegic locations. The private sector should be encouraged to help fund warehouse and trans-shipment facilities at the borders.

(f) Regulation and deregulation: There should be a deregulation of transport services, interna-tional transport, and transit; but there should be regulations regarding safety and mandatory third-party liability insurance. The current regulations on drivers and vehicles need to be made more rigorous in order to improve road safety and protect the environment and road infrastructure.

(g) Human resources: Skills development policies and strategies have to be synchronized with the government’s infrastructure development program. Skills upgrading is necessary for project implementation and for postproject management of assets and services. Appropri-ate investments would have to be made in skills development and management capacity building.

C. Implementation Strategies

(xiv) It is recommended that an Economic Corridor Development Authority be established to pursue the network development proposals presented in this study.

(xv) It is also recommended that a Bangladesh Corridor Management Authority (BCMA) be es-tablished by an act of Parliament to coordinate the development, operations, and manage-ment of all economic corridors. It is also recommended that the BCMA establish a Special Implementation Cell to fast-track important transport corridor projects. The Special Imple-mentation Cell would be responsible for implementation and for monitoring implementa-tion progress.

(xvi) Ongoing road and bridge projects, together with other mega projects, would have to be ex-pedited to avoid economic losses and human suffering, and to reap the economic benefits.


Mega projects are interlinked due to the budgetary allocation process and intersectoral linkages. Therefore, to facilitate the synchronized implementation of all mega projects, the existing Fast Track Project Monitoring Committee, headed by the Prime Minister, should be reorganized on a more structured basis and should focus directly on implementation, not only on monitoring implementation, with adequate capacity for performing this more de-manding task. In addition, the concerned government ministries and agencies must monitor the progress of work very closely and take corrective action at the first sign of trouble.

(xvii) The implementation of the recommended priority actions should be phased in sequence or in parallel, as the case may be, to create the maximum synergy for optimal development impact. All the actions recommended in this study would have to be incorporated into the government’s Seventh Five-Year Plan and into its revised Perspective Plan. Implementation would be operationalized through the 3-year rolling Medium-Term Budget Framework, un-der which the annual budgetary allocations would be made.


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AsiAn Development BAnk6 ADB Avenue, Mandaluyong City1550 Metro Manila, Philippineswww.adb.org


Economic corridors are anchored on transport corridors, and international experience suggests that the higher the level of connectivity within and across countries, the higher the level of economic growth. In this paper, a new set of corridors is being proposed for Bangladesh—a nine-corridor comprehensive integrated multimodal economic corridor network. This paper presents the initial results of the research undertaken as an early step of that development effort. It recommends an integrated approach to developing economic corridors in Bangladesh that would provide a strong economic foundation for the construction of world-class infrastructure that, in turn, could support the growth of local enterprises and attract foreign investment.

About the Asian Development Bank

ADB’s vision is an Asia and Pacific region free of poverty. Its mission is to help its developing member countries reduce poverty and improve the quality of life of their people. Despite the region’s many successes, it remains home to a large share of the world’s poor. ADB is committed to reducing poverty through inclusive economic growth, environmentally sustainable growth, and regional integration.

Based in Manila, ADB is owned by 67 members, including 48 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance.

CoNNECtiNg BANglADEsh: ECoNomiC CorriDor NEtworkMohuiddin Alamgir

adb SOUTH aSia wOrking paper SerieS

No. 49

december 2016

Date post:	04-Jul-2020
Category:	Documents
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