ADB plans big to fix infrastructure gap
The Asian Development Bank is preparing a new strategy for the next five years for Bangladesh, slotting in the priorities of the government's development goals, a top official said.
Wencai Zhang, a vice-president for the Manila-based lender, said the new strategy for 2016-2020, which coincides with Bangladesh's next five-year plan, would continue to support the high-impact and productivity-enhancing infrastructure projects.
“We have a big package. In the coming years, ADB will try to mobilise more resources for Bangladesh to support the country's priority projects,” Zhang told The Daily Star in an interview on Wednesday.
The multilateral lender is also exploring options to mobilise more resources for the country as it “needs for more support and has the capacity to absorb more resources”.
ADB's main focus is to help the country fix its wobbly infrastructure, he said, adding that the multilateral lender will also support public-private partnerships in flagship infrastructure projects.
Infrastructure deficit is the major constraint for wooing in both foreign and domestic investment, he said.
“You don't provide a very good investment environment, particularly from the infrastructure point of view. You don't have good roads, connectivity, railways, port, airport and inland waterways, which make it difficult for investors to reach their national and international markets.”
Of ADB's total assistance of $2.9 billion to Bangladesh between 2011 and 2013, about 65 percent was allocated to energy, transport and urban infrastructure.
Zhang, who was on his maiden visit to Bangladesh, was caught up in the traffic jam, commonplace in the capital, on the day he gave interview to The Daily Star, as he moved around the city to meet various government officials.
“We should do something to ease the traffic jam in the city.”
For improving transport infrastructure and to support regional cooperation, ADB has included in its 2016 pipeline a $1 billion SASEC Railway Connectivity Investment Programme.
The lender has been supporting the development of Bangladesh Railway through the ongoing Railway Sector Investment Programme involving $430 million. “The railway is the lifeline of Bangladesh transport system,” said the Chinese national.
Zhang is also in favour of the Saarc Regional Railways Agreement to improve connectivity in South Asia. It will contribute to expanding market access for countries of the region and enable them to reap economies of scale, he said.
ADB is also expanding its support to the country's energy sector, where it is the lead development partner.
As of 2013, ADB had provided around $3.85 billion through 42 loans to support the energy sector in Bangladesh, contributing to increased power generation capacity and expanding transmission and distribution.
ADB has been implementing the Power System Expansion and Efficiency Improvement Investment Programme involving $700 million, the third tranche of which is included in the 2016 programme.
The lender will support the Bangladesh-India Electric Grid Interconnection Project to connect the two neighbouring countries in the coming years. It has already been included in the 2015 pipeline.
“We hope this will promote power transaction between Bangladesh and other neighbouring countries such as Bhutan and Nepal in future as those two countries can export power to Bangladesh,” Zhang said.
In the education sector, the ADB vice-president said the focus will mainly be on secondary education and skills development. It will provide $850 million for the sector and for skill development.
He said Bangladesh has a younger population, but if they don't have the skills the companies and the market need then the investors, who think long-term, will not have confidence in the country.
“Still there is a gap between the supply and demand sides. So, you need to develop the skills of the workers."
In addition, ADB has also included in the 2015 pipeline an additional financing of $120 million for the Third Primary Education Development Programme.
Zhang said Bangladesh needs to achieve higher economic growth in the coming years from the average 6 percent seen in the last one decade, to lift people out of poverty and become a middle-income nation.
He pointed to a stubbornly low investment-GDP ratio, saying the country needs to raise its investment level from the present 28.7 percent of GDP to the 35 to 36 percent range, to shift the economy to a 7 to 8 percent growth trajectory.
Both public and private investment will need to rise, together with raising the economy's productivity.
“I believe Bangladesh has the potential to achieve more than 6 percent annual growth in GDP,” he said, while calling for an improvement in the policy and regulatory environment.
“You need to simplify the procedures for doing business and help investors set up factories easily.”
He said more domestic resources need to be mobilised to support the higher public spending in infrastructure and social sectors.
The country needs to raise the tax-GDP ratio from the current 11 percent to a higher level to support the stronger growth in the coming years.
Zhang also welcomed the Asian Infrastructure Development Bank, a regional initiative led by China and is being seen by many as a challenger to other development partners such as the World Bank.
“We have always said that the need for financial resources is huge. The region faces a lot of challenges in trying to improve the infrastructure.”
Zhang said in his first visit to Bangladesh has been an eye-opener: he learnt a lot about the country and its current and future development strategy.
“I got the real sense. I see the challenges the country faces and also the opportunities and potential.”
The country is geographically located in a very good position, and could serve as a gateway, connecting South Asia with East Asia and Southeast Asia and even with Europe and Africa, he said.
He said if the country can continue to enjoy very stable political and social environment and put in place right macroeconomic policies it can move to high level of development stage and enjoy better living standards.
“The country has a bright future. My visit really gave me further confidence about the country. So, we should do something for the country,” he added.
Comments