FDI is an important avenue for technology transfer, capital mobilisation, market access, and job creation. It has played a pivotal role in advancing the ready-made garments (RMG) sector, establishing Bangladesh as a global leader in the industry. Despite the RMG success, Bangladesh continues to trail its regional counterparts in attracting foreign investment. In 2023, Bangladesh secured only $3 billion in FDI which is significantly lower than Vietnam's $18.5 billion and India's $28.16 billion. At the same time, Bangladesh is in critical need to enhance its participation in the global value chain and diversify its export products and markets.

In this context, developing ports-led logistics infrastructure could be transformative in addressing these challenges by enhancing connectivity, reducing overall logistics costs and lead time, and creating an investor-friendly environment to attract higher levels of FDI. However, Bangladesh's current logistics infrastructure is under-developed and this will limit the industries and economy from reaching their full potential.

Chattogram Port, which handles over 90% of the nation's trade and about 98% of container trade, has been steadily increasing its capacity to handle cargo. The port is ranked 337th out of 405 in the World Bank's Container Port Performance Index 2023. According to the same report, ships face average turnaround times of 3.23 days at Chattogram, compared to Colombo's 0.86 days. Lastly, import clearance takes an average of 11 days, while export border compliance requires 36 hours.

Any efficiency gains in the ports will be negated if bottlenecks in the broader logistics ecosystem are not removed. Road, rail, and inland waterway connectivity between ports and the cargo hinterlands remain inadequate, adding to transportation costs and delays. The recent launch of a National Single Window (NSW) system is a step in the right direction that will streamline the regulatory process and improve efficiency, but it will take time for the full implementation to proceed and the benefits to take effect. These challenges, coupled with limited port capacity, prevent Bangladesh from capitalising on its geographic advantage and robust manufacturing base.

According to the World Bank, the logistics costs in Bangladesh range from 4.5% to 48%, varying by sector, which is significantly higher compared to other trade partners and neighbouring countries. The report suggests that national export earnings could increase by 19% with targeted short-term and medium-term reforms in the logistics sector. A 1% reduction in transportation and logistics costs could boost the demand for Bangladeshi exports by up to 7.4%.

Some critical projects under planning, such as the Matarbari Deep Sea Port and the Bay Terminal in Chattogram, offer glimpses of hope. These initiatives promise to increase port capacity, reduce export lead times, and cut shipping costs by up to 15%. However, the success of these projects depends on swift completion of project preparations and roll out of the project implementation, as well as supporting infrastructure such as a breakwater and adequate dredging of the navigational channel, and complementary investments in hinterland connectivity, warehousing, and digitalisation.

Global examples like Vietnam and Singapore underscore the importance of embracing technology, encouraging private sector participation, and ensuring a policy framework that attracts long-term investments.

For Bangladesh, the path forward is clear. The government must prioritise private participation in port operations, engaging highly reputed global operators through public-private partnerships. This will also help mobilise foreign private capital at a time when the government needs to minimise its public spending until fiscal discipline is restored. Simplifying customs procedures, reducing regulatory barriers, and integrating digital tools like AI and blockchain can significantly enhance operational efficiency. Moreover, developing multimodal logistics systems that connect ports with industrial zones and economic hubs is crucial for unlocking the country's trade potential.

The author is the chairman and CEO of Policy Exchange Bangladesh