Economic impacts of the Padma bridge in Bangladesh

The proposed Padma Bridge will be a multipurpose road-rail bridge across the Padma River. When
completed it will be the largest bridge in Bangladesh and the first fixed river-crossing for road traffic. The
under-construction Padma Bridge, due to be opened to traffic by the end of 2018 to serve as gateway
between the capital city Dhaka and 21 South-Western districts, is changing people's mindset with hopes for
rapid and vast socio-economic developments. Economists predict once the bridge becomes operational, it is
expected to push growth of the country's gross domestic product (GDP) up by 1.2 per cent and create
employment opportunities for 10 million people.
The Padma Multipurpose Bridge will transform the lives of nearly 30 million people living in the country's
southwest region, promoting industrial and commercial activities and increasing economic and employment
opportunities, according to various studies and reviews on the major economic impact of the bridge project.
At least 30 million people, almost one-fifth of the countrys total population, will directly benefit from the
bridge, according to a study by the World Bank.
In a study, the Asian Development Bank (ADB) said that the construction of the Padma Bridge would
significantly help improve various sectors of the economy nationally and regionally. "With the bridge,
capital inflow will increase, promoting industrial and commercial activity and increasing economic and
employment opportunities for the local population," the ADB said. Besides, the ADB said that the people of
the region would have better access to health-care facilities available in Dhaka while easier communication
would help to expand better education and training facilities, ensuring the availability of the quality workers
required for sustainable economic growth.
Each taka being invested in the Padma Bridge will produce about Tk 2 worth of social good, says a research
report. A US nonprofit think-tank, Copenhagen Consensus Center came up with this finding in its research.
According to the research calculation: Over the 31 years following completion of the bridge, overall
benefits to road users from these two sources are projected to be Tk 1.3 trillion (Tk130,000crore).

Financial inclusion (Bangladeshi perspective)

Financial inclusion or inclusive financing is the delivery of financial services at affordable costs to sections
of disadvantaged and low-income segments of society. The term "financial inclusion" has gained importance
since the early 2000s, a result of findings about financial exclusion and its direct correlation to poverty.
BANGLADESH has made a broad social commitment for inclusive, equitable and environmentally
sustainable socioeconomic growth 'leaving no-one behind', as espoused in the new sustainable development
goals. The government has accordingly led proactively with the country's progress in sustainable
development, with policy thrusts on massive digitization to support financial inclusion and inclusive growth.
Bangladesh Bank, the country's central bank, is supporting the government's efforts with its own initiatives
by promoting financial inclusion and environmentally sustainable financing.
Some of the inclusive financial products are -
Ten-taka (12 cents) bank accounts for millions of farmers and social safety net beneficiaries (The
central bank approved a Tk 200 crore refinancing scheme to provide loans to Tk 10 account holders . As of
September this year, the number of Tk 10 account holderswho are mostly farmers, garment workers, city
corporation cleaning workers, freedom fighters and social safety net beneficiariesstood at around 1.87
crore. )
Bank-led mobile banking (Mobile banking in Bangladesh continues to grow fast, scaling a new height last
year with 53 percent growth year-on-year.
In 2015, the industry saw Tk 157,773.31 crore in transactions through mobile phones -- the amount being
more than half the country's national budget, according to a report of Bangladesh Bank. In 2014, the mobile
banking industry saw Tk 103,155.37 crore in transactions. The average monthly transactions made through
mobile phones stood at more than Tk 13,147.77 crore last year, rising from Tk 8,596.28 crore in 2014.)
School banking (at the end of December last year, there were 133,000 accounts in 45 banks with a total
deposit of Tk 9,605 million. The number of such accounts rose to 224,719 in 46 banks until June this year,
showing a deposit of Tk 1.28 billion. Currently, the average savings in these accounts work out to about Tk
5,716. )
SME loans for women entrepreneurs (The central bank has launched target-based credit activities for
banks. Between 2010 and 2015, about 18.35 lakh SMEs got loans to the tune of BDT 262,340 crore. Loans
of nearly BDT 100,000 crore are going to SMEs every year. BB has launched a number of refinancing
schemes involving BDT 2,100 crore from its own fund as well as funds from development partners. )
 "SMEs in economy of Bangladesh/Role of SMEs/Status of SMEs in BD"
ACCORDING to the National Industrial Policy 2010, any firm employing more than 10 but less than 25
workers is called a micro-enterprise. If the number of workers employed remains between 25 to 99, the
enterprise is identified as small. A medium enterprise employs 100 to 249 workers in Bangladesh. Small and
medium enterprises (SMEs) are expected to play a pivotal role in achieving the goals of poverty alleviation
as envisaged in the current development paradigm.

SMALL and medium enterprises (SMEs) are treated as the engines of growth and drivers of innovation
worldwide. They play a significant role in driving economic growth and generating jobs.

In Bangladesh, the sector is actually changing the face of the economy. SMEs are playing a vital role for the
country's accelerated industrialization and economic growth, employment generation and reducing poverty.
SMEs now occupy an important position in the national economy. According to the available information
provided by Bangladesh Bureau of Statistics, They account for about 45 percent of manufacturing value
addition, about 80 percent of industrial employment, about 90 percent of total industrial units and about 25
percent of the labor force. Their total contribution to export earnings varies from 75 percent to 80 percent.
The industrial sector makes up 31 percent of the country's gross domestic product (GDP), most of which is
coming from SMEs. The total number of SMEs in Bangladesh is estimated to be 79,754 establishments. Of
them, 93.6 percent are small and 6.4 percent are medium. The 2003 Private Sector Survey estimated that
there are about 6 million micro, small and medium enterprises, with fewer than 100 employees. About 60 to
65 percent of all SMEs are located outside the metropolitan areas of Dhaka and Chittagong. The country's
SME sector has created 15 lakh jobs between 2009 and June 2014. Now, private and foreign banks disburse
half of all farm loans and a third of these are going to SMEs.
Central banks role - The central bank has been at the forefront of SME development in Bangladesh.
The government
has rightly identified SMEs as the priority sector for transforming Bangladesh into a middle-income country.
In line with government's thrust, BB has been instrumental in designing and implementing SME sector
development initiatives as part of its development financing agenda.
BB has shown the world that a central bank can successfully manage its traditional role of monetary
authority while playing the complementary role of development driver. BB has already become the role
model in SME financing in the international arena within a span of only five years. Its initiatives are being
studied by other central banks of the world. The central bank is regularly receiving delegates from other
central banks who are looking at the country's success stories.
The central bank has launched target-based credit activities for banks. Between 2010 and 2015, about 18.35
lakh SMEs got loans to the tune of BDT 262,340 crore. Loans of nearly BDT 100,000 crore are going to
SMEs every year. BB has launched a number of refinancing schemes involving BDT 2,100 crore from its
own fund as well as funds from development partners.

SMEs in Bangladesh should see whether they could be part of this new phenomenon. It is worth noting that
SMEs that invest in technology and those with high labor productivity are more likely to be part of the GVC
(global value chains) . Bangladesh needs to maximize the benefits derived from the SME sector, as this
sector plays a pivotal role in promoting and sustaining the industrial as well as overall economic growth.
 DIGITAL BANGLADESH
Digital Bangladesh means she will be an e-state. The activities of governance, commerce, education,
agriculture etc. will be powered by computer and internet. Bangladesh has a goal of achieving Digital
Bangladesh in 2021. The goal of establishing such digital country would bring success in the ICT
(Information Communication-Technology) sector which cannot be ignored this 21st century.
Digital Bangladesh vision has four key priorities
(a) developing human resources ready for the 21st century; (b) connecting citizens in ways most meaningful
to them; (c) taking services to citizens doorsteps; and, (d) Making the private sector and market more
productive and competitive through the use of digital technology.
Digital Bangladesh is one of the nation's dreams, and so special emphasis is given on the application of
digital technologies to realize Vision 2021, which we commonly call Digital Bangladesh. By 2021, after 50
years of independence, our goal is to be a middle-income country with peace, prosperity and dignity. The
government of Bangladesh implemented a large number of projects relating to digital technologies and a
number of these are already underway. National ICT Policy-2009 was developed with a view to achieve
middle-income status of the nation by 2021 and developed status by 2041.
According to the National ICT Policy-2009, short-term, mid-term and long-term plans consisting of 306
action plans have been identified for the realization of Vision 2021
In spite of several bottlenecks and limitations, works are in progress for the realization of Digital
Bangladesh. Several projects for digitalization have been completed and a big number of projects are under
progress. The nation now, with over 12 crore mobile subscribers and 4.3 crore Internet subscribers, enjoys
the fruits of digitization in numerous areas of activities. The ultimate objective is to make more and more
services available at the doorsteps of the people with increased digitization where possible.

PMO is leading the Digital Bangladesh Vision 2021 agenda of the government facilitated bya2i with
technical assistance from the United Nations Development Programme (UNDP) and the United States
Agency for International Development (USAID). Our effort will focus specifically on achieving greater
financial inclusion through our more than 5,000 Digital Centres that were established in all rural and urban
local government institutions around the country, said Principal Secretary of the Prime Ministers Office
(PMO) and Chair of the Steering Committee for Access to Information Programme (a2i).
These Centers already provide an average of 4.5 million underserved citizens with access every month to a
wide array of more than 60 digital services. By mandating that one of the two entrepreneurs managing these
Digital Centers is a woman, we ensure a more gender-sensitive service delivery environment.
It is necessary to mention that in the short run "Digital Bangladesh" aims at E-Governance and service
delivery through utilizing ICT. But the vision "Digital Bangladesh" encompasses the whole arena of a
knowledge based Digital Economy. Bangladesh can't afford to achieve that goal in the short and medium
run. The thinkers, technocrats and IT experts have to focus on the short run issues and measures the present
Government should undertake to digitalize Bangladesh. It is important to start digitalizing service delivery
organs like Police, City corporation, Land Department, Tax Department, PDB, Water supply, Gas and other
authorities also including sectors like Banking, Insurance, Customs, Tax Collection. Digitalized institutions
like Bangladesh Bank, NBR, PSC, UGC, EC, ACC and other vital institution to go a step ahead towards
Good Governance.
Our government must take proactive steps to take technology to rural citizens. However our dream towards
digital Bangladesh has a long way to go. Digitalization of Bangladesh will depend how best the Government
can leverage the power of ICT to increase the access to information of its population.
 Private sector investment: Status and suggestions
The countrys economic growth and development strongly depends on private sector. Private sector plays a
huge role in improving the living standards of people. The private investment has been stagnant for past few
years in BD.

The figure shows the current scenario of the Private sector investment in Bangladesh. The major reasons for
the stagnant position in private sector invests are higher interest rate of bank loan, political unrest, lack of
sufficient electricity, gas , sustainable infrastructure, lack of good governance, lack of transparency in
various field etc.

By overcoming these pitfalls the next budget is likely to envisage a huge private sector investment in the
economy, a gap of above Tk 80,000 crore or nearly 22 per cent growth from the poor investment made in the
outgoing financial year. It will raise the contribution of private sector investment to gross domestic product
to 23.3 per cent in the next 2016-17 financial year against 21.78 per cent in the revised estimate for the
outgoing 2015-16 financial year, officials concerned said.

The national economy seems to be trapped under a 6.0 per cent growth due mainly to lack of investment.
Investment is not accelerating due to lack of proper policy and investment promotion strategies, Debapriya
Bhattacharya, a distinguished fellow of Center for Policy Dialogue (CPD), told The New Nation on recently .
He said, Bangladesh targets a GDP growth of 8 per cent in its Seventh Five Year Plan. If the country wants
to achieve the target, the share of investment in value needs to be accelerated to 32.5 per cent from current
28 per cent. We cannot overcome such sluggish investment scenario unless investors are being facilitated
by planned way. A strategic plan with various fiscal incentives for the investors is a must to gear up the
investment scenario further, he noted. Debapriya Bhattacharya further said the investors need supportive
policies along with congenial political environment for the security and return of their investment.

Former Bangladesh Bank governor Mohammed Farashuddin at a workshop of Economic Reporters Forum
in the capital said that the responsibility rested with the government to help boost private sector investment,
as the issue required pro-business and investment-minded economic policies. He insisted on lowering
interest rates by the private sector banks so that investors could feel encouraged to park their fund to propel
growth in the private sector business and subsequently contribute to the growth of the national economy.

Written by
The great Abu Zafar Rubel
Assistant Director of Bangladesh Bank