Jun 11, 2015
Last week saw the Indian Prime Minister Narendra coming to Bangladesh on his maiden visit to the neighbouring country, elevating Bangladesh-India relations to a new era of cooperation. The visit which saw multiple instruments being signed, resolution of historical issues like the Land Boundary Agreement (LBA), and fruitful discussions being held on other contentious pending matters, was well received by all sections of the Bangladeshi society, media and intelligentsia.
According to World Bank and IMF, Bangladesh has emerged this year as the world’s 44th largest economy in terms of the Gross Domestic Product (GDP), advancing 11 notches from the previous year. In 2015, the national GDP grew to $205.3 billion, up from $185.4 billion a year earlier, while in terms of purchasing power parity, the country secured 33rd place in 2015, up by two steps from the 35th position in 2014. This development is yet another testament of the Awami League’s sound economic management of the country in the last six years.
Taking a landmark stride to transform the country into a developed one within 2041, the Awami League led government has rolled out a $37 billion national budget for next fiscal year, targeting to take the national growth level to 7%. The proposed budget has drawn welcoming response from the businesses and chamber leaders as being "business, industry and investment friendly". According to trade leaders, once implemented it would create vitality in the economy with generating a lot of employment.
Bangladesh's economy has been demonstrating healthy outlooks from the vantage point of a number of key indicators. Riding on the back of successful labour diplomacy, the country is set to receive over $15 billion in remittances, marking the highest growth ever, by the end of this year. A wide range of incentives in promotion of RMG sector has lifted the export earnings at $28.14 billion in the first 11 months of the current fiscal, up 3% from a year earlier. Meanwhile, the country’s foreign exchange reserves have once again gone past $24 billion mark.
With a vision to change livelihood of one million farmers, the World Bank has announced to provide Bangladesh with $476 million to develop a strong financial sector and improve agricultural productivity. Of the support, $300 million will be allocated to the financial sector while the remaining $176.06 million would go to the agricultural sector. Strengthening financial markets, infrastructure, food security and regulatory oversight are the ancillary benefits this allocation would bring for the country.
Infrastructure and Mega Projects
As part of stepped up efforts to change the progress of the nation, the government has designed and adopted a series of measures aiming to revamp and remodel the communication sector. To that end, the road transport and bridges ministry has taken up a 20-year mega plan involving around $4.94 billion to modernise the entire transport system. In addition, an amount of $187.5 million has been approved for the development of some 1,557 km district roads under 10 zones to ensure safe road communication across the country.
Bangladesh, in a monumental stride, has formulated a 20 year master plan with the goal to give the country's railway system a major uplift. The scheme includes as many as 235 projects to be implemented centering construction and upgrade. Moreover, the government has taken another initiative to construct the 2nd Bhairab and Titas railway bridges over Meghna and Titas rivers with the proposed Indian Line of Credit. Works are progressing fast to upgrade Dhaka-Chittagong rail tracks to double lines, of which work on 124km stretch has been completed.
Growth and Development
Overwhelmed at the milestones the country achieved in developing skills of the ultra-poor people, Hoonae Kim, Director Asia and the Pacific Region of International Fund for Agricultural Development (IFAD), has assured of enhancing cooperation further with Bangladesh in the fields of agriculture and employment. She commented that Bangladesh has made commendable progress in alleviating poverty and hunger as it is maintaining excellent economic growth over the last two decades reducing poverty as well as absolute hungers.
Last week, the government signed an agreement with the Asian Development Bank for a $120 million loan in for a six-year programme to improve the quality of primary education. The additional funds are expected to raise key performance indicators relating to student achievement, access and efficiency in Bangladesh which has one of the largest primary school systems in the world with over 19.5 million children enrolled in about 106,000 primary schools. Additional funding will come from the World Bank and the Global Partnership for Education.
Social Justice and Equity
The government has undertaken an initiative to enhance the number of beneficiaries and allowances for some of the major programmes under the social safety nets (SSNPs). The move coincides with the government’s effort to build a poverty-free country. The finance minister, in his 2015-2016 budget speech, proposed to change 3 million lives with the programme from the current 2.7 million and to bring more widows, abandoned and destitute women under coverage of subsistence allowance, using funds worth around $2 billion.
The Asian University for Women in Chittagong has launched a special summer course on Global Mental Health for its undergraduate students studying liberal arts and sciences. The course was originally proposed and initiated by Ms. Saima Wazed Hossain, member of the World Health Organization’s Expert Advisory Panel on Mental Health. It is being taught by visiting faculty from such universities as Harvard, Yale, NUS and London School of Hygiene & Tropical Medicine and AUW's own resident faculty. Thirty students from Afghanistan, Bangladesh, Bhutan, India, Malaysia, Myanmar, Nepal, Sri Lanka, and Vietnam have enrolled in this course.
Power and Energy
In a bid to make the promise to ensure electricity for all by 2021 a reality, the Awami League led government has signed two separate deals with major Indian power giants that would generate 4,600 megawatts of electricity. According to the deal, Reliance will spend about $3 billion to set up a 3,000-megawatt power plant based on imported liquefied natural gas, while Adani Power, India's largest private sector power producer, would build a 1,600 megawatts coal-fired power plant investing $2.5 billion.
To achieve double-digit growth rate for the economy within seven years, the allocation for the power and energy sector has been almost doubled in the proposed national budget for the upcoming fiscal year. The allocation stands at $2.39 billion which is 6.3 percent of the total budget. Over the last six years, the power generation capacity has been increased to 13,675 megawatt (MW) from 4,942 MW in 2009. In last fiscal year, the sector got $1.2 billion, accounting for four percent of the total budget.
Trade and Investment
In a recent report, the US Department of State has commented that Bangladesh made significant strides in reducing a number of investment-related constraints with up-scaling the investment opportunities, citing the government policies “in favor of increased economic growth”. The report titled “Investment Climate Statements 2015” stated that sustained economic growth, a demographic dividend, and increased reforms of the RMG sector are resulting in substantial interest in investing in Bangladesh.
Aiming to take the export earnings to a staggering $40 billion, the government chalked out plans to create jobs for 10 million people by setting up 100 economic zones within the next fifteen years. Once implemented, it would boost up the industrialization process, expand the employment opportunities while a major expansion on export promotion and diversification will also take place. The government has plans to make Bangladesh a middle-income country by 2021 and a developed nation by 2041.
International and Regional Cooperation
The Cabinet this week approved the draft motor vehicle agreement between four South Asian countries that would allow trans-border movement of vehicles, modeled after the EU. As per the deal, passenger, personal and cargo vehicles can run on designated routes in the four countries. Meanwhile, the World Bank may lend more than $1 billion to implement a number of regional connectivity projects for boosting trade and investment among Bangladesh, India, Nepal and Bhutan.
In another manifestation of strengthening regional connectivity, Bangladesh is going to provide river transit to India this year. At a recent meeting, shipping ministry officials of the two countries agreed to make mutually beneficial arrangements for the use of waterways, roads and railways for bilateral trade and passage of goods between two places in one country through the territory of the other. Twelve ports, six each in Bangladesh and India, have been proposed as ports of call where ships would load or unload cargos and undergo repairs.
Digital Bangladesh
The government has taken an initiative to impart quality IT and cyber security training to about 2,500 officers of ministries, departments and directorates in order enhance public sector efficiency and security of government services. The move came as part of establishing e-governance in line with government's Digital Bangladesh vision under a World Bank financed project titled as 'Leveraging ICT for Growth, Employment and Governance (LICT)'. A globally acclaimed training institution will conduct the training.
Works are progressing fast to implement different programmes for modernizing the country's land management system. As of now, a report has been prepared with digital land zoning maps covering two district towns of plain land and 152 upazilas of coastal area under Coastal Land Zoning Project. The government aims to develop physical infrastructure of all union land offices by 2019 and to digitize land related services in all upazila land offices by 2020. Another "Agricultural Land Protection and Land Use Act" has been drafted and will be finalized soon.
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