Traffic congestion holds back Bangladesh exports, says World Bank

Traffic jam increases spending for Bangladesh exporters as congested transportation imposes high costs on the economy, the World Bank says in a new report.

Traffic congestion has led to an increase of export costs of goods, according to the global lender.

“Bangladesh’s congested transportation and often unsophisticated logistics systems impose high costs to the economy,” said Mercy Tembon, World Bank Country Director for Bangladesh and Bhutan, on Wednesday.

The congestion on roads and seaports, high logistics cost, inadequate infrastructure, distorted logistics service markets and fragmented governance hamper manufacturing and freight, further eroding Bangladesh's competitive edge, and putting its robust growth path at risk, she said while launching the report in Dhaka on Wednesday.

Bangladesh needs to improve its transport and logistics systems to meet the needs of its growing economy and boost export growth, said the country director.

“By making its logistics more efficient, Bangladesh can significantly optimise its connectivity, business environment, and competitiveness, putting the country on the right path to become a dynamic upper middle-income country,"

Efficient logistics, the report argues, has become one of the main drivers for global trade competitiveness and export growth and diversification.

For Bangladesh, improving its logistics performance provides an opportunity to increase its world market share in garments and textiles, which account for 84 percent of its total exports, expand into new markets, and diversify its manufacturing and agriculture into high-value products.

The report notes that improving Bangladesh’s logistics requires a system-wide approach based on greater coordination among all public institutions involved in logistics and with the private sector, increasing the effective capacity of core infrastructure, and removing distortions in logistics service markets to reduce costs and improve quality.

Efficient logistics has become one of the main drivers for global trade competitiveness and export growth and diversification, said the report.

There’s no doubt that reforms and investments for better transport and logistics will yield Bangladesh substantial economic benefits and strengthen its competitive advantage,” said Matías Herrera Dappe, senior economist at the World Bank and author of the report.

“But the solution to logistics is not just to invest more but to invest better, by focusing on the service gap, and creating the incentives for high quality and competitive logistics services,” he added.

Speaking at the function, Mashiur Rahman, economic affairs advisor to the prime minister, described the measures taken by the government to improve the communications system.

Recently, a meeting was also held with Indian traders to transport goods to Assam, India.

He said India proposed to use Chattogram and Mongla ports. “The proposal is at the initial stage,” he added.