Economic impact of Padma Bridge

The Padma Multipurpose Bridge is a dream project for the millions of people in the southwestern region of Bangladesh.

Prior to the opening of the bridge, these districts were cut off from the country’s major economic centre, the Dhaka-Chattogram economic corridor. Ferries, launches and boats were the only means of communication and transport on the Padma River to the south-western districts. This form of transport was not only uncertain but was also time-consuming.

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Due to poor connectivity, economic operations in the southwestern zone have not been too easy. Consequently, the districts did not seize much industrialisation. As a result, poverty and under-employment constitute major problems in the region.

What is more, this region is strongly affected by climate change. Increased water salinity also has a major effect on agricultural production, and this area is particularly vulnerable to flooding.

However, the Padma Bridge will offer many advantages to the region.

It will connect the isolated 21 southwestern districts to the mainstream economy. It will also connect the port of Mongla and the port of Payra, respectively the second and third-largest ports in the country, with the capital.

Enhanced connectivity will encourage investment in the region. Therefore, not only will the economy in the southwestern region prosper and create jobs, but the economy as a whole will grow.

The Padma Multipurpose Bridge is estimated to boost the country’s annual GDP by 1.23 per cent. Similarly, the southwestern region’s GDP is projected to increase by 2.5 per cent.

Additionally, the bridge will be linked to the Padma Rail Link Project, which is expected to turn Bangladesh into a sub-route of the trans-Asian rail network and accelerate GDP growth by approximately 1 per cent. By doing so, Bangladesh will be able to maintain a railway network with Bhutan, Nepal and India.

The bridge will improve transportation to the southwestern districts and reduce the distance between Dhaka and the port of Mongla. Increased cargo movement between Dhaka and the Mongla Port will also reduce congestion in the port of Chattogram.

It is expected that the travel time between the Dhaka division and the southwestern region will be saved by about two hours for cars and buses and over 10 hours for trucks. A 10 per cent reduction in travel time to and from Dhaka will lead to a rise in the region’s economic output by 5.5 per cent, according to a study by the Japan International Cooperation Agency.

Agriculture and industry will benefit from new business opportunities brought about by improved transportation. New industrial units will be established, creating a large number of job possibilities.

The Bangladesh Economic Zones Authority is developing 17 economic zones in the region to accelerate industrialisation and economic growth. All of the southwestern districts will be covered in these areas.

There will be increased hiring, re-skilling or up-skilling of the labour force in accordance with industry needs, and maybe a hike in the minimum wage as the demand for labour rises. Hence, more economic opportunities will ultimately improve the living conditions and thus reduce poverty.

Of the districts, 13 have higher levels of poverty than the national average. Roughly 5 per cent more people live below the poverty line in the southwestern districts, in comparison with the rest of the nation, said the Asian Development Bank in 2011. Nevertheless, it is expected that the opening of the Padma Bridge will reduce poverty rates at the national and regional levels.

In a study published in 2011, the World Bank predicted that the poverty reduction rate will increase by 1 percentage point in the region and by 0.8 percentage points at the national level.

Agriculture and agro-processing-based industrialisation hold high potential for the region. As the southwestern region contributes a greater share to agriculture in GDP, mobilising investment in agriculture will be beneficial.

A variety of small and large sectors, including readymade garments, IT and logistics have the potential to develop in the region. The industrial expansion will have spillover effects in the form of network economies that will support cottage, micro, small and medium-sized enterprises (CMSMEs). The CMSMEs will, therefore, be able to link to other businesses and support organisations and benefit from economies of scale in buying, production, and distribution if they integrate with the local production systems.

Increased access to markets and resources will, thereby, improve CMSMEs’ sustainability and enable them to grow through increasing productivity and profitability.

The Padma Bridge provides a broad range of economic opportunities. So, an appropriate set of policies needs to be targeted with a higher priority.

First, the business environment is very crucial to attracting foreign direct investment (FDI) to this region. It can be improved by securing electricity, gas and water supplies and developing internal road infrastructure. Therefore, policymakers will need to develop and put into practice business-friendly policies.

Second, the government and private sector organisations should work together to improve credit access in the area to maximise the economic benefits of the bridge. In this connection, financing options for the CMSMEs should be eased and expanded.

Third, environment-friendly industrialisation that will preserve nature and maintain balance among ecosystems must be ensured.

Fourth, skilled workforce and land availability will be two major issues in this region. Hence, the government should prioritise skill training for its workforce and land acquisition through clearly defined channels.

Finally, if the right policies are in place, the Padma Bridge will transform the southwestern region into a regional economic hub for connectivity, trade and investment, boosting growth and development.

The author is a senior research associate of the South Asian Network on Economic Modeling. He can be reached at [email protected]

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