Bangladesh, once dismissed as a 'basket case', is now on the rise to becoming an economic power in the Asia-Pacific region. Unquestionably, the country has come a long way since its independence in 1971, as is evident in its remarkable socioeconomic performance. Furthermore, several megaprojects have been initiated in recent years to ramp up the advances and address future challenges.
When we go through newspapers or watch television channels, we can find updates and news regarding various megaprojects. The majority of these ongoing megaprojects are being completed under public-private partnerships (PPPs). We hear diverse economists and experts' perspectives on how these projects will accelerate the country's economic growth. This inspires us to hope for a brighter future for Bangladesh. However, alongside numerous positive accomplishments, we frequently hear reports of irregularities and mismanagement in various ongoing projects.
Due to these drawbacks, often many projects cannot be completed within the stipulated time and the public money gets wasted. Initially, public-private partnership was considered a means of attracting foreign investment. Realising the importance of this latest development paradigm, the PPP policy was adopted in 2010 and the PPP Act in 2015. With the enactment of the PPP Act, a separate office attached to the Prime Minister's Office has also been opened for proper supervision of projects. Although a bulk list of 79 PPP projects is available on the website, the achievement and progress of these projects are not that satisfactory. Even methods of public-private partnership in project financing have often been criticized by various policymakers for the failure of several development projects.
However, looking at the outside world, we can see the successful implementation of various big projects through public-private partnerships. We can even learn from our neighbouring country India. With an estimated $263.61 billion in investment, there are 1,089 active projects in India under PPPs.
There are some reasons for which this method of public-private partnership in financing megaprojects has been effective in other countries but not in Bangladesh. Interference of politicians or influential people of society, awarding tenders of projects to the people of their choice, and spending the money allocated for the project indiscriminately can be seen regularly in our country.
In many cases, projects that are not technically or economically viable are implemented to advance political agenda, leaving out other important projects. Although the main purpose of all these projects is to serve the people, to make their life easier, but for all these negative reasons, what people get in the name of various projects and megaprojects neither guarantee the quality nor make their lives comfortable. In the midst of all this, people's money gets wasted in the name of development, and the country lags.
Bangladesh's dependency ratio has been steadily declining since the 1990s, and it is now in a position to benefit from demographic dividends. With the steady Gross Domestic Product (GDP) growth in recent years, Bangladesh has achieved outstanding growth in three major sectors: industry, agriculture, and services.
In the last five years, the services sector alone has experienced about 90 per cent growth. According to the recent official estimates, the services sector accounts for about 54 per cent of the country's total GDP. Also, due to its strong resilience in remittance, exports, and agriculture, Bangladesh has tremendously combated the negative financial impacts of the Covid-19 pandemic while many big economies have struggled during this period. As an indication of good performance in numerous socioeconomic indicators, Bangladesh is ready to graduate from the LDCs (Least Developed Countries) list in 2026, which could be a step towards its journey of 'Vision 2041'.
At the same time, we have a possible huge opportunity because of the trade war between the U.S.A and China. As a result of this dispute, investors are shifting their focus from the Asian trading hub, Hong Kong, to investing in other Asian countries. Also, in the first quarter (July-September) of this fiscal year, nearly an estimated $85 million in foreign direct investments (FDIs) has come to Bangladesh. The government is taking various policies to bring more such foreign investments. Recently, the government has identified 11 potential sectors for investment. The budget for the on-going fiscal year (FY22) also shows several initiatives to encourage new investments from local and foreign sources. However, time will tell whether these initiatives have been successful or not.
Also, we need to keep in mind the challenges lying in the future. LDC graduation will certainly give us an edge to move forward but at the same time will take away some of the benefits we have enjoyed for so long. In the future, we will not have the facility to take loans from abroad at low interest. So, there is no alternative to FDIs to sustain the trend of development. Again, the success of the FDIs will depend crucially on how effective the public-private partnerships are. Due to bureaucratic complexities, new initiatives in Bangladesh have to struggle with a lot of momentum to be successful. To attract more efficient local private, and foreign investors, the government should take enticing measures.
If the wrong party is tasked with addressing risks in any project, the total project cost will increase. If, for example, the risks associated with currency- exchange rate fluctuations or oil price fluctuations are transferred to the private sector, the private sector will substantially increase its costs to absorb them. In contrast, the public sector is better equipped to manage these risks and cost-effectively address them, thereby decreasing the overall cost and increasing the project's viability.
Moreover, given the lengthy duration (sometimes decades) of infrastructure development projects, the private sector may be uneasy about the implications of potential political leadership transitions over time. Governments must reassure the private sector that their obligations will be met to alleviate this concern.
There are numerous development projects currently running throughout the nation. In addition, numerous others have either been announced or are awaiting the announcement. The extent to which Bangladesh will be able to overcome upcoming obstacles depends on the successful implementation of these projects.
There is no doubt that effective public-private partnerships play a significant role in the successful execution of each of these projects. However, if the wrongdoing with the megaprojects continues, the country's prospect of a prosperous future may be ruined. To ensure effective public-private partnerships, investment-friendly policies, transparency, and accountability are a must. During the bidding process, projects should be awarded to companies that met the requisite standards.
Dr Md. Mahbubul Hakim, Associate Professor, Department of Economics, Shahjalal University of Science and Technology, Sylhet. [email protected]
Sayed Arafat Zubayer, Student, Department of Economics, Shahjalal University of Science and Technology, Sylhet.