A new World Bank report recommends Bangladesh improve its transport and logistics systems to better meet the needs of its growing economy and boost export growth.
The report, “Moving Forward: Connectivity and Logistics to Sustain Bangladesh’s Success,” found that by making logistics more efficient, Bangladesh can significantly boost export growth and maintain its position as a leading garment and textile producer and create more jobs.
U.S. apparel imports from Bangladesh were up 9.29 percent to $4.57 billion in the year to date through September compared to a year earlier. This gave the country a 6.78 percent market share of U.S. apparel imports in the period, a gain of 10.13 percent for the 12 months through September.
According to the report, those imports to the U.S. and elsewhere could be higher if logistics were better. The World Bank cited congestion on roads and in seaports, high logistics costs, inadequate infrastructure, distorted logistics service markets and fragmented governance in hampering manufacturing and freight, further eroding Bangladesh’s competitive edge and putting its robust growth path at risk.
Efficient logistics, the report contended, 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 expand into new markets, diversify its manufacturing and agriculture into high-value products, and increase its world market share in garments and textiles, which account for 84 percent of its total exports.
“Bangladesh’s congested transportation and often unsophisticated logistics systems impose high costs to the economy,” Mercy Tembon, World Bank country director for Bangladesh and Bhutan, said. “By making its logistics more efficient, Bangladesh can significantly optimize its connectivity, business environment and competitiveness, putting the country on the right path to become a dynamic upper-middle-income country.”
The report said 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.
“There’s no doubt that reforms and investments for better transport and logistics will yield Bangladesh substantial economic benefits and strengthen its competitive advantage,” Matías Herrera Dappe, senior economist at the World Bank and author of the report, said. “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.”