Building infrastructure in Bangladesh is costliest in the world, the World Bank said in a briefing on the national budget.

The global lender made the statement as it presented a comparison of infrastructure spending from other countries.

“Bangladesh’s spending for each kilometre of track is higher than in China and India,” said Zahid Hussain, the World Bank’s lead economist for its Dhaka office. 

He said the absence of competition in the bidding process for these works amount to corruption. 

“The cost becomes higher when there isn’t competition in the tender process. This is part of corruption. Acquiring high and low lands also increases cost,” said Hussain.

The World Bank has long been funding Bangladesh’s infrastructure.

But making allegations of graft, it had pulled out of a loan deal for building Bangladesh’s longest bridge on Padma River in 2012.

The project continued after Bangladesh initiated a plan to fund the bridge itself. A number of other structures are also under construction.

Bangladesh spent $6.6 million on each kilometre as it expanded the Rangpur-Hatikumrul highway to four lanes, said Hussain.

A chart showed that each kilometre of expansion work on the Dhaka-Sylhet highway cost $7 million. For Dhaka-Mawa, it was $11.9 million per kilometre and $2.5 million for the Dhaka-Chittagong highway. The expansion work of Dhaka-Mymensingh highway cost $2.5 million per kilometre.

But in India, constructing one kilometre of a four-lane road cost $1.1 million to $1.3 million, including land acquisition, he said. In China, the figure was $1.3 million to $1.6 million.

For Europe, the cost for each kilometre of four-lane road was $3.5 million, while the conversion of a two-lane road to four was $2.5 million. 

“The figures are a bit old, from 2013. But the picture is still the same,” Hussain said.

Long and short

Finance Minister AMA Muhith’s big and optimistic budget for the coming fiscal year lacks a well-grounded assurance, according to the World Bank.

The budget plan worth Tk 4 trillion is “long on hope but short on assurance,” said Hussain.   

Many of the goals were impractical, and based completely on hope, said the economist in his analysis.

Since presenting his budget in parliament on Jun 1, Muhith has faced criticism from MPs and business leaders for wanting to impose a uniform VAT rate of 15 percent.      

When asked about Prime Minister Sheikh Hasina’s take on the planned rate, the finance minister told reporters that she would bring it up on Jun 28 and there was no way to know before that.

There was also no way to realise Muhith’s plans for achieving the largely VAT-reliant budget without implanting the new VAT law, said Hussain.

“The implementation of the new VAT law is integral for increasing revenue. Big budget means big earnings,” said the economist.   

Prices under the new law would not be very different, he added. “VAT isn’t charged on rice, lentils, edible oil, medicines and several other essential goods. Businesses below turnover of Tk 3.6 million are also not under VAT.”

“So prices must increase slightly, not much. But the negative propaganda around the new law may lead to fear and some price hike.”

Growth target ‘healthy’
 
The World Bank also cast doubt on the target set by Muhith to achieve 7.4 percent economic growth in the next fiscal year, but said it was healthy. 
 
“Growth isn’t on autopilot. Investment must go up for achieving this. The target cannot be reached if the present state continues. Investment must go up in both public and private sectors,” said Hussain.

As the government scrambled to fill up shortages of rice following crop losses in flash floods, the economist advised that high prices be contained in the shortest possible time.

“The high prices are putting the poor at risk. Rice prices are very sensitive in Bangladesh’s reality. This has to be controlled fast.”

Expediting imports of food grains should be the way forward for now, he said. 
 
“There is no point in trying to scare millers and storage owners. They’ll release their stockpile if import increases. The market will be in control.” 

news:bd news 24/21-jun-2017