Political parties and local business associations are worried about the government’s plans to sign contracts with foreign firms to run three important terminals under Chittagong Port, which manages 92% of the nation’s import and export traffic.
Mohammad Yousuf, Senior Secretary of the Shipping Ministry, stated at a seminar in the capital that agreements will be signed by December of this year for foreign operators to operate the Pangaon Terminal in Dhaka’s Keraniganj and the Laldia and New Mooring Container terminals in Chattogram.
As per the Secretary, “Among these, Laldia Terminal is being leased out to a foreign company to operate for 30 years and the other two container terminals for 25 years.”
The Economic Reporters Forum organised the event with the subject ‘Investment Potential in the Seagoing Shipping Industry’.
Political parties like the BNP and Jamaat-e-Islami, as well as significant business associations like the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), have already sharply criticised the decision to have foreign companies manage the Chittagong Port.
Following the cancellation of numerous prior contracts signed under the G2G (Government-to-Government) framework during the Awami League tenure, the current government has pledged to ensure transparency through open tenders for all public procurements. However, critics have pointed out that the administration has once again chosen to use the same procedure for the strategically and geopolitically important port operation.
According to Economist Professor Anu Muhammad, the country’s security is at risk if the New Mooring Terminal at Chittagong Port is given to foreigners without a tender.
In an attempt to assuage the public and detractors, Shipping Secretary Mohammad Yousuf stated that the contracts would be made public on the website in order to maintain transparency and dispel the myth that “we are selling the country.”
Citing instances where international companies are already operating successfully and trouble-free in ports in India and Sri Lanka, he allayed worries about strategic and topographical issues.
By pointing out that Bangladesh’s average logistics cost is 15% whereas the world average is 7%, the Secretary further emphasised the current inefficiencies. At Sri Lankan ports, the ‘berthing time’ is less than a day, but at Chittagong Port, it is approximately four days.
Despite the tariff rise, he maintained that increased efficiency would help local companies: “The tariff increase will raise costs by US $ 170 – US $ 180 per container.” However, they will save roughly US $ 15,000 in ship rent for that day if the ship turnaround time is shortened by even one day following the appointment of the foreign operator.
He went on to say that companies won’t protest the extra expenses if service quality and speed are improved.
However, the Secretary acknowledged that no such data is available when questioned if the government has carried out any research on the volume of foreign direct investment that will enter the nation through the foreign operators on a five-year basis. All he said was that the size of the investment is still being negotiated.
The Secretary came to the conclusion that without foreign businesses, the port would not be able to manage the 5.36 million TEUs of containers that it needs to by 2035. In order to fully realise the country’s economic potential, he emphasised the necessity of establishing a multimodal transportation infrastructure that connects the country’s port, train, road and canal networks.
Mohammad Yousuf went on to say that hiring foreign operators will help firms cut down on needless delays and demurrage expenses while also improving service quality and streamlining processes.
According to the Secretary, the government has raised Chittagong Port’s tariff rates by an average of 40% in order to make the operation lucrative for international businesses, based on suggestions made by a hired consultant.
