Catering to own and regional business

 

The government's "go slow" approach in taking the initiative to develop a deep-sea port off Sonadia is going to cause the country serious problems after 2015. If we are to go by the Japanese Pacific Consultant International firm's Techno-Economic Feasibility study conducted for the Department of Shipping in 2009 that outlined a three-phase construction plan, the potential for GDP growth by 2% brought about by substantial employment generation and increase in bulk handling capacity should have been impetus enough for the government to have taken a decision by now.
Yet the first phase of the construction that was recommended to begin in 2011, at a cost of Tk.13,000 cr., and completed in 2015 has not seen the light of day.
While Bangladesh has been dilly-dallying with what to do, other countries have not sat idle. The deep sea ports in Karachi and Colombo, both scheduled to open in 2013 and 2014, will sport some of the most advanced facilities in the region. In an age of global economic downturn, it becomes imperative for countries to take strategic decisions to stay ahead by upgrading competitiveness, and in this case deep-sea ports play a crucial role in providing infrastructure that act as a gateway for the rapid movement of raw materials and cargo considered essential for manufacturing and reaching finished products to end users.
Although Chittagong port handles about 80% of the country's imports and exports, it will be in dire straits when meeting increased demand if transit facilities are granted to Nepal and Bhutan. Even if infrastructure were improved and better management practices introduced to improve turnaround time for ships, Chittagong port remains essentially a river port. The crux of the problem lies with the narrow approach of Karnaphuli River which means that large container ships more than 617ft. in length cannot pass through and transhipment of containers takes place either in Singapore or in other big regional ports.
The increased Chinese interest in helping Bangladesh develop a deep-sea port comes as no surprise particularly with Chinese wages increased to US$400-500 per month, while average wages in Bangladesh' readymade garments (RMG) sector hovers around $80 is obviously one of the key drivers for proposed relocation of the Chinese RMG sector.
In the backdrop of global consultancy firm, McKinsey & Company's study "Bangladesh's ready-made garments landscape: The challenge of growth" that predicts that Bangladesh can double its garments exports in the next decade, the arguments for a deep-sea port become more compelling. Beyond the "wage advantage," European and American companies believe that "with a current 5,000 RMG factories employing about 3.6 million workers from a total workforce of 74 million, Bangladesh is clearly ahead of Southeast Asian RMG suppliers in terms of capacity offered (e.g. Indonesia has about 2,450 factories, Vietnam 2,000, and Cambodia 260 factories)."
McKinsey forecasts that the RMG sector can look forward to an increase in sourcing by an annual growth rate of about 10% for the next decade resulting in an export value of $36-42 billion, up from the current $19 billion per annum. In other words, we are potentially looking at the market doubling by 2015 and nearly triple by 2020.
With lead-times for sea freight costing the country's RMG sector an additional ten days due to the lack of a deep-sea port, it highlights Bangladesh's vulnerability in both import and export. Going back to the suitability of the single sea port of Chittagong, it lacks the required draft (maximum at full tide 8.81 metres) that bars ocean going ships to berth in the port.
As a result 'mother vessels' anchor at the outer anchorage and we have to take the services of lighter vessels to carry goods to and from ships to harbour. This arrangement not only restricts the ports' cargo handling capacity but also adds additional costs and time. Additionally, the cyclone prone Bay of Bengal is not the ideal zone for lighter vessels operations.
Looking beyond the RMG sector prospects, it is worthwhile to point out that the government plans to generate 7,800 MW power using imported coal within 2015 by installing 13 coal fired power plants in the country. Apart from the investment and cost of power generation challenges, the major impediment is the absence of deep sea port.
The smallest coal carrying ocean going vessel carries 45,000 tonne coal (Handimax) and requires 12 metres minimum draft, therefore, Bangladesh cannot at this stage import large amount of coal (imagine small lighter vessels queuing at the Karnaphuli channel to unload a single coal carrying vessel). All the berths are busy only with coal unloading (8,000 MW power generation will require annually an estimated 24-25 million tonnes of coal import and handling facilities).
The latest Chinese proposal to finance construction of a deep-sea port is welcome news. What is interesting to note is that China has expressed its willingness to let other countries such as India and the US to come onboard in a joint development effort. We can take advantage of a deep sea port (if constructed) off Chittagong rendering services to our regional neighbours that are beneficial to both regional commerce and ensuring our own future needs.