** Black smokes billow from the flame as a fire broke out at a shoe market godown at Bhoirab in Kishoreganj on Sunday. NN photo ** Strike paralyses waterways across Bangladesh ** A ball goes past the Belgium's goalkeeper Thibaut Courtois (right) as Morocco's Romain Saiss (centre) and Morocco's Achraf Hakimi block his view from an offside position during the World Cup group F soccer match between Belgium and Morocco at the Al Thumama Stadium in Doha of Qatar on Sunday. Agency photo ** FIFA World Cup 2022: Messi leads Argentina to 2-0 win over Mexico ** Road crash leaves 3 dead in Chattogram ** PM officially announces completion of Karnaphuli Tunnel’s south side ** Workplaces are still not safe for women ** 10 killed in apartment fire in northwest China's Xinjiang ** Richarlison's second-half brace give Brazil 2-0 win over Serbia ** Son, Suarez subdued in Uruguay-Korea stalemate ** Raising retail power tariff: 3 more distribution companies submit proposals ** 6 hurt in three-wheeler crash on Mayor Hanif Flyover ** FIFA World Cup 2022: Young Spain rout experienced Costa Rica 7-0 ** Japan stun Germany with late strikes at World Cup ** Hundreds of vehicles get clogged with heavy traffic congestion in city’s Tejgaon area on Saturday. NN photo ** Japan stun Germany 2 goals in 8 minutes ** Bangladesh arrests man tied to death-row militants’ escape ** Traffic alert: Dhaka commuters urged to avoid Airport-Uttara route from tomorrow till Sunday morning ** A man dries up fishes at Bakolia area of Chattagram city on Tuesday ahead of imminent winter. NN photo ** Clothing piles up at Bangladesh warehouses as west cuts imports ** Six cops among 21 injured as police clash with BNP in Sherpur ** FIFA World Cup 2022: Saudi Arabia beat Argentina 2-1 ** Fire kills 38 at industrial wholesaler in central China ** Bangladeshi fisherman injured in firing by Myanmar border force ** Our police are not serious about their professionalism and honesty **

Tier-2 cities like Gazipur, Narayanganj must promote urban growth outside Dhaka: World Bank

29 September 2022
Tier-2 cities like Gazipur, Narayanganj must promote urban growth outside Dhaka: World Bank

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UNB, Dhaka :

Bangladesh has made remarkable economic progress in the past five decades. To sustain and further accelerate the growth rate in the long term, the country needs a strong reform agenda, says a new report by the World Bank (WB).

The World Bank Dhaka office in a release on Thursday quoted Nora Dihel, Senior Trade Economist: “Greater Dhaka generates one-fifth of the country’s GDP and almost half of its formal employment.  The already congested capital needs to be prepared to accommodate climate migrants,”

“Better urbanization and connectivity will help absorb the climate migrants and sustain fast productivity growth. Successful urbanization will mean attracting tradable activities to small and medium-sized cities,” she said.

This will require making the next tier of cities attractive to formal firms and skilled workers. Cities will need to raise their own revenues to finance infrastructure investments and the provision of services, including affordable housing. Faster broadband speeds, better access to basic services, and easier intercity transport connectivity can lead to tier-2 cities like Gazipur and Narayanganj promoting urban growth outside Dhaka.

Although digitalization of payments has increased rapidly with 34 percent of adults using digital payments in 2017 in comparison to 7 percent of adults in 2014, about 40 percent of adults do not have a bank account. Strengthening credit infrastructure and promoting further digitalization of financial services will be important to reach the most underserved population.

The report urges strong policy reforms in three areas critical to sustaining growth: stem the erosion of trade competitiveness, address vulnerabilities in the financial sector, and ensure an orderly urbanization process.

The report also explores the implications of digital development and climate change as cross-cutting themes in these reform areas.

“Over the past decade, Bangladesh has been among the top 10 fastest growing economies,” said Dandan Chen, World Bank Acting Country Director for Bangladesh and Bhutan.

“But there is no room for complacency. New and emerging challenges—including, advances in technology and climate change—demand new policy and institutional innovations to cater to the changing needs of a growing economy. To achieve its vision of upper middle-income country by 2031, Bangladesh will need strong and transformative policy actions.” Chen said.

The report envisages export diversification to reduce the risk of export volatility, create new sources of growth, and increase foreign exchange earnings in the long term.

The heavy reliance on ready-made garments and Bangladesh’s protective tariff regime inhibits diversified export growth. Further, with trade competitiveness based on low wages and trade preferences eroding, the country can increase the resilience of economic growth by diversifying its export basket.

The WB report said the average tariffs in Bangladesh are higher than its comparator countries: the average tariff rate on intermediate goods in Bangladesh is 18.8 percent, which is about twice the rate as in China, Thailand, and Vietnam.

Overall trade costs and inefficient border processes are major impediments to trade. Deep and comprehensive trade agreements with the European Union and India covering tariff modernization, increased trade facilitation, and services and investment reforms can boost Bangladesh’s GDP by 0.4 and 0.5 percent and exports by 1.4 and 3.9 percent, the report said.

Scaling up private sector financing is essential for sustaining economic growth. Actions to improve asset quality, increase the capitalization of banks, and address increasing non-performing loans are urgently needed to maintain financial stability and accelerate credit growth.

Unlike Thailand, China and Vietnam, Bangladesh has an untapped domestic capital market, which is required for raising long-term finance, particularly for infrastructure and climate adaptation projects.

Unlocking private sector financing for green investments and climate risk financing will become increasingly important. The country also needs to focus on expanding access to finance in underserved segments, such as women and MSMEs.

Bangladesh also needs to source external resources proactively, including through international capital markets, by promoting local currency financing, easing external borrowing constraints, and attracting foreign direct investment.

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