MODERNIZATION OF SEAPORT OF BANGLADESH FOR REGIONAL CONNECTIVITY – IMPLICATION FOR NATIONAL DEVELOPMENT AND SECURITY

©Author: Khaled Hasan. Email: [email protected]

MODERNIZATION OF SEAPORT OF BANGLADESH FOR REGIONAL CONNECTIVITY – IMPLICATION FOR NATIONAL DEVELOPMENT AND

SECURITY

By Khaled Hasan

Chapter 1: Introduction

1.1 Background

1.1.1 From time immemorial sea is being used as a medium of transportation. Since then the

shipping business is growing/ flourishing around the globe for the overall trades through the sea

routes of the countries in the world. Today seaports are the most important link of global trading

system and all the major exports and imports of almost all the maritime nations take place

through the sea. Bangladesh being a maritime nation is no exception and mostly depends on the

sea for her overseas trades. Therefore, seaports are the integral part for its foreign trades with the

outside world. Efficient and effective utilization of seaports of the country will greatly contribute

to the national economy and thereby ensure national development and security.

1.1.2 As per geographic location, Bangladesh is a country surrounded by India on her three

sides with a small border with Myanmar in the south east. It has the only opening to the south

which is the main gateway for its major trades. Around 90% of the total trades are routed through

the sea which is the life line of the country. The two seaports of the country viz Chittagong and

Mongla are the main trade facilitator and run under the control of Chittagong Port Authority

(CPA) and Mongla Port Authority (MPA) respectively. But still the seaports of the country

remain under utilized despite its contribution towards the national economy, development and

security. The respective seaports authorities are undertaking modernization program every year

in order to increase the efficiency as well as improve upon the working environment of the ports.

1.1.3 To avoid congestion of ships at outer anchorages and reduce lead-time by the seaports, it

is imperative for Bangladesh to modernize existing infrastructure. It will also facilitate the free

flow of trades. The connectivity of the North Eastern states of India and the land locked


countries Nepal and Bhutan with the proposed Asian Highway through the seaports of

Bangladesh shall not only meet the domestic requirement rather it will be a source of foreign

currency earnings and develop regional cooperation. Moreover, being able to have the access to

the Indian Ocean the seaports of the country will contribute to the requirements of the SAARC

and ASEAN countries for the benefits of all in the region.

1.1.4 In Bangladesh the modernization of seaports is the ongoing activities of respective port

authorities. It shall not only ensure efficient port operations rather it will enhance the

opportunities to share the facilities with regional countries in the world. However, the

modernization alone of seaports may not serve the purpose of regional connectivity rather the

coordinated development of other seaport related infrastructures in the country is paramount to

support the activities of the seaports. At the same time the country needs to generate sufficient

amount of cargo to be routed through the seaports of Bangladesh. Thus there will be a scope for

the vertical and horizontal expansion of the industries in the country. Moreover, marketing of

seaport facilities by making the same lucrative to the neighbours and other regional countries

will foster mutual cooperation and understandings and enhance regional security and

development.

1.2 Nature of the Problem

1.2.1 The exports and imports of the country are increasing day by day and contributing to the

economy as well as survival of the people in the country. The timely and speedy delivery of the

imports and exports shall not only save time but also reduce the costs of doing business at the

receiving ends. The ultimate result is the reduction of the price of essential commodities and to

keep the same within the purchasing capacity of the low income groups in the country. There the

seaports of the country can play the significant role by modernizing their infrastructure and other

facilities to keep pace with the global trend and technological advancement. The initiatives of the

respective seaports authorities towards modernization shall open up new avenue to share the

facilities with the neighboring/ regional countries. Moreover, the economic policy of the

government of Bangladesh is to have a free market economy to ensure social justice to all. This

necessitates the economy to be competitive in the global market and for which regional and

global connectivity is a must for the overall progress of the country.


1.3 Importance of the Study

1.3.1 In the age of globalization there is no scope to remain in isolation. The seaports provide

the ultimate connectivity to the global village in the cheapest means. Once the modernization

efforts of the seaports authorities match with the international standards and requirements it will

generate the interests of the global shipping to have connected with the seaports of Bangladesh.

Being a maritime nation the development and security of the country is directly linked with the

efficient operation of the seaports. Almost all the industries in the country depend heavily on the

imported raw materials and fuel, which is the prime source of energy, transported through the sea

route. In addition to support the food security policy of the government, bulks of the food grains

are imported from regional, South Asian and Middle Eastern countries of the world. Due to

geographical configuration of the country the dependency on seaborne trades is vital where

seaports play the vital role. In addition to sustain the activities of all the Export Processing Zones

(EEZ) and Ready Made Garments (RMG) Industries the professional turn out of seaports

through modernization is essential.

1.4 Scope of the Research

1.4.1 Bangladesh is a country that mostly depends on her maritime trades for economic

progress. Most of the export trades of the country are USA or EU bound with a very little to the

regional countries. Similarly most of the import trades are coming from the Middle Eastern and

South Eastern countries with a small portion from the neighbors or regional countries to meet the

emergencies. This ultimately has given importance to the east and west bound Sea Lines of

Communications (SLOC) for the overall trade requirements of the country. In the geostrategic

context the South Asia is almost at the centre of all economic hubs and, therefore, the region is

maintaining a bridge between the east and west. The efficient engagement and continuation of

the bridge shall definitely contribute towards the overall economy, national development and

security of the countries in the region.

1.4.2 With the passage of time, the South Asian region has become important and more

focused to the regional and extra regional powers. Thus for reasons of economy, development

and security Bangladesh needs to maintain a very harmonious relationship with all the SAARC

and ASEAN countries where exchange of bilateral trades can play the major role. The seaports


of Bangladesh are greatly supplementing the overall trade requirements of the country. India has

shown interests on the Bangladeshi seaports since long to have access to the regional

connectivity. Similar awareness is also seen in the land locked countries Nepal and Bhutan to

conduct their trades through Bangladeshi seaports. The absence of formal legal instrument, the

seaports of the country are yet to gain required momentum. Continuous support of all the stake

holders to the modernization initiatives of seaport authorities will bring most desired results for

all.

1.5 Research Objectives

1.5.1 In this research the emphasis will be given to the requirements of modernization of

seaports of Bangladesh for the furtherance of regional connectivity. Therefore, the objectives of

the research will be as follows:

a. To study the shortcomings of the seaports of Bangladesh towards regional

connectivity.

b. To ascertain how the removal of shortcomings can be initiated within the

modernization program of respective seaport authorities.

c. To determine how the seaports of the country can engage and contribute in the

direction of the regional connectivity.

d. To understand the implications of the overall progress of the seaports of the

country on the national development and security keeping pace with the regional

connectivity.

1.6 Research Questions

1.6.1 Modernization of seaports of Bangladesh is always a continuous process to support the

requirements of the trades of the country. But the engagement of Bangladesh to the regional

connectivity needs to have national developments and security requirements. Therefore, answers

of the following questions will be sought in the process of research:

a. What are the existing problems of Bangladesh's seaports?

b. How the existing problems could be solved?


c. Whether regional connectivity could be established through our seaports?

d. How national development and security could be made through enhancing the use

of seaports?

1.7 Limitations of the Study

1.7.1 The theme of the research subject may be considered massive in compared to time

limitations as the research demands three distinct directions of approach. This indeed leads to

extensive study, field visits and interaction with wide range of public and private high level

officials. Secondly, the issue of regional connectivity using seaports of Bangladesh involves a

good number of stakeholders who almost work independently. Many of the stakeholders have

almost nil or shallow ideas about the overall contribution of the regional connectivity to the

national development and security. Therefore, all isolated data to be accumulated in a single

framework to attain the end state of the research. But due to time constraints such a

comprehensive and realistic experimental venture may not be possible at this stage. However, the

limitations shall in no way affect the analysis and findings in order to achieve the objectives of

the study.

1.8 Review of Literature

1.8.1 There are numerous studies have been carried out on seaports, seaborne trades,

connectivity and the developments of countries through seaborne trades by authors, analysts and

researchers both in home and abroad. Endeavor will be made to review a good number of such

literatures as practicable within the limited period of time during research to draw sound

conclusions. In addition contemporary articles published in various newspapers, national and

international journals and magazines and internet sources shall also be explored.

1.9 Methodology

1.9.1 The research will be carried out on the basis of secondary data analysis that are obtained

from various sources like available books, journals, periodicals, individual research papers of

previous ND courses etc. Efforts will also be made to take interviews of or have discussion with


some important personalities viz Chairmen of Port Authorities (present and past) of Bangladesh,

Officials of Ministry of Shipping, Department of Shipping and Shipping related industries/

organizations who is available with the latest information related to the research in order to

obtain to the point answers of all the research questions. This will ultimately lead to the logical

development of the paper and draw sound conclusion. In fact geostrategic scenario of the region

dictates the necessity of modernization of seaports for regional connectivity. The collective

effect of modernization of seaports, associated infrastructures and external and internal

connectivity shall cause ultimate development of the country and thereby enhance security.

1.10 Framing of the Paper

1.10.1 The paper will be organized in seven chapters. The contents of chapter-1has already been

shown in the foregoing explanations. In chapter-2, initially the paper will give an idea about the

geo-strategic scenario of Bangladesh relative to its seaports in order to ascertain the viability of

the use seaports for regional connectivity. In chapter-3, the existing problems of the seaports of

Bangladesh shall be analyzed to find out the scope of modernization of the seaports of the

country. Then in chapter-4 the requirement of modernization of seaports to overcome the

problems shall be explained to show the effect of modernization to regional connectivity.

Thereafter in chapter-5 cost benefit analysis shall be discussed to observe the trade patterns of

neighboring and regional countries towards the benefits of the country. This will be followed up

in chapter-6 where regional connectivity and implications on national development and security

through seaports shall be discussed to attain the objectives of this research. Finally, in chapter-7,

the concluding statements will be made with specific recommendations.

Chapter 2 - Geo-strategic scenario of Bangladesh relative to its Seaports

2.1 General.

2.2 Bay of Bengal and its Importance.

2.3 Resources of the Bay.

2.4 Significance of the Bay.

2.5 Trades and Commerce Potentials.


2.6 Maritime Security of Bangladesh.

2.7 Maritime Strategy of Bangladesh.

2.8 Standing of Bangladesh – against Neighbors.

Chapter III: Problems of Existing Facilities of Seaports of Bangladesh.

3.1 General.

3.2 Berthing of Ships and Turnaround Times.

3.3 Navigation of Vessels.

3.4 Pilotage.

3.5 Dredging.

3.6 Maintenance of CPA Vessels.

3.7 Space Utilization.

3.8 Cargo Handling – Break Bulk and Containerized.

3.9 Equipment Installation.

3.10 Employment of Operators.

3.11 Shortages of Equipment.

3.12 Labor Issue.

3.14 Absence of Autonomy of Port Authorities.

3.15 Implementation of Rules, Regulations, Conventions etc.

3.16 Port Security.

3.17 Accidents.

3.18 Corruption.


3.19 Internal Connectivity.

Chapter IV: Requirement of Modernization of Seaports to overcome the problems

4.1 General.

4.2 Prospects of Modernization of Seaports of Bangladesh.

4.3 Interests of Regional Countries.

4.4 Modernization Program of Seaport Authorities of Bangladesh.

4.5 Initiatives versus Outcome of Modernization to overcome Problems.

Chapter V: Cost Benefit Analysis

4.6 Trade Potentials of Neighboring Countries.

4.7 Trade Potentials of Regional and Extra regional Countries.

4.8 Estimated Benefits and Costs.

Chapter V: Regional Connectivity and Implication on National Development and

Security through Seaports.

5.1 Regional Connectivity and Seaports of Bangladesh.

5.2 Indian perspective.

5.3 Perspective of Myanmar to use the Seaports of Bangladesh.

5.4 Perspectives of Nepal and Bhutan in Regional Connectivity.

5.5 Regional Connectivity and Deep Seaport.

5.6 National Development and Security of Bangladesh through Regional Connectivity.

Chapter VI: Recommendations

6.1 Conclusions.


6.2 Recommendations.


Chapter II - Geo-Political Scenario of Bangladesh relative to Seaports

General

2.1 The geography of a country is defined in terms of its location, size and resources

of the place in the globe. In the same way the geopolitics examines the political and strategic

significance of the country in relation to its geography. This geographical location of Bangladesh

ultimately has become the most significant factor to influence much in the foreign policy

formulation of the country. Because the country is land locked on her three sides by India which

is disadvantageous for her overall progress. But the small land boundary with Myanmar at the

south eastern part and its entrance in the sea at the south i.e. in the Indian Ocean through Bay of

Bengal give the country an advantage to its external connectivity. Thus the present geopolitical

orientation of Bangladesh gives it both strength and weakness from different perspectives. Again

the needs of India to have corridor through Bangladesh enhances the importance of Bangladesh

in the region and is keeping its foreign policy in an advantageous position. In this situation the

very location of the country is also attractive to USA and China to maintain their regional

strategy1.

Bay of Bengal and its Importance

2.2 With an area of about 144,000 sq km, Bangladesh is situated between 20034' north and

26038' north latitudes and 88001' east and 92041' east longitudes. The country is bordered by

India on the east, west and north and by the Bay of Bengal on the south. There is also a small

strip of frontier with Myanmar on the southeastern edge. The land is a deltaic plain with a

network of numerous rivers and canals. Through Myanmar and Bangladesh is linked to the entire

South East Asian region. China is not very far off and geographically she is very close neighbor

of Bangladesh with only 100 km of Indian land territory in between the borders. Again, though

Bangladesh does not have a common border with Nepal and Bhutan but both the countries are

very close neighbors separated from the northern border of Bangladesh by 13.7 miles and 18.67

miles of Indian land territory respectively. Bangladesh shares 54 international rivers with India

and Myanmar. Though in the south she has her own out let to sea but the funnel like shape of the

Bay of Bengal puts her in conflicting situation with both India and Myanmar.

1 khairul01.hubpages.com/hub/geopolitics - Geopolitical Importance of Bangladesh 09 Dec 2011


2.3 It is not only India that has interest over the geopolitical location of Bangladesh. But also

courtiers like Nepal, Bhutan, China, and USA and even courtiers like Japan and Australia are

showing their interest considering the geopolitical importance of Bangladesh. Nepal and Bhutan

being land locked and not having sea access are very much interested to use the seaports of

Bangladesh to promote their trades and commerce. As china has competing relationship with

India always seeks opportunities to contain India geo-strategically where Bangladesh becomes

one of the perfect positions to her intention. USA having its biggest naval base in Andaman

Nicober islands (to be checked in the internet) intends to use seaports of Bangladesh viz.

Chittagong seaport to strengthen its strategic position in the South Asia considering the

importance of the region in World politics. More clearly in terms of any dispute with India and

China, the Chittagong port is the better place to contain two nuclear powers which are growing at

a faster pace as a super power in the international system. Japan and Australia also for their

national interests maintain good relations with Bangladesh where Australia has different project

and aid in great deal in Chittagong Hill Tracks.

Trades and Commerce Potentials

2.4 Over the years the South Asian Association for Regional Cooperation (SAARC) has become ineffective in fostering trades and investments within South Asian countries. As such the experts in overseas businesses think that if the leaderships act in a planned way the Bangladesh China, India and Myanmar (BCIM) Forum can become a valuable and useful organization to promote trades and commerce between nations in the region. According to them Bangladesh can be immensely benefited economically if the trade between Myanmar and Bangladesh increases. This will however lead to have business access to other potential markets including Malaysia through Myanmar when there is a sound trade relation with India. It is learnt from the Executive Director of the Centre for Policy Dialogue (CPD) that there is huge potential to maintain trade relations between member countries of BCIM that demands investments in infrastructure development to ensure better connectivity2.

2.5 There is huge potential in the areas of trade, investment, tourism and energy cooperation between the BCIM Forum member states. This may lead to the sound connectivity between southern China and northeast India using seaports of Bangladesh to have economic advantage. The trade volume between China and India stood at US$ 75 billion in 2012 which was US$ 73.9 billion in 2011 and may become US$ 100 billion by 2015 if BCIM Forum takes proper steps for economic benefits where Bangladesh remains always positive. This will also lead Bangladesh to have greater business access to a number of countries including Malaysia, through Myanmar cutting the cost of doing business. India-China rivalry may not have any negative impact on trade and investment as the countries give always priority to trade and business than politics.

2 www.newstiday.com.bd, on line edition of News Today, 02 March 2013.


2.6 Another most vital area that needs attention, under the ambit of connectivity, is the transport infrastructure in the region. In this situation the multimodal transport system is necessary to explore new business and opportunities. The cost of doing business between the BCIM countries is likely to increase when trade happens through the land borders only. Thus multi-dimensional cooperation among the BCIM countries is imperative for the growing interest of the global community in the Asia Pacific region through seamless connectivity using seaport of Bangladesh. This enhanced trade facilitation and joint exploration of common resources will offer opportunities for accelerated economic growth, reduction of poverty and raising the standards of living of the people of the region.

Standings of Bangladesh Against Neighbors

2.7 In the era of 21st century the developments that are taking place in international logistics, shipping technology, industry consolidation and environmental regulations bringing major changes in the way the seaports will operate. Technological advancement in shipping sector, particularly the containerization, exchange of information etc changing at a rapid rate, is creating the need for major financial commitments. The relatively small number of global terminal operators is the most powerful players to change the way the seaport services to be provided. They have made the total distribution patterns increasingly evolving into common networks giving the seaport a hub status. Some of these global operators have shown in Bangladeshi ports to be a development partner looking at the huge opportunity to grow to attain the position of world class standard. Thus the seaports are presently behaving as partners in assisting the customers to compete for business in the global market.

2.8 Today one-sixth of the world population lives in the eight independent states of South Asia. It is linked with the heartlands of China and Central Asia in the north, the Indian Ocean in the south to give it a central position to oversee the sea routes from Malacca Straits to the South Atlantic via the South African rim. Geo-strategically South Asian region has gained importance for nuclear threat potential posed by the two sub continental adversaries India and Pakistan. The gradual emergence of a Yen bloc in the Asia pacific region which is the fastest growing area of the world, the only sub region which is left for prospective US trade and investment in South Asia possessing tremendous potential. The geographical location of this region has evoked much interest not only among the major powers and other small states but also their location is important for each other because of the trade purposes to other states. Bangladesh which is a small state of South Asia gives her people a great advantage for its geographical location. She is positioned to serve as a transit hub not only to India but also to Nepal, Bhutan and even China. In future, this could make Bangladesh a regional hub of trade and commerce3.

2.9 According to the Globalist Argument, if connectivity through Bangladesh is established, then the North-East India could get access to the Bay of Bengal through Bangladesh. From the

3 www.webcache.googleusercontent.com – University of Dhaka.


Bangladesh point of view, such transit links with North-East Indian states should be increased as a part of a comprehensive, integrated, development package, where the seaports of Bangladesh especially Chittagong port could emerge as the hub port of the region and with the inclusion of Mongla port Bangladesh exports can flow freely to the markets of India, Nepal and Bhutan and vice versa more vigorously than ever before.


Chapter III: History, Functions and Management of Seaports of Bangladesh

History of Chittagong Port

3.1 The history of Chittagong port dates back to ancient times of pre-historic era. Although

the political status of Chittagong in pre-historic times is rather sketchy, the perilous accounts of

the Erythrean Sea documents provide a vivid picture of this port and city.

The Yemeni, Arabs, Portuguese, Malayan, Chinese, Turkish, Greek, Macedonian and traders

from Middle East, Africa and Europe used to trade with this port. During the 9th century, the

Arabian and Yemeni traders started using this port as their base port, and the control of the port

remained in their hands for quite some time. The Arabs called it port “SAMUNDA” .The

Portuguese called it “PORTE GRANDE” (a great port).The Chinese called it “Seetagong” (great

port of the west). During the British India period, Chittagong port reached its pinnacle of

importance. The growing significance of Chittagong port in Bangladesh as a gateway to this vast

region as a natural outlet induced the British to make it a business hub for this region. They made

all necessary arrangements to link it with all British ports by rail and sea. Chittagong is also

being considered as the bridgehead of the world’s two most vibrant economic blocs ASEAN and

SAARC4.

3.2 Chittagong Port, the principal sea port of Bangladesh, is situated in the estuary of the

Karnaphuli River, which originates in the hills north-east of the Chittagong Hill Tracts and flows

into the Bay of Bengal. The main significance of this port lies in the fact that it provides a deep-

water anchorage a few miles inland from the sea. The steering distance is 16 kilometers from the

outer bar on the Bay of Bengal to the main berths on the bank of the river Karnaphuli. The

location of the port and its natural harbour made it an important centre of trade and business as

far back as the 9th century AD when the Arab merchants found it to be a lucrative centre for

trade. By the beginning of the 15th century, the port of Chittagong was an important trading

centre. Chinese chronicler Ma Huan, who visited Chittagong in 1405 with a Chinese mission,

refers to "Chit-le-gan" as a port frequented by Chinese trading vessels. The most frequent

visitors to the port were the Arabs.

4 Chittagong Port and the Sea borne Trade by Mr Farid Ahmed Chowdhury, The New Age, 01 April 2012.


3.3 Among the Europeans, the Portuguese were the first to arrive at Chittagong. They tried

twice, without success to capture Chittagong, first in 1517 under John de Silviera and again in

1527 under Alfonso-de-Millo. Finally they secured it and Satgoan, the port, from Mahmud Shah

the ruler of Bengal, in return for helping him against Sher Shah Sur. Under the Portuguese, the

Chittagong port prospered and became a commercial centre acquiring the title of "Porto Grande",

the great port, as opposed to Satgoan, the "Porto Pequene". In 1665-66 Shaista Khan, the Mughal

Viceroy of Bengal advanced on the port and took it by storm. By that time, the East India

Company had opened their first factory at Hughli in 1651. However, they were not content for

long with the position of mere traders; they aspired to acquire a fortified base at Chittagong. An

expedition was sent to capture Chittagong during the Anglo-Mughal War (1686-1690) but failed.

3.4 Chittagong continued for another hundred years in the hands of the land-based Mughal

rulers of Bengal. It was finally ceded to the English in 1760 by Nawab Mir Qasim. During the

18th and 19th centuries, Kolkata gradually developed into the premier port of Bengal, while

Chittagong found itself relegated to the secondary position of a feeder port. The relative shift in

importance and government attention was evident in the singular absence of any significant port

facilities in Chittagong when the Chittagong Port Trust came into being in 1888. In fact the first

attempt to develop an administrative and policy making system for the port of Chittagong was

taken in 1887 when a Port Trust was created under the Chittagong Port Commissioner's Act of

that year. After a false start in 1887 the Port Trust was lawfully constituted by the Bengal

Government notifications Nos. 35 and 36 Marine of 15 May 1888 for the management of the

affairs of the port.

3.5 The Chittagong Port Commissioner's Act of 1887 provided for nine Commissioners, six

of which are to be nominated by the local government and three to be elected by a nominated

electorate consisting of local firms nominated by the Bengal Government with the previous

sanction of the Governor General in Council. Commissioners were to serve for a period of two

years. All the six nominated members were Europeans and the three elected members were

Indians. The composition of the board changed considerably over the years, in part because of

the introduction of more officials into the group of nominated members, but the European

dominance remained unchallenged and indeed was strengthened by changes in the electorate

nominated by government. The Chittagong Port Commissioner's Act of 1887 gave only limited


powers to the Commissioners while placing the Port Trust under the dual administrative and

financial control of the Government of India and the Government of Bengal.

3.6 All acts and proceedings of the Commissioners were subject to the approval of the Local

Government who could cancel, suspend or modify any act or proceeding. In 1903, the control

and administration of the jetties was made over to the Assam Bengal Railway. Henceforth the

division of authority between the Port Trust, responsible for the conservancy of the river and

movement of shipping, and the Railway Company, in charge of the jetties of ocean going vessels

and the foreshore facilities, created administrative difficulties. The administration was also

seriously hampered by the presence on the Port Trust board of so many members who could not

devote much time and energy to its affair. The Chairman of the Port Commissioners, who was

responsible for the running of the Port Trust, was the Divisional Commissioner of Chittagong,

the multifarious nature of whose work demanded that the day to day administration of the port be

left to someone else. Prior to the formation of the Port Trust in 1888 the administrative work of

the port of Chittagong was carried out by an officer who was both Customs Collector and Port

Officer.

3.7 To do away with the dual administration of Port Railway and Port Commissioners, the

Port Trustwas reconstituted on the 01 July 1960 as a semi-autonomous body under the provisions

of the Chittagong Port Act of 1914 and as amended by an Ordinance promulgated in 1960. With

the birth of Bangladesh in 1971 the trade of the port expanded greatly. To cope with the rapid

development and expansion of the port, the Government of Bangladesh promulgated the

Chittagong Port Authority Ordinance in 1986 and dissolved the Port Trust. Henceforth the

management of the Port came under the Chittagong Port Authority. Initially this Authority

consisted of a Chairman and three other Members but later on inclusion of another Member

made the Authority a team of five where the Chairman is the executive head.

3.8 In case of Port facilities the port commissioners of Chittagong in the latter half of the

19th century, owned only one jetty for passengers, and a few small jetties for landing salt. They

had no pontoon, no crane and no storehouse, even for their own materials, much of which stayed

in the open. The single iron jetty, which existed, was built in 1879 in Sadar Ghat. This jetty was

practically of no use, as it did not extend into a sufficient depth of water to be used by ocean

going vessels, or even coasters. Four salt jetties were built in 1891 opposite the government Salt


Golas or storehouses. They were though very minor works, even so, the construction of the four

salt jetties was a great boon. Previously, persons engaged in handling and shipping salt had to

wade up to their waist in mud.

3.9 At the time of the formation of the Chittagong Port Trust in 1888 it had been pointed out

that the principal improvements required in the port were the lighting the approaches to the port

and the removal of the Ring buoy shoal, the acquisition of the foreshore land, the construction of

a strand road, the establishment of telegraphic communications at the mouth of the river, the

provision of a steam tug and the appointment of medical staff and increased hospital

accommodation. The proposal of the Government of Bengal was to develop the port of

Chittagong only as a minor coastal port. No suggestion was made to the construction of jetties or

to the dredging of the inner and outer bars which were major obstacles to the navigation of the

river Karnaphuli. Removal of the Ring buoy shoal was indeed proposed, but the Ring buoy was

upstream near the Sadar Ghat jetty, which was then not even fit to handle coastal vessels.

3.10 Two developments of great significance contributed substantially to change this state of

affairs. One was the decision by the Government of India to build a railway connecting the tea

gardens of Assam to the port of Chittagong and the other was the partition of Bengal and the

creation of the new province of Eastern Bengal and Assam. The need to connect the hinterland of

Chittagong with its port had attracted attention from time to time. As far back as 1873 the

Collector of Customs at Chittagong emphasized on the need for the improvement of inland

transit by land or water. With the growth and development of jute trade in Eastern Bengal from

the middle of the 19th century, the Government of Bengal was approached by the merchants to

survey the river Meghna and declare it safe for navigation. The Government of Bengal finding

much difficulty of navigation in the river Meghna for the ships from Britain declared Chittagong

as the most convenient port for the shipment of the produce of eastern districts, the produce

being sent down the Meghna to Chittagong in flats towed by light draught river steamers.

3.11 The proposal to use the port of Chittagong once raised, led to further investigations and

discussions and in 1881 a railway from Chittagong to Daudkandi was instead seriously

considered. Early in 1882, the Commissioners of both Dhaka and Chittagong submitted reports

strongly favoring the construction of such a railway. That same year the Lieutenant Governor of

Bengal expressed the opinion that a railway connecting Chittagong with its hinterland, if


constructed, would be second to none in Bengal in importance. In June 1882, the Government of

Bengal placed before the Government of India a scheme for the construction of a railway line

from Chittagong to Chandpur instead of Daudkandi. At the same time the Government of India

was also discussing the importance of opening out the Brahmaputra Valley by the building of a

railway system. Out of the three options the first one was the construction of a railway line

connecting the Brahmaputra Valley with the Northern Bengal Railway. The second proposal was

to construct a railway line from a point opposite Goalundo through Dhaka to Mymensingh led

the authorities to assess the feasibility of extending such a Dhaka-Mymensingh line across the

Garo Hills into the Brahamputra Valley. The third possibility was introduced by JW Buyers, the

Engineer-in-Chief of the railway suggested during discussion that the extension of the line from

the port of Chittagong through Eastern Bengal across the north Cachar Hills into the

Brahmapurtra Valley. He focused in favor of the scheme and pointed out certain definite

advantages of Chittagong port over the Kolkata port anticipating the trade pattern at that time.

3.12 From 1882 the construction of a railway from Chittagong to Assam received the serious

attention of the Government of India. In the course of the investigations in 1885, 1886 and 1887,

the advantages of connecting the Brahmaputra Valley with the port of Chittagong were found to

be so obvious that in May 1891 the Government of India gave sanction for the construction of a

line from Upper Assam to the port of Chittagong. The needs both of Eastern Bengal and of

Assam, therefore, led to the construction of the Assam Bengal Railway. The Company, Assam

Bengal Railway, immediately after its formation pointed out to the Government of India the need

for adequate and permanent landing facilities at the port of Chittagong. This demand was then set

into motion which eventually led to the acquisition of foreshore land, the construction of jetties

and other allied facilities necessary for a port to accommodate ocean-going steamers. In August

1892 therefore the Trust applied to the Government of Bengal to sanction the acquisition of a

plot of land on the western bank of the river Karnaphuli measuring about 3,500 feet in length and

660 in breadth for the erection of jetties and warehouses.

3.13 The Commissioners, however, pointed out that the land asked for will only berth four

vessels and that it was advisable to acquire without delay, an extensive river frontage and asked

for a larger grant of loan. In the mean time the consulting engineer for the railway had also sent a

proposal to the Government for the issue of a notice to acquire a section of foreshore land about


8,000 feet in length and 1,500 feet in width. On the receipt of these proposals the Government of

Bengal appointed a committee in February 1893 to report on the most suitable arrangements to

be made in Chittagong for landing and shipping goods. This Committee, in May 1893, suggested

that jetty room for at least six ships (500 feet for each) should be provided and that the land

required for the joint needs of the Port and Railway should extend in length from the Double

Mooring jetty to the mouth of the Guptakhali Khal (a distance of 3/4 miles), with a depth of

about 2,000 feet.

3.14 The Government of Bengal in reporting the Committee's finding to the Government of

India expressed the opinion that the Port Trust should own the whole of the foreshore, wharves

and jetties at Chittagong and should control the warehousing and landing and shipping of goods

there, providing the Railway Company with suitable access and facilities. While the working

arrangements of the jetties were being discussed, the first jetty was constructed at the Double

Mooring and was opened in 1899. The Government of Bengal approved the erection of a second

jetty in May 1902. The jetty came into full use in 1904-05.

3.15 In the mean time the Assam Bengal Railway Company convinced the Government of

India that the ownership and control of the port jetties should be transferred to the railway and

the jetties were transferred to the railway on 27 March 1903. The Government of India however

retained the right to resume the jetties. With the transfer of the jetties to the railways in 1903 the

history of the port of Chittagong entered a new phase because if the transfer assisted the working

of the railway, it was to prove very deleterious to the development of the port. The port of

Chittagong from then on became more or less the commercial monopoly of the Railway

Company with the Port Commissioners having little or no say over its day to day operations.

3.16 With the partition of Bengal in 1905 began the most significant period in the history of

the port during the British period. Previous to the partition, Lord Curzon, the then Viceroy of

India, in order to win support for the partition had promised financial help to the Port

Commissioners. The promises of Curzon materialized in the precise form of a grant of Rs

1,000,000 from the Imperial budget for the development of the port facilities (other than jetties,

which were funded from railway development budget). Clamor for further grants from the

Imperial budget continued unabated until 1910 when Rs 550,000 was made available, a sum

which was quickly absorbed by the fast developing port.


3.17 The Government of the new province of Eastern Bengal and Assam gave due importance

to its principal port and matched their interest in and enthusiasm for the development of the port

with substantial funds from their own resources. They made financial commitments in 1907 for

the half the cost of revetment from 1907 onwards to a maximum of nine lac in all (this upon an

estimated total outlay of thirty lac on revetments and dredger combined). Should the final total

exceed thirty lac then proposals for increased provincial aid would be favorably considered. The

second commitment was an annual provincial grant of up to Rs 59, 624 a year for five years to

cover the operating costs of the dredger. With the annulment of the partition the flow of

government funds for the development of the port ceased. The growth of regular

communications with places on the west side of the river Meghna slowed to a halt, the plans for

seven jetties drawn up in 1906 were abandoned and no new jetty was built after the fourth one

until 1947. Not until the creation of Pakistan in 1947 when Chittagong became the principal port

of East Pakistan that renewed efforts were made to exploit its full potentials. From 1971, the port

of Chittagong again received the attention due to it as the principal port of the country. By June

1999 it is therefore found that the number of jetties had increased to 22.

History of Mongla Port

3.18 The to the history the maritime trade had greater interaction in this area and over the

centuries. Sub-continental coastlines have provided natural orts of call to the distant traders of

the South East Asia and West Asia. Mongla is the second main sea port situated in the Bagerhat

district in the south western part of the country. Formerly it was located at Chalna, about 11

miles (18 km) upstream on the Passur River. But it is now located 48 km south of Khulna city, as

established on 11 December 1954. The Port is surrounded as well as well protected by the

Sundarban mangrove forest. The name Mongla originated from Mongla River permanently

known as Mongla Nala. The anchorage was shifted to Mongla in 1954 as the place could

accommodate sea-going vessels with greater draughts. During the Pakistan period, the

administration of the port was under a port director, whose main office was at Khulna. The port

is situated at the confluence of the Passur River and the Mongla River. It lies about 62 miles

(100 km) north of the Bay of Bengal and is connected to the major inland river ports and to the

rail terminal at Khulna. It is very near to Sundarbans. The port has trade links with almost all

major ports of the world, although vessels arriving here are mostly from ports of Asia, the


Middle East, Australia, Europe and North America and the ships rarely come to Mongla from the

countries of Latin America or Africa5.

3.19 The freedom of Bengali trade by the effective Mogul after the conquest of Bengal is the

key to strengthen shipping from Kolkata, Mongla, Chalna and Chittagong to the other littoral

ports of the Bay of Bengal and Arabian Sea. Emperor Akbar established an imperial naval

department called Nawara and appointed Mr Amirul Bahar to look after the riverine navigation

with a view to increasing trade and commerce within the empire. Even at that time this part of

Bengal was famous for excellence in the art of navigation and the Nawara used to buy ships and

boats made of Sundari. Thereafter the British, Portuguese, Dutch, Chinese and Arakanese came

to this area across a flourishing trading system in South Asia that linked the business centres of

East Bengal with Kolkata through the river routes of Mongla and the Sunderban.

3.20 At the beginning the Arakanese (Maghs) Pirates, the Portuguese (Ferringhees), Dutch and

English defectors were the pioneer to use the ports in this Sundarban area for their systematic

piracy and robbery. With some small and light galleys they used to enter into the Sunderban

through the rivers like Zulfiquar channel (Marjjal), Malancha, Jamuna, Arapangsia with arms to

loot away the things they wanted from the area. Their cruelty starting from the isles of the lower

Bengal often penetrating even beyond the Sunderban and went up into the countryside. They

used to torch people and make women slaves great and small, with strange cruelty and burning

all they could not carry away. Not a householder was left on the sides of the rivers as they swept

it with the broom of plunder and hence turned this area into the victims of exploits and

depredations of foreign and native adventurers. For ages this area was known as Magher Mulluk

due to terror created by the Maghs and the Portuguese fleet. This probably resulted desertion in

many fine isles in the mouth of Ganges/Sunderban, which were formerly well peopled, and later

on turned into a haven of wild beasts and specially tigers.

3.21 Later on the Bengali rulers built forts in the confluence of Sibsa/Marjjal, Araibaki

(Known as Ferringhee Fort) and Malancha and Jamuna for encountering the pirates. There are

still channels in the Sundarban, which is known as Ferringhee Fari/Khal, Ferringheer Doania

5 en.wikipedia.org


khal as these used to be places of heavy encounter. Khulna encompassing Mongla was set up as a

first sub division in 1842 to establish rule of law in the area. While in-charge of the sub division,

Bankim Chandra helped very largely in suppressing river dacoits in the area and establishing law

and order in the river routes/canals. The Government of British India also established a port at

Morelganj at the request of Mr. Robert Morel in 1869, which was to expedite the movement of

goods, products and commodities via Mongla. Even foreign ships visited the Mongla port for

want of good quality of cheaper rice, pulse, coconut, battle nut, tobacco, indigo and salt from

Khulna, Mongla, Gouramva, Lakhpur, Bagerhat Fakirhat, Rampal, Chaksree (remnants of a fort

recorded) and Morelganj. All these items including rice of Barisal were ferried by boats to

Kolkata and Saptagram through Mongla for export.

3.22 The name Mongla originated from Mongla River presently known as Mongla Nalla.

Mongla River originated from Passur and Rampal is situated beside Pussur. It is at the

confluence of river Passur and Mongla Nalla where the present Mongla Port is working. Admiral

Jefford, the first C-in-C of the Pakistan Navy knowing the importance of a second port, steamed

into the approaches to the Passur River with PNS Jhelum and Zulfiqar and sailed some 60 miles

up the newly surveyed channel to Chalna anchorage. During the passage up and down the river

he examined the charts both the seaward approach and those of the river which had been drawn

up by Zulfiqar. He decided that the site for a suitable riverine port at Chalna that could take some

of the load off Chittagong port. Subsequently, the light vessel “Sindhi” was used in the

approaches of the Passur river and the first class swinging moorings arrived Chalna from Karachi

Port trust including Mr. ESB Bhombal, a senior pilot to serve as the Port Officer and Conservator

at Chalna.

3.23 Historically, this part of Bengal always produced good quality boats for sale, which were

used for carrying various types of merchandise to Hoogly/Saptagram/ Kolkata and other areas.

The Sundari provided the best form of wood that used to last long or did not worn out/spoil

easily in saline water and proved much better than the British Oaks. The types of boats made are

Ghurab, Gallivat/Jalia, Bepari, Balia/Balam Pal/Polwaree Massoola, Fusta and koosa boats and

budgerows. Even the name of Chinese junk originated from the boats called Janpatrak or nick

named Janak used in this area. Some of these boats were very fast and most of them were

employed as warships either against the Moghuls or the pirates.


3.24 With the partition of the Sub-continent in the year 1947, East Pakistan came into

existence with its own export and import requirements, which were unique compare to West

Pakistan separated by one thousand miles of Indian Territory. Chittagong being only port with

limited facilities and inadequately equipped for handling large number of ships, faced a sudden

on-rush of imports and exports of all types of commodities required for East Pakistan.

Chittagong Port being located at the south eastern part of the country, the import and export had

to be transported through different tedious, expensive and time consuming modes of transport

causing excessive delay and rising transportation cost. In the meantime the Korean War broke

out. The war caused unprecedented rise in the export demand for jute and jute goods. The

increased volume had put enormous strain causing congestion at Chittagong port. The emergent

of a second seaport, therefore, became most essential for smooth handling to mainly export of

jute and jute goods and import of the north and western parts of the country.

3.25 Accordingly, the legal framework for the creation of a second seaport was provided

through a Gazette and by virtue of this notification Chalna Port came into existence with effect

from 01 December 1950 under the Ministry of Communication. A British merchant ship “City of

Lyons” first entered the port and anchored at Joymonirgol on 11 December 1950, thus making

the auspicious beginning of cargo handling operation at the anchorage. On 17 March 1951, the

anchorage was shifted near Chalna Bazar, 22 km upstream. But as the anchorage site was found

unsuitable for operation, further investigations were undertaken for selecting a suitable site. In

1953, Sir Claude English came to the then East Pakistan for surveying the Channel of Chittagong

Port who was also assigned with the responsibility of surveying Passur Sibsa river basin to find

out a suitable site for the anchorage. In his survey report, submitted in 1954, Sir Claude English

recommended that the anchorage site to be shifted to Mongla, about 16 km downstream from

Chalna Bazar. Accordingly on 20 June 1954, the Directorate of Chalna Anchorage was shifted to

Mongla between Mongla Nalla and Passur River. Thereafter a series of studies were undertaken

and the present site was selected for constructing permanent port facilities and finally five jetties

were constructed with necessary back up facilities including handling of containers in 1978. The

port directorate was then changed to an autonomous body called, Chalna Port Authority and

placed under the Ministry of Shipping from 1978. On 24 March 1982 Chalna Port Authority was


again renamed as Port of Chalna Authority and at last the port found its present name Mongla

Port Authority since 08 March 19876.

Functions of Chittagong Port

3.26 Chittagong port is the major seaport of the country. It provides a major gateway for the

countries trade with outside world. During the year 2010-2011 the port handled 45 metric tons of

cargo including 1.46 millon TEWs containerized cargo which is around 92% of the total

maritime trade of the country. The GDP growth of Bangladesh is around 6-7% while the

container traffic is about 14% which is double of the GDP rate. Thus the contribution of

Chittagong port to the economy is remarkable. To meet the challenges of globalization and

liberalization of world trade and economy, Chittagong port has undertaken many ambitious

projects to enhance its capacity, improve efficiency and quality of service and also to develop

adequate facilities to turn itself into a world class regional port7.

3.27 Therefore the functions of CPA are as follows:

3.27.1 To manage, maintain, improve and develop the port.

3.27.2 To provide and maintain adequate and efficient port services and facilities in

the port or the approaches to the port and maintain the navigability of the port channel

and port.

3.27.3 To regulate and control smooth and efficient berthing at jetties and movement

and navigation within the port i.e, entering into and exit of vessels from the port.

3.27.4 To do such acts and things as may be necessary or convenient to be done in

connection with or incidental or conducive to the performance of its functions under the

ordinance8.

3.28 Thus the Chittagong port is a service delivery institution as per the Chittagong Port

Authority Ordinance 1976 in the country. The infrastructural facilities that it has are dedicated

6 www.mpa.gov.bd 7 Chittagong port authority overview 2012. 8 Chittagong port authority overview 2012.


absolutely for the smooth management of cargo that comes within its premise for export and

import purposes. However, even with the modernization efforts of Chittagong port, some

stuffing and un-stuffing of exports and imports are done inside the port for the want of the

stakeholders in addition to its usual loading and unloading of ships and other peripheral activities

or functions of the port.

The Functions of Mongla Port

3.29 The Mongla port is the second seaport of the country situated at the south western part of

the country. Due to resource constraint it is yet to come out as an alternative to Chittagong port

in time of need or emergency. Mongla port with its present condition is somehow handling 5% to

8% of the total trade9 of the country. However, the Mongla Port Authority is with its mission to

make the port sufficiently vibrant in order to meet the requirements of the growing trend of the

trades of the country and attain the international standard.

3.30 The functions of the Authority as per its ordinance are as follows:

3.30.1 To manage, maintain, improve and develop the Port.

3.30.2 To provide and maintain adequate and efficient port services and facilities in

the Port or the approaches to the Port.

3.30.3 To regulate and control berthing and movement of vessels and navigation

within the Port.

3.30.4 To do such acts and things as may be necessary or convenient to be done in

connection with, or incidental or conducive to, the performance of its functions under this

Ordinance.

3.31 The Mongla Port being the service providing institution has not been grown up in the

same pace of Chittagong Port. The development of any seaport demands visionary approach as a

part of its long time planning and development. But due to paucity of resources and absence of

9 Interview with the present Chairman of Mongla Port Authority on 06 May 2013 and IRP of Commodore H R Bhuiyan during NDC p2.


top down guidelines such kind of planning probably could not be initiated from the port

authority. As a result, the Mongla port does not have required infrastructure facilities to provide

international standard service to the ships calling the port, especially in handling containerized

cargo in the port. However, the present Mongla Port Authority has already projected its short and

long term plans to the government to bring the port to its minimum level of international

standard.

Port Management

3.32 Both Chittagong and Mongla seaports are managed by the authorities known as

Chittagong Port Authority (CPA) and Mongla Port Authority (MPA) respectively. Both CPA and

MPA are administered by a board comprising of a Chairman and four members in case of

Chittagong Port and a Chairman and three members in case of Mongla Port. The general

direction and management of the CPA and MPA and its affairs shall vest on the Board which

may exercise all powers and do all acts and things which may be exercised or done by the

Authority. The Board in discharging its functions shall be guided on questions of policy by such

directions as may be given to it, from time to time, by the Government. The Chairman and other

members shall be full-time officers of the Authority and shall hold office on such terms and

conditions as may be determined by the Government. The Chairman shall be the chief executive

officer of the Authority. There are 15 and 12 department in Chittagong and Mongla Ports

respectively to look after the day to day businesses of the ports.

Existing Facilities of Chittagong Port

3.33 Chittagong Port being a historical port has a huge area both in land side and river fronts

with adequate facilities to accommodate large number of ships round the year. However, it has

length and draught restrictions and as such the maximum allowable length is 186 m and draught

is 9.1 m. Presently the port has 19 jetty berths of which 7 are designated for berthing container

ships. Out of the 7 container berths 2 are provided with 4 rail mounted gantry crane facilities.

Shore crane facilities are available with rest 9 jetties for handling general cargo out of which 5

are provided with railway tracks. 10 jetties are also provided with transit sheds and backyard

facilities are also there for handling containers and containerized cargos. There are 6 specialized


berths for bulk cargo like wheat, cement clinker, rock phosphate, urea and liquid ammonia10.

Chittagong port also has 5 mooring berths for edible oil, POL in bulk, vegetable oil carrier and

repair and lay off vessels. For coasters and inland vessels Chittagong port has 1 Grain silo lighter

jetty and 2 permanent cement concrete jetties and 4 pontoons with shore connection lighter

jetties.

3.34 For general cargo handling purpose the Chittagong port has 30 Mobile Cranes, 85

Forklift Trucks, 14 Industrial Tractors, 2 Heavy Trailers and 30 Light Trailers each with different

capacities (tons). In addition the Chittagong port also has 4 Quay Gantry Cranes, 11 Rubber

Tyred Gantry Cranes, 31 Straddle Carriers (4 high), 19 Reach Stackers, 7 Forklifts, 19 Forklift

Spreaders, 3 Forklift forks, 6 Container Movers, 37 Terminal Tractors and 56 Terminal Trailers

each with different capacities (tons) for handling containers and containerized cargos. As the port

activities are increasing the Chittagong Port procures good numbers of container, containerized

cargo and general cargo handling equipments in every fiscal year.

3.35 Chittagong Port has 13 ware houses totaling 60,650.77 sq, meter area for providing

29,892.94 M. tons of cargo. In addition the port has baggage shed of 1789.00 sq. meters area, 2

additional sheds of 18829.36 sq, meter area for accommodating 8,106.16 M. tons tea export

cargo, automobile shed of 2,258.36 sq. meter area and huge converted space outside port

protected area. However, the specialized jetties and container berths have their huge own

backyard space for the storage of bulk wheat, TSP, cement clinkers, bulk POL, edible oil and

containers.

Existing Facilities of Mongla Port

3.36 The total land area of the Port is about 950 ha, of which some 90% is at the

water front location on Mongla River. The main port facility is a pile-mounted concrete

deck with length of 915 m, almost in a straight line, providing berthing for five ships. In

addition, there are seven mooring, in-stream buoys and 14 anchorage areas. Hence,

altogether, the port can accommodate 26 ships (Jetty – 5, Mooring Buoys – 5, Anchor Berths – 8,

Private Jetty Berths – 5). It has four on-dock transit sheds, each with about 20.000 sqm

and 2 warehouses of similar size. In addition, there is a paved container yard of 3.6 ha that can

10 Annual Report 2010-2011 of Chittagong Port Authority.


store 2,200 TEUs (one tier), including 20 reefer plugs11. The dock is equipped with four rail-

mounted electrical cranes with lifting capacity of 3 tons. These cranes are old and designed for

handling bags; they are not useful for handling containers that weigh up to 30 tons. There is also

an old, 100-ton crawler crane that can handle containers to/from ships. Yard handling of

containers can be provided by old three straddle carriers and a top-lift.

3.37 Both the jetty and the sheds are in good working condition. The Port has leased

about 65 hectares of waterfront land to private industries; among them four cement factories

(clinker grinding), two LPG bottling plants and one petroleum terminal. All these seven

plants have their own jetties and cargo handling installations and as such they do not use

Mongla’s public port facilities. The cement plants also use anchorages, especially at Harbaria,

for lightering clinker ships. The port provides facilities for handling of cargoes in the river as

well as alongside the jetty. At present two jetty berths are functional in respect of depth.6.5 m

draught ship can take berth at the jetties. Mooring buoys are also for berthing ships of 7.0 m

draught and ships of 8.5 m draught can anchor and carryout unloading and loading in the

anchorage. There are four transit sheds and two warehouses with the total capacity of

60,000 M ton. Mongla Port also has sufficient cargo handling equipment and vessels for

smooth port operation.

11 A Study of Mongla Port’s Strategic Development Options for The World Bank, by Asaf Ashar, April 2010.


Chapter IV: Problems of Existing Facilities of Seaports of Bangladesh

General

4.1 Chittagong Port. The Chittagong Port is the principal port of Bangladesh and

therefore has very special role to play in the national development process. It provides necessary

facilities and services in proper and efficient handling of export-import cargo of sea-borne trades.

The process of trade liberalization and globalization in the eighties has resulted in greater

mobility of goods and services across the international borders. The subsequent shift in

manufacturing activities towards countries with comparative economic advantages has presented

a challenge for many developing countries aspiring to expand their manufacturing bases and

stimulate domestic economics through improved global linkages in trade and commerce.

Bangladesh is seeking to explore opportunities to further expand international economic

activities for sustainable development. To meet the trade objectives, Chittagong Port is with its

mission to improve efficiency make it more responsive to the commercial needs of exporters,

importer and carriers. In today’s global environment, the seaports have become competitive to

offer increased level of efficiency and costs. So it is imperative to upgrade the efficiency of

Chittagong port keeping in view of the visions set for the Chittagong Port as regional hub to

meet the challenges of the situation. The port of Chittagong despite many constraints continues

to cope with changing patterns of the trade and creates facilities to meet the market demands. In

order to enhance the port efficiently, productivity and level of services, the Chittagong Port

Authority has taken dynamic steps and reform initiatives to handle more ships and cargoes by

using 60% of existing port facilities.

4.2 Mongla Port. Mongla Port in the second seaport located at the south western part of the

country to deal with international seaborne trade. The vessels arriving in this port are mostly

from ports of Asia, the Middle East, Australia, Europe and North America and rarely from the

countries of Latin America or Africa. That is why the port has trade links with almost all the

major ports of the world. Due to rapid and sustained economic growth there are expansions of

industrial development in the country that demand major exports and imports activities through

seaports. The success of the export based apparels industries causing serious capacity constraints

at Chittagong Port. To meet the increased demand to provide international standard seaport


facilities the government of Bangladesh has taken a strategic decision to reinvigorate Mongla

Port and develop its facilities up to international standard. As a part of this initiative a significant

amount of government investment has been earmarked for a number of projects in Mongla

Port12.

Berthing of Ships and Turnaround Times

4.3 Chittagong Port has good number of jetties to berth ships that are calling the ports. Ships

having maximum length overall (LOA) 186.00 meter with minimum speed 10 to 12 knots with

days permissible draft not exceeding 8.55 meters can be berthed at jetties 2 to 13, Chittagong

Container Terminal (CCT) and New Mooring Container Terminal. In addition the Chittagong

port has some specialized jetties/ berths (Dolphin Oil Jetty, River Moorings, Dry Dock Jetties,

Grain Silo Jetty, Triple Super Phosphate Jetty, Cement Clinker Jetty, Chittagong Urea Fertilizer

Limited Jetty, Karnaphuli Fertilizer Company Jetty etc) that can also accommodate ships with

maximum LOA 186 meters and draft maximum 9.15 meters. This size and draft depends upon

the size of the jetties and the depth of water available at there. The length of the vessel cannot be

increased due number of bends leading to the Jetties and the width of the turning basin in the

Karnaphuli Channel.

4.4 Mongla Port has place for the construction of 11(Jetty number 1 to 11) jetties to

accommodate ships that calling the port. Jetty number 1, 2, 10 and 11 are in the future

development plan of the port. For jetty numbers 3 and 4 only piling have been done over the

years and thereby cannot accommodate ship alongside. Jetty numbers 5, 6, 7, 8 and 9 are the

concrete jetties but due to heavy siltation in the channel only jetty no 8 is operational at the

moment to accommodate ship with maximum LOA 180 to 200 meters and draft 6.5 meters

alongside. In addition there are 6 mooring berths and 8 to 10 anchorage berths that can also

accommodate ships of the same LOA and drafts. In fact depth of water in the channel leading to

the port is a major problem to accommodate ships of higher drafts.

12 www.pppo.bd/projects-two-jetties-mpa-at-mongla-port.


Navigation of Vessels

4.5 Both the Chittagong and Mongla ports are suitable for day and night navigations for the

ships with required LOAs and draughts, which is 186 meters LOA and 9.1 meters draught in case

of Chittagong Port and LOA 180 to 200 meters and 6.5 meters draught in case of Mongla Port.

Channels are well marked for the purpose and vessels are to take pilots for ensuring safe

navigation in the channels. The size and draught of the ships are restricted to 153 to 165 meters

LOA with 0.5 meters less than the day’s permissible draught in case of Chittagong Port and 140

meters LOA with 0.5 meters less than the day’s permissible draught in case of Mongla Port for

night navigation to take berth inside channels and alongside jetties of the ports. In addition

vessels with bridge at the bow and containers on deck obstructing clear view forward and all

types of tankers are not handled during night. Since the ports are tidal ports all the inward and

outward navigation in the channels are conducted during high tide.

Pilotage

4.6 Pilotage is compulsory for all oceangoing vessels calling Chittagong and Mongla ports.

Because the entrances to the Karnaphuli channel of Chittagong port and the Passur channel of

Mongla port are continuously changing and, therefore, no vessels should attempt to enter the

channels without pilots. In case of Chittagong Port the incoming vessel receiving a pilot is

required to wait at the pilot boarding ground. But in case of Mongla Port the pilotage ground

extends from the Fairway Buoy, approximately at position Lat. 21° 26´ N Long 89° 34´ E to the

northern limit of the port. In both the cases the master of the vessel requires to navigate himself

up to the pilot boarding ground and then the Port Pilot will board and guide the master for rest of

the passage up to the respective berths of the ports.

4.7 At present the Chittagong and Mongla ports have limited number of pilots to provide

pilotage services to vessels calling the ports. Several attempts were taken to increase the number

of pilots in the ports but due to bureaucratic complicacies in the country the ports are yet to

achieve desired results in this regard. Due to insufficient number of pilots in the ports the pilots

are overburdened that may cause devastating situation at any moment and hamper port

operations.


Dredging

4.8 The siltation in the channels of both Chittagong and Mongla ports is common due to river

based port as well as slow downward flow of the river. As a result the ports are to wait for the

high tides to handle vessels with higher permissible draughts. This demands planned capital

dredging depending on the hydrographic studies and river trends analysis in the channels side by

side maintenance dredging in the channel round the year. In addition river engineering is also

essential to have the strong downward flow of the rivers. Chittagong port has already undertaken

capital dredging program in the year 2010 and yet to acquire desired results. The port also carries

out maintenance dredging at the harbor mouth using its only dredger Khanak and employing

private parties at the jetty heads. But due to the absence of effective monitoring and supervision

much improvement is yet to be achieved. Similarly the Mongla port is with its process to

undertake projects for capital dredging in the channel and procure dredger to conduct

maintenance dredging in the channel.

Maintenance of Vessels

4.9 Chittagong port has a fleet of dredger, tug boats, specialized vessels and other utility

vessels for the maintenance of the channel, smooth handling of the ships, providing logistic

support, environment control etc. The Marine Engineering department of the Chittagong Port

Authority (CPA) is mainly responsible for the maintenance of the vessels. But due to non

functional state of the marine workshop, shortage of skilled manpower and unwillingness of the

technicians to carry out maintenance within own means; most of the maintenance works of the

vessels are outsourced in the local market. As a result proper maintenance is at times

compromised which cause huge loss of the port as well as life span of the vessels. Similarly

Mongla Port has a smaller fleet of tug boats and firefighting vessel for the operation of the ships

inside the channel. Like Chittagong Port the maintenance works of the fleet are managed from

outside causing loss of the port in every year. Lack of proper monitoring and supervision of

maintenance works of vessels is a serious threat to the fleets of both the seaports of the country.

Space Utilization

4.10 Presently Chittagong Port has a total 183773.74 sqm (square meter) and 225179.36 sqm

areas within protected area and outside protected area respectively for break bulk cargo. In


addition Food Department (Grain Silo), TSP Complex, Cement Clinker Grinding Company and

different oil companies have their own storage facilities (covered and open) adjacent to

respective berths. Similarly Mongla port has 39258 sqm areas for break bulk cargo. In case of

containerized cargo Chittagong Port has 672803 sqm and 58735 sqm areas for Container Storage

Yard and Container Freight Station respectively. This area can accommodate a total of 32017

TEUs containers at a time. In addition Chittagong Port has 900 reefer points. Likewise Mongla

Port has 3 container yards of 35752 sqm area for accommodating 2180 TEUs containers at one

stack. The port has 120 in numbers reefer point plugs. Over the years Chittagong Port has

utilized its 60% areas and Mongla Port has utilized 25% areas13 for the cargo handling purpose.

Handling of Cargo and Containers

4.11 Break Bulk Cargo. The Chittagong Port handles huge quantity of cargo every year. A

summary of bulk cargo handled by Chittagong Port over the years is given below:

Calendar Year Imports (tones) Export (tones) Total (tones)

2006 2,39,36,103 30,89,550 2,70,2,653

2007 2,42,36.261 33,92,974 2,76,29,235

2008 2,44,92,707 37,04,862 2,81,97,569

2009 3,05,86,680 39,57,894 3,48,44,574

2010 3,66,70,356 45,12,439 4,11,82,79

2011 3,82,66,480 48,73,562 4,31,40,042

2012

4.12 Containers. Over the years Chittagong Port has acquired the capacity to handle large

numbers of containers in a year. The container handling figures are summarized below:

Calendar Year

Chittagong Port(TEUs)

Cargo (Tones)

Dhaka ICD (TEUs)

Cargo (Tones)

2006 8,76,186 85,17,130 77,567 3,25,305 2007 9,58,020 96,06,032 80,714 3,31,216 2008 10,69,999 102,16,055 82,458 4,34,628

13 Regional connectivity will make Bangladesh an open country, Dr M Rahmatullah, The Daily Star, 02 February 2010.


2009 11,61,470 12,27,321 63,780 4,94,525 2010 13,43,448 1,43,70,217 64,369 4,83,039 2011 13,92,104 1,47,62,762 69,723 5,56,781 2012

4.13 A substantial part of Mongla Port remains unused every year. Statistics show that the

Mongla port has the capacity to handle 6.5 million tonnes of goods and 50,000 TEUs (twenty-

foot equivalent units) of containers every year. The port handled some 2.69 million tonnes of

goods and 27,000 TEUs of containers during fiscal year 2010-11which were 42 per cent and 54

per cent respectively of the port's capacity14.

Equipment Installation

4.14 To make the ports an international standard there are initiatives from the ends of both

Chittagong and Mongla Ports. For this reason Chittagong Port has already installed computerized

Container Traffic Management System (CTMS) which is at present under trial run. This has

enabled the port users to get information about the arrival and departure of containers and vessels

sitting in front of the computers. The port is also installing Vessel Traffic Management

Information System (VTMIS) in order to ensure a safe and smooth flow of traffic and take care

of the planning and streamlining of the logistic processes in the port. The major tasks of the

management and operation of the port will be brought under the automated system15 once the

systems are implemented, and the capacity and efficiency of the port will be increased up to 50

percent. Similarly the Mongla Port is in the process of procuring one cutter suction dredger and

few container and cargo handling equipment in order to bring high draught vessel in the port and

bring further efficiency in port operation.

Employment of Operators

4.15 Earlier the cargo handling activities in both Chittagong and Mongla Ports were mostly

looked after by the Stevedores and Clearing and Forwarding (C&F) agents enlisted in the ports.

As the jobs were labor intensive, the Stevedores used to take labors from the Dock Workers 14 http://www.defence.pk/forums/bangladesh-defence/170389-adb-backtracks-funding-mongla-port-development.html 15 Daily Star, 25 April 2011, Ctg container handling to go automated, Dwaipayan Barua, Ctg.


Management Boards and the C&F Agents had their own labor pool. The laborers had different

groups as per different types of jobs and each group had their own union. The leaders of the

unions used to demand/earn money without getting involved in the jobs and they used dictate the

gang formation involving more number of laborers to works for a particular purpose. The

situation at times became critical/worse and often the port operation got stopped due to the high

demands of the laborers. During the last caretaker government reform initiatives were taken in

the port especially in Chittagong Port that abolished the Dock Workers Management Boards of

both the seaports and berth operator system was introduced. The Stevedores were divided into

number of berths available in the port and the able bodied laborers of the Dock Workers

Management Boards were distributed among the berth operators. The laborers not willing to

work under new system, unsuitable due to old age and whose track record was bad were sent

home with their dues as per the relevant rules of the Dock Workers Management Boards. The

system brought dramatic change in the port operation, was accepted by the port users and cost of

doing business became minimum for all concerned.

4.16 The berth operators were initially divided into twelve berths and the one who had more

cargo/container handling experience was made the berth leader. But as the days were passing the

berth leaders were not giving due shares to their partners and thereby there had been

misunderstandings between the partners in each berth. However, as the new system was

introduced in the port operation it was justified/ institutionalized by issuing a gadget by the

government. As per gadget the berth operators are to be employed by a tender in order to

undertake works in a competitive price. Accordingly, the Chittagong Port somehow managed to

employ the berth operators through tender and faced complicacies in conducting the tendering

process.

4.17 Similar reform works have also been taken for Mongla Port, but instead of berth operator

system the stevedoring system is still on and accordingly separate gadget has been published in

this regard. The Dock Workers Management Board has been abolished and the stevedores are

booking their laborers on their own choice from those who were working in the port and have

good track record. This has brought significant improvement in the port operations and

satisfaction is evident among the port users as the new system has lessened the cost of doing

business in the port.


Labor Issue

4.18 The new system of port operation has brought significant improvement in the cargo

handling activities in both the seaports of Bangladesh. But still the laborers are causing unrest in

the day to activities of the ports as the berth operators in Chittagong Port and Stevedores in

Mongla Port sometimes do not follow their normal ethics in employing the laborers in a

particular operation. They on opportune moment select some of the laborers from the outside

meaning instead of those have been allocated to them or selected for the purpose in order to

employ them at a cheaper wage to maximize their profits. At the same time some of the laborers

who lost their jobs with the introduction of new system want to get back their jobs being

politically motivated even after taking back their dues from the previously held Dock Workers

Management Boards. Thus the unholy demands from both ends are the serious concern for the

Port Authorities to conduct cargo handling activities in the ports.

Shortages of Equipment

4.19 Shortage of equipment is a widely talked about point on the part of the port users. Port

users allege that equipment deficiency poses challenges to the operational activities in the port as

there is a 24 per cent deficit with respect to the sanctioned equipments. A large segment of the

existing equipment remains inoperative or out of order for most of the time16. In order to

overcome the limitations of equipment the Chittagong Port is procuring good number of various

types of equipment every year. Again due to old age, some of the equipment gets nonoperational

during operation causing unnecessary delay in the operations. But in case of Mongla Port, the

authority due to paucity of funds could not procure cargo handling equipment over the years.

However, very recently while the number of ships are increasing in Mongla Port and requiring

equipment, the government has taken a project at a cost of taka 82.80 crore to procure good

number of equipment for a quick and smooth cargo handling at Mongla port. Therefore, the

process to procure equipment is on and once those are available will improve upon the existing

situation further.

16 Chittagong Port to .play catalytic role in regional connectivity, The Financial express, 03 May 2013


Absence of Autonomy of Port Authorities

4.20 Both the Chittagong and Mongla Ports are under the administrative control of the

Ministry of Shipping. The activities of the ports are managed by a board consist of the Chairman

and four members in case of Chittagong Port and Chairman and other three members in case of

Mongla Port. Both the Chittagong and Mongla Port Authorities are the autonomous bodies to

take decisions on port related matters. But occasional deviations cause unnecessary delay in the

implementation of projects where the role of ministry in giving approval create confusing

situation among the stake holders. In an interview with the Daily Star, a renowned news paper,

Mr. Kamal Hayat, the Chief Executive of Safe Shipping Lines Ltd, who is also Senior Vice

Chairman of Bangladesh Shipping Agents’ Association, said that, the Chittagong Port Authority

(CPA) should be given more autonomy and decision making power. From our long involvement

with CPA, we see that it cannot in some cases take even the simplest of decisions without

government approval. Construction of the New Mooring Container Terminal was completed long

ago, but CAP has failed to take a decision on operating the terminal till today. Though the

present capacity and productivity of Chittagong Port may be termed satisfactory, productivity is

sometimes hampered due to the long and complex process of getting approval from

management; this needs to be streamlined. The port authority must be given more power to

decide on their own on any project which is financed by the earnings of the port. These decisions

could be taken in consultation with the stakeholders; otherwise, it creates bottlenecks from the

ministry, unnecessarily delaying the process and also not getting the work implemented on

time 17 .” Similar situation also prevails in the Mongla port that is following the age old

administrative procedure and much time is elapsed in materializing the projects. Faster decision

making is essential to make the port most vibrant and the stakeholders believe it would

contribute to the regional economy for many more years if its efficiency and capacity is

increased18.

17 Chittagong Port Authority needs more powers, Bangladesh Shipping Agents’ Association official wants less govt interference, Uday Sankar Das, 26 March 2013. 18 Ctg port to celebrate 123th founding anniversary, Users want port of world class standards, Dwaipayan Barua, the Daily Star, 24 April 2012


Implementation of Rules, Regulations and Conventions

4.21 The seaports of the country provide the gateway to conduct overseas trades. Therefore, it

is mandatory for the ports to implement some international rules, regulations, conventions etc.

By now both the ports have implemented the International Ships and Port Facilities Security

codes (ISPS codes) as a part of the Safety of Life at Sea (SOLAS) convention. This has also been

monitored by the US Coast Guard and IMO on many occasions and showed their satisfaction to

have US trades through these seaports. In addition Chittagong Port has introduced Container

Scanning Equipment, Radiation Detection Equipment etc which provide necessary security

checks to US bound containers. Introduction of some of the pollution control equipment in

Chittagong Port ensures compliance of Marine Pollution (MARPOL) convention of International

Maritime Organization (IMO) in the port. Mongla Port due to its fund constraints and the want of

US assistance is yet to take similar measures for ensuring necessary security to its trades with

western and far eastern nations.

Port Security

4.22 Seaports are normally a bonded area and foreign flag carriers calling the ports are foreign

territory demand highest level of security all the times. This security is also extended beyond

jetty area to mooring berths and anchorage areas of the respective ports. For this both the

seaports of the country have their own security department to provide overall security of the

ports. Introduction of ISPS code has enhanced their efforts and regular training is imparted to the

security personnel to maintain their optimum efficiency. Some breach of security is evident in

the port areas which at times causes image crisis for the ports as well as the country.

4.23 Loosing of ships’ store is the most common phenomenon in the seaports of the country.

Cases of this nature are sometimes reported to the Malaysia based International Maritime Bureau

(IMB) and Singapore based Regional Cooperation Agreement on Combating Piracy and Armed

Robbery against Ships in Asia (ReCAAP) as piracy. The initiative of Bangladesh government to

portray the real picture of the situation around the seaports of the country has reinstated the good

image of the country in front of those international institutions. That is why the name of

Bangladesh is no more there in the list of piracy prone countries in the world. Bangladesh Coast


Guard as a part of their duty ensures the security of the seaports of the country especially at the

water fronts and anchorages.

Accidents

4.24 grounding, sinking of ships and fire onboard are the most common maritime accident

worldwide. As most of the ships visiting the seaports of the country are old, often lose their

seaworthiness and may cause maritime accident onboard. The seaports of the country have very

limited capacity to fight against maritime accidents. Thus they will have to depend on other local

resources available nearby to somehow manage the crisis. But in case of large scale accident the

concerned port authority may have to seek foreign assistance with the help of the government.

4.25 The country made coasters, lighter vessels, tankers etc are also vulnerable to accident as

those are on most of the cases built without proper care and monitoring. They though lack in

proper equipment, indiscriminately ply in the seaports of the country to carry cargo hinterland

through river routes. Due to maintenance of bad seamanship onboard and desperate ship

handling compromising bad weather sometime gets damaged and sinks. The situation becomes

worse when such sinking takes place within the navigable channel of the ports.

Corruption

4.26 Corruption is the most common and deep rooted incident within the wrongly motivated

port officials which tarnish the image of the seaports of the country both in home and abroad.

There are also irregularities in the management of dock workers and the exporters and importers

have to face financial losses due to alleged corruption by the Customs officials and "go slow"

policy by dock workers of the Port if they are not paid tips for loading and unloading of

containers. Bribes have to be allegedly paid even to the white-collar pilots of the port19. Though

it is a widely talked about subject among the stakeholders but both the parties become happy at

the end of the day. This makes the high cost of doing business at both the ends causing huge loss

of revenues. This is beyond doubt is detrimental for the overall development of the seaports as

well as the country.

19 Chittagong Port to .play catalytic role in regional connectivity, The Financial express, 03 May 2013


4.27 The country’s two seaports, Chittagong and Mongla are likely to see a good rise in

container handling once neighboring India is granted transit and transshipment for carrying

cargos to its Seven Sisters states20. Officials said Bangladesh’s ports have become very important

for South Asian regional connectivity. So, many countries are interested to invest in this sector

for good and quick return. But if corruption is continued in the same pace the fate of the

development of the seaports of the country may not see the light in near future.

Internal Connectivity

4.28 To support the activities of the seaports of the country there is a huge need of

infrastructure development in terms of roads, rails and water transportation. Experts say a vibrant

Chittagong port could potentially become a hub city helping the country in terms of growth and

employment. The hub city will emerge due to economies of scale and technological

improvements of the transportation. It city and the port needs to be equipped with facilities like

physical infrastructure, such as roads and highways, railway and inland waterways, advanced

information and technology, power and energy, banking and finance, hotels and restaurants,

administrative, especially effective law enforcing machinery to ensure safe passage of foreign

goods21. Though Chittagong Port is connected by roads, rails and waterways with the Dhaka and

other hinterlands but still there are scopes for immediate expansion/ improve upon the existing

infrastructures. Otherwise, the efficiency alone of Chittagong Port may not give dividend to the

overall growth and development of the country.

4.29 The importance of Mongla Port is on the rise as the Foreign Minister Dipu Moni said “the

Bangladesh is working towards providing Nepal with transit to access Chittagong and Mongla

seaports”22. Similarly the Railway Minister also spoke in the similar tone to connect Khulna city

and the Mongla Port by the construction of 53 kilometer railway line. The government on 14

June 2012 signed agreements with two Indian construction firms to facilitate the implementation

of the project23. The rise of Mongla Port shall not only have impact in the south western region

20 Govt to scrutinize UAE’s deep seaport funding proposal, Syful Islam and Badrul Ahsan, Financial Express, 19 February 2013. 21 Chittagong Port to play catalytic role in regional connectivity, The Financial express, 03 May 2013. 22 Nepal to get access to Mongla Port, The daily star, 03 Aug 2012. 23 Construction of Khulna-Mongla Port railway line to begin in July, Staff Correspondent Khulna New Age 20.02.2013


but also on the national economy. Therefore, a better road communications from Mongla to

Dhaka is much needed for this facelift since time consuming and irregular ferry services have

widened the distance between Mongla and Dhaka24. Again with the construction of Padma

Bridge the distance between Dhaka and Mongla will be 170 kilometers while the distance of

Chittagong port from Dhaka is about 265 kilometers. Thus the Padma Bridge will enhance the

importance Mongla Port as well as ease out the pressure of Chittagong Port. To improve upon

condition of the river route there is a need to carry out dredging in the channel leading to Dhaka

from Mongla port.

24 Mongla Port requires a facelift, Urgent steps needed to exploit full potential of the port, Zahid Hossain Biplob, The Daily Sun, 17 February 2013.


Chapter V: Requirement of Modernization of Seaports to overcome the problems

General

5.1 The port sector in Bangladesh provides the main gateway for its trade with

the outside world. Total cargo handled by the Chittagong and Mongla ports was 43.5 million

MT during 2011-12. The country's import and export has been growing by 15% per

annum most of which is being done through the Chittagong port. Currently,

Chittagong Port handles around 94% of the total sea borne trade and rest 6% is handled at

Mongla Port. The Chittagong port has been able to show a marked improvement in handling

containers. The optimum utilization of the berths and yards has made the port easier for the

country to become an economic gateway to South Asia25. But the potential of the Mongla

port has not yet been utilized as in the case of the Chittagong port. The inbuilt facilities

available on-shore is not fully utilized due to less cargo traffic generating over there. The

primary reason is the insufficient depth in the main Passur Channel. The other reasons are the

inadequate road connectivity with the hinterland and the major cargo generation centers of the

country, insufficient and lack of manufacturing industries in and around the port facility. Thus

the Government of Bangladesh is actively considering further development of Chittagong Port

and revitalizing the Mongla Port to raise it to a position that is comparable in terms of capacity

and activity with that of the Chittagong port.

Prospects of Modernization of Seaports of Bangladesh

5.2 Chittagong Port is the golden gate for the economic development of the country. Total

cargo handling growth of the port rose significantly at a rate of 22% in the last fiscal year i.e. in

2010-201126. At the same time the container growth rose to 24% due to robust surge in export

volume against the average container handling growth at 14% over the past two decades.

Chittagong Port Authority (CPA) with its 8.5% annual growth is utilizing only 60% of its

capacity. In order to make best use of the rest of its capacity projects have been taken in hand to

construct 600 meter long Karnaphuli Container Terminal in place of the existing general cargo

25 Bangladesh could become economic gateway using Chittagong Port, A K M Moinuddin, Dhaka Courier, 16 November 2012. 26 Chittagong Port to play catalytic role in regional connectivity, Pankaj Dastider, Financial Express, 03 May 2013.


berths numbers 10, 11, 12 and 13 with necessary back up facilities and procurement of container

handling equipment under DPP. The newly installed automated Container Tracking and

Management System (CTMS), Management Information System (MIS), Marine Pollution

Control Efforts, process to employ global operator to supply, operate and transfer New Mooring

Container Terminal, construction of Multi Storied car park, Capital dredging including bank

protection in the Karnaphuli River etc will augment the modernization efforts of CPA.

5.3 Around 40 per cent of the heavy industrial activities of the country are located in

Chittagong city and adjoining areas encompassing the Port. They include dockyard, dry dock, oil

refinery, steel mill, power generation plant, cement clinker factory, automobile industry,

pharmaceutical plant, chemical plant, cable manufacturing plant, textile mill, jute mill, paper

mill, fertilizer factory, Chittagong EPZ and Karnaphuli EPZ etc. Besides, Youngone

Corporation, a Korean company, has established an export processing zone at Anowara on the

south bank of the Karnaphuli River. Most of the entrepreneurs from abroad have come up with

FDI in these special export processing zones. Major business houses of the country are based in

this region. Apex trade body Chittagong Chamber of Commerce and Industry has erected a

multipurpose commercial tower World Trade Centre while the CDA and Parjatan Corporation

will jointly construct another 20-storied Commercial Bhaban at the BPC Motel Soikat site on the

Station Road in the Chittagong city to facilitate businesses to the local and foreign commercial

establishments. In fact Chittagong Port will be required to play the role of a hub port to facilitate

the growth of trade, business and commercial activities of the South Asia and ASEAN regions.

5.4 In case of Mongla Port though the situation is little different the port was incurring loss

over the years. In fiscal years 2005-06, more than 130 ships anchored in the port followed by 110

ships in 2006-07, 95 ships in 2007-08, and 151 ships in 2008-09.The port incurred loss of Tk

11.09 crore in fiscal year 2005-06, Tk 16.40 crore in 2006-07, Tk 16.93 crore in 2007-08 and Tk

5.91 crore in 2008-0927. But the port has started making profits since September 2009 as the

charges of unloading goods have been reduced by more than 50%. As the cost of doing business

by the Stevedores has also gone down more overseas trades are generating in Mongla port to be

routed through. Observing the situation the government has started allocating funds for Mongla

port for dredging and other modernization program to bring it to a status of second largest port at

27 Mongla port turning active, starts to earn profit, UNB connect, 30 April 2010.


the south western part of the country. Since the initiatives are taken a large number of ships are

now started arriving at the port. A total of 256 ships arrived at the seaport in the fiscal year 2010-

11 as against 156 in previous fiscal year 2009-10 with an average of 30 ships per month28. Under

the modernization program the projects that will take lead are the installation/ renewal of the

Navigational Aids of Mongla Port, Dredging at Outer Bar of Passur Channel and Collection of

Cutter Suction Dredgers and Boats, Improvement of Logistic Efficiency and Development of

Jetty, Yard and Link Road etc.

5.5 In an analysis on traffic through the seaports of Bangladesh it is seen by Infrastructure

Investment Facilitation Company (IIFC) that the Ready Made Garments (RMGs) and Knitwear

industries of the country have a huge potential of growth in the future29. Thus an alternative to

the Chittagong port will be needed to handle the growth of traffic expected. Mongla port has vast

unutilized lands which can support the import and export volume of the country when needed.

Thus the development of Mongla port is essential for the economic growth of the nation. In

addition being a viable alternative to Chittagong port, the development of Mongla port will have

significant economic impact especially in the northern and southeastern part of the country.

Cargo to and from northern and western part can be imported/ exported much more cost

effectively through Mongla port instead of Chittagong port. Industries set u in Mongla EPZ and

surrounding areas will be able to export and import their cargo more comfortably without going

to Chittgong port. The port may also be used as a transit point for supplying the coal to the coal

based power plant scheduled to be constructed in the region. In addition the stevedores will be

able to employ new workers and it is expected that there will be significant indirect employment

generation due increased traffic and infrastructure.

Interests of Regional Countries

5.6 Bangladesh lies at a strategic point of South and East Asia. The geographic location of

the country gives her a unique position to serve as a bridge between east and south Asia. Thus

the country can serve as a transit hub not only to India, but also to Nepal, Bhutan, Myanmar and

even China. If such situation is established the country will become a regional hub for trade and

28 www.newstoday.com.bd, News Today, 20 June 2011. 29 Feasibility Study Report on the Development of Two Jetties of Mongla Port Authority through PPP by IIFC, Volume 1 of 2, pp 21, March 2013


commerce in future. Chittagong seaport is important to India so that her north eastern states

known as seven sisters can use this port. That is why Bangladesh has given special attention to

have cross border trades with neighboring countries. China has already shown her interests to

help Bangladesh to build the world’s longest river crossing i.e, Padma Bridge, and deep sea port

at Sonadia island, in the south eastern part of the country. Once that port is built it will serve

landlocked parts of India, Myanmar including China. In fact China is keen to establish a road and

railway link to connect Chittagong of Bangladesh with the city of Kunming of China via

Myanmar.

5.7 Experts in businesses think that Bangladesh, China, India and Myanmar (BCIM) Forum

could be a potential platform to give a big boost to trade and investment if the governments of

these countries can act in a planned way. They feel that Bangladesh can hugely be benefited

economically if trade between Myanmar and Bangladesh increases and have business access to

other potential markets, including Malaysia through Myanmar, as a sound trade tie with mighty

India that is already in place. In fact there will be requirements of investments for infrastructure

development which the sea port authorities are doing making border crossing easier and ensuring

better connectivity. Sound connectivity between southern China and northeast India will ensure

economic advantage of having deep seaport in the future in Bangladesh30.

5.8 Very recently a visiting business delegation from Nepal urged Bangladesh to allow its

businessmen to use Mongla and Chittagong port. The delegation under the umbrella of Birgunj

Chamber of Commerce & Industries, Nepal discussed on the trade potentials with its counterpart

in Bangladesh Dhaka Chamber of Commerce & Industry (DCCI) 31 . The DCCI president

appreciated the very good economic relation between Bangladesh and Nepal though there is no

sign of much improvement despite tremendous potentials for expanding and diversifying trade

between these two friendly countries. In South Asia, Bhutan and Nepal trade mostly within the

region32 which is 86% and 65% respectively. But the others like Bangladesh, India and Sri Lanka

having direct access to seas trade mostly with the rest of the world.

30 BCIM can boost regional trade, investment: experts, New Age, online edition, 02 March 2013. 31 www.thenewnationbd.com, B&F Report, Nepal Business serious to use Ctg and Mongla ports, 11 May 2013. 32 Bangladesh to become hub of labor intensive industries, the News Today, 16 May 2013.


5.9 At present, Bangladesh and Bhutan are going to renew their transit deal where the

government of Bhutan has requested Bangladesh to sign a full-fledged agreement on transit.

Bhutan is interested to use seaports including Chittagong and Mongla, airports including

northwestern Syedpur and Lalmonirhat airports and some land customs stations for transporting

their goods and passengers. Export and import activities between the two countries are currently

taking place through Tamabil and Burimari land customs stations. Once transit is agreed then

the Bhutan will have to use Indian land to avail transit facility provided by Bangladesh. In fact

the country has the arrangement which India has recently reiterated that they would allow

Bhutanese vehicles to use their land for transit purpose through Bangladesh for bilateral and

third-country trade33.

Modernization Program of Seaport Authorities of Bangladesh

5.10 The Chittagong Port Authority (CPA). The CPA being the principal seaport of the

country is with its modernization program throughout the year. Because, with the economic

growth of the country and government response towards globalization and trade liberalization,

the cargo handling activities at Chittagong port has increased remarkably. Thus to support the

steady growth in the volume of container arriving at the port, the port authority is implementing

various development programs in phases. The major ongoing projects are described below:

5.10.1 Construction of Backup Facilities behind berth nos. 4 and 5 of New Mooring

Container Terminal (NCT). To ensure the full utilization of NCT, the backup facilities

behind berth nos. 4 and 5 is under construction. The contract was signed with the selected

bidder on 20 May 2010. The project is expected to be completed by 2015.

5.10.2 Capital Dredging with Bank Protection with Jetty Facilities in the Karnaphili

River from Sadarghat Jetty to third Karnaphuli Bridge. To ensure navigability of the

channel the Capital Dredging with Bank Protection with Jetty Facilities in the Karnaphili

River from Sadarghat Jetty to third Karnaphuli Bridge has been undertaken on 28 April

2011. The project work is still in progress.

33Bangladesh proposes 10 year transit agreement with Bhutan, Jasim Uddin, New Age, 11 March 2013.


5.10.3 Chittagong Port Trade Facilitation Project. The main objective of the project is

to increase the capacity at the port through the installation of Computerized Terminal

Management System (CTMS) in port operation, construction and improvement of

physical infrastructure like port internal roads, bridges along with creation of adequate

facilities for port environmental management to international standard. The CTMS has

already been installed in the port and is being utilized in a limited scale.

5.10.4 Vessel Traffic Management Information System(VTMIS). The VTMIS is a

computer aided system to ensure smooth movement of the vessels coming to Chittagong

Port. The system is in the process of installation and once installed the Chittagong Port

will attain the international standard in the managing the vessel movement in and around

port.

5.10.5 Other Projects. In addition to the projects mentioned above the Chittagong

Port has undertaken many short, medium and long term projects as part of her continuous

development program. Such projects include enhancement of Jetty/terminal facilities,

procurement of vessels and container/cargo handling equipment, employment of terminal

operator, construction of multistoried car park and ware house etc.

5.11 The Mongla Port Authority (MPA). The MPA under the directives of the government

has given top priority for developing port facilities up to international standard. As such five

different projects have been undertaken at an estimated cost of take 465.00 crore to develop the

port. A sum of take 129.37 crore has at been allocated in the ADP of 2012-2013. It is expected

that after implementation of the projects port will be operated more efficiently. Project wise

descriptions are given below:

5.11.1 Procurement of Cutter Suction Dredger, Pilot and Dispatch Boat. In order to

conduct regular maintenance dredging and smooth functioning of the port one cutter

suction dredger, one Pilot boat and one Pilot dispatch boat will be procured. The project

was approved on 13 April 2010 at a cost of taka 82.93 crore. The dredger with all

associated gears viz. crane boat, shore pipe, floating pipe, floater and house boat etc for

has already been procured by MPA. A contract has been signed on 04 July 2011 to


procure Pilot boat and Pilot dispatch boat and about 90% works has already been

completed and the project is scheduled to be completed by June 2013.

5.11.2 Navigational Aids. To ensure smooth day and night movement of sea-going

vessels in the channel a project has been undertaken at a cost of taka 23.00 crore to install

some navigational aids in the channel. The project was approved on 13 May 2008.

Under this project 62 in nos. buoys, 2 in nos. beacons, 6 in nos. light towers with

lanterns and anchors have already been procured and installed.

5.11.3 Dredging at the Outer Bar in the Passur Channel. To increase the navigability

at the Outer bar area of the Passur channel a project has been undertaken to facilitate

entrance of more than 9 meter draft ships into Mongla Port area easily. The estimated

cost of the project is taka 58.46 crore to dredge about 3.2 million cubic meter silt in the

Outer Bar area. The project was approved 27 September 2006 and the process in on to

materialize the project.

5.11.4 Dredging in the Harbor Channel. To increase the navigability of the Harbor

Channel of the Passur River the project has been undertaken at an estimated cost of taka

132 crore and the project has been approved on 30 March 2010. Under the project 4.196

million cubic meter dredging will be done at different places in the Passur Channel. The

project will be materialized by the financial year 2013-2014.

5.11.5 Procurement of 6 nos. Dredgers and Ancillary crafts and Accessories for Ministry

of Water Resources and Ministry of Shipping. Under this project 1 dredger will be

procured for MPA to maintain adequate depth in the Passur Channel. The project has

been approved on 17 August 2010 at an estimated cost of taka 104.26 crore and it

is expected to be completed by 2015.

5.11.6 Development of Jetty nos. 3 and 4. The MPA intends to select a private partner

to develop her Jetty nos 3 and 4 on Public Private Partnership (PPP) basis. The private

partner will undertake the works to design, construct, finance, operate and maintain the

various elements of the project for a fixed period of time on the basis of a concession

agreement made with the MPA. He will also set and charge tariff to the users of the while

operating and maintaining the project in order to meet the costs of undertaking the


project. At the end of the contract agreement all the assets will be transferred to the MPA

at no cost along with all site improvements, infrastructure, fixtures, fittings and

equipment. Total cost of the project has initially been estimated to be approximately US$

50 million.

Initiatives versus Outcome of Modernization to overcome Problems

5.12 The Chittagong has undergone many changes over the years. The purpose is to give

emphasis on overall capacity building and modernize Chittagong Port to make it as an ideal

regional transport hub so that it can provide services to all the neighboring countries against the

backdrop of a rapidly expanding regional trade34. This will ultimately cause more revenue

income in terms of ship and cargo/container handling in Chittagong Port. Thus the net earnings

of Chittagong port in fiscal year 2009-10 was taka 5.31 billion, in fiscal year 2010-11 it was taka

8.77 billion and in fiscal year 2011-12 it was 8.44 billion35.

5.13 Similarly the Mongla Port Authority is also making progress steadily in the last few

years. The decreasing in channel depth reduced the number of ship calling the port. But with the

motion of the government to revitalize the port has given momentum to make the port again a

profitable one. The recent modernize program of Mongla port has resulted large number of ships

to arrive at the port. A total of 256 ships arrived at the port in the fiscal year 2010-11 as against

156 in previous fiscal 2009-10. The net earnings of Mongla port in fiscal year 2009-10 was taka

22.74 million, in fiscal year it was taka 218.30 million and in fiscal year 2011-12 it was taka

162.32 million36.

34 Chittagong port to play catalytic role in regional connectivity, Pankaj Dastidar, the Financial Express, 03 May 2013. 35 Ctg port earns Tk 22.52b in 3 years, Pankaj Dastider, the Financial Express, 29 August 2012. 36 Finance and account department, Mongla Port Authority.


Chapter VI: Cost Benefit Analysis

Trade Potentials of Neighboring Countries

6.1 In the face of changing global economic order the most immediate neighbors India and

Myanmar are the members of Bangladesh China India Myanmar (BCIM) Forum for economic

cooperation. Thus Bangladesh should have endeavored to have benefits from the trade potentials

of these countries mainly two immediate neighbors, India and Myanmar. Today in the backdrop

of the urgent need for increased regional economic cooperation the Business Council of BCIM

has agreed to interact on trade-related matters of the region. This in fact gives the evidence of the

seriousness of the stakeholders of BCIM to grab opportunities of mutual cooperation for

economic development of the region. As the Asian economies emerged from the global

economic crisis faster than the rest of the world on the wings of an export-oriented growth

strategy, cheap high-quality labor, and noticeable forward jumps in technology it is increasingly

clear that the world's centre of gravity is shifting from the Atlantic to the Pacific. China and India

along with some emerging players such as Indonesia and Vietnam are driving Asia’s economy

into a position of economic and political dominance. In this scenario the potentials that are

opening up for Bangladesh definitely point out its position as an influencing player to participate

in the Asian century.

6.2 Bangladesh is now trying to establish itself as the next rising star in South Asia for

foreign investment. The country is strategically situated between China and India with favorable

demographics of a growing young population and one of the fastest growth rates of labor supply

in the world. This unique situation of the country offers a distinctive opportunity to the foreign

investor having technological knowhow to invest in Bangladesh. This has clearly been exposed

in the latest World Investment Report (WIR) of the UNCTAD that Bangladesh advanced by

some steps among the 74 numbers Foreign Direct Investment (FDI) recipient countries across the

world bears testimony to that. A recent study on the country revealed that Bangladesh has the

potential to attract US $ 5.0 billion in FDI a year. Therefore, there will be tremendous loads on

the seaports of the country to support the investment activities of the foreign investors and for

which the respective seaport authorities needs to prepare sufficiently.


6.3 The trade policy of Bangladesh is currently pursuing a progressively more open regime.

As an original member of the WTO, Bangladesh grants at least Most Favored Nation (MFN)

treatment to all its trading partners and receives the special and differential treatment provided

for in the WTO Agreements. It continued to participate actively in the work of the WTO, serving

twice as the coordinator of the LDC Group in Geneva in 2007 and 2011. Bangladesh is

advocating the issues of interest to LDCs, including greater market access, increased flexibility

in the development of multilateral trade rules as well as targeted assistance to trade

infrastructure. A periodic review of trade policy and practices in Bangladesh made by WTO

observed that the country's involvement in and commitment to regional integration initiatives has

deepened with the progressive development of a South Asian Free Trade Area (SAFTA) and a

Bangladesh, India, Myanmar, Sri Lanka and Thailand Economic Cooperation (BIMST-EC) Free

Trade Area as well as the expansion of product coverage.

6.4 Bangladesh is aware of the setbacks it is facing due to infrastructure short-comings and

is, therefore, geared to transform its challenges into opportunities. Encouraged by the recognition

of "British Bangladeshi Power 100", Bangladeshis in Britain have expressed their keen interest

to invest in Bangladesh's prospective sectors especially power. The measures taken in this regard

include the government's recent decision to borrow hard-term loans worth nearly US$1.5 billion

from Export Credit Agencies (ECA) for setting up five big power plants and signing up by

Bangladeshi and Indian power companies deals worth $1.5 billion to build a coal-fired plant to

provide around one-fifth of the country's energy needs and address chronic power shortages. In

another initiative, India-based US investors have been advised to come up with investment in the

sectors such as infrastructure, energy, power, IT, healthcare in Bangladesh as the country has

proved itself as an ideal destination for investment and industry relocation. Whatever, kind and

type of investment may be, the raw materials will routed through the seaports of the country.

6.5 The role of BCIM as a regional initiative in a global situation where every country is

trying to outpace others to get a place for itself in the face of fierce global competition cannot be

over-emphasized. Together with the economic factors, the closer geographical proximity, a

strong cultural affinity and presence of a huge informal border trade among the countries

provides strong optimism for forming a regional trading bloc comprising BCIM. Initiated

primarily as a Track II initiative, gradually the BCIM has evolved into a Forum where the


governments of the participating countries (Track I) have also started to take an active interest.

The rise of the economies of India and China, the new developments in Myanmar towards

democratic governance and Bangladesh's unique geographical location offer potentials for the

enhancement of connectivity, trade and commerce in the region. BCIM cooperation is expected

to help to revive the centuries-old Silk Road running from Chittagong to Yunnan through

Myanmar, a fact that will help to facilitate transit and thus trade among these countries. The

potential benefit of utilizing the two seaports of Bangladesh, i.e. Chittagong and Mongla, is a

vast increase in trade and investment in this region. The BCIM initiative will ensure greater flow

of trade, investment and financial cooperation and strengthen the age-old cultural ties of its

members.

Impact of Seaport Investments on Economy

6.6 The term “economic impact” includes all the change as regards to employment, the

demand for goods and services and contribution to tax revenue that can be attributable directly or

indirectly to the transport infrastructures i.e. seaports. The roles that are performed in large scale

by seaports start from the trades in the direction of the industrial development to the financial

activities with major economic, environmental and external social impacts. In fact the ship and

cargo handling activities in seaports initially generate business to earn revenue for the firms

supplying marine services. This revenue is used to purchase employment (direct jobs) to provide

the services, to pay stockholders and for retained earnings to purchase goods and services from

local firms as well as national and international firms. More importantly there is also a question

to pay taxes from the business revenue. Thus the economic impact of seaports has a complex

structure that can be classified in 4 different ways viz. direct impact, indirect impact, induced

impact and catalytic impact. The direct impact is the employment and income generated by the

direct construction and operation of the port. Indirect impact is the employment and income

generated by the chain of suppliers of goods and services to the ports and shipping companies.

The induced impact is the employment and income generated by the spending of incomes by

employees created by the direct and indirect effects. Finally, the catalytic impact is the

employment and income generated by the role of the port as a driver of productivity growth and

then as an attractor of new firms.


6.7 Thus it is seen that the seaports are causing increased business and employment

opportunities, gross national product (GNP), land prices etc. with their developments. The

population migration towards the seaports related activities rises dramatically and above all

economic development takes place both at the local, national and regional levels. Thus the

improvement of seaports is important and for which there should be investments in the seaports

which is the key issue in modern ports economics with respect to planning to port development,

financing and assessing the returns on investments.

Impact of Seaport Investments on Regional Development

6.8 The investment in seaports affects both economy and regional developments. Because

investment in seaport causes increased urban development with employment and infrastructures

opportunities, taking migration, land valuation, technology developments, economic growth, etc.

In reality seaports are scattered in an area and ships rarely come from the port in the first

opportunity because of connection and settlement inadequacies. But when the seaports develop

and come up to a stage of providing all required services, the penetration and hinterland capture

takes place. Short sea /feeder services start taking place between the nearest ports. Each port is

established to connect with the land giving rise to the population and economic growth that

demand interconnection and concentration in businesses. As a result the main seaports, city

centers and freight corridors come up and load flows in the main seaports. This ultimately leads

to load centers and deep sea liner services begin to operate. Then the question of regionalization

comes forward and regional load centre network improves. When seaport develops there is need

for employment generation for the movements of trades and economies. At the same time the

workers and their families begin to settle in the area create infrastructures opportunities for

grocer, bank, companies etc. Consequently, economic movements and regional development

takes place side by side as they are closely associated with each other37.

Estimated Benefits and Costs

6.9 In order to find out the benefits and costs there is a need to see the statistics of both

Chittagong and Mongla port over the years. Chittagong Port is the principle sea port of

Bangladesh handling about 94% (40.90 million tons) of total sea borne trade of the

37 International Journal of Business and Management Studies Vol 3, No 2, 2011 ISSN: 1309-8047 (Online).


country. Out of total sea borne trade handled at Chittagong port, import account for 88%.

In recent years, neighboring countries, such as India and China, have looked to the

Chittagong port city as a future gateway to landlocked southern Asia, including northeast

India, Bhutan, Nepal, southwest China and parts of Myanmar etc. Chittagong intends to emerge

as a regional economic hub in South and East Asia, and is undertaking various megaprojects,

including contributing a lot for the erection of the deep sea port. The imports and exports

statistics of Chittagong Port for the last fiscal years are given below:

Cargo Handled by Chittagong Port

Year Import

(In Metric tons)

Export

(In Metric tons)

Total

(In Metric tons)

2007-2008 2,53,46,048 36,00,520 2,89,46,568

2008-2009 2,67,18,834 37,63,747 3,04,82,581

2009-2010 3,28,13,208 41,87,968 3,70,01,176

2010-2011 3,99,14,145 49,80,375 4,48,94,520

2011-2012 3,61,84,935 47,16,374 4,09,01,309

Source: Over View 2013, CPA

Source: Overview 2013, Chittagong Port Authority

0

5000000

10000000

15000000

20000000

25000000

30000000

35000000

40000000

45000000

2007‐08 2008‐09 2009‐10 2010‐11 2011‐12

Imports through Chittagong Port ‐ In Metric Tons


Source: Overview 2013, Chittagong Port Authority

Containers Handled by Chittagong Port

Year

Import

(In Metric tons)

Export

(In Metric tons)

Total

(In Metric tons)

TEUS Tons TEUS Tons TEUS Tons

2007-2008 5,17,510 74,98,904 5,10,235 31,44,310 10,27,745 1,06,43,214

2008-2009 5,57,891 81,69,677 5,50,165 32,27,074 11,08,056 1,13,96,751

2009-2010 6,12,883 93,77,271 5,99,769 35,62,978 12,12,652 1,29,40,249

2010-2011 7,29,693 1,10,71,826 7,39,221 45,11,273 14,68,914 1,55,83,099

2011-2012 6,75,796 94,39,987 6,67,612 43,98,815 13,43,408 1,38,38,802

0

1000000

2000000

3000000

4000000

5000000

6000000

2007‐08 2008‐09 2009‐10 2010‐11 2012‐12

Exports through Chittagong Port in Metric Tons


Source: Overview 2013, CPA

Vessels Handled in Chittagong Port

Source: Overview 2013, CPA

6.10 Chittagong Port is considered the heart of the economy of Bangladesh. The

geographic location of this port creates the opportunity of easy and cost-effective foreign

trade to be carried out through this port with all the South Asian countries as well as

other Asian countries. Based on the trade statistics provided in the exhibit above, it can

0

100000

200000

300000

400000

500000

600000

700000

800000

2007‐08 2008‐09 2009‐10 2010‐11 2011‐12

Import

Export

1900

2000

2100

2200

2300

2400

2007‐08 2008‐09 2009‐10 2010‐11 2011‐12

Vessels Handled By Chittagong Port ‐ in Nos

Year No of Vessels

2007-2008 2074

2008-2009 2088

2009-2010 2203

2010-2011 2308

2011-2012 2079


be concluded that it is the most preferred port of Bangladesh for handling sea borne

trade. The revenue income and expenditure for the last five years in Chittagong Port is given

below:

Year Income

(in Crore Taka)

Expenditure

(In Crore Taka)

Surplus

(In Crore Taka)

2007-08 1057.04 447.15 609.89

2008-09 1133.73 457.51 676.22

2009-10 1155.34 624.77 530.57

2010-11 1453.15 638.42 814.73

2011-12 1508.93 664.65 844.28

Source: Annual Report 2010-2011 and Overview 2013, CPA

Trade through Mongla Port

6.11 Mongla Port is the second largest port of Bangladesh; during 2012, it handled

around 2.6 million tons of sea borne trade. Out of total trade, import accounted for maximum

around 95% of the total traffic, which is usually bulk cargo or breaks bulks. Some of the major

commodities imported include food grain, clinker, Slag, fertilizer, Gas, Machineries and

Motor Vehicles etc. Food grain, fertilizer and clinker are the major commodities handled

0

200

400

600

800

1000

1200

1400

1600

2007‐08 2008‐09 2009‐10 2010‐11 2011‐12

Income

Expenditure

Surplus


at Mongla Port, together account for around 90% of the total import. There has been

increase in import during the last 5 years, majorly because of increase in import of food grain,

fertilizers, clinker and general cargo. The import growth during the last 5 year was around

30% per annum, which is higher than that import growth at Chittagong Port. Some of the

key factor attributing to increase in import traffic is because Government of Bangladesh has

mandated import of some specific commodities through Mongla Port. Import through Chittagong

port has grown at the rate of 8% per annum and total sea borne import increased at the rate of 9%

per annum. Total import traffic and type of traffic handled at Mongla Port during last 10 years

are given below:

Figures: Import through Mongla Port

Source: Mongla Port Authority

0

500

1,000

1,500

2,000

2,500

3,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Imports through‐ Mongla Port

Item wise Imports ‐Mongla Port

Machinery and motor vehecle

Food Non Cereal

Gas

Slag

General Cargo

Food Grain


6.12 The share of export is only 5% of the total traffic handled at Mongla port. Some of the

major commodities exported include jute, jute products, frozen food/shrimps, clay tiles, betel

nuts etc. Most of the exported commodities are handled in containers. Jute, jute products and

shrimps accounts for over 90% of total export. There has been continuous decline in export

traffic at the Mongla Port since 2003 because of various physical constraints. The export

traffic has shown negative growth of 8% per annum in the last 5 year. While there has been

increase in export traffic at the rate of 7% per annum at Chittagong port and around 6% of the

total sea borne trade of Bangladesh. Total export traffic and type of traffic handled at Mongla

Port during last 10 years are given in exhibit below.

Figures: Export through Mongla Port

Source: Mongla Port Authority

0

50

100

150

200

250

300

350

400

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Export through Mongla Port

Export throughMongla Port

Export through Mongla Port

Jute and Jute Porducts

Shrimp

Clay Tiles

Betel Nuts

General Cargo


6.13 The export growth of sea borne trade through Chittagong port has been quite close

to the sea borne export of Bangladesh because over 97% of export traffic is handled

through Chittagong port. At the same time export traffic growth at Mongla Port has shown

negative growth during the same period because of various reasons such as:

6.13.1 Insufficient draft in the Passur channel - low frequency of ships calling at

Mongla Port.

6.13.2 Lack of efficient connectivity with major industrial centers.

6.13.3 Low industrialization in the hinter land such as Khulna, Rajshahi, Rangpur

etc.

6.14 Currently, Mongla Port has a handling capacity for around 6.5 million tons of cargo

however it is handling only about 1.6 million tons for the year 2011-12. This is about 24% of the

total capacity. The under-utilization of the Port is because of the above constraints. The revenue

income and expenditure are given below:

Year Income

(In Lac Taka)

Expenditure

(In Lac Taka)

Net Income

(In Lac Taka)

2000-01 7586.16 5504.44 2081.72

2001-02 7058.88 5275.14 1783.74

2002-03 5588.50 6139.76 -551.26

2003-04 5198.35 5779.23 -580.88

2004-05 4547.99 5709.53 -1161.54

2005-06 4724.52 5664.19 -939.67

2006-07 4934.08 552.51 4381.57

2007-08 4769.53 4765.31 4.22

2008-09 5839.78 5542.69 297.09

2009-10 6649.01 6421.52 227.49

2010-11 8551.54 6368.54 2183.00

2011-12 9073.75 7450.55 1623.20

Source: Mongla Port Authority, Finance and Accounts Department


Source: Mongla Port Authority, Finance and Accounts Department

Vessels Handled In Mongla Port

Source: Mongla Port Authority Traffic Department.

‐2000

0

2000

4000

6000

8000

10000

Income

Expenditure

Surplus

0

50

100

150

200

250

300

350

400

450

500

2000‐01

2001‐02

2002‐03

2003‐04

2004‐05

2005‐06

2006‐07

2007‐08

2008‐09

2009‐10

2010‐11

2011‐12

Vessels Handled

Vessels Handled

Year Vessels

Handled

2000-01 315

2001-02 266

2002-03 295

2003-04 441

2004-05 454

2005-06 391

2006-07 193

2007-08 126

2008-09 151

2009-10 187

2010-11 298

2011-12 268


6.15 From the above statistics it is learnt that both the seaports are at present contributing

towards national development and economy. Though, the Mongla Port has some grey period in

the last ten years or so, but it has turn round and started making progress. Both the seaports have

taken good number of development projects specially the Mongla Port and with the help of

government once the ports are well set they will be able to contribute more vigorously in

domestic, regional and extra regional trades for the overall development of the country and

nation.


Chapter VII: Regional Connectivity and Seaports of Bangladesh

Regional Connectivity and Seaports of Bangladesh

7.1 In a globalized economy where transport cost is becoming a significant determinant of

competitiveness there may be a need to have integrated regional connectivity infrastructure for

the development of the countries in the region, South Asia. Such integration is especially

crucial to countries such as Nepal and Bhutan and the North East Indian states, as this

could serve to end their landlocked or semi-isolated status and provide shorter transport and

transit access to the seaports Chittagong and Mongla of Bangladesh. The unique geographical

location of Bangladesh Provides the country an unique opportunity to establish regional

connectivity having two landlocked countries, such as Nepal and Bhutan and one semi-

landlocked territory, North East India at the hinterland.

7.2 Despite South Asia’s impressive growth it remains one of the least integrated regions in

the world38. The intraregional trade of South Asia is less than 6% of the total trade of the region

in South Asia as some countries trade mostly within the region, while others trade mostly with

the rest of the world. For example, landlocked Bhutan and Nepal trade mostly within South Asia,

while Bangladesh and Sri Lanka, having direct access to seaports, trade mostly with the rest of

the world. Bhutan and Nepal’s export share within the region is 86 per cent and 65 per cent,

respectively, of which more than 90 per cent of goods are exported to India. However, exports

within the region for Bangladesh at 3%, India at 5% and Sri Lanka at 6% which are very small as

most of their export markets are to the United States and Europe. Intraregional trade in South

Asia is impeded not only by high costs of lengthy processes but also due to the absence of

connectivity and missing of trade and transport agreements between countries.

7.3 The necessity of regional connectivity was felt during the 12th SAARC Summit held at

Islamabad in 2004, to strengthen transport, transit and communication links across the region.

Thus the SAARC Regional Multimodal Transport Study (SRMTS) was undertaken by the

SAARC Secretariat in 2006. The recommendations of SRMTS were placed before the

14th SAARC Summit in New Delhi, in 2007. The Summit decided that the implementation

38 Rising labor costs in SA countries, Bangladesh to become hub of labor intensive Industries, News Report, The News Today, 16 May 2013.


of these recommendations be pursued by the Transport Ministers of SAARC countries. Based on

SAARC Regional Multimodal Transport Study (SRMTS) findings, an attempt was made to

identify a few strategic routes which could be pursued to provide transport connectivity

among the countries of North East Sub-region of South Asia. Once the connectivity is

established Bangladesh and other regional countries may enjoy the possible benefits that would

create win-win situation for all.

7.4 As the cost of non-cooperation is likely to be very high, it would be beneficial for all the

concerned countries to go for regional connectivity at the earliest. However, the issues related to

regional connectivity need to be resolved together with other unresolved issues for common

advantage for all. What is needed for a long lasting solution is the political will and commitment

of the leaders of South Asia, who should sit together with an open mind to resolve various issues

once for all.

Indian Perspective on Connectivity

7.5 Prior to the partition of India in 1947, the trade and commerce of the North-

Eastern sub-region with the rest of India and the outside world used to pass through the

territories of what is now Bangladesh. Rail and river transit across the erstwhile East Pakistan

continued till 1965 when, as a consequence of war between India and Pakistan, all transit traffic

were suspended. Although river transit was restored in 1972, no progress has been made

on the issue of road and rail transit/transshipment. Bangladesh and could benefit

considerably, if transport connectivity is conceived to link effectively the North Eastern

states of India . Bangladesh is fortunate to have two seaports and in order to have a convenient

and shorter access to the sea for the North Eastern Indian states, India has been asking for their

access to Chittagong Port.

7.6 Currently, Bangladesh has large trade deficit with India. Trading in transport services

with India, for example, will reduce some of this deficit. In this context, it is crucial to

understand clearly that these transport services will have no market elsewhere outside this

region. At the same time, it is also important to recognize that these opportunities of

trading in transport services may not continue for long. The matter, therefore, deserves

urgent attention of the policy makers and the Governments concerned. Under this strategy,


Bangladesh could emerge as a “transport hub” of the region comprising Nepal, Bhutan and North

East India. The end result could create a win-win situation for all countries involved.

Considering India’s vital interest to develop its North Eastern states, it should give as many

concessions to its neighbors especially Bangladesh as possible and remove disputes like

countries in all parts of the world.

Perspectives of Nepal and Bhutan in Regional Connectivity

7.7 Nepal and Bhutan have shown their interests to have access to Mongla Port for their

third country trade. It was clearly reflected in the the India Bangladesh trade agreement of

January 2010 which offered Nepal and Bhutan to use the seaports of Bangladesh, Mongla and

Chittagong, for their exports39. The foreign minister of Bangladesh has reiterated the same very

recently saying that Bangladesh is working towards providing Nepal with transit to access

Chittagong and Mongla seaports40. Within the spirit of improving SAARC connectivity,

Bangladesh is serious to provide connectivity to all the three countries simultaneously. This

rail route once established would provide Nepal traffic a direct access to Mongla port.

Compared to road link (1314 km) to Mongla, this rail route will be less than 1000 km, and

could provide a cost-effective service. Provision of such a direct rail route for Nepal’s third

country trade movement through Mongla port would, however, bring a win-win situation for all

the three countries, Bangladesh, India and Nepal. India will earn rail charges for each container

or each ton of cargo carried by railway in addition to the transit fees. The benefit for Nepal

would be the “quick service” that its export/import cargo would get at Mongla port and

the reasonable port charges it would be required to pay compared to Kolkata Port. In

addition, there would be no waiting required for Nepal’s traffic, as Mongla port has some spare

capacity. The benefit for Bangladesh would be the port charges, the rail charges and the

transit fees that it would charge for each container or for each ton of cargo handled.

7.8 This land route that is already being used for bilateral traffic, although very little traffic

actually moves, but the third country traffic of Nepal is not allowed to use this route

which could have provided Nepal a direct access to Mongla port. To make road transport more 39 Trilateral agreement for Nepali Trade, Mallika Shakya, HIMAL online edition, www.homalmag.com . 40 Nepal to get access to Ctg, Mongla ports,Diplomatic Correspondent, The Daily Star, 03 August 2012.


efficient, modern facilities shall have to be established for quick transfer of goods/containers

at several points at a time. Loading of goods/containers would be undertaken only after

proper inspection and these would move under bond with full insurance cover. To facilitate

faster clearance of goods/containers, on line customs IT connectivity shall have to be established.

The main benefit of India will be the availability of Kolkata Port entirely for its own use.

India would, however, be able to charge transit fee for 22 km of route across the chicken neck.

Bangladesh will gain in several ways. Besides earning road transport charges, it will also earn

port charges and transit fees.

7.9 Bhutan is a landlocked country and she even does not have any rail system. The country

is entirely dependent on road transport for its regional connectivity. The road route between

Mongla Port and Thimphu (880 km) would provide Bhutanese traffic an alternative and

shorter access to Mongla port in Bangladesh. To avoid damage to Bangladesh Road

network, multi-axle vehicles and/or truck-trailers shall have to be introduced to carry goods and

containers. Bangladesh inter-district road transporters could provide this logistic support to

carry these goods/containers between Burimari and Mongla Port. These goods/containers

would be transferred only after proper inspection and these would move under bond, with

full insurance cover. To make road transport more efficient, modern facilities could be

established at the land port for quick transfer of goods/containers at several points at a

time. To facilitate faster clearance of goods and containers, on-line customs IT connectivity may

also be established at the land port in Burimari, besides efficient warehousing facilities.

Bangladesh has finalized the draft of the transit agreement with Bhutan with a provision of

providing transit through land, rail, air and waterways and imposing fees and charges for using

its infrastructure. Initially the agreement will be for ten years which will be extendable on mutual

consent of both countries41. In that case Bhutan will have to use Indian land to avail transit

facility provided by Bangladesh. The country has the arrangement and India has recently restated

that they would allow Bhutanese vehicles to use their land for transit purpose through

Bangladesh. Once the agreement is signed, Bhutan would be allowed to use Bangladesh’s land

for bilateral and third-country trades.

41 Bangladesh proposes 10-year transit agreement with Bhutan, Jasim Uddin, New Age, 11 March 201.


Myanmar Perspective on Regional Connectivity

7.10 The strategic location of Bangladesh on the Bay of Bengal provides her opportunity to

connect her neighbors. Though India and Myanmar are the immediate recipients but the

concession remains open to China. The diplomatic thaw in Myanmar, which had seemed like a

permanently missing link between South Asia and South-East Asia, has raised the worry that it

might steal a march on Bangladesh in the ongoing race to connect the vast crescent of land that

stretches from the Indian state of Assam all the way to Singapore. Bangladesh has agreed to

allow India to use its territory for transit. But the absence of proper roads makes the concession

meaningless. As such India is making plans without Bangladesh to secure access to its

landlocked North Eastern states via Myanmar bypassing Bangladesh. Myanmar is presently

developing a deep-sea port in Sittwe, the capital of Rakhine state, which is around 500 km from

Kolkata the main port of India on the Bay of Bengal. So under Kaladan Multi Modal Transit

Transport Project, India will soon establish its gateway to her landlocked North Eastern states.

Subsequently this may allow India to have gas line to its state Mizoram from the Shwe gas field

of Myanmar. However, this route of India to enter her North Eastern state by passing Bangladesh

may not be cost effective. Earlier on 27 July 2007 Bangladesh and Myanmar signed a bilateral

agreement for a Bangladesh-Myanmar Friendship Road, which would serve as a link between the

two countries that would give Bangladesh access to Thailand, Malaysia and Singapore through

Myanmar. Bangladesh proposed to bear the entire cost of this road42.

Regional Connectivity and Deep Seaport

7.11 Bangladesh has a potential for developing deep-sea port but the development of such a

deep-sea port can only be justified if there is a sub-regional patronage. In order to provide the

NE-India States, a convenient and shorter access to the sea, India has been asking for their access

to Chittagong Port. So India may show her interests to the deep seaport of Bangladesh for her

access to North Eastern states. Bangladesh stands on the vortex of the Bay of Bengal, blocking

the sea access to the entire region laying north, north-east and north-west of her, which includes

seven north-eastern states of India, Kunming city in China, and Chin and Rakhine states in

42 India Bangladesh and Southeast Asia – Connecting the Neighborhood, Dr Smruti Pattanayak, Research Fellow, IDSA, New Delhi, IPCS Issue, Brief No 113.


Myanmar43. A narrow deep strip of the Bay with a natural depth of 14m has protruded close to

the Sonadia Island, south-east of Bangladesh and is the deepest point of the Bay. Thereby the

development of deep seaport will have a positive impact on the growth and development of

countries in the region.

7.12 Though Indian ports are being used by Nepal and Bhutan for long but cannot be used as a

hub port for serving the landlocked states of India, China and Myanmar. The small amount of

transshipment cargo to and from Nepal were handled at Bangladesh’s ports more than a decade

ago, however, in recent years no transit cargoes to and from Nepal have been handled at

Bangladesh’s ports. Therefore, it may be concluded that the impact of port development in India

is very limited on the future port developments in Bangladesh. Moreover, Myanmar is taking up

projects to built deep seaports in Dawei and Kyaukphyu,and it is also learnt that India has shown

their interests to be development partner of Myanmar. But due to their location it will not be cost

effective for India and other regional counties to use those ports.

43 Deep sea port in Sonadia: A unique opportunity for Bangladesh, Capt A K M Shafiqullah, The Daily Star, 20 March 2013.


Chapter VIII: National Development and Security through Seaports

Seaports and National Development of Bangladesh

8.1 In the age of globalization and free market economy the development of seaports is

directly related to the development of the country. The seaports play an important role in the

sector of sea transportations, exports, imports, tourism, and travel and this is an important

ingredient of the economic growth44and thereby national development. A large part of world

trade is carried by maritime transportation and routed through the seaports of the respective

nations. In addition seaports provide an important contribution to the areas of economy which

has direct link with the development of the countries in the world. The ports have provided vital

opportunities for the increasing flow of trade, foreign exchange, employment in transportation

sectors and other infrastructures that form the main transport arteries in the from multi modal

transportation system. Thus where there is a challenge for national development, there is a need

for seaports development.

8.2 Bangladesh is a country of more than 150 millions of people and to meet the basic needs

of this huge mass of population is a big challenge of the country. Even then the country is

making progress steadily due to the contributions of both public and private sectors. Over the

years the GDP growth rate is maintained at the level of 6% despite political turmoil/unrest in the

country. This has happened due to the positive contributions and policy implementation of the

government in the agricultural, industrial and service delivery sectors. As a result, food security

is ensured having small amount of land in relation to the demography of the country. This is

expressed by honorable Minister of Food, Dr Muhammed Abdur Razzak in a lecture given by

him on 26 May 2013 in the NDC Lecture Hall where he mentioned about the food sufficiency of

the country. That is why the government has not imported foods in the fiscal year 2012-13.

However, there are challenges to food security due natural disaster every year the country is

facing. The effect of natural calamity that is the instant sufferings of the people can be solved

over night and Bangladesh has shown its efficiency in that to the world community. But the long

term effect is colossal and one of which is the loss of agricultural land due to increase of salinity

level of the soil. In mitigating that there is a requirement of the introduction of high tech in the

44 International Journal of Business and Management Studies Vol 3, No 2, 2011 ISSN: 1309-8047 (Online).


agricultural sector. This will allow ultimately allow the maintenance of sustainable growth of

food production over the years. Like agriculture sector similar situation is available in other two

sectors as well. From the graph given below it is evident that agriculture, industry and service

sectors contribute around 20%, 30% and 50% towards the GDP of Bangladesh respectively.

8.3 Once the food sufficiency is achieved the most important problem that the government

should address is the employment for the people in order to ensure their healthy life style. There

is also a need to transfer of work force from informal sector to formal sectors that demand

industrial revolution in the country which has already been started in an indiscriminate way. But

to attain the level of sustainability more composite approach is essential starting from the policy

formulation to the implementation level. The creation of job opportunity in the public sector is

remote over night due to various limitations. Thus there is requirement of the private sectors

investments both in national and international levels which the government is fostering as that

can gradually meet the growing demands of the people. Thus the industrial expansion and

diversification side by side agricultural diversification is essential which depends heavily on the

imports for raw materials and exports of the finished products in the overseas markets

worldwide. The statistics of imports and exports of the country over the years is shown below

which shows continuous growth and, therefore, demand seaport development to handle the

growing situation in various sectors in the country:


Fiscal Years Imports in billion USD Exports in billion USD

2001-02 8.54 5.99

2002-03 9.66 6.55

2003-04 10.9 7.6

2004-05 13.15 8.65

2005-06 14.75 10.53

2006-07 17.16 12.18

2007-08 20.37 14.11

2008-09 21.44 15.57

2009-10 33.66 16.2

2010-11 35.52 22.92

2011-12 34.81 24.3

Table: Exports and Imports of Bangladesh. Data from World Bank, updated 30 April 2013

8.4 Due to cheap labor force there is a huge scope for foreign investment in labor intensive

industries in the country. The government is actively seeking foreign investment, particularly in

the energy and infrastructure sectors. At the same time the government is offering a wide range

of investment incentives under its industrial policy and export-oriented growth strategy, with few

formal distinctions between foreign and domestic private investors 45 . Bangladesh has the

potential to capture at least 15 million jobs and this unique competitive position of the country

may be utilized by China as the country is outsourcing her 80 million jobs from labor-intensive

industries. To support the development strategy of the government the seaports development is a

must as the seaports act as a catalyst for the countries international trades in the form of exports

and imports. Thus when there is a scope for industrial revolution in the country for subsequent

development, the seaports are to be simultaneously developed to handle increased quantity of

cargo in the most efficient manner to be in the same track of other countries in the region.

Importance of Seaports for National Development and Security

45 Bangladesh Development Update Report No 76457, Poverty Reduction and Economic Management, South Asia Region, The World Bank, April 2013.


8.5 The importance of seaports shall always be there if it can cause economic impact for the

want of national development and ultimately ensure security. Today the terms development and

security are so closely interlinked with each other that one cannot happen without the presence of

the other. That is why the ex president of World Bank, Mr. Robert McNamara has rightly said

that the “Security is not military hardware, though it may include it. Security is not military

force, though it may involve it. Security is not traditional military activity, though it may

encompass it. Security is development. Without development, there can be no security. A

developing nation that does not in fact develop simply cannot remain secure.” Hence, the

economic benefits of the country can always be achieved if due importance is given to its

seaports developments. It will eventually lead to provide high standard of service to its

customers who contributes for national development and ensure security.

8.6 The term “economic impact” includes all the change as regards to employment, the

demand for goods and services, and contribution to tax revenue that can be attributed directly

and indirectly to the transport infrastructures presently available in the country. From the figure

given below it is evident that seaport activity (cargo or vessel) initially generates business

revenue to the ports for supplying marine services.

Local purchases Retained earnings

Dividends

Investments

Indirect Jobs

Seaport Activity

Payroll

Taxes

Business

Revenue

Direct Jobs Re‐spending Induced Jobs


Figure: Flows of Economics Impact through the Economy

This revenue is used to purchase employment (direct jobs of the employees of the port) to

provide the services, to pay stakeholders (berth operators/ stevedores), kept for retained earnings

and to purchase goods and services from local firms, as well as national and international firms

(creating indirect jobs with these firms). Businesses also pay taxes from the business revenue.

Therefore, the development of a country means national development takes place with the way

its seaports perform as a whole.

Regional Connectivity – key to National Development and Security

8.7 Regional connectivity today is playing an important role in ensuring integration of

regional countries. This is turning the economy of regional countries into complementary status

leaving behind the erstwhile competitive mood. Capitalizing on this regional connectivity and

integration of EU and ASEAN countries there is a scope to make giant strides towards

development of their region and respective countries46. As the development becomes the primary

focus in the new world order, nations attempt to advance their interests through multilateral

regional and international cooperation. Even states those have traditionally been sovereignty

sensitive, today are trying to negotiate multilateral economic arrangements in the form of

connectivity across their national boundaries. Due to poor regional connectivity between

Bangladesh and the neighboring countries of India, Nepal and Bhutan, all the countries

and their territories have been losing a great deal in many fronts. Because, a container

usually takes 20-25 days and occasionally even up to 60 days to move from New Delhi to Dhaka,

as the maritime route is via Bombay and Singapore/ Colombo to Chittagong Port and then by

rail to Dhaka. But the same container could have been moved to Dhaka within 3-4 days,

if direct connectivity is established and utilized between India and Bangladesh.

8.8 Similarly, if there is connectivity between Nepal and Bangladesh, the former could have

used Mongla port, which is conveniently located and has spare capacity to connect Birgunj with

a direct broad gauge rail link. The shipment of Assam tea to Europe is required to travel

46 Abul Kalam. 2001. Subregionalism in Asia: ASEAN and SAARC Experiences. University Press Limited (UPL). Dhaka 2001.


1400 km to reach Kolkata port, since no agreement exists for India to use the traditional

route through Chittagong port which could have been shorter by more than 50%, in

terms of distance. The Southern border of Tripura State is only 75 km from Chittagong

port, but goods from Agartala are required to travel 1645 km to reach Kolkata port. If there

were transport cooperation between Bangladesh and India, goods would have traveled only

around 400 km across Bangladesh to reach Kolkata, and have a much shorter distance to reach

Chittagong Port. With the implementation of “Kaladan project”, though expensive it will be an

alternative route for India to have access to North East Indian states through Kolkata Port.

8.9 Cooperation in connectivity cannot be considered in isolation; it has to be

considered in the wider context of regional or sub-regional context. This approach has the

consequence of wider cooperation and widening the scope of regional interaction increasing the

number of stakeholders. A multi-lateral arrangement inherently contains greater safeguards

for smaller and weaker countries. SAARC Regional Multimodal Transport Study (SRMTS)

has recommended regional connectivity through all possible modes. Bangladesh being at the

centre of the North Eastern sub-region of SAARC, it could consider opening up regional

links to other countries in the sub-region through all possible means of transportation. South

Asia has attracted global attention because of its growth on GDP and maintaining the same for

quite long period of time. While progress has been made in reducing trade barriers with the rest

of the world, intra-regional trade is a mere 5.0 per cent of total official trades due to same trade

barriers as compared with 45 per cent in East Asia.

8.10 A careful look at South Asia's geography shows that the border areas tend to be generally

underdeveloped due to poor connectivity, lack of investment and political neglect causing

insecurity problem. Due to the absence of connectivity there is very poor state of regional trades

and sign of insecurity as well. Connectivity would result gradual increase of exchange of trades

within the region. This in turn would develop interdependency between regional countries and

enhance security. As formal trade expands, the intricacies to achieve benefits at all ends through

territorial expansion/ regional connectivity recede. Conversely, heightened trade barriers

stimulate economic conflicts of interests that can contribute to raise tensions and may lead to

military discord. That is why the Montesquieu the great political philosophers of the

Enlightenment argue two centuries ago that “The natural effect of commerce is to lead to


peace. Two nations that trade together become mutually dependent: if one has an interest

in buying, the other has an interest in selling; and all unions are based on mutual needs”47.

Thus the intraregional connectivity can contribute a lot for the overall development and ensuring

security of the countries in the region.

47 Brig Gen Shakil Ahmed. Transit and Transhipment: Implications for Bangladesh. IRP. National Defence College. Dhaka.


Chapter IX : Recommendations

9.1 Bangladesh is a least developing country in the world. It has significant prospect to

become developing country along with other four countries (Nigeria, Kazakhstan, Vietnam and

Kenya) in the world. According to Goldman Sachs due to the huge population Bangladesh is

considered as one of the next eleven counties that can compete with BRIC (Brazil, Russia, India

and China) in the world. The main problems of Bangladesh that have been pointed out are weak

political condition and fiscal management. Even then the country is progressing for which there

is a huge need of infrastructural development. In that note the modernization of the seaports of

Bangladesh is vital to keep pace with the future trades of the country. In order to make further

progress in the area of regional cooperation there is a need of regional connectivity for the

wants of expansion of regional trades between in the region. This will generate interdependency

and as the trade volume will increase the security of the countries will get enhanced for the

mutual benefits of all in the region. Thus to attain a position of world class standard and for the

furtherance of regional connectivity following measures are recommended for the overall

development and security of the country:

9.1.1 Political Stability. Political turmoil is one of the most common phenomena in

the country where difference of opinion is hardly liked or accepted. There is no scope for

the commons to participate in the tender bids even becoming eligible and prospect to be

the lowest bidder unless there is a political link or blessing. This kind of situation in

available everywhere including the seaports of the country causing financial crime and

high cost of doing business. Therefore, it recommended that difference is opinions are to

be mitigated through political means/ initiatives and business to be made available to all

through proper accountability and transparency.

9.1.2 Corruption frees Environment. Presently corruption is observed almost all

over the places in the country and seaports are not free from that. This has created a most

uncongenial atmosphere for the stakeholders and hampers name and fame of the seaports

including the country as a whole. Even at most of the cases the personnel involved

corruptions are promoted or rewarded so that wrong doings are not exposed in any way.

Rules and regulations are there to prevent corruptions but often the same are twisted

instead of applying them in the right perspective. It is, therefore, recommended that


corruptions of all sorts of corruptions are to be stopped immediately and strong punitive

measures are to be taken against the wrong doers so that corruption free environment

prevails in the seaports of the country.

9.1.3 Full Autonomy of the Seaports. Seaport authorities are supposed to enjoy

full autonomy in preparing and implementing their modernization/ development plans.

But in reality political and ministerial influence is so rampant that the concerned

authorities do hardly take or make any decision on their own for the development of the

ports. This not only makes unnecessarily delay in the implementation of the development

projects but also opens up avenues of malpractices in the organization. Thus it is

recommended that full autonomy should be given to the seaport authorities in planning

and implementation of the development projects and the ministry should perform the role

of a watch dog.

9.1.4 Goal Setting. Presently the seaports are making progress indiscriminately due to

the absence of preset goals. If some target is set before the seaport authorities annually

forecasting the trade patterns and growth, the concerned authorities will undertake their

activities/ development more professionally and a competitive atmosphere will prevail

within the port premises to attain the desired goal. Therefore, it is recommended that the

ministry should set a goal annually for the development of the ports and the activities of

the ports should be monitored quarterly to ensure proper functioning of the seaports.

9.1.5 Minimum Cost of Doing Business. The present cost of doing business much

higher than it is expected both at the side of seaport authorities while procuring things as

well as the stakeholders while delivering the service. This on the other way creates

uncomfortable situation and unnecessary pressure on the general mass of the people in

the country as the cost of commodities go up. It is recommended that, since port is a

service delivery organization the cost of doing business should the properly calculated

and kept minimum to ensure congenial atmosphere for all.

9.1.6 Infrastructure Development. In reality the development of seaports does not

remain limited within the ports alone. The infrastructure of seaport related organizations

viz. off docks, customs, road networks, other related industries etc need to be equally


developed so that port activities can be run smoothly and efficiently. Presently due to

poor road networks the CTMS implementation is getting hampered. It is, therefore,

recommended that the government should take up road net work projects in such way that

the port activities can go on smoothly and efficiently.

9.1.7 Utilization of Port Facilities. At present only 60% and 20% port facilities are

utilized for the operation of the seaports. This is because of the non generation of the

export or import cargos needed to be routed through the seaports. In such situation the not

utilized facilities to be shared with the neighboring countries for mutual cooperation and

benefits of all in the region. It is recommended that the government should formulate all

necessary policies that will attract the neighboring countries to route their commodities

through the seaports of the country for the ultimate development of the country.

9.1.8 Quick and Efficient Implementation of the Projects. Presently some of the

high value projects in terms of money and necessity take much time to get implemented.

It is so, due to incapacity of the bidders, political inclination and opportunity to make

more money. Efficient implementation of the projects depends upon the efficient

formulation to the final monitoring of the same. Therefore, it is recommended that the

development projects of the seaports are to be designed in such a way that it is

implementable within the time frame of the tender schedule and meet the requirements of

the ports.

9.1.9 Refrain from Political Influence. Most of the port officials including CBA

(Central Bargaining Authority) are at present linked with the political parties. They at

times instead of performing in the offices remain busy with the political activities and

thereby hampering port smooth operations. Similarly the CBA remains busy to

materialize the political agenda of the influencing political party instead of maintaining

healthy working environment neglecting their official business/ commitments. Thus it is

recommended that strict disciplinary measures should be adopted in such a way that the

port officials should concentrate only in their official business for the overall

development of the seaports.


9.1.10 Obligation towards Regional Needs. Presently the seaport authorities have

no obligation towards regional trade requirements. Since India, Nepal, Bhutan and China

has shown their strong will to use the seaports of the country, some policy directives and

instructions need to be formulated for the seaports to support the regional trades more

efficiently for the common interests of all in the region. It is, therefore recommended that

the government should initiate policy directives and instructions and issues the same to

the seaport authorities for timely implementation for regional understanding and

cooperation.


Conclusions

10.1 Bangladesh is a maritime nation and mostly depends upon sea for her trades with other

countries in the world. Since ancient time the seaports of the country especially the Chittagong

port was famous to the outside traders for its unique location in the globe. As a result the

Yemeni, Arabs, Portuguese, Malayan, Chinese, Turkish, Greek, Macedonian and many others

including the British traders were visiting this port on a regular basis for doing their business

using the seaports of the country. Later on Mongla port has also come up and is meeting the

requirements of global needs. During the industrial revolution in the west, this part of the world

was explored thoroughly for the want of raw materials and other essential commodities to ensure

their better livelihood and prosperity. Today in the geopolitical reality Bangladesh has become

equally important to the west and east for the dominance as well as partnership building in the

South Asian region. In doing that importance has been given to the trade and commerce for

mutual benefits and understandings. Again in the South Asian region the countries are giving

more importance to their economical development over others issues to close the gaps of

misunderstandings between them. Here comes the requirement of the use of seaports to have

regional and extra regional trades to ensure mutual growth and development. The dependency on

each other’s seaports shall ultimately lead to the overall development and security in the region.

10.2 Presently the Chittagong port handles around 92 per cent of the total seaborne trades of

the country and the rest 8 percent is looked after by the Mongla port. Though the seaports have

contribution towards the economy and development of the country but still 60 percent areas of

Chittagong port and 80 percent areas of Mongla port remain unutilized/ vacant despite

limitations of the individual ports as well as the country. This underutilization of the port

facilities may be explored by other regional and extra regional countries that will be a source of

income generation for the ports in the form of revenue collection. The SAARC with the passage

of time could not do much for the development of the countries in the region. But the newly

emerged BCIM is considered to play much more positive role as the two Asian giants India and

China has huge trade potentials that can be shared by the member states towards the aspirations

of their people. Thus there are pressures on the Bangladeshi seaports and, therefore, the

modernization of the seaports is essential to attain a position of world class standard.


10.3 The seaports of the country is under administrative control of Ministry of Shipping are

yet to enjoy or exercise their full autonomy to plan and materialize their vision relative to the

modernization and development of the ports. This is a great challenge for the ports to take instant

decision and run the seaports as a commercially viable service delivery organization. Due to

bureaucratic hassle of the ministry and subsequent delay in the decision making process the

Chittagong port has not yet been able to employ global operator to make the NCT fully

operational. In the mean time the backup facilities are coming up and once that is completed the

whole area will be added to the unutilized portion of the port. Similar situation is also prevailing

in Mongla port in case of the construction of jetty facilities there to accommodate more number

of ships alongside jetty for easy service delivery. In fact many foreign countries/ world reputed

investors have shown their interests to participate in the development initiatives of the respective

seaport authorities in the country but no significant light is seen towards the total development of

the ports. The situation is not only affecting the growth and productivity of the seaports but also

depriving the country to earn huge amount revenue as a whole.

10.4 Moreover being river based seaports both the Chittagong and Mongla ports have some

inherent limitations. The limitations those are natural are acceptable to the stakeholders but the

ones which are manmade are difficult to accept as those are hampering the image of the seaports

both in internally and internationally. The natural problems are the restrictions of the incoming

vessels’ lengths and draughts, siltation in the channels, occasional accidents etc. The initiatives

of the seaport authorities are on to restrict the natural problems within acceptable limits and

improve further. The most serious man made problem of the seaports in the country is the

corruption which is extremely deep routed and difficult to stop over night. This has a serious

effect on the overall modernization efforts of the respective seaport authorities in the country.

This is also delaying the projects and making the expenditures much higher than the estimated

costs. If this particular issue is dealt seriously and aggressively, other man made problems are

likely to vanish automatically and consequently the reflection of the seaports of the country will

go up instantly.

10.5 In fact in many cases the corruption is so rampant in both the seaports of the country that

is causing great hindrance to remove or overcome the bottlenecks at every level of the port

affairs. As a result the seaports are unable to maintain the berthing schedule, employ more pilots,


have benefits of dredging, maintain optimum level of efficiency of equipment and vessels,

procure equipment as per requirements, delivery services to the stakeholders, stop pilferages etc.

Though the seaport authorities have brought some discipline in its cargo handling activities and

increased productivity but occasionally there are lapses on the part of the berth operators/

stevedores including port officials and laborers. This at times gets coupled with the political

mind sets of some of the stakeholders including port officials and as a result the ports fail to

maintain their efficiency and progress further. Addressing all the odds detrimental to the port

operations holistically and in a more pragmatic way, the seaports may accelerate their forward

march more vigorously and comfortably and contribute towards the overall development of the

country.

10.6 Despite limitations there is no shortcut other than the developments of the seaports in the

country. To fulfill the huge demands of the trade bodies the seaport authorities are with their

improvement initiatives to bring the ports up to the expected level of expectations of the

stakeholders. As a result more prospects and opportunities are coming up in front of the

businessmen in the country to engage more in the overseas trades than before. The joint efforts

of the business houses and the seaport authorities are inviting the investors to devote more in

their overseas trade and explore the facilities of both the seaports in Chittagong and Mongla. In

fact the very strategic location of the country has given her to act as a regional hub in South Asia

in respect of trade and commerce. Within the region India and outside China are the two

economic giants of Asia have shown their huge concern to remain attached with Bangladesh for

the growth and development in the region in general and countries in particular. Since they

provide enormous market opportunity, the aspiration of the people of Bangladesh is to remain

close to their desires for the obvious development of the country as a whole. Similarly

Bangladesh is also willing to serve the trading interests of the landlocked countries, Nepal and

Bhutan utilizing the seaports of the country. However, their need some multimodal connectivity

through India where Bangladesh has full support and remain prepared with own development

program.

10.7 The changed global order in economic development and the demography of Bangladesh

provides her a unique opportunity to have more foreign investment. Moreover the cheap labor

force of the country also attracts the world traders to shift their linking industries in Bangladesh


which may cause an investment prospect of US $ 5.0 billion a year. This has coupled with the

MFN treatments given to all trading partners under WTO agreements. In addition the desires of

expatriate Bangladeshis especially those in Britain to invest US $ 1.5 billion in power sector are

another source of inspiration for the foreign investors to pay attention in Bangladesh with their

investment program. Thus there will be enormous scope of raw materials import and finished

product export through the seaports of the country. This may ensure the unutilized spaces of the

seaports to be best used or require better managed for smooth transaction of the goods routed

through. Moreover, the present statistics of Chittagong port and the very recent one of Mongla

port are encouraging but to keep pace with the future trade potentials there is scope for

significant improvement to meet the satisfying needs of the various business forums and

partners. All these aspects insist seaport development which is a great challenge for the seaports

authorities of the country to deal with and contribute to the overall development in the country.

10.8 Over the years the South Asian countries are making impressive growth in their

respective fields of economics. But due to lack of extension in connectivity, the intraregional

trades are absolutely meager even there are lots of prospects and opportunities. This has been felt

by the leaders of the countries as well as members of the trade bodies in the region. As such there

are persuasions and exchange of dialogues between the leaders and business houses/ trade bodies

to establish/ strengthen the regional connectivity for overall development in the region. India

being a regional power has shown its interests in the regional connectivity but the ways and

means are not yet equally transparent to all in the region. In between the Chinese interests in

regional connectivity has opened up a huge avenue for the countries in the region to utilize the

growing market opportunity and benefit further. However, to attain a win-win situation regional

connectivity is essential in all modes (sea, rail, road) for the transportation of trades between

Bangladesh, India, Nepal, Bhutan and Myanmar. However, if such connectivity is well

established and methodically done may lead to trades with China in the North East Asia as well

as Malaysia and Singapore in the ASEAN region.

10.9 Bangladesh though a small country in the South Asia has all the potentials to be a

developing country in the world. Economically the country has attended fourth position due to its

active population and maintenance of around 6% GDP growth for the last five year. At the same

time the country has reduced poverty, increased literacy level and moderated her population


growth to a sustainable level. But to acquire full scale sustainability there is a requirement of

continuous growth and development in industrial, agricultural and service delivery sectors that

should be competitive as well as complementary to each other. Full exploitation of the

opportunities will require considerable investment in order to expand capacity and growth

of all sectors including the seaports of Bangladesh. All these will ultimately move the country

ahead with all developing countries and partners in the world. In that case the regional

connectivity is a must and once the connectivity is made operational, donor countries and

agencies may come forward to assist and in the process, Bangladesh will initially earn

annually around US$500 million, with considerable multiplier effects in the economy48.

10.10 With the passage of time the seaports of the country has attended some international

standard. But with the development and progress of the country the seaport authorities need to

extend further and continue with their modernization program especially in the fields of regional

connectivity for furtherance of the regional trades. The interdependency of the countries is

essential for their overall growth and development of the nations in the region towards national

goals. The neck to neck contact between nations will develop mutual understanding between

them, expand simultaneously and only then the security will be ensures and get strengthened for

the advantages of all in the region.

Documents

MODERNIZATION OF SEAPORT OF BANGLADESH FOR REGIONAL CONNECTIVITY – IMPLICATION FOR NATIONAL DEVELOPMENT AND SECURITY