| Project Detail |
The proposed SDP will improve the volume, efficiency, predictability, and security of cross-border trade in Bangladesh, which will contribute to the national goals of accelerating growth with industrialization and trade, and expanding subregional trade and commerce. To achieve this, the SDP will introduce policy reforms and complement these with upgraded infrastructure at border crossing points (BCPs). The program part of the SDP will support policy reforms to help Bangladesh comply with the World Trade Organization (WTO) Trade Facilitation Agreement (TFA), and implement the Customs Modernization Strategic Action Plan, 2019-2022. The program part will support three reform areas: (i) compliance of customs legal framework with international standards, (ii) improvement of cargo clearance processes, and (iii) strengthening the capacity of customs agencies.
Project Name South Asia Subregional Economic Cooperation Integrated Trade Facilitation Sector Development Program
Project Number 53260-001
Country / Economy Bangladesh
Project Status Approved
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 4177-BAN: South Asia Subregional Economic Cooperation Integrated Trade Facilitation Program
Concessional ordinary capital resources lending US$ 90.00 million
Loan 4178-BAN: South Asia Subregional Economic Cooperation Integrated Trade Facilitation Sector Development Program
Concessional ordinary capital resources lending US$ 53.00 million
TA 6911-BAN: Supporting the South Asia Subregional Economic Cooperation Integrated Trade Facilitation Sector Development Program
Technical Assistance Special Fund US$ 1.50 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Regional integration
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Private sector development
Sector / Subsector
Industry and trade / Industry and trade sector development - Trade and services
Gender Equity and Mainstreaming Some gender elements
Description The proposed SDP will improve the volume, efficiency, predictability, and security of cross-border trade in Bangladesh, which will contribute to the national goals of accelerating growth with industrialization and trade, and expanding subregional trade and commerce. To achieve this, the SDP will introduce policy reforms and complement these with upgraded infrastructure at border crossing points (BCPs). The program part of the SDP will support policy reforms to help Bangladesh comply with the World Trade Organization (WTO) Trade Facilitation Agreement (TFA), and implement the Customs Modernization Strategic Action Plan, 2019-2022. The program part will support three reform areas: (i) compliance of customs legal framework with international standards, (ii) improvement of cargo clearance processes, and (iii) strengthening the capacity of customs agencies. The PBL has two tranches: (i) tranche 1 involves formulating policies to strengthen regulatory and institutional arrangements, and capacities of customs agencies; and (ii) tranche 2 will implement the policies formulated under tranche 1. The project part of the SDP will upgrade infrastructure by (i) building integrated land customs stations (LCSs) and land ports (LPs); (ii) installing facilities and equipment for customs clearance and cargo transshipment operations; and (iii) operationalizing the facilities following the improved regulatory and institutional arrangements supported under the program part at Akhaura, Sonamasjid, and Tamabil BCPs. The project part will also design central customs facilities in Dhaka, and integrated trade facilities at Bibirbazar, Birol, Darshana, Sheora, Sonahat, and Teknaf BCPs for future investments. The SDP will contribute to climate adaptation and mitigation through climate-resilient infrastructure, streamlined cargo clearance processes, and facilitated transit arrangements.
Project Rationale and Linkage to Country/Regional Strategy
Performance in cross-border trade and binding constraints. Customs and other border clearance operations are inefficient and costly because of poor facilities at BCPs, excessive physical inspection of cargoes, and time-consuming documentation processes. Insufficient coordination between customs agencies of neighboring countries delays border clearance. Limited capacity of Bangladesh customs offices hinders sustained and holistic implementation of WTO TFA. The World Banks Logistics Performance Index of 2018 indicated weaknesses in Bangladeshs customs operations and quality of infrastructure, resulting in an overall logistics performance index score of 2.58 out of 5, and a ranking of 100 out of 160 economies. Insufficient public investment and lack of coordination among government agencies have hindered the development of border infrastructure and clearance procedures to respond to growing trade and demand.
Border crossing facilities. While Bangladesh has 23 declared LPs at BCPs with India and Myanmar, the subregional trade accounts for only 10% of the total trade of Bangladesh. Most existing customs offices of the National Board of Revenue (NBR), and the cargo transshipment and storage facilities of the Bangladesh Land Port Authority (BLPA) are underdeveloped, and their capacity is insufficient to handle international cargoes. Cargoes have to wait a long time for customs clearance and cargo transshipment at the LPs. Time release survey of the Asian Development Bank (ADB) revealed that the average time required from entry to the LPs to exit from the LPs are about 4 hours for import and 3-6 hours for export at Akhaura, Sonamasjid, and Tamabil BCPs, 40%-60% of which are waiting time for subsequent steps. While SASEC corridors are being developed, border crossings remain as bottlenecks to subregional trade. Also, perishable goods cannot be traded under such slow and unpredictable operations by the existing trade facilities. Bangladesh needs to integrate customs clearance and cargo handling operations at BCPs by building well-equipped LCSs and modernizing LPs through the governments internal coordination of the NBR and BLPA to make cross-border trade faster, less costly, more predictable, and more secure so that trade with other SASEC countries will be expanded and diversified.
In 2020, international transit cargo operations started at Chattogram port, where almost all maritime cargoes of Bangladesh are handled. International cargoes unloaded at Chattogram port can be transported to the northeastern region of India through Bangladesh without customs clearance. This SDP will support expansion of the international transit cargo operation to the whole country. Improvement of integrated trade facilities at Akhaura, Sonamasjid, and Tamabil BCPs will enable cargo transportation between the northeastern region and other regions of India through Bangladesh, and also enable Bhutan, India, and Nepal to use Chattogram port for export and import. Chattogram port as well as Materbari port in Coxs Bazar, which is under construction, will be gateways for trade in the subregion.
Under the country partnership strategy for Bangladesh, 2021 2025, ADB will upgrade transport infrastructure, including SASEC corridors, across all modes to meet fast-growing transport and freight traffic demand, support trade routes, and yield maximum trade and economic benefits. In addition to the ongoing trade facilitation measures that focus on expediting trade and transit clearance, reducing transaction costs, and increasing compliance management efficiency, ADB will prioritize trade facilitation reforms and evolving initiatives that help sustain trade, particularly in critical goods, with due regard for public health and safety. Trade facilitation and customs modernization is one of the focus sectors of SASEC. The SASEC Trade Facilitation Strategic Framework adopted by the SASEC countries deals with priority areas such as customs modernization, cross-border facilities improvement, and institution and capacity building. This SDP aligns with the priority areas of ADBs country partnership and regional cooperation strategies.
Impact
Accelerated growth with industrialization and trade (Perspective Plan of Bangladesh, 2021-2041).
Expanded subregional trade and commerce (SASEC Vision: Powering Asia in the 21st Century). |
