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A transshipment port in the making
Shahiduzzaman Khan

          THE Chittagong Port Authority (CPA) is struggling to take possession of required land for the New Mooring Container Terminal (NMCT) project. As such, the port suffers a setback. Nearly 14.5 acres of land earmarked for the project is still being occupied by people who have already been compensated.
According to reports, the total project area is 36.5 acres. About 45 per cent work of the project, the biggest container terminal in Bangladesh, has been completed. The construction work of the project is being carried out on 22 acres of land. The CPA is constructing the project at a cost of Tk 4.340 billion to cope with the growing number of containers at the seaport.
The port authority apprehends it might miss the September 2006 deadline for completion of the project due to delay in taking possession of the land. Port users said that such delay in implementation of this vital project would further aggravate the container congestion at the country's premier port.
The local people were still reluctant to leave the acquired lands although the Chittagong Port Authority (CPA) developed an area for the rehabilitation of nearly 200 families near the port. The CPA claimed that it had paid the victims Tk 630 million in compensation in September 2005. Yet the local people are reported to have been raising demands one after another. They are now asking for providing most utility services at the place immediately.
Experiences gathered from other ports suggest that private ports have been successful in improving port functioning and reducing handling costs and improving labour productivity. They have been mostly successful due to competition among or within ports. Competition makes ports seek faster and more cost effective methods of handling in order to keep business up at their facilities.
Chittagong Port needs to be privatised. The country is fully capable of implementing private projects as can be seen by Jamuna Bridge located on the outskirts of Dhaka. This bridge was privately constructed and being run under private management. Privatisation of the port will greatly help the economy of the nation, which is expected to help develop the country. Singapore, for instance, has become developed thanks to its efficient private sector handling.
If Chittagong Port was modernised it could be like Singapore and Colombo. Soon it will become a transshipment port. The port is poised to be successful through privatisation. For example, Colombo port has been greatly benefited by privatisation. Colombo is one of the few of deep-sea ports existing in the Indian subcontinent. In the past, public investment was the propeller for the infrastructure sector. The government changed that by involving the private sector in port activities. The Asian Development Bank (ADB) granted Sri Lanka a $10 million loan to improve the efficiency of the country's main port. The project dubbed as the Colombo Port Efficiency and Expansion Project increased the efficiency of the existing terminal -- Jaya Container Terminal -- by corporatisation and enhanced management.
This project was carried out by 537 consultants who were experts in the field -- half of them being local and the other half being overseas. The project helped the Sri Lankan government to attract participation from the private sector to the port creating competition leading to cheaper costs.
Today, Colombo has also become a key port for transshipment business and a cargo handling hub, in the Indian subcontinent. This is because the port is located in a favourable position along the shipping route between Eastern Asia and Europe and North and South America. Chittagong Port also has the potential to become a transshipment port but it can only do so if its conditions are improved.
In line with the successful implementation of the Colombo port development, the Chittagong Preservation Committee and Development Action Committee decided to build a New Mooring Container Terminal. Prime Minister Khaleda Zia inaugurated this terminal in October 2003. Once implemented, the terminal is expected to double the capacity of containers. The jetty would be built between the current terminal and the naval base. The terminal should be able to handle 5,000,000 TEU containers and earn about 20 million taka annually. The port would also cover trade from Bhutan, Nepal, parts of Myanmar and the northeastern states of India. This port will be under the control of the CPA but all container handling would be done by a private company.
The building of the terminal is being done by China Harbour Engineering Group -- a Chinese company. The port will take 3.31 billion taka to construct. The NCT should be able to handle five feeder ships and cargo vessels simultaneously decreasing the current lead time. This project will be one step toward development in the port.
Privatisation will be good for the port as it will lead to competition with the existing port, makes things cheaper and more efficient. If New Mooring Container Terminal is built it should be able to cater to the future needs of the port. Apart from illegal occupation of land by a section of local people, there have been problems with the construction of the port because of steel prices, which have gone up by 150 per cent. Since steel is 40 per cent of the cost for construction, this has considerably raised the cost of the project. Therefore, the future of this terminal still hangs in the balance.
Bangladesh has to compete globally to gain access of textile products to developed markets. This is already a difficult thing for Bangladesh to manage, as the country imports 86 per cent of the fabrics needed for textile production whereas nations such as India, China and Pakistan all manufacture their own fabrics. To remain competitive in the world, it is necessary that Bangladesh reduce some of its prevailing high costs. As of now, one of the biggest hindrances of the readymade garment industry is the lead time issue at Chittagong Port.
Long before Bangladesh had a fixed market and as such, the delays of Chittagong Port could not affect it so terribly. However, after 2005, Bangladesh cannot afford to lose money due to port-related problems. It is necessary that shipping, customs and port-related expenses are all reduced. A more cost efficient port will allow the garment industry to compete with other markets in the post-MFA period.
With a private port in place, hopefully these problems will be alleviated, if not totally solved. A better port would also help Bangladesh's political and economic relations especially with India. The seven northeastern states of India including Assam, Tripura, Meghalaya, Nagaland, Mizoram, Arunachal, and Himachal do not have direct links from mainland India. If Chittagong Port were to be developed, India could do transshipping through Bangladesh.
A private port will serve Bangladesh's best interest both economically and politically. Now that the SSA port is not going to be constructed, other alternatives must be looked at. The New Mooring Terminal could help a lot. If no action is taken, the economy will take a major nose-dive because of various problems afflicting the country. Development of the port would be the only way for any economic prosperity in the future.
Therefore, the government and the people together must take necessary steps to mitigate these problems as early as possible. Given the seminal importance of international trade, Bangladesh needs to improve the functioning of the Chittagong port with a certain degree of privatisation. In the next few years, Bangladesh should strive to construct more private container terminals.


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