Logistics still a weak point for Bangladesh

Bangladesh has ranked the lowest yet again among four emerging South Asian economies in the Agility Emerging Markets Logistics Index 2021, indicating the country's lack of improvement on providing domestic and international logistics opportunities.

The country's overall performance was undermined by its weak performance in business fundamentals, measured by the openness, robustness, fairness and strength of an emerging market's business environment, rule of law and market independence.

Bangladesh held onto its 38th position among 50 of the world's most promising emerging logistics markets, and remained behind India, Pakistan and Sri Lanka in the 12th edition of the index unveiled by Agility – a Kuwait-based global logistics company on Tuesday.

Despite being the source of the Covid-19 pandemic, China has performed best across the board. It is followed by India, Indonesia, the UAE and Malaysia. Among Bangladesh's neighbours on the index, Pakistan ranked 28th, and Sri Lanka 34th.

The index is based on three broad categories – Domestic Logistics Opportunities, International Logistics Opportunities and Business Fundamentals. Bangladesh's overall score in these sub-indices is 4.44 out of 10, which is 0.01 less than the previous year.

The higher the score, the better a country's ranking.

Bangladesh performed the worst in the Business Fundamentals category. It ranked 45th in this sub-index, slipping 2 notches with a score of 3.40.

Among the other two sub-indices, Bangladesh only performed better in Domestic Logistics Opportunities, moving up one notch from last year's performance to rank 19th with a score of 5.03.

The Domestic Logistics Opportunities sub-index measures the performance of each emerging market and its potential to sustain and develop domestic demand that requires competitive logistics markets.

In the International Logistic Opportunities category, Bangladesh has dropped a notch to rank 40th with a score of 4.36.

This sub-index measures internal and external demand for trade intensive logistics services and the capacity of individual emerging markets to facilitate cross-border logistics operations.

The report pointed out, "Despite the depth and intensity of the Covid-19 pandemic, the effects of trade wars, increased protectionism, and the quickening adoption of technology in the logistics sector, the overall rankings for the index display a remarkable degree of stability."

The Emerging Markets Logistics Index 2021 also picked 20 emerging markets with the most potential, where Bangladesh slipped one notch and positioned 14th. In this ranking, the top five are China, India, Vietnam, Brazil and the UAE.

It should be mentioned that in the World Bank's 2018 Logistics Performance Index, Bangladesh (100th among 160 countries) was also significantly behind neighbouring India (44th) and Sri Lanka (94th).

'A transport network is indispensable'

Dhaka Chamber of Commerce and Industry (DCCI) President Rizwan Rahman said, "The country fared poorly compared to its regional peers due to inadequate physical and communication infrastructure.

"A sustainable logistics system which features trade friendly ports and a transport network is indispensable for local economy and international trade competitiveness. The cost of doing international trade should be lower, backed by an advanced and integrated logistics system."

He continued, "For an improved logistics system, our infrastructure investment to GDP ratio needs to be increased to a minimum 5% threshold. Most of the trade-led economies such as China, Vietnam, Philippines and India have been investing more than 5% of their GDP in core infrastructure for a long time, this is why they ranked higher in the logistics network.

"Our infrastructure investment is mostly government funded, however blended financing including foreign agency, PPP modelled financing and long-term infrastructure development mapping are critical for quality infrastructure development."

Rizwan added that an infrastructure bond may also help ease the financing issue. "Also, private sector engagement is of utmost importance as they are the economic drivers. The DCCI works as an ambassador in promoting the country's image globally."

'No global recovery in 2021'

Along with the index, the Agility surveyed 1,206 supply chain professionals for their opinions on the prospects and challenges facing emerging markets and disruption caused by the Covid-19 pandemic.

Of the professionals surveyed, 51.5% believe that the global economy will not fully recover from the pandemic until at least 2022. They see Latin America and Sub-Saharan Africa as likely to be the last regions to bounce back.

But many are more optimistic for the recovery prospects of Asia Pacific, Europe and North America ahead of this period.

"By 2027, the global consumer class will number 5 billion, with the fastest recoveries from pandemic impacts to be found in emerging markets including China, Egypt, Vietnam, Taiwan, Bangladesh, and India as well as across much of Southeast Asia," the report read.