Bangladesh will earn about $50 million annually during the first five years of transit after infrastructure is created along corridors, according to a study.
Once capital works are completed, the country will earn more than half a billion dollars annually from the sixth year onwards, the study predicted. At one point in time, the benefit will reach $1 billion a year, it said.
Despite uncertainties, Bangladesh's benefit will be robust, said the study report. 'This stream of benefits, albeit partial, would more than justify investment amounts.'
Transport expert Dr M Rahmatullah conducted the study last year for Asian Development Bank, Centre for Policy Dialogue and South Asia Centre for Policy Studies. The Daily Star obtained a copy of the report.
Senior researcher of Bangladesh Institute of Development Studies Dr Mohammad Yunus supported Rahmatullah in conducting the study. They also took support from experts in Bhutan, India and Nepal.
The convenor of a transit committee, Mujibur Rahman, prepared another report and submitted it at a meeting chaired by Finance Minister AMA Muhith in Dhaka on Tuesday.
The latest report did not mention how much benefit Bangladesh will get by providing transit to India, Nepal and Bhutan.
The meeting asked the committee to recast the report, incorporating the details such as benefits to be accrued from allowing transit to the countries.
According to the report prepared by Rahmatullah, Bangladesh would be required to invest in projects along the identified corridors for facilitating seamless movement of transit traffic to derive the anticipated benefits. As there are sizeable direct benefits, the country should release enough resources for projects to be implemented along the corridors and ensure allocation of required financial resources for the proper maintenance of the facilities.
The Rahmatullah report also said the results of aggregate cost-benefit analysis under 2 percent growth of the diverted freight traffic, and 70 percent of the transit revenue accrued to Bangladesh, show that trade in transport services is an economically viable option for Bangladesh.
The internal rate of return (IRR) of the aggregate analysis is 33.46 percent, the cost-benefit ratio is 2.86 and the net present value (NPV) is $2.3 billion. The sensitivity analysis shows that the estimates are robust to various types of uncertainties, the report said.
The committee led by Mujibur Rahman identified probable profit-making routes for transit -- seven road routes, six rail and two water routes. The committee said about Tk 50,000 crore has to be invested to make the routes fit for full-fledged transit.
A member of the committee said, as Bangladesh will not be able to make the full transit facility effective at the initial stage, its benefits will be less. However, when the improvement of the infrastructures is complete, the benefit will increase, he added.