Experts welcome move to appoint foreign port operators but call for transparency

Economists and business leaders have cautiously hailed the selection of reputed foreign companies by the interim government to develop and operate two Bangladeshi ports, saying this will uplift the country's capacity.

Experienced and well-known foreign firms handling the ports will not only boost the efficiency of the latter but also transfer the global port operation system knowledge to the local companies and workers, they say.

However, some of them say the selection process should have been transparent with the disclosure of the terms and conditions before the public.

The Chittagong Port Authority (CPA) on November 17 signed two deals to outsource the operations of the Laldia Container Terminal and the Pangaon Inland Container Terminal to two foreign companies.

The move was aimed at bringing world-class technology, efficiency, and global best practices to Bangladesh's port system.

Mohammad Hatem, managing director of MB Knit Fashion and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) president, told The Financial Express they welcomed the deals.

There was no way but to allow some world-class companies to operate the ports in order to reduce the lead time and ensure efficient handling of the export and import cargo like Shanghai, Singapore, and Colombo, he said.

For a political government, most of the cases of handing over ports to experienced foreign companies might become tougher, but it was comparatively easy for the interim government, he added.

Professor Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), told The Financial Express, "Amid the Donald Trump tariff regime and the upcoming challenges after graduating from the least developed country (LDC) status, our port capacity needs to be enhanced."

"We need local or foreign investments to tackle those challenges. From that view, the particular investments in Laldia and Pangaon are expected," he said.

However, if the government maintained transparency and revealed the terms and conditions before the public, no question would have been raised, he added.

The CPA signed a 30-year public-private partnership (PPP) deal with Denmark's APM Terminals for the development and operation of the Laldia terminal in the upper estuary of the Karnaphuli River.

APM Terminals will invest $550 million to develop the terminal.

The CPA also signed a 22-year concession agreement with Switzerland-based logistics firm Medlog SA to manage and operate the Pangaon terminal in the Buriganga in Keraniganj.

Former lead economist at the World Bank's Dhaka office Dr Zahid Hussain said it was a good sign that Bangladesh had been able to convince two reputed and well-known foreign companies to invest in the country.

This would prove Bangladesh's development capacity further in the global arena, he said.

At the same time, Bangladesh's port handling capacity would boost and business would be smoother, he told The Financial Express.

"Our port operation rating is currently lower than that of Singapore, Colombo, and India. Management problems of the current local operators and corruption in port operations have been reported for many years.

"We have so far failed to improve the situation. We hope the reputed foreign companies will bring some difference in port operations," Dr Zahid said.

It would not only upgrade Bangladesh's port efficiency but would also ensure knowledge transfer, the noted economist said.

However, he called on the government to disclose before the public the parts of the deals that would not conflict with the legal framework, saying this would help them avoid criticisms and remain transparent.

Former Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president Faruque Hassan said appointing foreign companies to handle the ports was a welcoming decision from the government.

"They are world-class companies. They have the latest technology for port operations. Their efficiency will enhance our foreign trade," he told The Financial Express.

It would also open up knowledge transfer opportunities to those handling Bangladesh's ports, he said.

Under the Laldia agreement, APM Terminals, a subsidiary of Denmark's AP Moller-Maersk Group, will design, finance, build, and operate the new terminal, with a possible 15-year extension based on performance.

Earlier in March 2013, the Laldia terminal was approved by the Cabinet Committee on Economic Affairs to be built under the PPP model with the CPA.

After short-listing five foreign companies for the project in 2017, the process was abruptly cancelled by the government.

For years, the project saw little to no progress due to land acquisition issues and a change in strategy by the government.

In 2024, the project gained new momentum after the government appointed the International Finance Corporation (IFC) as a transaction adviser.

Once operational in 2030, the terminal will expand Bangladesh's annual port handling capacity by over 800,000 twenty-foot equivalent units (TEUs), improving the country's global trade efficiency and connectivity.

This will also help the key engines of Bangladesh's export economy, such as textiles, apparels, and manufacturing, reach the import markets around the world.

Over time, the new deep-water facility will allow the Chattogram port to handle vessels of up to 6,000 TEUs, compared to the current limit of 2,800 TEUs.

This advancement will reduce congestion, lower logistics costs for supply chain actors, and support the continued growth of the export sector.

Meanwhile, the Pangaon port in Bangladesh was planned in the early 1990s, with land acquired in 1993, but construction stalled until a renewed initiative in 2005.

It was finally built by the Bangladesh Inland Water Transport Authority (BIWTA) and the CPA at a cost of Tk 1.54 billion and inaugurated in November 2013 as the country's first inland container terminal, intended to relieve pressure on road and rail corridors between Dhaka and Chattogram.

The new agreement with Medlog is intended to modernise operations and increase the terminal's capacity to 160,000 TEUs annually, with a focus on improving inland logistics and connectivity with seaports.

After signing the deals in Dhaka, CPA Chairman Rear Admiral SM Moniruzzaman said the terminals were crucial for meeting the rising cargo demand.

"We are seeing 11 per cent annual growth, and by 2030, we must handle an additional 1.5 million TEUs. The time when we urgently need both capacity and efficiency for the terminals is coming," he said.

Robert Maersk Uggla, chairman of AP Moller-Maersk, which owns APM Terminals, said, "Together, we are not merely building a terminal. We are building a gateway to Bangladesh's next era of trade growth and prosperity."

Under the agreement, APM Terminals will complete construction within three years and operate the terminal for 30 years.

The facility will run 24/7, accommodate larger vessels, reduce logistics costs, speed up cargo delivery, attract new inland logistics investment, and create 500-700 direct jobs and thousands more indirectly.

Several organisations protested against the government's plan to lease the key Chittagong port terminals to foreign operators.