Imagine it is late 2030. Bangladesh is trying desperately to gain additional markets for its garments, pharmaceuticals, professed foods and steel products. Just a few years ago, the country had lost a huge stable market due to its elevation to the developing world. Bangladesh has realized that without a faster and efficient seaport, it is difficult to gain competitiveness in goods when competition is severe and tough. This doesn’t look like an impossible scenario.
The year 2030 is not too far. By 2030, most of the old ports in Bay Bengal, particularly Bangladesh, Myanmar, Thailand and West Bengal state of India will turn into inland ports due to rising siltation and navigational constraints.
In such a challenging time, Bangladesh has dual mandates: First, to set up a deep sea port in support of national infrastructure requirement so that not only the elevation to the developing world becomes smooth and sustainable but also trade picks up new markets for new products ; and second, to build a deep sea-port in order to keep the economy growing at a faster pace.
Bangladesh and other Bay of Bengal countries continue to face climate issues, either rising sea levels or natural disasters. Trade among the Bay of Bengal countries will slow down if they fail to set up a deep seaport, hurting the growth and development. So, an abundance of caution must be in order.
Today, Bangladesh is setting up a deep seaport at a place called Matarbari between Cox’s Bazar and Chattogram. This port is going to add over 10 million tonne port capacity by 2030, starting with a container terminal in 2026, the year by when Bangladesh elevates to the developing world, leaving aside the baggage of LDC. Japan has come forward to help Bangladesh in developing the deep sea port and related infrastructures. Not only the development of the port, Japan and Bangladesh together are also building two coal-fired thermal power plants at Matarbari, which are likely to become operational by 2024. A 14-km wide navigational channel has been erected between the port terminals and deep water pockets in the Bay of Bengal, which provide a draft of 18.5m at the jetty on a continuous basis. Besides, two breakwaters have been constructed to protect the ports against tides, siltation, and storm surges. An economic zone centering the deep seaport is coming up very fast in Bangladesh. Bangladesh has three more ports, namely, Chattogram, Pyra and Mongla, and these are smaller tidal ports. By 2030, they may function as inland ports, feeding several smaller inland terminals in the region (see the Map).
On the other hand, ports in West Bengal, namely, Kolkata and Haldia, which were built as impounded docks, have been struggling for cargo. Bhutan and Nepal might shift to the ports in Bangladesh for their third country trade. West Bengal government’s plan to set up a port at Tajpur is still uncertain. The design of Tajpur port is quite similar to that of Matarbari: construct an 18-km long navigational channel between jetties and deep water pockets in Bay of Bengal and breakwaters. But, Tajpur port will continue to face navigational constraints. It presently aims for an 8m draft at the jetty side and requires expensive capital dredging from time to time. While Matarbari port is well connected and strategically located in Bay of Bengal, Tajpur is in a disadvantageous position. It would be quicker to bring cargos from Singapore or Colombo to Matrabari because of its locational advantage. To compete with nearby ports like Dhamra, investments in inland connectivity are essential, however. Tajpur may not be able to handle bigger vessels (say, containers), either.
What next? To fill up the gap, India has planned to build an international transshipment terminal at the Galathea Bay in Great Nicobar Island. It offers several major benefits: First, located only 40 nautical miles from the international shipping corridor; second, availability of natural water depth of over 20m at berth; third, transshipment for international shipping lines. Development of a full-fledged port there may cause huge environmental risks and damages. Environmental costs may appear to be higher than navigational benefits. To replace Colombo or Singapore or Port Klang, Galathea Bay has to be developed as a sustainable smart city. Simply looking at the savings of transshipment costs does not make sense. Instead, it may generate many diplomatic costs and the loss of friends. The requirements of India and Bangladesh in the port sector are two different mutually exclusive events. For India, what is needed is drastic port reforms and improvement of port performance. To sustain the Galathea container terminal, India has to generate enough cargoes for having direct calls. However, it is not to deny that it has potential to replace the Colombo port as a transshipment terminal for India. Once Thailand has decided to cancel the Kra Canal project, the economic relevance for the Galathea Bay terminal is not so strong.
Thailand has reactivated the capacity enhancement of Ranong port in the container handling segment. Bangkok port is almost converted into an inland port. Myanmar has planned to develop Myeik and Dawei as deep sea ports. Although these two ports have high potential, given the current political situation, adding new port capacity in Myanmar is impossible. However, there is hope that Myanmar with the help of Chinese assistance will be able to complete the construction of the Kyaukpyu deep sea port by 2024. Kyaukpyu deep seaport is going to have 14m draft at the jetty with less capital dredging requirement. India has assisted Myanmar in redeveloping Sittwe port in Rakhine state, but it remains as a tidal port with low draft.
Fast-forward once again to late 2030. Most river-based ports in the Bay of Bengal will become inland ports to handle smaller vessels and cargoes, and these are not beyond our imagination: Kolkata, Chattogram, Haldia, Yangon, Bangkok, Sittwe, Pyra and Mongla. If there are no deep seaports in the Bay of Bengal region, growth will be severely hampered. In other words, disappearing deep sea ports is a real headwind.
Matarbari deep seaport is going to be a game changer. If it is developed in time connected with super efficient logistics networks, cargoes from India’s East and Northeast, Nepal and Bhutan may eventually move to Matarbari. Without a major port in the Bay of Bengal, Bangladesh’s rise as a developing nation may not sustain in the long-run. Here, the only country which is endowed with natural deep water port assets is Sri Lanka. The country is busy in rescuing the economy from the current economic crisis, but its absolute advantage may disappear if Sri Lanka fails to transform the port sector as a true regional hub port by dismantling the oligopolistic cartel of shipping lines and investing in South Asian ports and shipping sector.
There are lessons for Bay of Bengal countries from this port framework. Given that ports take a long time to build, these countries may consider a regional framework for maritime cooperation so that trade moves seamlessly. Here, Japan comes as an honest partner, a country that has grown with best performing ports, high speed vessels and abundance of technology and capital. There is a lesson from India as well. The Indian economy did not do well in the first decade of the liberalization since the country was not having faster and efficient ports. India changed the port profile with drastic reforms and higher TFP, and the country started gaining from the growth. Bangladesh may follow suit.
The article has been authored by Prabir De, professor, ASEAN-India Centre, Research and Information System for Developing Countries (RIS), New Delhi