Report: Infrastructure development to increase in Bangladesh

Bangladesh will remain a priority market for the Asian Infrastructure Investment Bank (AIIB) in 2019, a report has said.

The Asian Infrastructure Finance report, released on Tuesday, said despite infrastructure stakeholders' concerns about inflation pressures and their projected depreciation of the taka, Bangladesh will remain a priority market for AIIB.

According to AIIB, there continues to be significant infrastructure investment opportunities across Asia, including in Bangladesh, despite current market uncertainty and short-term challenges.

In contrast to other countries in the report, a marginal reduction in infrastructure- borrowing costs, over the next 12 months, is expected in Bangladesh; due to a more competitive domestic financing environment.

In other words, lending spreads are expected to narrow as the financial sector strengthens, due to the presence of more long-term lenders in the market.

However, currency volatility could affect project financing, although multilateral development banks are expected to help with the hedging challenge.

"Bangladesh is a fast-growing economy and its improving economic conditions present a great opportunity to address infrastructure shortfalls," AIIB Vice President Policy and Strategy Joachim von Amsberg said, reports UNB.

He said: "We remain committed to working with the Bangladeshi government and other partners to identify infrastructure projects that are financially sound and have the potential for significant economic impact."

AIIB is actively reviewing several projects in the transport, energy, and water sectors, including the Mymensingh Kewatkhali Bridge Project and the Sylhet to Tamabil Road Upgrade Project.

Till date, AIIB's Board of Directors has approved up to $274 m for three projects in the energy sector.

AIIB is also developing strategies to help its members respond to short and long-term challenges in infrastructure development.

"There is a growing awareness of Bangladesh's economic potential," AIIB Principal Economist Dr Jang Ping Thia said adding: "Improving on construction costs and project implementation would further accelerate private sector investments."

The AIIB is a multilateral development bank with a mission to improve social and economic outcomes in Asia.

Headquartered in Beijing, the bank began its operations in January 2016 and has now grown to include 93 members worldwide.

Asian Infrastructure Finance features contributions from more than 40 industry experts across: banking, financial services, project and infrastructure finance, multilateral development banks, plus energy and transport.

This inaugural report features benchmarks in three areas—infrastructure financing volume, infrastructure financing cost, and road construction costs—to provide a snapshot of the health and direction of project financing in eight markets: Bangladesh, China, India, Indonesia, Pakistan, Philippines, Russia, and Turkey.