Muhith to check if he can cut corporate tax

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Muhith to check if he can cut corporate tax

Finance Minister AMA Muhith yesterday promised to examine scope for reducing corporate income tax for the coming fiscal 2018-19. He gave the assurance at a meeting with secretaries of various ministries. Businesses have long been demanding it, a meeting participant quoted Muhith as saying. The meeting was organised by the finance ministry to hold consultations with senior public officials before going for formulating the next fiscal’s budget. Currently, the revenue authority collects corporate tax in six categories, ranging from 25 percent to 45 percent. Companies listed with the bourse face a 25 percent tax while non-listed ones pay 35 percent. Cigarette and bidi manufacturers have to pay a 45 percent income tax. Responding to secretaries’ requests, Muhith also promised to consider a hike in interest of a savings instrument called Pensioner Sanchayapatra.

ne of four types of savings instruments run by the Department of National Savings, Pensioner Sanchayapatra is a five-year savings scheme designed for retired public officials offering the highest 11.76 percent interest on reaching maturity. Muhith said the government’s contribution in public-private partnership schemes was likely to be fixed at 30 percent for the next fiscal year.

Keep watch on banks

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Keep watch on banks

The Metropolitan Chamber of Commerce and Industry yesterday urged the government to pay special attention to banking sector management in the budgetary measures for next fiscal year. “Almost all the banks are suffering from liquidity shortage. A big problem will arise unless this is overcome,” said MCCI Vice-President Golam Mainuddin at a discussion held at the National Board of Revenue headquarters. The NBR organised the event to listen to the views and recommendations of the trade body as part of its exercise to consult with various stakeholders ahead of formulating the fiscal measures for the incoming year.

The MCCI suggestion comes at a time when the banking sector is encumbered by various loan scams and some banks are going through a cash shortage owing to lending above the permissible limit. To rescue the banks, the government recently took a host of measures, undoing some of the contractionary intent of the monetary policy announced earlier in January.

The trade body also urged for cuts in import tariff on basic raw materials and intermediate goods to enhance competitiveness of domestic industries and abolition of the taxmen’s discretionary authority.

It also suggested cuts in tax for high-income individuals from 30 percent to 25 percent and called for a hike in the tax-free income limit.

“We expect the government to frame an intelligent budget to face the ongoing problems faced by the economy,” Mainuddin said, adding that many consider the budgetary measures will be framed keeping in mind the upcoming election.

He went on to express hope that the government will prepare the budget taking into account the advancement of the country — and not the election.

The trade body, citing the ballooning shortfall in revenue collection from target, said it has seen in the past that the revenue administration imposed higher tax burden on the firms and individuals under the Large Taxpayers’ Unit to make up the deficit.

“This is a kind of punishment for compliant firms like us. Firms under the LTU consider it as unjust and it will discourage firms from coming under purview of the LTU,” the MCCI said. Businesses also wanted an end to the practice of double-taxing dividend income.

In response, NBR Chairman Md Mosharraf Hossain Bhuiyan said his office will focus on framing tax measures keeping the suggestion in mind.

He said he has already discussed the issue with Finance Minister AMA Muhith.

“We are trying to find out a formula. Tax should be payable only once.”

The tax administration will also work on easing the refund mechanisms for taxes paid in excess through the advance income tax, he said. “Many have told me about the hassles in getting refunds. We try to adjust the refundable tax with the successive return. But when this cannot be adjusted, we allow refund subsequently. The process is a bit slow.” Protection for local industries will be ensured next fiscal year. M Anis Ud Dowla, committee member of the MCCI and the chairman of ACI, demanded withdrawal of trade VAT on superstores and advance income tax on imports.

Bangladesh faces stiffest tariff in US

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Bangladesh faces stiffest tariff in US

Bangladesh pays the highest import duties out of all the 232 exporting nations to the US because of its substantial trade in apparel and footwear — items that the US generally taxes highly.

Pew Research Centre, a Washington-based think-tank, analysed data from the US International Trade Commission and found that Bangladesh faces the highest import duties. “Nearly all Bangladeshi imports were subject to US duty and the tariffs on them were 15.2 percent of the total value of the country’s shipments to the US — the highest such average rate among the 232 countries, territories and other jurisdictions in the ITC database.” Bangladesh exported about $5.7 billion worth of goods to the US last year, 95 percent of which were apparel, footwear, headgear and related items.

And apparel exports are subjected to the stiffest tariff by the US, Bangladesh’s single largest export destination. About 20 percent of Bangladesh’s export receipts come from the US.

The average American tariff for knitwear or crocheted clothing is 18.7 percent and 15.8 percent for non-knitted clothing — the two highest average rates out of 98 broad import categories. Footwear is close behind with the average tariff rate of 11.9 percent.

Other countries with similar profiles are Cambodia (duties equal to 14.1 percent of the total value of imports from there), Sri Lanka (11.9 percent), Pakistan (8.9 percent) and Vietnam (7.2 percent).

The disclosure underscores the need for the country to diversify its export basket. Garment accounts for more than 80 percent of Bangladesh’s overseas shipments. Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue, said the US’s protectionist attitude towards clothing is beneficial for none. “The higher duty neither benefits the US consumers nor ensures consumption of American-manufactured clothes,” he said.

The high tariffs have done little in keeping jobs making shoes or clothes in the US, but it has instead mounted pressure on Bangladeshi garment makers to lower prices for the aim of boosting the retailers’ profitability. Furthermore, Bangladesh has been struck off from the Generalised System of Preferences scheme that allows duty-free exports to the US from the least-developed nations since June 2013.

China blames US for trade frictions, says negotiations currently impossible

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China blames US for trade frictions, says negotiations currently impossible

BOAO/BEIJING (REUTERS) – China stepped up its attacks on the Trump administration on Monday (Apr 9) over billions of dollars worth of threatened tariffs, saying that Washington was to blame for trade frictions and repeating that it was impossible to negotiate under “current circumstances”.

The comments come after US President Donald Trump on Sunday predicted that China would take down its trade barriers, and expressed optimism that both sides could resolve the issue through talks.

Chinese state researchers and media talked down the likely impact of US trade measures on the world’s second largest economy and described the Trump administration’s posturing on trade as the product of an “anxiety disorder”.

“Under the current circumstances, both sides even more cannot have talks on these issues,” Chinese Foreign Ministry spokesman Geng Shuang told reporters at a regular news briefing.

“The United States with one hand wields the threat of sanctions, and at the same time says they are willing to talk. I’m not sure who the United States is putting on this act for,” Mr Geng said.

The trade frictions were “entirely at the provocation of the United States”, he added. Beijing did not want to fight a trade war, but was not afraid of one, Vice-Commerce Minister Qian Keming said at the Boao Forum for Asia in the southern province of Hainan.

The focus this week will be on the forum, with President Xi Jinping and International Monetary Fund Managing Director Christine Lagarde delivering speeches on Tuesday.

China’s Premier Li Keqiang said that a trade war of unilateralism will not only harm bilateral interests but also hurt common interests of the world, according to a statement released by the state council on Monday.

Amid uncertainties in global economic conditions, it is required of us to oppose unilateralism and trade protectionism, Mr Li told United Nations Secretary General António Guterres at a meeting in Beijing on Sunday.

Challenging multilateralism with unilateralism will threaten global peace and stability, Mr Li added.

‘GREAT WALL OF DENIAL’

The US move last week to threaten China with tariffs on US$50 billion (S$65 billion) in Chinese goods was aimed at forcing Beijing to address what Washington says is deeply entrenched theft of US intellectual property (IP) and forced technology transfer from US companies.

Beijing claims that Washington is the aggressor and is spurring global protectionism, though China’s trading partners have complained for years that it abuses World Trade Organisation rules and practices unfair industrial policies that lock foreign companies out of crucial sectors with the intent of creating domestic champions.

After repeated pledges by Beijing to open up sectors such as financial services have yielded little substantial progress, Mr Trump has said that the United States will no longer let China take advantage of it on trade.

“China’s reaction to Mr Trump’s legitimate defence of the American homeland has been a Great Wall of denial – despite incontrovertible evidence of Beijing’s illicit and protectionist behaviours,” White House trade advisor Peter Navarro said in a commentary in the Financial Times on Monday.

“Nothing less than the US’ economic future is at risk from China’s assault on American technology and IP, and its mercantilist bid to capture emerging high-tech industries,” he said.

Chinese officials deny such charges, and responded within hours of Mr Trump’s announcement of tariffs with their own proposed commensurate duties. The move prompted Mr Trump to threaten duties on an additional US$100 billion in tariffs on Chinese goods.

one of the measures have yet gone into effect, offering some hope for compromise and a watering down of the proposals even as both sides’ rhetoric grows more strident.

China’s ambassador to the United States Cui Tiankai said in an interview in China’s Securities Daily newspaper that the United States should “adopt a more responsible attitude” on trade or it would harm itself with its own policies.

“Some people in the United States are still accustomed to being the world leader, and haven’t adapted to the change in the global situation,” Mr Cui said.

The Chinese Communist Party’s official newspaper described US trade policies as a populist tilt by Mr Trump ahead of the US mid-term elections, but that the steps would ultimately end up hurting US consumers through higher prices.

“In the world’s perception, the US is overshadowed by an anxiety disorder and is very keen to show its anxiety,” the newspaper said.

‘IMPACT WILL BE LIMITED’

A researcher with China’s state planning agency said China’s economy will see little impact from the trade dispute, as the country’s vast domestic market can compensate for any external impact.

Even with the US tariffs, China can still reach its 2018 GDP growth target of around 6.5 per cent and the impact on employment will be limited, researcher Wang Changlin at the National Development and Reform Commission (NDRC) wrote in a post on the commission’s official microblog account. Dr Fan Gang, an influential economist and adviser to China’s central bank, on Sunday flagged the possibility of a US trade war as the US economy faces pressure from China’s rapid development.

Discussion of the trade dispute also touched on the possibility of China leveraging its massive holdings of US government debt, which has been dubbed the “nuclear option”. Dr Zhang Yuyan, a researcher at the Chinese Academy of Social Sciences, a government think-tank, said China was unlikely to sell off its holdings of US Treasury bonds as a tactic in the trade dispute.

“On whether China will reduce its foreign exchange reserves, how policymakers think, I don’t know. I personally believe this possibility is very small,” Dr Zhang said on Sunday in Boao. China is evaluating the potential impact of a gradual yuan depreciation as a tool in the trade dispute, Bloomberg News reported on Monday, citing people familiar with the matter, though it said the analysis does not mean officials will carry out the move.

The yuan has been nearly unchanged against the dollar over the last month as the trade dispute heated up and has appreciated about 3 per cent so far this year.

Analyst shows ways to cut Indo-Bangla trade gap

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Analyst shows ways to cut Indo-Bangla trade gap

India should source at least 5 percent of its $400 billion worth of annual imports from Bangladesh to narrow down the ever-swelling bilateral trade gap between the two countries, said a trade analyst yesterday.

Bangladesh is no longer an aid-dependent nation, but a trading one, which indicates that the country has the competitiveness to meet the global demand for goods, said Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue.

Even 10 to 15 years ago, Bangladesh’s aid versus trade ratio was 1:1 but now it has become 1:15, Rahman said.

He spoke at the “bilateral conclave on India-Bangladesh relations, deepening cooperation and the way forward” at the Pan Pacific Sonargaon hotel in Dhaka.

The Institute for Policy, Advocacy and Governance organised the discussion. Amit Datta Roy, senior research fellow at the institute, moderated the event.

Bangladesh has the largest bilateral trade deficit with India, importing goods worth $6 billion through the formal channel and exporting nearly $600 million worth of goods, said Rahman.

The two governments should sign a much-needed mutual recognition agreement for more Indian acceptance of sanitary and phyto-sanitary certification of goods made in Bangladesh to help the latter export more, he said.

“We should go beyond the SAFTA (South Asian Free Trade Area). We should sign [an agreement for] comprehensive economic partnership for more business,” Rahman said, urging India to give trade facilities beyond zero-tariff.

Bangladesh earlier enjoyed zero-duty benefit on all exports to India, except 25 alcoholic and beverage items.

In 2012, India imposed a 12.5 percent countervailing duty on the export of Bangladeshi garments, the country’s main export item. As a result, Bangladesh’s export to India has not increased at expected levels.

Rahman called for removing non-tariff barriers, improving the banking system along border areas and upgrading infrastructure at land and river ports of both the countries. He reasoned that 80 percent of goods were imported from India through the land ports while only three ships have made use of the Ashuganj river port in the past three years.

Rahman said both India and China should not be at loggerheads when it comes to investing in Bangladesh. India has promised to invest $8 billion in Bangladesh while China has proposed to put in $25 billion. Bangladesh will need $100 billion in foreign direct investment in the next 10 years, so both countries can invest here without competing with each other, he said.

The value of goods imported from India, through formal and informal channels, stands over $10 billion. So, the $600 million worth of exports from Bangladesh are insignificant, said Mir Nasir Hossain, a former president of the Federation of Bangladesh Chambers of Commerce and Industry.

Hossain suggested that Indian businessmen invest in IT and power sectors as the government has approved a separate special economic zone in Bangladesh for them.

Prabir De, coordinator at the ASEAN-India Centre, suggested greater collaboration, holding more meetings and building more partnerships to resolve outstanding bilateral business issues. He urged Bangladeshi companies to set up more business units in Rangpur and Saidpur for easy transportation of goods to India, taking advantage of the geographical proximity. Power is now the major sector for Indian investment in Bangladesh while pharmaceuticals and IT are the other two, said Goutom Ghosh, director of the Federation of Indian Chambers of Commerce and Industry.

WB doubts 7.65pc GDP growth estimate

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Qimiao Fan, country director of the World Bank, speaks at a press conference at his office in Dhaka yesterday. Zahid Hussain, the lender’s lead economist for Bangladesh, was present. Photo: Star

WB doubts 7.65pc GDP growth estimate

The World Bank yesterday questioned the 7.65 percent economic growth estimate being peddled by the Bangladesh Bureau of Statistics for fiscal 2017-18, raising doubts over claims of robust expansion of the manufacturing sector and domestic demand.

It is being said that the manufacturing sector is growing faster than last year. But the Washington-based multilateral lender said production capacity has not increased from last year as private investment has remained almost stagnant. “It is also difficult to believe that there was excess production capacity,” said Zahid Hussain, lead economist of the World Bank’s Dhaka office, while presenting the ‘Bangladesh Development Update’ at a press conference in the capital. The WB also raised doubts over the estimate of 7-8 percent growth of domestic demand. The possible explanations behind such spike in growth could be either growth of employment and labour income or a rise in remittance inflows. “But we do not see any leap in any of these cases,” he said, citing the growth of employment in 2017 to be 2.2 percent and labour income 2.7 percent.

While the remittance inflows have recovered, the level of remittance still remains 2.7 percent less than in the July-March period of fiscal 2015-16.

“If consumer demand grows, where is the source of the growth?”

Last week, the BBS said the economy is on course for a 7.65 percent growth, driven by double-digit growth in manufacturing and construction sectors. This is the third consecutive year that the economic growth was above 7 percent after years of languishing in the neighbourhood of 6 percent. The WB said the latest growth estimate is exceeding Bangladesh’s potential GDP growth of 6.5-6.6 percent.

While the economy has remained robust owing to rebound in exports and remittance and strong performance of the agriculture sector, the service sector, whose contribution to the GDP is about 52 percent, has slowed down this year.

Private investments are not taking off yet: it is projected to increase to 23.25 percent of GDP in fiscal 2017-18 from 23.1 percent a year ago, said the WB. In addition, rising inflation, interest rates on loans, rising default loans, large external deficit resulting from soaring imports payments, revenue shortfall and pressure on expenditures for rising subsidies, the elections and spending on the Rohingyas have made macroeconomic outlook challenging.

“And the banking sector woes remain unattended,” Hussain said.

The multilateral lender went on to criticise the recent moves of the government to boost the banking sector.

“These are on balance expansionary actions that are hard to justify when growth is already above the potential, inflation is rising and the exchange rate is depreciating.”

The WB also flagged the issue of slowing pace of poverty reduction although the economy is growing at a faster pace in recent years. The annual pace of poverty reduction fell from 1.7 percentage points in 2005-10 to 1.2 percentage points in 2010-16, despite 6.1-6.5 percent GDP growth during the latter period.

At the same time, inequality increased.

“Welfare differences between the historically poorer west and the rest of the country have re-emerged,” Hussain said.

Looking forward, Bangladesh’s outlook is positive for factors such as progress in key infrastructure projects, rising shipment of higher value-added garment items and prospect of a spike in remittance. The multilateral lender suggested regulatory reforms in the banking sectors to address the poor risk practices, corruption and collusion.

It also called for a cautious monetary policy approach and exchange rate flexibility.

“Exchange rate flexibility and monetary policy independence can mitigate external risks. Increased caution on the monetary policy stance is needed given the concerns on rising inflation, surging global crude oil prices and fiscal slippage,” Hussain said. Despite having floods twice impacting agriculture, Bangladesh maintained robust growth in the current fiscal year, said Qimiao Fan, country director of the WB.

But, actions are needed to address some emerging challenges.

For instance, tax revenue as a share of GDP remains among the lowest in the world. “As the economy generates the wealth of a middle-income country, it also needs to generate the revenue for public services and investment of a middle-income country.”

The medium-term revenue strategy development process launched by the National Board of Revenue last week was a positive step in this regard, Qimiao said.

He was also critical of the government’s high reliance on National Savings Certificates to meet a part of the budget deficit. “The means of financing the deficit, mainly through issuance of National Savings Certificates, has become increasingly expensive. It also brings significant distortions in the financial sector, which is facing tightening liquidity and double-digit lending rates.” He also stressed maintaining sound, credible data and monitoring systems to underpin evidence-based policy making.These include not only data for poverty measurement and tracking, but also data on the national income accounts, inflation and the budget.

 

Economy marches towards record 7.65pc growth

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Economy marches towards record 7.65pc growth

The Bangladesh economy is charging towards record growth figure for the second consecutive year, driven by double-digit growth in manufacturing and construction sectors.  GDP growth in fiscal 2017-18 is likely to be 7.65 percent, up from 7.28 percent a year earlier, as per the estimate of the Bangladesh Bureau of Statistics.

This is the third consecutive year that the economic growth was above 7 percent after years of languishing in the neighbourhood of 6 percent. The rise in construction growth is attributable to progress in implementation of mega projects and increased growth in housing construction, stimulated, among others, by recovery in remittance, said Zahid Hussain, lead economist at the World Bank’s Dhaka office. The provisional estimates show that the manufacturing sector grew 13.18 percent this fiscal year and the construction sector 10.11 percent.

“The final figures may be higher,” said Planning Minister AHM Mustafa Kamal while unveiling the provisional estimates at a press conference held at the National Economic Council auditorium after the meeting of the Executive Committee of the National Economic Council.

The provisional figures are based on data from the past 6 to 9 months.

Various macroeconomic indicators are now showing positive trend, he said, citing export and remittance as examples. “Due to these causes, growth was good. Besides, there is no depression in world economy, which also helped,” the planning minister added. Kamal’s disclosure comes after Finance Minister AMA Muhith on Sunday said the economy is on track to log in better GDP growth figures than last year even though it is an election year.

The BBS data shows that the agriculture sector, whose contribution to the GDP is 14.10 percent, grew 3.06 percent in fiscal 2017-18, up from 2.97 percent last year. The services sector, whose contribution to the GDP is 52.85 percent, grew 6.33 percent this year, down from 6.69 percent registered a year earlier.

Exports decline 1.38pc

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Exports decline 1.38pc

Export earnings fell 1.38 percent year-on-year to $3.05 billion in March due to a decline in leather goods shipment.

March’s receipts fell short of the $3.16 billion target for the month, according to data from the Export Promotion Bureau (EPB). Leather and leather goods sector—the second largest export earner after garments—fetched $848.78 million in the July-March period, down 8.04 percent year-on-year. The shipment of leather and leather goods went down largely as the relocation of tanneries from Hazaribagh to Savar has hampered production of such goods.

All the tanneries have been relocated, but only 25 out of 155 have so far started production in their new location, industry people said.

Garments exports grew 9.11 percent year-on-year to $22.83 billion in July-March. Knitwear exports rose 11.61 percent to $11.32 billion and woven garments exports increased 6.75 percent to $11.51 billion during the period.

Garment shipment, which account for more than 80 percent of the national export, grew because of the increased sales of high-value items and the depreciation of the local currency against the US dollar.

“The higher exchange rate of the US dollar helped exports a bit,” said Siddiqur Rahman, president of Bangladesh Garment Manufacturers and Exporters Association.

The exchange rate rose to Tk 84 a dollar, up from Tk 78 and Tk 80 previously.

Rahman said garment exports would grow by 10 percent at the end of the current fiscal year as the market trend is favourable for Bangladesh.

Thanks to the significant improvement of the structural, fire and electrical safety in garment factories, western retailers and brands are coming with bulk orders, he said.

Nearly 90 percent remediation work in the garment factories has already been completed, which has brightened the image of the sector.

Bangladesh is also home to the highest number of green garment factories in the world, according to Rahman.

Moreover, the country is moving towards high-value items from basic garments. As a result, exporters are getting better prices, he said.

Jute and jute goods also fared well in July-March thanks to the diversification in the sector.

The demand for jute goods from Bangladesh is rising as customers are gradually giving up the use of harmful polythene globally. In July-March, jute and jute goods fetched $818.09 million, up 11.91 percent year-on-year, EPB data showed.

Jute production surged from 65 lakh bales in 2014 to 70 lakh bales last year for better prices ensured by a government rule that made its use mandatory in goods packaging, according to the jute ministry. More than 100 crore sacks were additionally produced thanks to the new rule. Local entrepreneurs also expanded the export base by increasing the number of products made from the natural fibre to 240 this year from 135 last year. Overall, exports grew 6.33 percent year-on-year to $27.45 billion in July-March period. It, however, narrowly missed the periodic target of $27.55 billion.

Shipment of agricultural products grew 15.46 percent year-on-year to $472.23 million, while frozen food exports were up 6.57 percent to $407.71 million. Home textile export surged 15.08 percent to $669.87 million and footwear shipment rose 5.84 percent to $187.09 million.

Exports of plastic goods fell 19.49 percent to $73.59 million in the July-March period.

BGMEA chief criticises the way BB handles liquidity crisis

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BGMEA chief criticises the way BB handles liquidity crisis

The chief of the garment makers’ platform on Monday criticised the way the central bank is dealing with the ongoing liquidity crisis in the banking sector.

Siddiqur Rahman, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), also gave examples of some banking scams and suggested ways to check the irregularities. He made the comments while delivering a speech at the BGMEA-BUFT Journalism Fellowship awarding ceremony at the BGMEA Bhaban in Dhaka. “Whatever I said is true. None has influenced me or put pressure on me before or after the speech,” Rahman told The Daily Star yesterday.

“I said 90 percent of the banks are doing fine, but some banks are not doing well. We are not in favour or disfavour of any bank. I have not told anything bad about Bangladesh Bank.”

Rahman said the business activities will not be affected due to his speech. On Monday’s event, Rahman said, “A bank has been given Tk 600 crore to help fight liquidity crisis, as it was hit by a Tk 600 crore loan scam. This is not the right way to solve liquidity crisis.”

“Giving a fund to a scam-hit bank to overcome the liquidity crisis will only inspire 10 other banks to get involved in such corruption. It should not work that way,” he said. Such banks should merge with other banks and the directors should be thrown out of the boards, he said. “What is the role of Bangladesh Bank here? If I steal today, will you give me Tk 100 crore to solemnise my theft?”

“We have regular contacts with many banks. We know that the conditions of banks are not good,” he said suggesting that the government discusses banking issues in cabinet meetings. Rahman said there was no reason for rod prices to rise by 40-45 percent to Tk 72,000 a tonne. He also questioned the morality of a section of traders who always try to do brisk business taking advantage of sudden surges in demand for goods on different occasions.

4-Lane Dhaka-Ctg Highway: Up for mending all too soon

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Workers and a road milling machine have been deployed to smooth down the Dhaka-Chittagong highway after the surface became uneven because of “overloading”. The photo was taken at Dhamoti in Cumilla on Wednesday. Photo: Anisur Rahman

4-Lane Dhaka-Ctg Highway: Up for mending all too soon

Mohammad Bachchu was intensely looking at the milling machine cutting ruts on the Dhaka-Chittagong highway at Nooritola of Chandina on Tuesday afternoon. This way, the highway is being made usable somehow.

“I never thought we would require cutting the road surface so soon,” said Bachchu, who was involved in the original expansion work of the highway. The project cost the taxpayers Tk 3,600 crore.

An employee of the project’s Chinese contractor Sino-Hydro that expanded 140km of the 192km highway, Bachchu was hired by the Roads and Highways Department (RHD) to supervise the rut-cutting job.

The RHD also hired two milling machines from Sino-Hydro for the job.

The rut cutting began much earlier though. As the long, deep track made by the repeated passage of vehicles began to develop within months after the expansion work ended in December 2016, Sino-Hydro itself cut them from several kilometers of the road.

The company left in June 2017 on expiry of the defect-liability period.

The road transport and bridges ministry is now seeking Tk 900 crore for maintenance in the next five years, ministry officials said.

For now, the RHD is fixing the damage temporarily, which will require Tk 10 crore.

The RHD began the mending job in Chittagong zone in November and it continued till January. In Comilla zone, the work began in February.

“It will take us one and a half months to complete the job in Comilla zone,” said Bachchu, adding that it took a day to cut ruts on one kilometre road.

The condition of the road in Feni is among the worst as the RHD could not work there for shortage of milling machines, according to RDH officials.

Experts say new roads remain in good shape for four to five.

On Tuesday, this reporter took a round trip on the highway and found ruts on the road mile after mile. At some places, the road is so bumpy that drivers have to be extra caution to avoid accident.

RHD engineers and ministry officials who were involved with the project now squarely blame overloaded vehicles for the condition of the highway, known as the economic lifeline of Bangladesh. This highway is responsible for carrying 90 percent of the export and import volume.

Though the ministry is seeking more funds for the mending job, it did not engage any experts to determine the causes of the ruts in such a short time.

“Plying of overloaded vehicles cannot be controlled. As a result, the road is developing ruts,” claimed RHD Chief Engineer Ibne Alam Hasan, despite the fact that there is a machine in Sitakunda to check overloading.

dhaka_ctg_highway_1dhaka_ctg_highway_02

Asked how he drew the conclusion when no examination was done by independent experts, Alam said, “There may be multiple reasons but overloading is the main.”

Alam, who was director of the expansion project, said the ministry discussed the problem several times and decided to go for continuous repair work.

A senior official of the ministry said the expansion work should have been thoroughly investigated before allocating fresh funds for the repair job.

“We do not know if there is negligence or wrongdoings by contractors,” the official said.

Bachchu, who is doing asphalt work for 20 years, blamed the high thickness of the “wearing course” (the upper layer of a bituminous broad) and excessive bitumen for the ruts.

“The thickness of the wearing course on the highway is higher than that on other roads. For this additional bitumen, the surface may be failing to hold the bottom layer,” he said.

Also, the bitumen grade for the highway was 60-70, which cannot stand overloading.

Alam said 60-70 grade bitumen was standard for the country. “Buet experts approved the specification and we followed it.”

Asked if the grade was appropriate for the Dhaka-Chittagong highway, he insisted that it was a standard practice in Bangladesh and worldwide and it could not be changed.

But a senior official of the road ministry said, “During the expansion work, they could have checked if the standard was appropriate because we all know overloaded vehicles ply the road,”

There must have been an alternative, he added.

Locals and drivers, who are critical about the quality of the work, blame the authorities for their failure to check overloading.

HAZARDOUS DRIVING

As a result of the damage, driving on the highway is difficult and dangerous.

“I struggle to control my vehicle when I drive at high speed and change lanes,” said Dulu Mia, a trucker.

Fazar Ali, who has been driving different modes of transports for 38 years, has a similar experience. “The road is so uneven at some points that I struggle to remain in my seat.”

Often, frequent road crashes claimed lives on the narrow but the busiest highway and so its expansion was badly needed both for faster communications and saving lives. Tailbacks were a daily phenomenon on the road, hampering export and import through Chittagong Port.

The project was initiated during the BNP-led government in September 2006. It was finalised in 2010, a year after the Awami League took office.

But it turned out to be the most talked-about project after the Padma bridge because of the government’s inability to supervise the project.

Construction works never got momentum for various reasons. As a result, a three-year project took six years and the cost more than doubled.

The biggest weakness of the project was the government’s giving in to the demand of Sino-Hydro for additional fund.

Reza Constructions Ltd and Taher Brothers Ltd were the two other contractors.