Economic Development

Bangladesh outpaced Nepal in just a decade

Published On: October 24, 2016 02:00 AM NPT By: Rudra Pangeni  | @rudrapang


KATHMANDU, Oct 24: Economic indicators of Bangladesh were worse than Nepal's a decade ago.

Now, Bangladesh has left Nepal far behind, achieving average economic growth of 6 percent over the past 10 years. Nepal's South Asian neighbor was upgraded to lower middle income country by the World Bank earlier this year.

Nepal, meanwhile, has been posting disappointing growth figures and its economic indicators are almost at the same place over the past decade. A Bangladeshi earns nearly double of what a Nepali earns annually. Similarly, Bangladeshi Taka is fairly stronger than Nepali currency. 

Until a decade ago, officials of Nepal and Bangladesh used to visit other countries to learn good development practices. Now, Nepali officials are visiting Bangladesh for the same.

 Four joint secretaries, an undersecretary and some officials of the Kathmandu-based office of the Asian Development Bank (ADB) visited Bangladesh in the first week of August to study the way projects are implemented in the South Asian neighbor. Experiences of the visit were shared in the Tripartite Portfolio Review Meeting of Asian Development Bank on Thursday.

The trip was funded by ADB. 

Team leader Baikuntha Aryal, who heads the International Cooperation Coordination Division, Ministry of Finance, said that they were impressed by the project management and the growth figures achieved by Bangladesh through infrastructure development and economic reforms“ "A major transmission line project was completed 3 months before the deadlin”," Aryal said.

Leave alone meeting deadlines, development projects in Nepal have been delayed by months if not years.

Similarly, drinking water supply exceeds the demand and all households in Dhaka, including the squatters' settlements, have drinking water facility as well as proper drainage system. “

"Two things surprised me in Dhaka. One is drinking water supply to all households and proper drainage system, and the other is completion of road and bridge projects before the schedule despite the fact that they have to import sand and aggregate from Gulf countri”s," Mukunda Paudyal, joint secretary of Ministry of Supplies, said.

Paudyal said efficient bureaucracy and committed politicians were the reasons behind the impressive economic growth posted by Bangaldes“. "It is a matter of shame that we have been failing to build roads and bridges even though we have sand and aggregate in abundan”e," he added.

Slow progress of road and bridge projects has become common in Nepal. Mega infrastructure projects, which are expected to change the game, are yet to take off.


The officials openly admire the 4.8-kilometer Jamuna Bridge over the Brahmaputra River that has sparked economic growth by connecting economic activities between eastern and western parts of Bangladesh. The bridge, which opened three years ago, alone is believed to have contributed one percentage point to economic growth.

Presenting a paper at the review program, Tika P Limbu, head of portfolio management unit of ADB's Nepal Resident Mission, explained the contrast of economic indicators. "Liberalizing economy through public private partnership and hiring chief executives in those project companies through global competition and providing full authority to those executives are key behind achieving attractive progress," Limbu, who was also in the visit team, said.

Bangladesh had a similar entity like Nepal Electricity Authority involved in generation, transmission and distribution of energy until 2003. It also did not have regulatory body for the electricity sector.“

"Power sector reform is one of the key factors behind Bangladesh's sustained economic growth," added Limbu. 

Overall system loss in electricity supply stands at only 11 percent in Bangladesh compared to 40 percent 10 years ago. Nepal's system loss has hovered between 24 and 27 percent in the past eight years. Bangladesh installed capacity more than doubled to 12,725 MW in 2016 compared to 5,803 MW in 2009. 

Nepal has recently begun the process to unbundle NEA as part of the policy introduced in 2001.

The government has yet to start preparation to set up regulatory agency for the energy sector.

Bangladesh's population below poverty line is at around 23 percent compared to 82 percent in the 1970s. Similarly, its foreign currency reserve has swelled to US$ 30.15 billion in 2016 compared to $7.5 billion in 2009. It is expecting $31 billion in export income in 2016, compared to less than a billion dollars in 1976. 


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