|Project Rationale and Linkage to Country/Regional Strategy
Urbanization and municipal services. Bangladesh has experienced increased urbanization since independence in 1972. The population growth in urban areas has been high at 6% per annum since independence, compared with total population growth at 2% per annum. Rapid urbanization has created growing demand for urban infrastructure and services. The development of urban infrastructure has not kept pace with rapid urbanization, causing an acute shortage in every urban service. Piped water is available in only one third of pourashavas (secondary towns), typically only for 2_4 hours per day. No urban areas have sewerage, with the exception of a very limited system in Dhaka. Drainage is underdeveloped and poorly maintained. During monsoon rains, roads and pathways become flooded, causing severe traffic congestion and risks to public health. As roads and bridges have insufficient capacity to meet growing traffic volume, traffic jams in city centers limit access to economic opportunities and social services. Rapid urbanization is largely attributed to immigration from rural areas. Immigrants compete for limited employment opportunities, and tend to be in low income group settling in urban slums without access to basic services.
Clustered cities. Through the urbanization, large cities and surrounding secondary towns have been agglomerating with close economic and social linkages, forming city regions. Industrial clusters are emerging in agglomerated cities, which have been a driving force of the national economic growth. The contribution of urban areas to the national gross domestic product grew from 26% in 1973 to 42% in 1999. However, lack of long-term vision, strategic planning and coordination among various public entities has been preventing the city regions from materializing their full economic growth potential. Capital investments have been often selected to meet supply-demand gaps, rather than to promote competitive industries based on strategic assessment of development potentials.
Competitiveness. Despite of recent expansion of certain industries such as readymade garment, Bangladesh is lagging behind in enhancing its competitiveness and promoting private sector activities. For example, Bangladesh is ranked 110th among 180 countries in the WB_s Doing Business Indicator in 2008. In particular, Bangladesh is one of the worst countries in terms of registering property and enforcing the contract. UNCTAD_s Word Investment Report showed that Bangladesh have not managed to attract foreign investment. Bangladesh is ranked 121st among 141 countries in the inward FDI performance index in 2007.
Flagship Study. In this view, ADB launched a flagship study _Inclusive Growth and Good Governance for Clustered Cities Development: Innovative interventions in South Asia_, under the second package of RETA 6337: Development Partnership Program for South Asia (the RETA). Roundtable discussions were held in 2008 with key stakeholders, who positively reacted to the new approach to the urban development in Bangladesh. The proposed PPTA will be built upon the conceptual framework to be developed under the RETA, and make a concrete program for capital investments and institutional developments to be funded under the ensuing City Region Development Project.
A city region comprises a large metropolitan city (City Corporation such as Dhaka, Chittagong and Khulna), secondary towns (Pourashavas) clustered nearby and adjacent areas. Intermediate results of the RETA showed that Dhaka is most competitive among the major cities in Bangladesh. Based on the final results of the ongoing RETA 6337 and initial assessments under the proposed PPTA, exact geographical coverage will be determined for the detailed studies in the project proposal and the ensuing Project.
Climate change impacts. Given that Bangladesh is one of the most vulnerable countries to climate change impacts, a PATA-BAN: Strengthening Resilience of Water Sector to Climate Change in Khulna (the PATA) is being prepared to assess the potential impacts and explore measures to adapt to and/or mitigate the impacts. The PPTA will be conducted with close collaboration with the PATA and incorporate the results in designing the ensuing Project.
Country Operations Business Plan (2009-2011) for Bangladesh lists the PPTA among the 2008 pipelines for non-lending products, and the ensuing project among the 2010 pipelines for lending products. Municipalities and other concerned agencies do not have sufficient capacity to formulate the detailed programs for the Project, and hence require ADB's support thought the PPTA.