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An Assignment on

Padma Bridge: WB’s views, government initiatives &good governance.

Prepared by Rabioul Aual Robel student of Dhaka University, dept. ofIR

1. Introduction: The Padma Bridge is a multipurpose road-rail bridge across the

Padma River to be constructed in Bangladesh. When completed it

will be the largest bridge in Bangladesh and the first fixed

river crossing for road traffic. It will connect Louhajong,

Munshiganj to Shariatpur and Madaripur, linking the south-west of

the country, to northern and eastern regions. The project will

include 6.15 km long and 21.10 m wide bridge, 15.1 km of approach

roads, toll plazas and service areas. The bridge will contribute

significantly towards facilitating the social, economic and

industrial development of this relatively underdeveloped region

with a population of over 30 million. The area of influence of

the direct benefit of the project is about 44,000 km2 or 29% of

the total area of Bangladesh. Therefore, the project is viewed as

very important infrastructure towards improving the

transportation network and regional economic development of the

country. The bridge has provisions for rail, gas, electric line

and fiber optic cable for future expansion. . In this term paper

I discussed the importance of Padma Bridge in Bangladesh context

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& also discuss the following questions for conducting my term

paper.

The central research questions are-

Why WB’s loan is important in Padma bridge project?

Why good governance fail in Padma bridge project?

What measures should be taken to revive WB’s loan policy ?

Figure 1: Padma Bridge.

2. Padma Bridge:

2.1 Location:

The Projected area is located in the south-central part

(Munshiganj, Shariatpur, and Madaripur Districts) of Bangladesh.

The left bank (north bank) on Mawa side is located in Lauhajang

upazila of Munshiganj District whereas the right bank (south bank)

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on Janjira side located in the Janjira upazila of Shariatpur

District and Shibchar upazila of Madaripur District.1

Alternatives for Project Location: Feasibility Study has identified

following four possible sites for the bridge construction and

recommended Site 3: Mawa – Janira as the preferred alignment but

their also other alternatives side & these are:

Site 1: Paturia – Goalundo

Site 2: Dohar – Charbhadrasan

Site 4: Chandpur – Bhedarganj

Figure: location of Padma Bridge.

2.2 Funding procedure:

1 Maunsell/AECOM New Zealand Limited,, “Padma Multipurpose Bridge Design Project”, Document Number: 60097044-REP-1C -00-SC-038 Rev1, June 30, 2010 , pp: 7, http://www2.adb.org/Documents/RRPs/.../35049-01-ban-oth-01.pdf.

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The total cost for construction of Padma Bridge has estimated US$

2.9 billion. The total cost is provided by:

The world bank-$1200 million

Asian development bank(ADB)-615 million

Japan international cooperation agency(JICA)-415 million

Islamic development bank(IDB)-140 million

Bangladesh government-50 million

The government also signed another $14.84 million agreement with

the IDB for the implementation of the water-supply and sanitation

project in cyclone-prone coastal areas, and Abu Dhabi Development

Group $30 million.

WB ADB JICA IDB BD govt0

200

400

600

800

1000

1200

1400

1200

515 415140 50

Series 3

Figure: Donor's contributions in Padma Bridge (USD)

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2.3 Construction:

One of the manifestations of present government (Awami league) is

to construct Padma Bridge. The Bridge will provide a vital

missing link in the national road network of Bangladesh,

particularly for the southwest part of the country. The bridge is

designed to be an approximately 6.15 km long fixed crossing

double deck composite steel truss bridge over the Padma river

with provisions for four lane highway on the upper deck, and a

rail line, gas pipeline, optic fiber cable and power transmission

lines on the lower deck. August 20, 2007: An ECNEC meeting headed

by Fakhruddin approves thr Padma bridge project with a cost

estimation of taka 10161 crore but in january11, 2011 ECNEC

revised the project & approve take 20507 crore for crore for the

project. Awami league government wanted to begin the project in

2011 but it is stopped because of cancellation WB’s of 1.2

billion loan (The WB had cancelled its $1.2 billion credit for

the Padma bridge project on June 29). In 25 sept 2012 WB revised

its policy & gives conditions to get loan. Government approves

these conditions & hopes that Padma Bridge will start on April-

may 2013. 2

2 Probir Bidhan, “The WB, Padma bridge & Abul Hossain”, ebangladesh desk, July 26, ,2012 http:// www.ebangladesh.com/.../timeline-the-wb-padma-bridge

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3. Padma Bridge & WB:

3.1 WB’s contribution:

The World Bank is established to provide loan to developing

countries at lower interest rate. WB mainly gives loan to reduce

poverty & infrastructural development. From our independence WB

is part & parcel of our development process. It gives loan to our

infrastructural development it had contributed to construct

Jamuna Bridge & also wants to contribute Padma Bridge. In Padma

bridge project (February 2011) The WB board approves the $1.2

billion financing out of a total cost of $2.9 billion. It

contributes half of the total project at a lower interest rate.

The World Bank was supposed to provide $1.2 billion at an

interest rate of 0.75 percent to be repaid in 40 years with a 10

year grace period. If the normal loan amortization schedule

applied, the government would have had to pay $249 million in

interest in 40 years. This interest is very low in contrast to

other proposal. For this WB’s contribution is very important.

3.2 WB’s conditions:

Early June 2012 in a letter to Prime Minister Sheikh Hasina, WB

Vice President Isabel Guerrer gives the government “five

conditions” to take to get WB funding for the massive project.

The conditions are:

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A high-powered investigation team has to be formed to

probe the corruption allegations in the project.

An independent firm has to be appointed to monitor

implementation of the project.

The independent firm will not be under the government or

any co-financier of the bridge project. It will make its

recommendations independently, and the authorities

concerned will implement those. The persons against whom

there are allegations of corruption regarding the bridge

project would not be in its implementation.

The co-financiers will have to be actively involved in the

procurement process for the bridge.

As a long term step, the government will take initiative

to increase the capacity of the ACC.3

3.3 WB’s policy about Padma Bridge:

Because of corruption WB adopted structural adjustment policy in

1980. Under this policy WB raised strong policy against

corruption. Under this policy in February 2011, The WB board

approves the $1.2 billion financing out of a total cost of $2.9

billion. But WB cancelled its loan because of corruption. In

September 21, 2011: The WB sends a letter to the finance

minister alleging that then the communications minister Syed Abul

Hossain and high officials of SAHCO had pressed for the

3 Probir Bidhan, ,“The WB, Padma bridge & Abul Hossain”, ebangladesh desk,june12,2012, http:// www.ebangladesh.com/.../timeline-the-wb-padma-bridge.

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appointment of SAHCO as a “commission agent” regarding the

selection of contractors’ pre-qualification for the main bridge’s

construction. The lender also suspends financing. WB request RCMP

to investigate against SNC –lavalin & by investigation they see

the presence of corruption in this project. After that a long

time bargaining WB decides to re-engage in this project & gives

strict policies & tells to the govt to implement these policies.

Policies are-

to place all public officials suspected of involvement in thecorruption scheme on leave from government employment until aninvestigation is complete;

to appoint a special inquiry and prosecution team within the

ACC to handle the investigation; and

To grant access to all investigative information to an external

panel of internationally recognized experts who will advise the

Bank and co-financiers on the credibility of the government’s

investigations.

4. World Bank & Bangladesh government:

4.1 WB-Bangladesh Relations:

Bangladesh has been maintaining a congenial relationship with the

World Bank (WB) for more than 40 years as this institution started

financing different development programmes in this region even before

the emergence of Bangladesh. Bangladesh became a member of the World

Bank in 1972 and till June 2012, it received US$ 16.80 billion as

financial assistance from the Bank. Bangladesh received US$ 3.10

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billion from the Bank in FY 2011 which was the highest quantum of

assistance for any particular year. Currently, the World Bank is

financing 41 projects/programs worth US$ 4.23 billion. These

projects/programmes are at various stages of implementation.

Bangladesh also received commitments for US$ 1.55 billion from the

World Bank in FY2012. In fact, the World Bank is the largest financier

among the development partners. In this long journey with the World

Bank, the government had differences of opinion, but, eventually it

found the Bank a progressive and close associate. At times, the World

Bank did not approve procurement or expenditure proposals for

different projects and also decreased or increased their level of

assistance to different projects. The cancellation of the loan may

have some long term impact on relations between Bangladesh and the

World Bank.4

4.2 Why Bangladesh government urge to World Bank?

This is important to question that why Bangladesh government urge

to WB, as WB is doing more harm than good for the developing

countries? Bangladesh, a developing country, is always choice WB

for infrastructural development. Bangladesh takes support from WB

because the World Bank has been Bangladesh’s development partner

since our independence. It provides a major part of funds for our

annual development programs. Most of our major development

4 AKM Moinuddin, , “Padma Bridge: A shattered dream?”, Dhaka courier, Vol 29,

26 October2012 ,http:// http://www.dhakacourier.com.bd

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projects carried out in last forty years was spearheaded by the

bank.

The financial assistance that comes from the World Bank is

actually funded by the international development agency (IDA),

the low-cost financing arm of the World Bank group. The financial

assistance, called credit, bears on interest & is repayable over

30-40 years. Each credit has a small commitment fee. IDA credits

are available to low-income countries of the world. Bangladesh is

among fifty or low-income countries that currently receive this

type of assistance. The World Bank assistance for Padma Bridge

was also a noninterest credit (.75%) for $1.2 billion. A major

fallout of this cancellation is that we have to seek an

alternative source, but at a higher cost. If we could get the

loans from the donors, the country would have had to pay $505

million. But if we have to get commercial loans, the interest

amount would be $ 4.4 billion. This is why Bangladesh government

is always urging to WB loans.

4.3 Bangladesh government policy about Padma Bridge project:

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The present government’s electoral pledge embodied in a vision of

Bangladesh is to achieve the status of middle income country. One

of the five strategic components of the government’s election

manifesto was a very uncompromising stance against corruption.

Present government’s one most committeemen is to begin the Padma

bridge project. The government want start its construction in

2011 but it is stopped because of cancellation WB’s loan. WB

cancels its loan because of corruption. The World Bank has

credible evidence corroborated by a variety of sources which

points to a high-level corruption conspiracy among Bangladeshi

government officials, SNC Lavalin executives, and private

individuals in connection with the Padma Multipurpose Bridge

Project. As present government’s most important manifestation is

to stand against corruption, so government must have clear cut

policy about Padma bridge project & the policies are-

Uncompromising stance against corruption backed by over a

dozen specific pledges to build capacity to control this

menace.

As WB told about corruption so the government should form

trusty board to investigate corruption.

To conduct of a full and fair investigation into evidence

of corruption.

As the bridge has the potential to accelerate growth and

transform lives in Southwest Bangladesh and across the

nation. So government must not give interest of many to

protect the interest of few.

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The WB for its part allowed itself to take a controversial

decision and miss the opportunity to continue to engage

with the government to assist the investigation process,

and keep the credit open parallel with the investigation

process.

Implement all conditions given by WB & work together with

WB.

Assures to give all types of facilities to ACC commission

independently to investigate corruption.

Provide all kinds of facilities to WB team.

Bangladesh government should revive its policies as soon as

possible because WB revives its loan policy but they do not

assure to grant loan. Grant of loan mainly depends on the

positive report of the WB investigation team. WB investigation

work with the Anti-Corruption Commission (ACC) so it is needed to

give independence of ACC to work freely together with WB team &

government should provide all facilities for positive report.

5. Padma Bridge & Bangladesh government:

5.1 Padma Bridge & domestic politics:

Politics of Bangladesh takes place in a framework of

a parliamentary representative democratic republic system whereby

different type’s political parties. But the scenario of domestic

politics in Bangladesh is not so good. There is lack of trust

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among the different parties. Since our independence to present

time there is no example where the ruling party & opposite party

works together in any crisis situation. This is one of the most

barriers of all types of development. In present time the issues

like Tipaimukh dam, Tista water sharing, Padma Bridge etc the

ruling party & opposite party stand against each other. This is

the real (negative) scenario of domestic’s politics in

Bangladesh. For this attitude (negative attitude) the country has

to pay unimaginable prices.

In present domestic politics the most talkative issue is the

cancellation of WB’s $1.2billion Padma bridge loan. Politics with

the planned Padma Bridge is now live in Bangladesh. Equations in

politics that the planned bridge has generated are complex,

multi-dimensional, and bear deeper implications in more than one

level. This dispute has transcended from a socio economic

investment to political issue. In this issue the leaders of both

political parties start to talk is such a way that they think the

citizens’ are too naïve & can easily be led believing anything

they say.

The ruling party politician are now blaring the slogans that the

World Bank did not insult not only the government but also the

160 million people of Bangladesh. Without understanding the real

scenario, the ruling party leaders started saying that the

government constructs this bridge with their own finance (ADP

budget). The government has announced that the Padma bridge will

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cost Tk 23,000 crore over 4 years. This year's budget forecasts

show that the total Annual Development Program (ADP) budget for

the next 4 years is expected to be more than Tk 300,000 crore. In

other words, the Padma Bridge will cost about 8% of the ADP

budget. ADP financing of the bridge will make it relatively

expensive because our ADP budgets are mostly financed through

direct government borrowing from the banking sector at interest

rates of up to 11-12%. It will definitely be more expensive than

the 0.75% concessional interest rate that the WB was offering on

its loan. They are saying this to recover their image to the

citizen. They do not think that the corruption is possible in

this project.

The opposition party, BNP, has tactical advantage in this issue.

They can pressurize the government to find out the corrupted

person but without considering the welfare of the country they

use this issue for their party benefits. They directly are saying

that this government is totally corrupted. We were better than

that of the present government. On Saturday, BNP Chairperson

Khaleda Zia alleged that Prime Minister Sheikh Hasina was

involved in corruption of the much-talked-about Padma Bridge

project. “The Padma Bridge couldn’t be built due to corruption of

the Prime Minister and her government.” She branded the present

tenure of the government as an ‘internationally-recognised

corrupt regime’. One of the opposite leader said that “The Prime

Minister knew who were involved in corruption in the Padma bridge

project. She had not taken any action in this regard. But, now

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she is giving her cell phone numbers and e-mail address to the

citizens. Corruption cannot be buried with such silly tactics”.

This is not right the opposite leaders should analyses the real

situation& gives the constructive advice to the government.5

5.2 WB’s views about Bangladesh domestic politics:

The world bank which giving loan to developing countries doing

more harm than good. They have intentions to control domestic

politics of loan receiving countries. If domestic politics in a

country is strong then WB can’t control this country’s policies.

So when they approves loan of a project, they also gives terms &

conditions of using this loan. WB’s view about Bangladesh

domestic politics is negative. They think that there have lack

accountability, transparency & trust among the political parties.

WB use this chance to show himself as an actor maintain what

polices the government should be taken. Corruption is remaining

in the entire project which is donated by World Bank. In all the

time the ruling government can’t any initiatives to minimize the

corruption. Under structural adjustment policy WB adopted strong

voice against corruption in late 80s.before 80s Bangladesh

governments receive a lot of loan they can’t used these properly

because of corruption. But now WB is strong against corruption

for this they cancel $1.2 billion loans because of corruption.

From the beginning, the World Bank classified its investment in

Bangladesh has “high risk” and expressed concern over a “weak5Farooque Chowdhury, “Bangladesh: Politics With Padma Bridge”,Countercurrents.org,23 July 2012,http:// http://www.countercurrents.org

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governance environment.” As such, the project entailed numerous

measures to prevent corruption in its Governance and

Accountability Action Plan. WB’s perception about Bangladesh

domestic politics of that it is fully corrupted country & there

is no strong mechanism to raised voice against corruption.

Accountability conception is limited, high officials, political

leaders, are not accountable for their activities.

6. Padma Bridge & good governance:

6.1 Peoples’ hope:

The Padma Bridge will be built to provide road and rail links

between the relatively less developed Southwest region (SWR) of

the country and the more-developed eastern half that includes the

capital of Dhaka and the port city of Chittagong. Furthermore,

because of its location in the South West region of Bangladesh,

Padma Bridge is expected to have larger impacts on this regions

compared to the other parts of Bangladesh. By facilitating

transportation across the river, the bridge is expected to lead

to a greater integration of regional markets within the

Bangladeshi national economy. Given the interdependence of

economic activities/sectors, the direct impacts of the Padma

Bridge on individual sectors and factor markets are likely to

induce a chain of changes in the rest of the sectors of the

economy. It is expected that the Padma Bridge will have the most

significant economic and poverty impacts in Khulna and Barisal

Divisions. At least 30 million people, almost one-fifth of the

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country’s total population, will directly benefit from the

bridge, according to a study by the World Bank. At the same time,

it is expected to raise Bangladesh’s GDP by 1.2%, pushing it over

7% and thus, enabling it to become a middle-income country by

World Bank standards, with over $1,000 per capita income by 2020.

But the construction of Padma Bridge is canceled because of high

level officials’ corruption. Peoples’ always hope that the

present government will start this project. To begin this project

government must be punished corrupted person & ensure the donor

agencies that present government is against corruption. WB

cancels its approved loan ($1.2billion) by saying that corruption

is remaining in this project. Without WB’s loan it is difficult

(not impossible) to construct Padma bridge. If finally WB cancels

this loan project then the other donor agencies will not provide

loan in this project. So people’s perception is that the

government should communicate the high officials of WB to

reconsider this project & also fulfill the conditions of WB.

Peoples think that if we consider receiving loan others than we

have to pay commercial interest of the loan which will affect our

national economy (more like national GDP) & WB’s loan is more

like noninterest (0.75%) duration to pay is long. So peoples’

perception is that at any cost government should agree WB to

reengage in this project.6

6 Selim Raihan & Bazlul Haque Khondker, , Estimating the Economic Impacts of thePadma Bridge in Bangladesh, November, 2010,http:// mpra.ub.uni-muenchen.de/37904/1/MPRA_paper_37904.pd

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Figure 2: Dreamy Bridge for the people of bangladesh

6.2 Why good governance fails:

In the 1992 report entitled “Governance and Development”, the

World Bank set out its definition of good governance. This term

is defined as “the manner in which power is exercised in the

management of a country’s economic and social resources for

development”. The World Bank identified three distinct aspects of

governance:

The form of the political regime;

The process by which authority is exercised in the

management of a country’s economic and social resources for

development;

The capacity of governments to design, formulate and

implement policies and discharge functions.

But governance in Bangladesh is very weak. There is no effective

mechanism to ensure good governance from top to bottom. The basic

characteristics of good governance (accountability, transparency,

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rule of law etc) are limited in our administrative system.

Because of limited good governance corruption is possible.

Entire nation has to suffer for the actions of just a few. The

cancellation of the $1.2 billion credit for the Padma Bridge

project will have an adverse effect on the Bangladesh economy for

years to come. But the ruling government consistently are saying

that there no corruption in Padma bridge project without

inquiring the real situation. Bangladesh has been at, or near,

the bottom of a number of accountability, transparency and

corruption indices over the last decade. Corruption is one of the

leading obstacles to political, economic and social development.

On top of endemic corruption, the rule of law is weak, and there

is limited bureaucratic transparency. It has undermined the rule

of law and has weakened the institutional basis for good

governance.

Good governance fails because the ruling government is not

willing to strong the mechanism of the characteristics of good

governance but good governance is preconditions for all kinds of

development. If the ruling government took measures at initial

stage of WB’s claim then there is to solve this uncertain

situation. Good governance fails mainly the unwillingness of the

government to raise voice against corruptions.

7. Experts’ views: From beginning to present experts’ express very important

analysis about Padma bridge issues. When WB cancel their approved

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loan because the corruption then the experts gives advice to

government what the government should do in this crisis

situation.

Executive director of transparency international Iftekharuzzaman

said that, “the present government's electoral pledge embodied in

a vision of Bangladesh to achieve the status of a middle-income

country. One of the five top strategic components of the

government's election manifesto was a very uncompromising stance

against corruption. The government should proceed fast to set up

a fully independent special judicial committee of highest

possible credibility to investigate into the allegations of

corruption. The proposed committee should be bestowed with full

powers, independence and technical support to investigate into

the matter and recommend action in accord with the relevant laws

within a specific deadline. While an investigation on alleged

corruption continues in Bangladesh and Canada, to which WB should

provide full support, it should review the decision and find ways

to provide the credit by sharing the responsibility as a key

fiduciary agent of the project to ensure integrity, transparency

and accountability in the implementation process.”

Chairman of Palli Karma-Sahayak Foundation (PKSF) Dr Qazi

Kholiquzzaman Ahmed, said, "I hail the Prime Minister for

deciding to build the Padma Bridge with our own fund, if needed."

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"The cancellation of the WB contract has opened up an opportunity

for us. Now we can assess our strength as a nation and stretch

our ability,"

Ziauddin choudhury said that, “The World Bank may have canceled

the IDA Credit because it thinks this is the best way to respond

to our seeming unresponsiveness. But the door need not be closed

forever, if we realize that for the greater good of the country

and our people we have to take some bold and corrective steps. A

nation's interest is much more precious and our people's future

is much more important than preserving the interests of an

individual or a few people. I do believe that the government will

take steps to reopen the dialogue with the World Bank. The Bank

remains and should remain our development partner.”

Civil servant A Ahmed said that, “we have to reopen our dialogue

with the World Bank & this time with members who enjoy confidence

of the people & have a reputation of integrity, impartiality, &

negotiating expertise. The Padma Bridge is a national issue for

Bangladesh & must be above politics. The leader of opposition

should stand by the prime minister on this issue.”7

8. Recommendations: 7 Iftekharuzzaman, Ziauddin choudhury & A Ahmed, ,”special feature: Padma bridge”, Economic observer,Vol23, july2012 ,pp:11-20.

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In present, the most important infrastructural development in our

country is to construct Padma Bridge. The ruling government has

taken initiatives but it is stopped because of uncertainty

between government & the World Bank (donor agency). The World

Bank cancels its loan (1.2 billion) because of corruption. As it

is the manifesto of ruling government to build Padma Bridge so

the government should communicate WB to revive its loan policy.

To reengage WB’s loan policy should take the following measures

(this is mainly my own conception)-

The government should resolve all disputes with the donor

agencies and manage aid coordination in an atmosphere of

mutual trust and respect.

The government to set up a fully independent special

judicial committee to investigate the allegations of

corruption and ensure exemplary punishment to those found

guilty.

The government should raise its voice against corruption.

The government should take corruption into consideration &

formed a trusted committee to investigate corruption.

The government needed to strengthen its procurement system.

The government should be taken initiatives measures to

strengthen the characteristics of good governance.

Government should be punished those person who is engaged in

corruption.

Government should be granted the conditions of the World

Bank & take effective measures to fulfill these conditions.

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Government should strengthen anti corruption commission

(ACC) to investigate independently.

The government should provide all support to the WB team.

Both ruling party & opposite party should not use this issue

for their party interest rather they should consider it as

national issue & work together to solve this problem.

The overall recommendation for government is that at any

cost the government should start Padma bridge project.

9. Conclusion: Construction of Padma Bridge is expected to generate welfare to

the people of Bangladeshi general and the people of South West in

particular. The benefits are expected to arise from the greater

integration of regional markets within the Bangladeshi national

economy. If it is constructed it will be the largest (6.15)

bridge in our country. It will directly impact the national GDP

(1.2%) of our country. In such project the government should not

compromise against corruption. The government should cooperate

with WB to find out corruption & to revive its loan policy. My

concern is that this issue should be above from dirty domestic

politics. Here in this issue the ruling & opposites should work

together.

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