The promises and pitfalls of port reform in Bangladesh
The government’s push for private participation at Chattogram Port signals a break from decades of public service management—but questions remain over transparency, labour rights, and financial stability
Bangladesh's recent move to bring in foreign private operators to manage terminals at Chattogram Port has ignited a national debate. Supporters hail it as a long-overdue step towards global competitiveness and operational efficiency.
Critics, however, warn of serious risks, including the potential loss of public revenue, job displacement, and weakened national control over strategic infrastructure.
To evaluate the implications of this reform, it is helpful to analyse it through the lens of port governance models outlined in the World Bank's Port Reform Toolkit, specifically the Public Service Port, Tool Port, and Landlord Port models. (Though two other models—corporatised and fully privatised—also exist, they are not central to the current policy context.)
For decades, Bangladesh's ports have largely operated under the Public Service Port model. In this system, the Chittagong Port Authority (CPA), a public body, is responsible for both infrastructure development and cargo-handling operations.
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While this model offers clear lines of authority and control, it suffers from major drawbacks. It allows limited or no role for the private sector, leading to operational inefficiencies, bureaucratic delays, and a lack of innovation. The heavy reliance on government funding, political interference, and absence of competitive pressure have also contributed to underinvestment and wasteful resource use.
This status quo has become increasingly unsustainable. Despite being the country's primary maritime gateway, Chattogram Port faces severe congestion, outdated equipment, and slow cargo clearance processes. Exporters and logistics firms have consistently called for reform.
In response, the government has proposed leasing out terminals, most notably the New Mooring Container Terminal (NCT), to foreign private operators to attract investment, introduce advanced technology, and improve efficiency. However, this reform risks transitioning the port into a mix of the Tool Port and Landlord Port models, each with its own set of challenges.
Under a Tool Port model, the public authority retains ownership and control over infrastructure and major equipment, while private firms are contracted to handle cargo operations.
On paper, this may seem like a balanced compromise between public oversight and private efficiency.
In practice, however, it often leads to fragmented responsibilities and blurred lines of accountability. Operational overlaps between public and private entities can create conflict and inefficiency.
Furthermore, private operators in this model tend to act more as labour suppliers rather than fully integrated logistics companies, discouraging long-term investment. In Bangladesh, Saif Powertec currently operates under a Tool Port model through a management contract—an arrangement that has sparked concerns about stability, expansion, and operator capacity.
Many experts argue that a move towards the Landlord Port model would provide a more sustainable and effective path forward. In this setup, the port authority retains ownership of land and core infrastructure but leases terminals to private operators who are responsible for investing in equipment and running daily operations.
This model promotes efficiency, responsiveness to market demands, and long-term investment. Operators working under long-term concessions are incentivised to innovate and improve service quality.
Nonetheless, the Landlord model is not without risks. Poorly regulated competition among terminal operators can lead to overcapacity or misaligned infrastructure development. In the case of Bangladesh, concerns have already emerged about the lack of transparency in the proposed leasing of NCT to a foreign company, reportedly without an open and competitive bidding process. A recent High Court ruling questioned the legality of such decisions, particularly when made by the transitional government.
Public scepticism has also been fuelled by the recent performance of the Patenga Container Terminal (PCT), which was handed over to a Saudi operator earlier this year. Despite initial promises of major investment and operational efficiency, the terminal has so far operated at just 12% of its projected capacity. This underperformance highlights the potential pitfalls of foreign-led operations, especially in the absence of strict oversight and enforceable contractual obligations.
Labour unions and worker organisations have also expressed deep concern. Under the Public Service model, the port authority serves as the main employer. Shifting to private operators, especially foreign ones, raises fears of job losses, automation-driven redundancies, and reduced labour protections. Without a clear transition plan and strong legal safeguards, the social costs of reform could outweigh its intended economic benefits.
A major financial concern centres on revenue. The NCT is already a highly profitable terminal. According to CPA records, it generated Tk 1,216 crore in revenue in FY2022–23, with a net income of Tk574 crore after expenditures. Ceding control of such an asset to a foreign entity risks diverting public income into private hands and undermining the state's financial stability.
Looking ahead, the government must clarify which governance model it intends to adopt. A fragmented or hybrid approach mixing elements of the Public Service, Tool, and Landlord models could lead to administrative confusion and underperformance. A deliberate, transparent shift to a Landlord Port model is likely the most balanced solution, provided it is accompanied by robust regulation, open tendering, transparent contracts, and an independent port regulator to ensure accountability and fairness.
Importantly, reforms should begin with greenfield projects such as the under-construction Bay Terminal, Payra Port, or the underutilised Mongla Port instead of profitable, already-functioning terminals like NCT. This approach allows for experimentation and private sector participation without disrupting current revenue flows or labour structures.
In conclusion, port reform in Bangladesh is not simply a question of public versus private; it is a question of choosing the right governance framework. By drawing on international best practices and applying them thoughtfully within its own economic and political context, Bangladesh can modernise its port sector while safeguarding the public interest.
If executed well, a shift from the Public Service model to a well-regulated Landlord model could unlock enormous potential. If mishandled, however, the reform could jeopardise national revenue, destabilise labour markets, and erode public trust in infrastructure development.
Mostafa Shaheen, a former mariner, is a faculty of port and shipping management at Bangladesh Maritime University. Email: shaheen.psm@bmu.edu.bd
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.
