Bangladesh and the Asian Development Bank (ADB) on Monday signed an agreement for $400 million in loan for constructing the Dhaka-Sylhet highway to improve mobility, road safety, and regional trade in the proposed north-east economic corridor in the country.

The assistance is the first tranche of a $1.78 billion multi tranche financing facility approved by ADB on 27 August 2021 for the SASEC Dhaka–Sylhet Corridor Road Investment Project, according to a press release.

Economic Relations Division (ERD) Secretary Fatima Yasmin and ADB country director Manmohan Parkash signed the loan agreement on behalf of Bangladesh and ADB, respectively at a hotel.

The Dhaka–Sylhet corridor, once completed, will support a new trade route that connects Chattogram port with India’s north-eastern states through the three land ports of Akhaura, Sheola, and Tamabil, and onwards to Bhutan and Myanmar.

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The project is the main part of Road Corridor No. 5 under the South Asia Sub regional Economic Cooperation (SASEC) program.

Transport and trade facilitation are among the priorities of SASEC members, which since 2001, have invested more than $14.3 billion in projects in the region, including 43 transport projects worth $11.4 billion.

The SASEC Dhaka–Sylhet Corridor Road Investment Project will be delivered in four tranches.

The $400 million first tranche of the facility will help finance the initial works of the major contracts for the widening of about 210 kilometres (km) along the Dhaka–Sylhet corridor from a two-lane to a four-lane road, and add lanes for slow-moving vehicular traffic.

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It will include 60 km of footpath, 26 footbridges, and 13 overpasses. Its design will have features responsive to the needs of the elderly, women, children, and the differently abled, as well as disaster and climate risks.

The government will fund $911 million of the total project cost of $2.69 billion. ADB will also provide a $1 million technical assistance grant from its Technical Assistance Special Fund and an additional $2 million grant from the Japan Fund for Prosperous and Resilient Asia and the Pacific, financed by the Government of Japan, to support capacity building of the Roads and Highways Department on road safety and maintenance, climate change, and gender equality and social inclusion.

ADB Country Director Manmohan Parkash said that the Dhaka-Sylhet Road will open up opportunities for the entire north-east region of Bangladesh and act as a strategic corridor for subregional, regional and international trade.

“The region is well endowed, and the corridor, which is a part of the Asian Highway network, will connect upcoming economic zones in the Sylhet region, catalyse foreign direct investment, reduce transportation and trading costs, increase competitiveness, create employment, and stimulate economic development,” he said.

He also mentioned that it will connect ports and industrial hubs like Chattogram and Matarbari, and integrate the region with the rest of the economy.