Prime Minister Sheikh Hasina on October 7, 2023, initiated the soft launch of the third terminal of Hazrat Shahjalal International Airport (HSIA) to address the increasing demand in aviation, enhance airport capacity, boost accessibility, and strengthen security, thereby making a substantial contribution to the economic growth of Bangladesh.
In line with Bangladesh’s persistent development, Japan funded the third terminal of the Dhaka Airport development project. In this context, in-depth talks between the Japanese consortium and airport authorities underscore Japan’s dedication to advancing Bangladesh’s development through this strategic partnership, with the shared goal of achieving mutual prosperity. Since the country’s independence, Japan, as the foremost bilateral development partner, has consistently offered support for the socio-economic progress of Bangladesh.
On December 25, 2023, Bangladesh signed a $540 million loan agreement with the Japan International Cooperation Agency (JICA) to fund the expansion of Hazrat Shahjalal International Airport’s third terminal, a cargo terminal, and associated facilities. The loan, equivalent to approximately BDT 5,600 crore, will support the HSIA Expansion Project, including the construction of a new passenger terminal building, a cargo complex, and multi-level car parking. The fund is the third tranche of Japanese loans for the airport expansion project.
The project aims to meet the growing demand for air and cargo traffic, improve airport access, enhance passenger terminal convenience, and strengthen security measures. The loan has an interest rate of 1.30 percent and a 20-year repayment period after a 10-year grace period. The expansion is seen as a significant step in redefining Bangladesh’s aviation capabilities and fostering economic growth and regional connectivity.
Japan Boosts Airport Expansion
Japan is set to allocate a third installment of 76,635 million yen, equivalent to about $540 million, for the completion of the third terminal at Hazrat Shahjalal International Airport, which is already 90 percent complete. This brings the total Japanese loan for the project to 324,191 million yen, approximately $2.21 billion. The third tranche of funds has been secured as part of the 44th official Development Assistance (ODA), and the signing ceremony for the deal took place at the NEC-2 Conference Room on Sunday. The ‘Exchange of Notes’ and ‘Loan Agreement’ were formalized under the ODA.
Md Shahriar Kader Siddiky, Secretary of the Economic Relations Division, and IWAMA Kiminori, the Japanese Ambassador to Bangladesh, signed the Exchange of Notes on behalf of their respective sides. Meanwhile, the ‘Loan Agreement’ was signed by HIROSHI Yoshida, Senior Representative of the Japan International Cooperation Agency Bangladesh Office, and the ERD secretary. Since the project’s initiation, the first round received 30,000 million yen, and the second round received 217,556 million yen.
According to a press release from the Japanese Embassy, the funds will be utilized for the construction of the HSIA 3rd International Passenger Terminal, a Cargo Terminal, and associated facilities. The Exchange of Notes outlines the terms of the loan, including an interest rate of 1.30 percent per annum for the Hazrat Shahjalal International Airport Expansion Project. Payments to consultants are set at 0.2 percent per annum, with a loan repayment period of 20 years after a 10-year grace period.
Japanese loans and grants have played a crucial role in various development projects spanning power, roads, bridges, telecommunication, agriculture, health, education, water supply and sanitation, rural development, environment, and human resource development. The ODA commitment has now surpassed $31.84 billion.
The Third terminal of Hazrat Shahjalal International Airport
The extensive makeover of Hazrat Shahjalal International Airport’s Terminal 3 is more than just a cosmetic upgrade. This ambitious project, initiated in December 2019 at a staggering cost of Tk 21,300 crore, sees the Japan International Cooperation Agency funding Tk 15,000 crore, with the government covering the remaining expenses. Encompassing a vast area of 542,000 square meters, the third terminal impressively spans 230,000 square meters, featuring 115 check-in counters, 66 departure immigration desks, 59 arrival immigration counters, and 3 VIP immigration desks.
As per the project proposal, the implementation timeline stretches from July 2016 to June 2025. By November 2023, the physical progress stood at 90 percent, while the financial progress reached an impressive 66 percent. JICA’s substantial contribution to the total project cost of Tk 213.99 billion amounts to Tk 161.41 billion.
Impacts of The Third terminal
Boost to Tourism Industry:
The 3rd terminal of Dhaka Hazrat Shahjalal International Airport serves as a gateway to the vibrant culture and diverse landscapes of Bangladesh. Increased passenger capacity allows for more international flights, attracting tourists and boosting the country’s tourism industry.
Job Creation and Economic Growth:
The construction and operation of the terminal have generated employment opportunities, from skilled labor during construction to service jobs within the airport. The influx of travelers and cargo through the expanded terminal contributes to economic growth by stimulating various sectors such as hospitality, transportation, and retail.
Enhanced Trade and Commerce:
With improved infrastructure and increased cargo-handling capacity, the 3rd terminal facilitates smoother import and export operations. Businesses benefit from faster and more efficient transportation of goods, fostering international trade relations and positioning Dhaka as a key player in the global market.
The upgraded airport signals a commitment to modernizing infrastructure, making Bangladesh more attractive to foreign investors. Improved connectivity encourages international companies to establish a presence in Dhaka, leading to the creation of joint ventures and partnerships.
Increased Airline Operations:
The 3rd terminal accommodates more airlines, providing them with the opportunity to expand their operations in and out of Dhaka. This not only enhances the city’s connectivity with the rest of the world but also stimulates competition, potentially leading to more affordable air travel options.
The expansion of the airport contributes to increased revenue for the government through various channels such as taxes, fees, and charges on airport services. The funds generated can be reinvested in further infrastructure development, creating a positive cycle of growth.
Improved Passenger Experience:
State-of-the-art facilities and expanded lounges in the new terminal enhance the overall passenger experience, making Dhaka Hazrat Shahjalal International Airport more competitive on the global stage. A positive passenger experience can lead to repeat visits and positive word-of-mouth promotion, further boosting tourism.
The initiation and funding of Hazrat Shahjalal International Airport’s third terminal exemplify the strong partnership between Bangladesh and Japan. The signing of a $540 million loan agreement underscores Japan’s commitment to advancing Bangladesh’s development. The project’s far-reaching impacts highlight its pivotal role in fostering economic growth and regional connectivity. The collaboration symbolizes a shared vision for mutual prosperity and further solidifies Japan’s crucial role as a bilateral development partner in Bangladesh’s ongoing journey of socio-economic progress.