BBIN: Inadequate infrastructure key deterrent to trade activities

The Financial Express, Dhaka, June 19, 2015
The concept of sub-regional trading bloc is not a new one. For the last two decades and more, different stakeholders in this region, to be precise South Asia, are looking up to sub-regional approach for enhanced connectivity and unimpeded flow of trade.

Sub-region generally indicates a kind of grouping of few small countries with a part or a territory of a big country or countries. A well cited example of sub-regional initiative is the Greater Mekong Sub-region. Five countries–Cambodia, Laos, Myanmar, Thailand and Vietnam, and Yunnan Province and Guangxi Zhuang Autonomous Region of China are members of the sub-region. All except Guangxi are situated on the Mekong river basin. Asian Development Bank (ADB) in 1992 formally initiated the Greater Mekong Sub-Regional approach.

In a similar vein, a South Asian sub-regional framework is also in the discussion for long. In 2001, ADB formally initiated the South Asian Sub-Regional Economic Cooperation (SASEC) Development programme. Bangladesh, Bhutan, India, Maldives, Nepal and Sri Lanka are members of this sub-region. It actually turned out to be a ‘SAARC minus Pakistan’ and lacked sub-regional characteristics in many ways. For instance, two island countries are there who couldn’t be connected through land or rail links. Again, the largest country of the region India is there, but not some of its provinces or states.

Forming a sub-regional platform comprising Bangladesh, Bhutan, Nepal and the north-eastern states of India has been in the air for long. Lots of discussions and seminars have taken place during last two decades on the subject. Finally, these four countries have agreed to directly link each other under the BBIN (Bangladesh-Bhutan-India-Nepal) framework. To make the sub-regional initiative visible and effective, the BBIN motor vehicle agreement (MVA) has been signed last week in the Bhutanese capital, Thimpu. Under the umbrella agreement, people of these countries will be able to move with their own vehicles across each other’s territories. Through this process, trade among these counties is likely to increase with high potential for integrated economic cooperation.

No doubt, India is the prime mover of BBIN. In 2013, then Indian government formally took the agenda of sub-regional bloc on board. In fact, improved relation with Bangladesh since 2009 helped India move with the BBIN agenda with relative ease than any time in the past. It is always easy for India to have Bhutan and Nepal on its side. But bilateral relationship with Bangladesh was not very smooth before 2009. Thus, Bangladesh considered SAARC (South Asian Association for Regional Cooperation) a better platform for trade and economic cooperation. India is, however, always sceptical about SAARC. Indo-Pak tension always cast dark shadows on SAARC and the South Asian regional initiative failed to bring desired results in the last three decades.

After Narendra Modi got elected as Prime Minister of India in 2014, India’s external policy seems to have assumed a more neighbour-friendly stance. This is clearly reflected in the quick move to make BBIN a reality. Pakistan’s refusal to sign the SAARC motor vehicle agreement (MVA) and the SAARC rail and power network deal at the SAARC summit in Kathmandu in November last year makes it easy for India to move with the BBIN. Had the SAARC road and rail linking deals been signed, then Pakistan and Afghanistan could have also come under the same arrangement in a far more extended form.

BBIN is expected to help land-locked Nepal and Bhutan to get access to Chittagong, Mongla and Kolkata sea ports. Bangladesh was always ready to provide transit facilities to Nepal and Bhutan but couldn’t do so due to India’s reservations. As the Nepalese and Bhutanese vehicles needed to pass through Indian territory to enter Bangladesh, India denied such access which is clearly non-compliant with the World Trade Organisation (WTO) principle. As per WTO principle, land-locked countries have full right to get transit facility in the second country to access a third country.

Bangladesh’s willingness to allow transits facilities to Nepal and Bhutan along with India was clearly reflected in the report prepared by a core-committee on transit. The committee, in 2011, recommended allowing transit to these three countries. In that sense, it is Bangladesh who actually pioneered for linking BBIN countries with one another.

The BBIN intra-region trade stood at US$24.3 billion in 2014 which was $ 5.78 billion a decade ago. India is the largest trading partner of Bangladesh, Bhutan and Nepal. Around 49 per cent of the SAARC intra-region trade is BBIN intra-region trade. The existing trade routes of BBIN are likely to be improved in line with implementing the MVA as lots of improvements in physical infrastructure are required.

One of the existing active trade routes in BBIN is Kathmandu-Karvitta /Panitanki-Phulbari/ Banglabandha-Hatikumrul-Dhaka. It is a 1448 km long road network thorough which bilateral trade between Bangladesh and Nepal takes place. India also uses this route for bilateral trade. In Nepal, its distance is 600 km, in India 54 km and in Bangladesh 498 km (up to Dhaka). If the route is considered up-to Chittagong port, total distance will be around 1700 km. Or, if the route is diverted from Banglabandha to Mongla, total distance will be 1329 km. Interestingly, SAARC regional multimodal transport study (SRMTS) has identified this route as SAARC Highway Corridor-4.

While trade route is there, inadequate infrastructure is the key deterrent to trade activities through out the route. A recent study by Consumer Unity and Trust Society (CUTS), an International research organisation based in Jaipur (India), shows that on the Bangladesh side, road conditions are satisfactory but there are deficiencies such as lack of warehousing and parking spaces. On the Nepal side, Kakarvitta land customs station is well equipped with warehousing, parking spaces and weighbridges, but there is no testing lab. On the India side, Panitanki land customs station is not well equipped as there is no sufficient parking space and warehousing facilities. No officials are permanently posted there to observe the customs formalities. The bridge connecting Panirtanki and Kakarvitta is narrow and congested. This scenario reflects the necessity of adequate infrastructure to make this trade route effective.

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