The idea of sub-regional cooperation was pitched during the 18th SAARC Summit in Kathmandu in November 2014, when Pakistan signed the Agreement for Energy Cooperation under the SAARC framework. But it didn't commit to two other equally important agreements—SAARC Motor Vehicles Agreement and SAARC Regional Railways Agreement.Since then, four South Asian countries—Bangladesh, Bhutan, India and Nepal (BBIN)—have been trying to give concrete shape to the idea of seamless cross-border movement of people, goods, and vehicles at least at sub-regional level. Accordingly, transport ministers of BBIN signed Motor Vehicles Agreement (MVA) at Thimpu, Bhutan in June.
Even in the past, Foreign Secretaries of BBIN had mooted a similar idea for sub-regional economic cooperation for greater movement of people and goods under "Growth Quadrangle," which was endorsed by SAARC Heads of State/Government at the Male Summit in 1997. But the idea could not take shape due to inadequate initiative of member countries in the sub-region. However, this time the MVA has gained momentum due to the initiative taken by India and also due to the growing realization of its importance.
Once the MVA comes into operation, connectivity in the sub-region is likely to get a boost. Better road-linkages would reduce travel time and cost in transporting goods. The distance between Agartala and Kolkata in India is 1,650 km, which is likely to be reduced to one-fifth (to 350 km) if they are connected through Bangladesh. So plans are afoot to launch regular bus service between India and Bangladesh—one through Kolkata-Dhaka-Agartala route and the other through Gauwahiti-Shillong-Dhaka route.
Movement of private, public and commercial vehicles of all four countries across each other's territories would greatly enhance trade volume. The more frequent contact should also enhance mutual understanding. Increase in infrastructure facilities would facilitate intra-state and inter-state trade, including border trade in BBIN region.
New economic corridors could enhance intra-regional trade by 60 percent and trade with rest of the world by 30 percent. Currently, intra-regional trade in goods is just five percent of total trade in South Asia, but in ASEAN countries it is 26 percent. South Asia is the least integrated region in the world in terms of trade. But the MVA will provide greater access of BBIN region to larger ASEAN markets as India is developing similar MVA agreements with countries like Myanmar and Thailand.
Nepal would benefit a lot because it would not only have greater access to India, but also to Bhutan and Bangladesh. Now Bhutan doesn't have to load and unload its perishable goods while exporting them to Bangladesh. Possibility of Bangladesh emerging as South Asia's gateway to Southeast Asia is also high. And Bangladesh could make India's north-east as its market. In turn, India would benefit from MVA as it would help develop its northeast region. Goods from India's northeast could be transported to the ports of Bangladesh for onward shipment.
As per the agreement, the MVA will be implemented in six months from the date of its signing, after it is ratified by each country. In this regard, bilateral and trilateral agreements would also have to be signed to specify the entry and exit points, routes, types of permits and custom related issues. However, to benefit from the MVA, it would be essential to implement appropriate transport facilitation measures for which non-tariff barriers would have to be reduced. It is also necessary to construct and upgrade our roadways, railways, airways and waterways. In addition, energy grids and communication facilities would have to be developed to ensure smooth cross-border movement of goods, services, capital, technology and people.
Until mid-1960s, India and Bangladesh were connected through road, rail and waterways. But after the Indo-Pak War of 1965 all such connectivity were snapped. Presently, the road density is poor in Nepal, Bhutan, Bangladesh and Northeast India. Most roads in the region are in dilapidated conditions. Nepal, Bhutan and Northeast India are still dependent on Kolkata and Haldia ports for trade with third countries.
However, in a significant development India has agreed to provide Bangladesh US $2 billion line of credit for the revival of the routes that were disrupted in the past. Besides, the Asian Development Bank (ADB) has made a commitment of technical and financial support for the development of transport corridors in BBIN region. Accordingly, 30 road projects worth US $8 billion have been identified to upgrade critical connections in the region. In all those projects, new employment opportunities will be created.
After the implementation of the MVA, hopes are high that BBIN would expand economic cooperation in areas like energy and trade. The BBIN region is rich in natural resources. In this region, there are 190 billion cbm of natural gas reserves, 900 million tons of coal reserves, potential 75,000 MW of hydro-power, 513 million tons of oil reserves, 4.4 billion tons of limestone reserves and 25 percent of the region is covered by forests.
Infrastructural development in the region would be an alternative to China's Silk Road Economic Belt initiative. Harnessing natural resources within the BBIN region would go a long way in changing the socio-economic fabric of the society. Sub-regional integration would get a new boost. Moreover, improvement in economic condition of the people would not only reduce domestic conflict but also contribute to peace, prosperity and stability in the region. Bangladeshi transport minister Obaidul Quader puts it nicely when he says: "Let our borders no longer be treated as separators but connectors."
The author is Executive Director of Centre for Economic and Technical Studies in Nepal
dr.hbjha@gmail.com
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