Reexamining OBOR

Published On: March 26, 2018 01:00 AM NPT By: Kishan Datta Bhatta

Kishan Datta Bhatta

Kishan Datta Bhatta

The author is Dean and Associate Professor at Faculty of Engineering, Far-western University

With significant increase in Nepal’s trade with China, improved connectivity and cross-border infrastructure have become our real needs

There are real prospects of Nepal reaping benefits from China’s One Belt One Road (OBOR). With development of transit route for China to penetrate into South Asia, Nepal could be transformed into a financial hub. In the context of recent political change and formation of new government, our priorities of developing infrastructures should be re-examined in light of significance of OBOR initiative, China’s biggest ever international project.

Launched in 2013, OBOR initiative is essentially China’s plan to revive traditional Silk Road and this has attracted more than 65 countries to join it. Composed of Silk Road Economic Belt and the 21st Century Maritime Silk Road sub-strategy, OBOR is expected to connect South Asian countries including its Himalayan neighbor Nepal. 

Some key sectors where Nepal should work with China include development of transport infrastructure such as railway and road-network, hydropower and alternative energy projects, telecommunication and information technology projects, and technical and medical institutions. Statistics show that bilateral trade and economic cooperation between Nepal and China have increased three times from 2010 to 2016.  Nepal’s commerce with China has been steadily rising. China is second source of international tourists for Nepal. 

Working with China 

With significant increase in trade and commerce, there is need for improved connectivity and cross-border infrastructure development. First, China has the best technology and engineering in railway sectors. Construction of efficient railway and road network would increase accessibility and mobility with China accelerating bilateral trade, economic activities and tourism in Nepal. Second, Nepal has tremendous potentials for hydropower projects. As China has excelled in world class technology and has long experience in hydropower engineering, Nepal could request China to invest and construct hydropower projects and electrical transmission lines in addition to development of alternative energy sector such as solar panels, biogas, and wind energy. This will have huge impacts on industrial development in Nepal. China has developed advanced technology in Information and Communication Technology sector. Nepal could benefit through Chinese investment in internet and software development. 

China is one of the world’s leading countries in terms of development of cutting-edge technology, innovation, research and academic institutions. Nepal could collaborate with China to develop academic institutions specifically in the technical and medical education. Nepal could work with Chinese Academy of Sciences and collaborate in educational programs with world class Chinese universities such as Tsinghua, Peking, Fudan and Sun Yat-Sen. These projects will enhance mutual cooperation, sharing of knowledge, cultural exchanges and strong bonding between two nations.

Issues to note 

Much has been talked about OBOR initiative but its implementation is challenging for Nepal. It should be noted that Nepal has a bitter experience in executing large scale projects. Technical and financial aspects aside, lack of political consensus is a major reason behind failure of big projects.  

The diversified views of different political parties often obstruct the projects. It’s often hard to garner consensus among political parties to start the projects. Strong vision, determination and more importantly political stability are determinants to move the projects forward.  

Nepal does not have enough resources to start large scale projects. We need to consider how Nepal can manage financial matters and technical expertise for large scale projects. Likewise, though China is emerging as a rising global power, Nepal’s southern neighbor India seems reluctant to join OBOR initiative. We should not ignore this aspect either. 

The prioritization, planning, and implementation of projects depend solely on Nepal and China. We need bilateral agreement, cooperation and funding mechanism to implement the projects. The new federal government should develop an efficient and effective model to commence projects under OBOR. Operation of the projects should be under the direct supervision of central government while the provincial and local government may also participate. Such projects should be accorded the status of High Priority National Projects. 

The government should form an authority to manage funding, human resources and construction technology. Mutual dialogue between Nepal and China is vital to proceed with the projects. OBOR projects will not only promote economic vitality, but also bring global communities together, which will be a key to maintaining peace and prosperity in the region.

Connecting 4.4 billion people together, OBOR is arguably one of the largest development plans in modern history aiming at fostering global trade and economic development. It is also included as a major development policy in the 19th Congress of Communist Party of China, using it as a tool to assert China’s regional leadership through economic integration. 

China aims to create a regional production chain, within which it could become a center of advanced manufacturing and innovation. It is investing one trillion USD for building of railways, roads, ports, and other infrastructure. Nepal has become a founding member of China-led Asian Infrastructure Investment Bank that started its operation from January 2016 and it has signed a Memorandum of Understanding on OBOR with China in May 2017. China also took initiative of forming Nepal chapter of Belt and Road International Trade and Investment Platform, a private sector-led initiative to promote OBOR initiatives in Nepal.  There are good prospects ahead.

Nepal has maintained a long history of political and economic relationship with China. Vibrant trade between Kathmandu and Lhasa before inclusion of Tibet into China is an example. Historically, Nepal provided an unrestricted trading route between South Asia and China and even to central Asia via Lhasa. A large number of people of Nepali origin have been living in Lhasa and other parts of Tibet for centuries, another proof of long-established relationship. OBOR will become a significant factor in taking Nepal-China relations to a new height.

The author is Dean and Associate Professor at Faculty of Engineering, Far-western University

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